History

From 1947 to the early 1990s, the economy made considerable progress in
the transformation from a wood-burning base to modern energy sources. The
process remains incomplete. Bagasse (the woody residue left over from
crushed sugarcane), dung, and firewood furnished about 32 percent of all
energy in FY 1988. Some localities had been denuded of firewood, forcing the
local population to use commercial energy sources, such as kerosene or
charcoal. Domestic sources of commercial energy accounted for 77 percent
of all commercial energy in FY 1990. The major domestic energy resources
are natural gas, oil, and hydroelectric power. The remainder of energy
requirements are met by imports of oil and oil products.
Crude oil production increased sharply in the 1980s, from almost 4.0 million
barrels in FY 1982 to 22.4 million barrels in FY 1992. This increase was the
result of the discovery and development of new oil fields. Despite this
expanded production, however, about 28 million barrels of crude oil were
imported annually in the early 1990s. The production from domestic oil
refineries also rose in the 1980s, reaching 42 million barrels annually in the
early 1990s. However, oil products imports accounted for about 30 percent
of the value of all oil imports.
Pakistan vigorously pursued oil exploration in the 1980s and early 1990s and
made a number of new discoveries. In the early 1990s, the most productive
oil field was at Dhurnal in Punjab, accounting for 21 percent of total output in
FY 1993. The Badin area in southern Sindh was the site of a number of
discoveries in the 1980s, and its proportion of total output has continued to
increase over the years. In the early 1990s, more favorable terms on pricing
and repatriation of profits stimulated the interest of foreign oil companies.
About twenty foreign companies are engaged in oil exploration, but poor
security for workers and property in remote areas of Baluchistan and Sind
remains a significant constraint on foreign investment.
The large Sui natural gas field in Balochistan was discovered after
independence. Production at Sui began in 1955 and peaked in 1985. In the
early 1990s, it remained the nation's most productive gas field, accounting
for 46 percent of production in FY 1993. The second largest gas field, also
located in Balochistan at Mari, accounted for 20 percent of all production.
1

Twenty-five gas fields were operational in FY 1993. Natural gas recoverable

reserves were estimated at 662.0 billion cubic meters, with an extraction
rate in the early 1990s of around 14.0 billion cubic meters, up from 9.3 billion
cubic meters in FY 1982 and 1.3 billion cubic meters in FY 1970.
Natural gas pipelines, in which the government owns controlling shares, link
the Sui gas field and a few others to the main population centers and the
major crude oil production areas. The southern pipeline leads from Sui to
Hyderabad and Karachi, and a spur supplies Quetta. The northern pipeline
branches at Faisalabad. One branch goes a little farther north of Lahore; the
other branch is connected to the crude oil fields and supplies gas to
Islamabad and Peshawar. There are plans for a new gas pipeline through
which Iran would export natural gas to Pakistan.
Coal reserves were boosted substantially in May 1992 when a large coal field
was discovered in the Thar Desert in Sindh. In early 1993, these reserves
were estimated at 17 billion tons. However, much of Pakistan's coal has a low
calorific value and a high ash and sulfur content, which limits its value.
Output was 1.3 million tons in FY 1992, down from 1.8 million tons in FY
1982. The bulk of production is from small, privately owned mines whose
owners generally lack funds, expertise, and interest in expanding output. A
public-sector firm, the Pakistan Mineral Development Corporation, accounted
for about one-fifth of output in the early 1990s. The corporation has six
operational mines--at Degari, Sor Range, and Sharigh in Balochistan; Lakhra
and Meting in Sindh; and at the Makerwal/Gullakhel complex straddling the
border between Punjab and the North-West Frontier Province.
Hydroelectric power is an important domestic primary energy resource, and
hydroelectric potential is estimated at around 10,000 megawatts. A large
number of additional sites with major potential exist in the mountainous
north, but the difficulty of access and the high cost of transmission to the
populous south make development a distant prospect. A large proportion of
hydrogenerators are located at two large multipurpose dams. The Tarbela
Dam located on the Indus River in the North-West Frontier Province has an
installed capacity of 2,164 megawatts, and the Mangla Dam situated on the
Jhelum River in Azad Kashmir has an installed capacity of 800 megawatts.
In 1965 Pakistani officials contracted with the Canadian government for the
supply of a 125-megawatt pressurized, heavy-water nuclear reactor, which in
1972 became operational near Karachi. This was Pakistan's only nuclear
power plant in 1994, and its operating record is poor. In 1983 plans for a
2

nuclear plant at Chashma, on the Indus River in Punjab, about 240 kilometers
south of Islamabad, were announced. The construction of this plant was
delayed, in part because of the reluctance of foreign governments to supply
needed fuel and technology because of concern over possible military use of
the atomic energy program. In 1993 Pakistani officials expected the plant to
open in 1997 with a capacity of 300 megawatts. China is providing the
necessary technology and materials for the Chashma plant. Pakistani officials
expect that fuel for the plant will be provided by the uranium enrichment
plant at Kahuta near Islamabad. Some observers, however, believe it is
unlikely that the plant will be ready in 1997.
In FY 1992, the country had a total installed generating capacity of 9,293
megawatts, of which approximately 62.7 percent was thermal, 35.9 percent
hydroelectric, and 1.5 percent nuclear. In FY 1991, industry consumed 34.2
of percent of electricity, households 31.7 percent, agriculture 21.4 percent,
commercial businesses 4.3 percent, and other users 8.3 percent. A rural
electrification program increased the number of villages having electricity
from around 14,000 in FY 1983 to nearly 41,000 in FY 1992, leaving only
about 5,000 villages without electricity. After the late 1970s, considerable
improvement was made in transmission facilities. By 1983 a grid connected
generators and urban centers of the more populous areas, largely in Punjab
and Sindh. Installations of high-voltage transmission lines and other facilities
helped reduce power losses. Nonetheless, in 1993 the World Bank estimated
that 28 percent of electricity generated in Pakistan was diverted illegally in
transmission and distribution, and even the government puts this figure at
12 percent.
In 1993 the government planned a rapid increase of generating capacity, in
part through the expansion of existing hydroelectric and thermal units and in
part through the construction of new plants. Nonetheless, observers
expected shortages of electricity to continue in the early 1990s and probably
longer. In much of 1993, both urban and rural areas experienced three power
cuts a day lasting a total of around two hours. Industrial and commercial
users are required to reduce consumption by an even greater amount, and
they risk being disconnected if they violate "agreed-on levels." Peak demand
for electricity is estimated to exceed the supply by around 30 percent.
In 1991 the power sector was opened to private capital, both foreign and
domestic. In that year, a World Bank consortium that included investors from
Britain, Saudi Arabia, and the United States agreed to finance a project for a
new US$1.3 billion, 1,292 megawatt oil-fired power station at Hub Chowki in
3

Balochistan, forty-eight kilometers west of Karachi. Construction began in

September 1992. The consortium is responsible for the construction and
operation of the power station, while its output is sold to the national grid. In
1992 the government announced plans to privatize the Water and Power
Development Authority's thermal plants and area electricity boards, but in
1994 legal and political obstacles prevented implementation of this policy.
Some development of renewable energy sources has been undertaken,
primarily for rural areas so isolated they would not otherwise have electricity
in the foreseeable future. The aim is to upgrade village life while lowering
urban migration, reducing reliance on firewood, and providing power to
pump water for irrigation where possible. For example, a small family-owned
biogas plant uses human and animal waste (from three or four water buffalo,
for example) to produce around 2.8 to 4.2 cubic meters of gas a day for
heating and lighting. Larger biogas plants serve a number of homes or a
village. Construction costs are too high for most villagers unless the
government underwrites installation.

Introduction
KEL was incorporated in April 1994 with the aim and objective to take part in the
prosperity of the country through power generation. KEL having paid-up capital of
Rupees 1,695 million and is a joint venture of Saigols Group of Companies (a wellknown multi-industrial group of Pakistan) and Toyota Tsusho Corporation (an
eminent consortium of multi-industrial undertakings of Japan.)
KEL is situated at 35-KM Link Mange Raiwind Road Lahore. It is one of the pioneer
projects of Independent Power Producers in Pakistan. The principle activities of the
Company is to own, operate and maintain a furnace oil power station with the net
capaity of 124 MW (gross capacity 131.44 MW). WAPDA is the sole customer of KEL.

VISION
To lead as an independent power producer (IPP) serving the nation through the power industry.

MISSION

To set the standards in the power industry in terms of:

Reliability in responding to the customers dispatch for electrical power

Responsiveness to the attendant social and environmental responsibilities

Efficient management of processes and resources

Human resource development and empowerment

Commitment to quality systems and effective leadership

Directors profile

Mr. M. Naseem Saigol is son of Mr. M. Yousuf Saigol, has done Chemical Engineering
from USA. He is one of the pioneer industrialists in Pakistan. The Saigols dynasty
was originally doing business in Calcutta and after Indo-Pak partition they migrated
to Pakistan and set up one of the largest textile unit under the banner of Kohinoor
Textile Mills Limited in Faisalabad (formerly Lyallpur) the textile city of Pakistan.
Thereafter they formed a largest Chemical Complex in Kalashah Kaku. Saigols family
is also founder of the United Bank Limited established in 1959 which became the
third largest banking network in the early years of Pakistan.
Mr. Naseem Saigol being an eminent textile entrepreneur has also the honor to
provide technical and management expertise to the governments of Libya, Somalia
and Tanzania for establishing textile industry in their countries.
Thereafter diversifying to manufacturing and assembling of home appliances he
brought another brand name Pak Elektron Limited (PEL). PEL is comprises of
Appliances and Power Divisions. Refrigerators, Air conditioners, Microwave Ovens,
Washing Machines, Water Dispensers, Generators, Transformers, Switchgears and
Energy Meters are major appliances and electrical equipments that are produced by
PEL.
In 1994 at the time when Pakistan was facing a severe shortage of power supply, he
came up with the vision to serve the nation through power industry. He joined his
hands with Tomen Corporation Japan (later on acquired by Toyota Tsusho
Corporation, Japan) and formed Kohinoor Energy Limited (KEL) as an Independent
Power Producer. KEL is proudly contributing to the dire power needs of the country.
5

He had also been the Chairman of All Pakistan Textile Mills Association (APTMA), Vice
President of Lahore Chamber of Commerce and Industry, President of Faisalabad
Chamber of Commerce and Industry, and is member of Industrial Employees
Association.
Mr. M. Naseem Saigol through his business group in terms of services,
manufacturing home appliances and electrical equipment, textile products and
exports thereof, and power generation, is not only contributing to exchequer and
the GDP of the country but also bestows businesses to local vendor industry and
providing job opportunities to thousands of Pakistanis.
Besides member and the Chairman of the Board of Directors of KEL since its
inception Mr. M. Naseem Saigol is also Director/Chairman of Pak Electron Ltd,
Kohinoor Industries Ltd, Azam Textile Mills Ltd, Saritow Spinning Mills Ltd and
Kohinoor Power Company Ltd.

Moreover we would reiterate about the dispute with WAPDA regarding

eligibility of indexation on non-escalable component of the capacity purchase
price relating to the period subsequent to repayment of foreign currency
loan. WAPDA had withheld Rs. 430.517 million from the invoice of April 2010.
Both the Company and WAPDA by adopting one of the courses pursuant to
the Power Purchase Agreement appointed an Expert for mediation. The
Expert has given his decision / recommendation in favor of the Company.
However WAPDA has not accepted the decision / recommendation of the
Expert. More detail is appearing in note 12.1.1 to theses financial
statements. The Management and the legal counsel are of the opinion that
the matter will be settled in Company's favor if the dispute is referred to the
Arbitration. Therefore, the Company has not provided for Rs. 430.517 million
in these financial statements. We would also like to explain that due to
supply of electricity shorter than the demand, WAPDA has invoiced to the
Company the liquidated damages (LDs). Up till June 30, 2015, accumulated
LDs invoiced by WAPDA are Rs. 402.433 million (2014: 385.83 million). We
are of the view that since technically the plant was available to deliver
electricity as per WAPDAs demand and the failure to deliver was
consequential only to financial constraints caused by nonpayment of dues to
the Company on timely basis and which resulted into inability of the
Company to make advance payments to the fuel supplier, therefore WAPDA
cannot impose and claim the LDs which triggered as a result of its own
default. Resultantly we have disputed the said invoices of LDs submitted by
WAPDA. Currently WAPDA and the KEL are in the process of the expert
6

appointment under the mechanism given in the Power Purchase Agreement.

The ultimate outcome of the matter cannot presently be determined,
however recently in case of other IPPs (both 1994 & 2002 power policy), the
expert has given his determination on LDs dispute in favour of the IPPs,
therefore no provision for such LDs has been made in these financial
statements. Further we would like to inform you that during the current
financial year, a sales tax demand of Rs 505.41 million was raised against
the Company through order dated August 29, 2014 by the Assistant
Commissioner Inland Revenue ('ACIR') by disallowing input sales tax for the
tax periods from August 2009 to June 2013. Such amount was disallowed on
the grounds that the revenue derived by the Company on account of
'capacity purchase price' was against a non-taxable supply and thus, the
entire amount of input sales tax claimed by the Company was required to be
apportioned with only the input sales tax attributable to other revenue
stream i.e. 'energy purchase price' admissible to the Company. Against the
aforesaid order, the Company preferred an appeal before the Commissioner
Inland Revenue (Appeals) ('CIR(A)') who vide its order dated November 6,
2014, upheld the ACIR's order on the issue regarding apportionment of input
sales tax with the caveat that tax demand pertaining to period of show cause
notice beyond the limitation of five years cannot be sustained and reduced
from the tax demand. Subsequently, the Company preferred an appeal
before the Appellate Tribunal Inland Revenue ('ATIR'). Additionally, the
Company had filed an application with the Lahore High Court seeking a stay
in recovery of tax arrears, default surcharge and penalty. The Lahore High
Court, in its order dated December 31, 2014, stayed the recovery of the tax
demand along with default surcharge and penalty till adjudication by the
ATIR, subject to deposit of Rs. 10 million with the Tax Department which the
Company duly submitted on January 7, 2015. The ATIR vide its order dated
May 4, 2015, upheld the CIR(A)'s order on the issue regarding apportionment
of input sales tax. Thereafter, the Company has filed an appeal against the
decision of CIR(A) in the Lahore High Court. Hearing of the case has been
adjourned by the Lahore High Court at the application of the Company. The
date of next hearing has not yet been fixed by the Lahore High Court. Stay of
recovery of tax arrears, default surcharge and penalty has been granted till
the next hearing before the Lahore High Court.

QUALITY POLICY

We, at KOHINOOR ENERGY LIMITED, fully recognize and realize the importance of achieving satisfaction and
confidence of our customer(s) by providing uninterrupted Electricity through National Grid under relevant
contractual obligations.
Our commitment to quality is driven by the following guiding principles:
MEETING OR EXCEEDING CUSTOMER NEED & EXPECTATIONS:
Customer requirements and expectations is determined, reviewed and incorporated in power plant
operations and customer satisfaction is regularly monitored.
COMPLIANCE WITH LEGAL & REGULATORY REQUIREMENTS:
Strict adherence is ensured to any legal and regulatory requirements that subscribe to power plant
operations and relevant activities.
CONTINUAL IMPROVEMENT:
Continual efforts are made to minimize our rejections and wastage, and improve the efficiency and
effectiveness of relevant processes and services.
EMPLOYEES DEVELOPMENT & INVOLVEMENT:
Employees is responsible for maintaining and improving quality in their work functions.They are competent
on the basis of their relevant qualifications and experience , and are regularly trained to enhance their
skills. Understanding of quality policy and awareness of compliance with requirements and procedures is
communicated to all employees through appropriate means by relevant levels in the management
hierarchy.

Advanced Financial Management

Final project
Ratio Analysis of Compan

We are going to calculate the ratio of Kohinoor company

Current ratio
Current Assets
Current Liabilities

Year

2015

2014

2013

2012

2011

ratios

1.86

1.68

6.91

2.21

2.65

Comparison:

yaer

2015

2015

2015

ratios

1.86

1.12

2.11

Quik ratio:

Quick Ratio

Current Asset
-Inventory
Current Liabilities

year

2015

2014

2013

2012

2011

ratios

1.77

1.59

6.40

2.14

2.59

Comparison
company

ratios

1.77

1.23

2.01

Total debt ratio

debt

total
Total

asset

year

2015

10

2014

2013

2012

2011

ratios

29.29

36.15

27.60

7.61

2057

Comparison

company

ratios

29.29

20.5

15.87

Total equity ratio= total debt/total equity

year

2015

2014

2013

2012

2011

ratios

41.42

56.61

8.23

38.12

25.90

Comparison

company

ratios

41.42

25.12

49.30

Captilization ratio = long term liabilities/long term fund

year

2015

2014

2013

2012

2011

ratios

0.34

1.86

0.36

0.33

1.62

11

Comparison:

company

ratios

0.34

1.72

0.67

Return on investmen= net profit after tax/total asset *100

year

2015

2014

2013

2012

2011

ratios

17.38

19.95

15.94

15.82

13.5

Comparison

company

RATios

17.38

12.15

20.22

Gross profit ratio

12

13