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For the year ended 31st December 2003
The Directors are pleased to present their report to the shareholders together with the audited accounts for the year ended 31 December 2003,
|Financial Results and profit Appropriations||
|Net Profit Before Providing Income Tax||263,618||352,232|
|Less: Income Tax Expense||(38,975)||(20,552)|
|Net Profit After Tax||224,643||341,680|
|Add: Profit Brought Forward From Previous Year||1,421,656||1,294,000|
|Profit Available for Appropriation||1,646,299||1,635,680|
|Recommended for Appropriation:|
|Transfer to Tax-Holiday Reserve||(91,3562)||(125,524)|
|Dividend Distribution Tax||(5,089)|
|Un-appropriated Profit Carried Forward||1,448,073)||1,421,656|
The Board of Directors has recommended a .10% cash dividend and a 10% stock dividend (Bonus Share) for your approval for the year ended 31st December 2003.
Mr. Salman F Rahman, Director of the company retires by rotation as per Articles 126 and 127 of the Articles of Association of the Company and being eligible, offers himself for reelection.
Mr. Iqbla Ahmed (Nominee of Bangladesh Export Import Company Limited) and Mr. O.K. Chowdhury and Mr. A.B. Siddiqur Rahman (Nominees of Beximco Holdings Limited) Directors of the company, retire by rotation as per Articles 126 and 127 of the Articles of Association of the Company and being eligible, offer themselves for re-election.
The Directors hereby report that the existing Auditors, M/S A.U. Russel & Co. Chartered Accountants, National Plaza. (6th Floor), 1/C Free School Street, Sonargaon Road, Dhaka-1205 who were appointed as Auditors of the company in” the Twenty seventh Annual General Meeting of the Company have carried out the audit for the year ended 31 December 2003.
M/S M.J. Abiding & Co., Chartered Accountants, National Plaza (6th Floor), 1/C Free School Street, Sonargaon Road, Dhaka-1205, the Auditors of the Company retire at this meeting and have expressed their willingness to continue in office for the year 2004
On behalf of the Board
ASF Rahman Chairman
27 April 2004
BEXIMCO PHARMACEUTICALS LIMITED
Report of Auditors to the Shareholders
We have audited the accompanying Financial Statements of Beximco Pharmaceuticals Limited consisting of a Balance Sheet, a Profit and Loss Account, and the Statement of Changes in Equity and Cash Flows as well as the Notes to the financial statements for the year from January 1 to December 31, 2003. The preparation and the content of the financial statements according to International Accounting Standards are the responsibility of the company’s board of directors.
In our opinion, based on our audit, the financial statements referred to above give a true and fair view of the financial position, the results of operations and cash flows of the company, in all material respects, for the year referred to above, in accordance with the Companies Act 1994, the Securities and Exchange Rules 1987 and the International Accounting Standards adopted by the ICAB.
We also report that:
- We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;
- In our opinion, proper books of accounts as required by law have been kept by the company so far as it appeared from our examination of those books;
- The Company’s Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts?
- The expenditures incurred were for the purpose of the Company’s business.
M.J. ABEDIN & CO.
National Plaza (6th Floor)
1/G, Sonargaon Road
27 April 2004
SQUARE PHARMACEUTICAL LTD.
TO THE SHAREHOLDERS FOR THE YEAR 2003-2004
In terms of provisions of Section 184 of the Companies Act 1994, Rule Inland the schedule thereunder) of the Securities and Exchange Rules 1987 and IAS- I (International Accounting Standards-l) codes as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), it is the pleasure of the Board of Directors to submit its report to the Shareholders for the year ended 31 March 2004 in the following paragraphs:
1. economic 7-environmental situation:
The year under review has undergone yet another period of turbulent law and order situation with an increased number of hartal and political agitation causing great losses to the economy, especially to the corporate sector.
Though export earnings increased and recovered the losses sustained during the previous year, the public expenditure through ADP shrunk as the revised budgetary allocation was reduced substantially as a result of which the GDP growth rate fell short of the target of 5.5%.
The foreign exchange reserve increased primarily due to increased remittances from expatriate Bangladeshis. However, the foreign portfolio and direct investment flow were almost non-existent despite v various promotional steps by the government and the private sector including lowering of bank rate and re-lending rate by the Banks.
As regards the capital, market situation, there were a few IPOS other than those of Banks which were oversubscribed a number of times, and the share price index moved up the ladder along with the increased volume of trade and capitalization. The process of dematerializing securities by CDBL is also encouraging for investors and the capital market.
2. PHARMACEUTICAL SECTOR:
The pharmaceuticals sector attained a lower growth of 5SQ% only during the year 2003 as against 10.18% during the previous year and against 22.46% during the earlier year as per IMS Report.
The wide variance in the growth rate of the national pharma market may be attributed to various factors such as public expenditure on health care, natural calamities including floods, cyclones, epidemical diseases & agro-crop harvest.
The national pharma market growth and that the Company during the past few years is given below:
National Market Growth Rate
Company’s Growth Rate
The statistics given above prove that the Company has been performing at a higher rate than that of the national growth rate of the pharmaceutical market ensuring a continued leading position in the market.
3. OPERATIONS REVIEW:
(1) PHARMA UNIT AT PABNA:
The Company continued to upgrade the qualitative capacity of the Pabna Unit and about 90% of output was produced in this plant. The company made a capital expenditure of Tk. 77.00 million at Pabna Plant divided as follows:
- (a) Land = 3.20
- (b) Building/Civil Works = 15.17
- (C) Plant Machinery = 29.08
- (d) Other Assets = 29.55
- Total Tk. (Million) = 77.00
As against the above capital expenditure during the year under review, an amount of Tk. 46.53 million was invested in the Pabna plant during the previous year. All Chose investments have helped to meet the increased demand- both qualitatively and quantitatively.
(2) CHEMICAL PLANT
The operations of the chemical Plant (at Pabna) during the last five (5) years are presented hereunder:-
|Years||No. of||Production||Own Use||Sales||Own||Turnover|
|Products||(M. Tons)||(M. Tons)||(M. Ton)||Use%||(Mi I ion Taka)|
The production/capacity utilization has been varying depending on the nature of demand from the formulation unit and market operators.
3. DHAKA PLANT:
As reported earlier the State-of-Art Plant located at Kaliakoir, commenced commercial operations with effect from 7th April 2002 with capital assets at Tk. 2,061,671,687 as of that date and Capitalized for charging depreciation, as allowed by Taz Laws, has been gradually increasing its capacity utilization arid by end of the accounting year, reached the level of as hereunder.
(Quantity in thousands)
(4) PRODUCT DEVELOPMENT:
In order to meet the requirements by the WTO regulations and heavy competition from 2016 resulting from globalization/ liberalization of trade and strict compliance of Intellectual Property Rights, the Company has been trying to develop new products every year.
The following table which is mention in the below table shows the position of existing and new products introduced during the year 2003-2004:
|SI. No||Products Categories||Position as on 31-03-03||Added during the year||Total (31-03-04)|
|5||ENT Preparation & Other||25||–||28|
|6||Opthal Preparations & Others||7||–||7|
|7||Dm Sump Suppository||14||–||14|
|11||Tablet, Powder, Liquid, Injectable- Agro Vet||19||–||19|
The new products have been well received by the medical profession and the market. Fill Gold Tablet is a multivitamin and multimineral product, which “Truly ensures 32 vitamins and minerals”. It is the best match option for all types of vitamin and mineral deficient patients (except children) to fulfill the deficiency. It is presented in a container with a child lock cap to protect it from misuse by the children.
Fill Cold tablet container has silica gel to ensure moisture protection. Fill Gold is the same formulation of the worldwide established brand Centrum.
(5) OUTPUT/CAPACITY UTILIZATION:
The overall capacity utilization of the- plant operation continued to improve during the year as shown hereunder:
|SI. No.||Product Categories||Units||Production in a thousand||Increase Decrease||Capacity Utilization|
|4||Injectables (Vials & Ampoules’||pcs||17,391||13,325||31||97%||74%|
|5||ENT Preparations & Others||Phials||10,669||8,651||23||237%||192%|
|6||Opthal Preparations & Others||Phials||958||1,083||(11)||160%||181%|
Capacity utilization during 2003-04 still remained lower due to the start-up of the new plant at Kaliakoir with huge operative capacity and lower initial production. The overall combined capacity mutilation of all the three plants (including the chemical plant) would gradually increase over the coming years.
(6) QUALITY CONTROL:
The company places total emphasis on maintaining and improving the quality of its products as “life science biology following strictly laid down criteria at every level of production and handling. The Company also follow-up withdrawals from the market of all expiry dated products through’ close ‘inspection and surveillance.
The quality control facilities include a high-quality standard Laboratory Building, Computerized equipment and tools, and a team of highly qualified /trained research personnel who are bent upon on unstinted attainment as an ethical and moral objective. We are proud of them.
The company is endeavoring to upgrade and adopt new technology in the production; quality control, distribution, and administration of its products to patients. During the year (2003-2004) the Company invested an amount of Tk. 9,524,491 in improving its Laboratory.
The Company is continuously pressing hard for expanding its export sales/ during the year under review, the exports amounted to Tk. 59.95 million as against Tk. 35.08 million in previous years, a 71% increase. The exports are expected to rise in the coming years.
(9) SUBSIDIARY OPERATION:
Square Spinnings Ltd.
The Company (SPL) holds 98% equity in Square Spinning’s Ltd. which .has a production capacity of 7,470,360 kg per annum (based on NE 20s) and commenced commercial production on 10 January 2001.
The Company’s operating results from the first year with the comparative position of performance over the years 2001.
The Company’s operating results from the first year with the comparative position of performance over the years (2001 -2003) is given below:
|Production (kg)||61, 16,123||76, 19,072||87, 28,975|
|Sales Revenue (Tk.)||703,524,368||768,539,068||883,390,854|
|Gross Profit (Tk.)||162,802,597||184,610,026||191,103,372|
|Net Profit (Tk.)||71,626,873||73,403,013||91,306,429|
Capacity Utilization (SSL):
The capacity utilization and operating profitability show improvement resulting in an increase in Net Asset Value to shareholders.
However, despite enough earnings for every share, the management has not yet considered it appropriate and opportune to declare dividend’s fund generated from operations by profit and depreciation have been largely utilized for repayment of loans and liabilities which, as a result, have been substantially reduced/restructured with the redemption of external debt risks.
The Net Asset Value has thereby been enhanced to the benefit of the shareholders.
The following changes took place in the position as on 31-12-2003 and 31-03-2004 and 31-03-2004 being the dates of closure of accounting year for Square Spinnings Ltd. and the Company (SPL) respectively:
|SI. No||Particulars||Position as on 31-12-2003||Position as on 31-03-2004|
|1||Fixed Asset Cost of Square Spinnings Ltd.||716,943,502||717,917,066|
|2||Investment by Square Pharmaceuticals Ltd.* Share Capital*Short Term Loan*Medium Term Loan||98,000,000 188,161,117 150,000,000||98,000,00 141,198,731 120,000,000|
Directors’ Report on the Company together with Audited Accounts containing Balance Sheet, Profit & Loss Statement, and Cash Flow Statement and Auditors Report thereon are included herein.
(10) LONG TERM INVESTMENT (OTHER THAN SUBSIDIARY):
The above investments include minority investments in ordinary shares/advance as Share Money Deposit in 7(seven) different companies as follows:
(1) Square Textiles Ltd. (STXL):
As of 31–03-04 investment in this Company (after listing with Stock Exchanges) ‘stands at Tk. 125,000,000 for 12,500,000 ordinary shares of Tk. 10. each (at cost) and the market value as on 31st March 2004 stood at Tk. 547,500,000 (at Tk. 43,80 per share) showing 338% appreciation.
The Company is in full operation and declared cash dividend at the rate of 30% and stock dividend at the rate of 10% (10:1B) for the year 2003 as against 32% cash dividend only for the previous year. SPL holds 49.62% shares of the Company.
(2) Continental Hospital Ltd. (CHL)
The Company (SPL) holds 120,000 shares of Tk 100 each amounting to Tk 12,000,000 out of the paid-up capital of Tk 223,185,300. The Company has a seat on the Board of Directors. The Company has not commenced operation as is considered stuck up due to management and fund problems.
Since the Company is not a listed one, it does not have any ready market value. SPL holds 5.38% shares of the Company.
(3) National Housing Finance and Investment Ltd. (NHFIL):
The Company (SPL) holds 200,000 ordinary shares of Tk. 100 each for Tk. 20,000,000 out of total Tk. 400,000,000 (5%). The Company has a seat on the board. NHL is in operation since 1999 and has declared interim dividends as 10% during the year 2003 as against 12/5% during the previous year.
(4) Central Depository Bangladesh Ltd. (CDBL):
SPL has paid for 10 (ten) shares of Tk. 1, 000, 000, 00 each in the Capital of CDBL which has been formed under the Central Depository Act 1999 for fungible and dematerialized shareholding/trading which will do away with the physical possession of scrip’s and primarily prevent fraudulent/fake share trading as a result of which corporate expenditure on share office will substantially be saved.
CDBL commenced its service w.e.f. July 2003. So far 15’companies have joined CDBL. The shares are not listed and therefore the market value cannot be assessed. The Company has a seat on the Board of CDBL as its Chairman.
(5) Square Hospitals Ltd. (SHL)
SPL holds 5,700 Ordinary Shares of Tk. 1,000/- each including 2,000 Shares with premium 6Tk. 5,50Q/- each. The project originally conceived as a Five-Star Hotel at Panthapath, Dhaka is now being developed as a modern hospital with 300 beds and diversified medical services with special emphasis on cardio-vascular remedies.
SHL has already entered into a Management Agreement with Bumrungrad Hospital of Bangkok. The project implementation is expected to be completed by the end of 2005. Meanwhile, partial services would be started by mid-2005. SPL holds 14.04% of SHL. Since the Company is not public and listed on the market value of an investment cannot be assessed now.
(6) Square Knit Fabrics Ltd. (SKFL):
Due to changes in equity holdings by SPL (from 84% to 48.84%) the position, of SKFI has changed from subsidiary to investment category. The Company started production in early 2002 and is trying to overcome initial teething problems as well as problems arising from international issues.
The Management is keeping a close watch on its operations and would continue to endeavor for attaining profitable results; the Company did not declare any dividend for the sustenance of losses. SPL now holds 1,260,000 ordinary shares of Tk 100 each of which is 48.84%. The Company is not a public/listed one and-hence the market value cannot be readily assessed.
(7) Square Fashions Ltd. (SFL):
SPL now holds 252,000 Shares of Tk. 100 each (48.46%) in the capital of SFL. The Company has not declared any dividend due to the sustenance of losses. Since the Company is not a public/listed one, the market value cannot be assessed readily.
(11) INVESTMENT IN MARKETABLE SECURITIES:
Pioneer Insurance Company Ltd. (PICL):
SPL acquired 150,000 Ordinary Shares of Tk. 100 each at Tk. 135 each including premium’ of Tk. 35 each by way of Pre IPO placement, this constitutes 10% of the issued capital of PICL. The Company (PICL) has declared dividends at the rate of 1 2% for the year 2003 as against 15% for the year 2002. The shares are listed and currently quoting at about Tk. 260 per share indicating about 92% capital gains.
(12) FINANCIAL RESULTS:
The operating financial results of the Company for the year 2003-2004 as compared to the previous year are summarized hereunder:
It may be observed that the Gross Turnover increased by 15.91% during the year under review over the previous year of 11.70% and the Gross Profit increased by 30.03% primarily due to a decrease in the cost of goods sold from 54.96% in the previous year to 51.35% during the current year.
This was again due to a decrease in the cost of raw materials consumed from 36.03% in the previous year to 31.80% during the current year The incidences of packing materials & Factory overhead also decreased marginally with a positive impact on gross profit, though operating & financial expenses marginally increased, net profit margin (BT) increased to 24.39% from 22.86% of the previous year.
The Earning per Share of Tk. 269.46 is based on an increased outstanding 3, 6000,000 shares of Tk. 100 each. However, if the originally issued capital for cash at the time of IPO is considered, .the ESP would stand at Tk. 48,502 in 2003-2004 as against Tk. 37,972 in 2001-2002 and Tk. 38, 244 in 2002-2003.
(13) APPROPRIATION OF PROFIT:
Considering the need for growing expansion and diversification of operations, increasing cost of external sources of funds, the Board of Directors have proposed and recommended for appropriation as follows:
|A||Un-appropriated Profit from previous||479,082,130|
|B||Net Profit for the Year (2003-2004)||970,043,543|
|C||Total funds available for appropriation||1,449,T25,673|
|1||Tax Holiday Reserve||193,058,076|
|2||Cash Dividend @ Tk. 70 per Share||252,000,000|
|3||Issuance of 720,000 Bonus Shares(Stock Dividend) at the rate of one share for every five shares held||72,000,000|
|E||Net inappropriate Profit||542,258,076906,867,597|
(14) DECLARATION OF DIVIDEND:
In the line of proposed appropriation of profit, the Board of Directors proposes arid recommendations for declaration of Cash Dividend at the rate of Tk. 70.00 per share for the year 2003-2004 this will involve an amount of Tk. 252 million, the Board also recommended for declaration of Stock Dividend (Bonus Shares) at the rate of one share for every five shares held.
This will need the issuance of 720,000 ordinary shares of Tk. 100 each-with appropriation of Tk. 72,000,000 to Capital Account.
(15) SHAREHOLDERS BENEFIT:
Investment in the company’s stock has substantially benefited the investors since IPO, a listing of the shares. An evaluation of shareholder’s benefit since IPO in 1994-95 may be presented as hereunder for a subscriber of 100 shares of Tk. 100 each at Tk. 900 per share:
|SI.||Accounting||Rate of Cash||Bonus Shares||Cash||Present Worth at 1 2.5%|
|The present Market value of 1 1 6 shares (Bonus) at Tk.3,’484/Share||404,144||404,144|
|Present VAlue of 275 shares of Square Textiles Ltd. at Tk.56/Share||15,400||15,400|
|A dividend of Square Textiles Ltd.||2,300||2,606|
|Capital Cain from 100 shares of SPL (Tk. 3,484-900)||258,400||258,400|
(16) CONSOLIDATION OF ACCOUNTS:
In terms of SEC regulations, the company has consolidated the Accounts following the codes of International Accounting Standard-27 (AIS-27) reflecting shareholders’ gross benefits/value of investments.
4. HUMAN RESOURCES DEVELOPMENT:
In order to improve the productivity of human input, the Company continuously provides formal and informal training to the employees at every echelon of operation and management.
During the year under review, 1,301 persons received in-house/in operation/on the job training at home and abroad which will ultimately make a great contribution to the Company’s profitability as well their own remuneration in due course.
5. ENVIRONMENTAL ROLE:
The Company maintains a high standard of pollution-free environment as per GMP Regulations /WHO standards/Government laws.
6. CONTRIBUTION TO NATIONAL EXCHEQUER:
The company contributed an amount of Tk. 1,102,617,542 (including Tk. 10,984,279 as a contribution towards machinery & spare parts imports to the National exchequer as against Tk. 978-032.738 in the previous year indicating an increase of 12.74%. The contribution constituted 23, 35% of the sales revenue (net) in 2003-2004 as against 24.05% in the previous year (2002-2003).
7. ELECTION OF DIRECTORS:
Dr. Kazi Harunar Rashid and Mrs. Jahanarda Chowdhury retire as per articles 99 and 100 of the Articles of Association of the company and being eligible, have offered themselves for re-election.
8. APPOINTMENT OF AUDITORS:
M/s. Chowdhury Bhattacharjee & Co. chartered accountants auditors of the company, retire at this annual general meeting and being eligible offer themselves for appointment as Auditors for the year 2004-2005 and refixation of an heir remuneration.
The Board of Director’s record with deep appreciation the contribution made and support & CO-operation given by the Officers, Staff, Workers, Customers, Creditors, Banks, Insurance Companies, Utility Providers, SEC, DSE, CSE, VCDBL arid the Government in particular and look forward to the global role of the Company.
Samson H Chowdhury
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