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Notes to the Financial Statements
137
9. PROVISIONS Warranties Liquidated Losses on Total
damages sales contracts
-------------------------------(Rupees in '000)----------------------------
Balance as at October 1, 2007 395,251 651,932 92,313 1,139,496
Additional provisions 262,195 1,253,174 74,079 1,589,448
Provisions transferred on acquisition of Afghanistan branch 29,254 10,900 - . 40,154
Reversals of utilised and unutilised amounts (255,111) (408,119) (74,080) (737,310)
Balance as at September 30, 2008 431,589 1,507,887 92,312 2,031,788
10. SHORT-TERM BORROWINGS 2008 2007
Note (Rupees in ‘000)
Due to an associate
Short-term loans - Unsecured 10.1 - . 330,646
Short-term running finances - Secured 10.2 907,909 2,357,180
907,909 2,687,826
10.1 Short-term loans
The facility for short-term loans was arranged from Siemens Financial Services (SFS) of Siemens AG, (the parent company) at a mark up rate of
5.33% per annum.
10.2 Short-term running finances
Short term running finance facilities available from various banks and financial institutions including SFS aggregated to Rs 3,292.225 million (2007: Rs
5,342.180 million). The mark-up on these facilities ranges between 2.28% to 15.38% (2007: 5.35% to 11.81%) per annum and the facilities are secured, where
applicable, by joint hypothecation of inventories of finished goods, work-in-process, raw materials and components and present and future trade receivables.
These include facilities aggregating Rs 2,546.225 million (2007: 4,007.180 million) obtained in UAE at 2.28% to 5.30% per annum (2007: 5.35% to 5.76%).
Other facilities granted by the banks and amounts remaining unutilised thereof as at September 30, 2008 are as follows:
2008 2007
(Rupees in ‘000)
Letters of credit
- limit 16,749,080 6,571,250
- unutilised portion 14,175,362 3,534,249
Guarantees
- limit 18,357,981 9,143,365
- unutilised portion 10,942,926 4,526,682
11. CONTINGENCIES AND COMMITMENTS
11.1 As at September 30, 2008 capital expenditure contracted for but not incurred amounted to Rs 150.997 million (2007: Rs 88.692 million).
11.2 The Company has been made party to a legal suit along with two other Siemens entities for infringement of intellectual property rights of an
individual. The plaintiff has prayed the court for recovery of cost and damages of Rs. 20 billion. The Company considers that the suit has no merit
and accordingly no provision has been made thereagainst.
11.3 The Company is defending various cases in the High Court of Sindh for the recovery of claims aggregating to Rs 129.600 million (2007: Rs 129.600
million) alongwith liquidated damages. The Company’s management is confident, based on the advice of its legal advisor, that the matter will be
decided in its favour and accordingly no provision has been made in these financial statements in respect of the amounts claimed.
11.4 The Company has filed a case in the High Court of Sindh against a claim of Sui Southern Gas Company Limited amounting to Rs 7.690 million. The
Company’s management is confident, based on the advice of its legal advisor, that the matter will be decided in its favour and accordingly no
provision has been made in these financial statements in respect of the amount claimed.
11.5 During the year ended September 30, 2007, the Company served notice of termination of the Operation and Maintenance Contract (O & M
Contract) to Karachi Electric Supply Company Limited (KESC) on account of material default by KESC on payments against the O & M Contract and
hiring of Company’s officials without the Company’s consent. However, pending the resolution by KESC, the Company filed suites on October 8,
2007 against KESC for the recovery of outstanding payments in respect of the fixed and variable fee plus mark-up accrued thereon and against
unauthorized access to Company’s intellectual property (i.e. SAP system) by KESC. In response to the notice KESC conditionally accepted the
Company's desire to terminate the O & M Contract while reserving its rights to initiate legal proceedings interalia for recovery of amounts paid to
the Company and the alleged damages and losses caused to KESC.
11.6 KESC has filed a suit against the Company and Siemens AG for recovery of an amount of Rs 57 billion on account of losses incurred by KESC under
the O & M Contract executed by the Company. The Company's management, based on the advice of its legal advisor, is confident that the suit is
not maintainable and hence will be decided in its favour and accordingly no provision in this respect has been made in these financial statements.