Mohsin Annual Report-Final 1-91:Layout 1.qxd - Siemens Pakistan

Directors’ Report 9Dear Shareholders,The Company ensures that corporate governance principles remain tobe integral part of its operating, decision-making and monitoringprocesses. The Company respects the rights of its shareholders andencourages their active participation in all general meetings of theCompany. The Company also recognizes its legal obligations towardsall of its legitimate stakeholders and business partners.The Directors are pleased to present the Annual Report and the audited financial statements for the yearended September 30, 2007 together with Auditors' report thereon.Last year's performance of your Company was once again the best ever. The Business Units continuedto focus on profitable growth keeping the momentum which the Company has achieved throughoperational excellence and good corporate governance. The Board of Directors remained very vigilant ofthe affairs of the Company through out the year and participated in all major decisions. The managementalso kept the Board well informed on all matters of significance and took every decision in the bestinterest of the shareholders.The year under review is unique in the history of the Company as the founding business, theCommunication business (COM business), was sold pursuant to a decision of Siemens AG (SAG), themajority shareholder of the Company, to globally carve-out its COM business. After taking your approvalin the fifty fourth Annual General Meeting held on December 27, 2006, the COM Carrier business ofSiemens Pakistan was transferred to Nokia Siemens Networks Pakistan (Pvt.) Limited on April 1, 2007and COM Enterprise Network business of the Company was transferred to Siemens EnterpriseCommunications (Pvt.) Limited on August 2, 2007 in line with the global carve-out plan provided bySAG.The Company has received an aggregate sale price of Rs 2,451 million and the whole transaction hasresulted in net after tax capital gain of Rs 1,498 million to the Company. We have all the intentions ofinvesting the proceeds received by the Company to further increase shareholders' value.Amalgamation of Carrier Telephone Industries (Pvt.) Limited (CTI) into the Company was anothersignificant event of the year. Your Company had acquired 52.51% shares of CTI from PakistanTelecommunication Company Limited and took over the management control in December 2005. Inorder to have better control and to get benefit of synergies, it was decided by the Board that the businessof CTI should be amalgamated into the Company and for that reason a scheme of amalgamationwas prepared and approved by the Board. According to the scheme of amalgamation, the Company alsoissued its 477,440 fully-paid ordinary shares to Siemens AG in consideration of their 47.49% shareholdingin CTI. In April 2007, the Company and CTI jointly filed a petition for sanction of the proposedscheme of amalgamation in the Hon'ble Lahore High Court, Rawalpindi Bench, which was approved bythe Hon'ble High Court in November 2007. Upon sanction of the scheme, entire undertaking of CTI hasbeen transferred to and vested in Siemens Pakistan with effect from October 1, 2006.Highlights of the national economyAccording to official statistics, Pakistan's economy continued to perform remarkably and real GDPgrowth accelerated to 7 percent in 2006-2007 against the estimated growth of 6.6 percent. Over thelast four years the real GDP has grown at an average rate of 7.5 percent and Pakistan has turned out tobe one of the fastest growing economies in Asia along with China, India and Vietnam. This impressiveGDP growth is primarily attributable to development and implementation of sound economic policies,on-going structural reforms and persistent influx of foreign investment. All three major sectors, namely