As KESC enters into the next century, we reaffirm our pledge to continue our journey with greater zeal and commitment.

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From a small port town, Karachi transformed into a sprawling metropolis, which rapidly became the financial and economic hub of our nation. However, lack of vision and poor planning in the 80s and 90s
From a small port town, Karachi transformed into a sprawling metropolis, which rapidly became the financial and economic hub of our nation. However, lack of vision and poor planning in the 80s and 90s led to an acute energy crisis. Taking over just four years ago, the KESC management has introduced value creation across all aspects of our operations and the financial performance has improved year after year. The KESC of today is providing thought leadership to the entire power sector, many of our interventions have been acknowledged as best practices by experts of our field, including the state and the corporate sector of Karachi. Our commitment to sustainability and to our environment, social and governance (ESG) philosophy have led us to proudly become the first utility in Pakistan to receive an 'A' rating from the Global Reporting Initiative (GRI). We realise that Karachi is the economic force of Pakistan. KESC and Karachi are synonymous with one another, which is why we were the first to exempt industries from load shed and this in itself is a testament of that realisation. As KESC enters into the next century, we reaffirm our pledge to continue our journey with greater zeal and commitment. CONTENTS KESC S FACT SHEET 01 LEADERSHIP TEAM 05 VISION, MISSION and VALUES 07 COMPANY INFORMATION 09 NOTICE OF MEETING 11 PROFILE OF THE BOARD OF DIRECTORS 14 DIRECTORS REPORT 32 STATEMENT OF COMPLIANCE 69 REVIEW REPORT OF AUDITORS 72 ECONOMIC SUSTAINABILITY 73 STAKEHOLDER ENGAGEMENT 91 FINANCIAL HIGHLIGHTS 102 QUARTERLY PERFORMANCE REVIEW 109 AUDITORS REPORT TO THE MEMBERS 111 BALANCE SHEET 113 PROFIT AND LOSS ACCOUNT 114 STATEMENT OF COMPREHENSIVE INCOME 115 STATEMENT OF CHANGES IN EQUITY 116 CASH FLOW STATEMENT 117 NOTES TO THE FINANCIAL STATEMENTS 118 PATTERN OF SHAREHOLDINGS 184 GLOSSARY OF TERMS 188 FORM OF PROXY 190 KESC's Network of Reach Residential Consumers 1.8 Million FY13 D. Loss FY13 AT&C Loss # of IBCs # of Consumers Ord. Consumers Consumption (MWh) Ind. Consumers Consumption (MWh) Number of Grid Stations Region % 41.2% 7 635,846 1,714, ,201 8 Low Loss Areas Gulshan-e-Iqbal Medium Loss Areas North Nazimabad Federal B Area North Karachi High Loss Areas Surjani Nazimabad Liaqatabad Public Sector Consumers 13 Thousand Total Consumers Approximately 2.5 Million Industrial Consumers 60 Thousand Commercial Consumers 0.6 Million Area Covered 6,500 square kilometres FY13 D. Loss FY13 AT&C Loss # of IBCs # of Consumers Ord. Consumers Consumption (MWh) Ind. Consumers Consumption (MWh) Number of Grid Stations Region % 38.5% 8 607,735 1,451,840 1,176, Low Loss Areas KIMZ Bin Qasim Medium Loss Areas Gulistan-e-Johar Shah Faisal High Loss Areas KESC, incorporated in 1913, is a publicly listed, fully integrated power utility involved in generation, transmission and distribution; lighting up Karachi for the last 100 years. 28 Integrated Business Centres (IBCs) located across Karachi. The organisation employs 10,603 workers in different capacities. Korangi Gadap Landhi Malir Integrated Business Centre Bin Qasim Power Station 2 KESC s Ghufran Atta Khan Chief Engagement Officer Syed Muhammad Taha Chief Distribution Officer Syed Arshad Masood Zahidi Chief Generation & Transmission Officer Nayyer Hussain Chief Executive Officer Leadership Syed Moonis Abdullah Alvi Chief Financial Officer and Company Secretary Asir Manzur Chief Human Resource Officer Eram Hasan Chief Supply Chain Officer Syed Naveed Ahmed Chief Business Development Officer Let The City of Lights be our legacy to our children 07 Our Vision, Mission and Values OUR VISION To restore and maintain pride in KESC, Karachi and Pakistan. OUR MISSION Brightening lives by building the capacity to deliver uninterrupted, safe and affordable power to Karachiites. OUR VALUES WE BELIEVE We speak as a professional, committed to helping the customer. As an organisation, we have a long way to go to provide the service we all deserve, so we cannot boast. We can do what we say we will do. Be accountable and continue to do better. WE ARE TRUSTWORTHY We speak simply, but never patronise. Long and complicated explanations are confusing and can appear as if we have something to hide. WE ARE OPEN We speak clearly and concisely. If the customer needs our assistance, or if we need to give them information, we don t waste their time. We tell the truth and are completely open and transparent. By explaining the good and the bad, we can gain the customer s trust and respect. We always ask for their involvement, never demand it. WE ARE DEPENDABLE We can be relied upon to do the right thing by everyone we come across and act in a responsible manner towards people, places and the environment. WE THINK ABOUT YOU We take time to listen to you and understand your needs. You are at the heart of what we do. We speak with a welcoming human smile in our voice. A conversation that begins this way shows that we are approachable and are here to help the customer. 08 Governance - Company Information Board of Directors (BOD) Chairman Tabish Gauhar Chief Executive Officer Nayyer Hussain Independent Director Khalid Rafi Non-Executive Directors Frederic Sicre Mubasher H. Sheikh Muhammad Tayyab Tareen Muhammad Zargham Eshaq Khan (statutory documentation in process) Noor Ahmed Omar Khan Lodhi Shan A. Ashary Wahid Hamid Executive Director Syed Arshad Masood Zahidi Board Audit Committee (BAC) Khalid Rafi Chairman Mubasher H. Sheikh Member Muhammad Tayyab Tareen Member Tabish Gauhar Member Wahid Hamid Member Board Human Resource & Remuneration Committee (BHR&RC) Omar Khan Lodhi Chairman Shan A. Ashary Member Muhammad Tayyab Tareen Member Chief Financial Officer and Company Secretary Syed Moonis Abdullah Alvi Chief Internal Auditor Khalilullah Shaikh Legal Adviser Abid S. Zuberi & Co. External Auditors KPMG Taseer Hadi & Company, Chartered Accountants Share Registrar Central Depository Company of Pakistan Limited Bankers Al-Baraka Bank (Pakistan) Limited Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Citibank N.A. Faysal Bank Limited Habib Bank Limited Industrial & Commercial Bank of China KASB Bank Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Standard Chartered Bank (Pakistan) Limited Standard Chartered Modaraba Summit Bank Limited United Bank Limited Registered Office KESC House, 39-B, Sunset Boulevard, Phase-2 Defence Housing Authority, Karachi Board Finance Committee (BFC) Muhammad Tayyab Tareen Chairman Shan A. Ashary Member Nayyer Hussain Member Omar Khan Lodhi Member Website 09 Board of Directors Board Audit Committee Board Finance Committee Board HR&R Committee Chief Executive Officer Chief Internal Auditor Chief of Staff (CEO) Chief G&T Officer CFO & Company Secretary Chief Supply Chain Officer Chief Engagement Officer Chief Business Development Officer Chief Distribution Officer Chief Human Resource Officer Chief of HSEQ Chief of Security 10 Notice of Annual General Meeting Notice is hereby given that the 103rd Annual General Meeting (AGM) of the Karachi Electric Supply Company Limited will be held at the Navy Welfare Centre, Liaquat Barracks, Karachi on Tuesday, October 29, 2013 at 10:30 a.m. to transact the following business: Ordinary Business 1. To confirm minutes of the Extraordinary General Meeting (EGM) held on August 23, To receive and adopt the annual audited financial statements of the company (with the Directors Report and Auditors Report) for the year ended June 30, To appoint auditors in place of retiring auditors, M/s. KPMG Taseer Hadi & Company, for FY13-14 and to fix their remuneration as recommended by the Board Audit Committee (BAC). Special Business 1. To approve change of name of the Company:- To consider and pass the following as special resolution with or without modification: Resolved that the name of the company be and is hereby changed to K-Electric Limited after obtaining requisite statutory approvals pursuant to the Companies Ordinance Any other business with the permission of the Chair. By order of the Board Syed Moonis Abdullah Alvi Company Secretary Karachi Electric Supply Company Ltd Karachi, October 8, N.B. (i) Transfer books of the company will remain closed from October 23, 2013 to October 29, 2013 (both days inclusive). Only those persons whose names appear in the register of members of the company as on October 22, 2013 are entitled to attend and participate in and vote at the AGM. (ii) A member entitled to attend and vote at the meeting may appoint a proxy in writing to attend the meeting and vote on the member s behalf. A proxy must be a member of the company. (iii) Duly completed forms of proxy must be deposited with the company secretary at the registered office of the company not later than 48 hours before the time fixed for the meeting. (iv) Shareholders (non-cdc) are requested to promptly notify the share registrar of the company of any change in their addresses. All the shareholders holding their shares through the CDC are requested to please update their addresses with their participants. (v) Shareholders who have not yet submitted attested photocopies of their Computerised National Identity Cards (CNICs) to the company are requested to send the same at the earliest. CDC account holders will further have to follow the below-mentioned guidelines as laid down in Circular 1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan. A. For attending the meeting (i) In case of individuals, the account holder or sub-account holder, whose registration details are uploaded as per the regulations, shall authenticate his/her identity by showing his/her original CNIC or original passport at the time of attending the meeting. (ii) In case of a corporate entity, the Board of Directors resolution/power of attorney with a specimen signature of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting. B. For appointing proxies (i) (ii) In case of individuals, the account holders or sub-account holders, whose registration details are uploaded as per the regulations, shall submit the proxy form as per the above requirement. Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. (iii) The proxy shall produce his/her original CNIC or original passport at the time of the meeting. (iv) In case of corporate entity, the Board of Directors resolution/power of attorney with a specimen signature shall be submitted (unless it has been provided earlier) along with the proxy form to the company. (v) The proxy form will be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. 12 Statement U/S 160(1)(b) of the Companies Ordinance 1984 KESC is the 1st power utility to mark 100 years of its existence. Driven by its ESG philosophy, KESC has also become the 1st power utility with a publically announced climate change policy, which represents a commitment to environmental, social and governance value creation. Over the last few years, KESC has practically demonstrated a strong will and the ability to bring about a sustainable change and it is visibly pursuing a path of growth and transformation which places it amongst the most dynamic institutions not only in Pakistan but also in the region. The signs of an operational and financial turnaround are clearly noticed by its stakeholders, who have a reason to believe that KESC now is a renewed entity with a brand new vision and a progressive outlook. Therefore, there is a strong case to reposition and rebrand KESC with a refreshing new visual identity as a manifestation of its aspirations and its current stance as leader among the energy sector companies in Pakistan. The Directors have no interest in the Special Business as mentioned above. 09 Profile of the Board of Directors Tabish Gauhar Chairman Tabish Gauhar has 19 years of experience in the infrastructure sector in the Middle East, South Asia, Europe and Africa. He is a Partner at The Abraaj Group and non-executive Chairman of KESC, having previously served as its CEO between November 2009 and February Before joining The Abraaj Group, he was the Regional CFO at AES Corporation for Europe, Middle East & Africa. He has previously worked with International Power on its Hub Power Project in Pakistan. Mr. Gauhar started his career at Exxon Chemical. He graduated with a First Class Honours degree in Electrical Engineering from King s College, London (Chevening/ICI Scholar), and also holds an MBA (Finance) from the Institute of Business Administration, Karachi. Other Offices: Director, MSF (Pakistan) Director, Byco Industries Inc. (Mauritius) Nayyer Hussain Chief Executive Officer Nayyer Hussain is the CEO of KESC since February He served as the Chief Distribution Officer between November 2009 and February Prior to joining The Abraaj Group he was with Mashreq Bank, where he managed the Retail Risk Management function. While with Citigroup from 1991 to 2005, he worked with their franchise in Pakistan, Saudi Arabia and Russia as Head of Retail Risk Management. In Pakistan and Russia, he was part of the pioneering team that was responsible for the launch of Retail Banking Business. During his tenure in Saudi Arabia with Saudi American Bank, he managed to turnaround an adversely performing portfolio and also led the retail banking team that helped merge United Saudi Commercial Bank (previously known as Saudi Cairo Bank). Khalid Rafi Independent Director Khalid Rafi is an Independent Director on the Board of the Company, elected at the AGM of the Company held on October 8, Mr. Rafi was a Senior Partner at A. F. Ferguson & Co., Chartered Accountants, a member firm of PricewaterhouseCoopers LLP, for 20 years. He was also the president of the Institute of Chartered Accountants of Pakistan and of Management Association of Pakistan. Mr. Rafi is a Chartered Accountant, being a Fellow at the Institute of Chartered Accountants in England and Wales. Mr. Rafi has been a Non-Executive Director of Unilever Pakistan Ltd. since April 19, Other Offices: Non-Executive Director, Unilever Pakistan Limited Chairman, FAMCO Frederic Sicre Non-Executive Director Frederic Sicre is a Non-Executive Director on the KESC Board since May 7, Mr. Sicre, Managing Director - The Abraaj Group, has over 20 years of experience in engaging the private sector on global issues, regional development agendas and community building. He spearheads the Abraaj Strategic Stakeholder Engagement Track (ASSET) at The Abraaj Group that works with leaders from all fields, including governments, the private sector, media and culture. Prior to joining the Group, Mr. Sicre spent 16 years as a managing director at the World Economic Forum where he established the Forum s activities in Africa and the Middle East. Mr. Sicre was responsible for the Center for Regional Strategies, with particular focus on global growth markets, and acted as the editor of South Africa at Ten, a book celebrating the first 10 years of democracy in the country. 19 Mr. Sicre is the Chairman of the Mustaqbali Foundation and serves on a number of Advisory Boards, including Dubai Cares and Injaz Al Arab (Junior Achievement). He is also a member of the Young President s Organisation. Mr. Sicre holds an MBA from IMD, a Bachelor of Arts and Sciences from Villanova University, Philadelphia and is a Fellow of Stanford University. Other Offices: Chairman, Mustaqbali Foundation Director, Wamda Limited Director, Injaz Director, Dubai Cares Mubasher H. Sheikh Non-Executive Director Mubasher Hussain Sheikh has been a Non-Executive Director on KESC s Board of Directors (BoD) since the privatisation of the company on November 29, Mr. Sheikh has been employed by the National Industries Group (Holding), Kuwait, since 2001 and is currently the Group Financial Controller. NIG is one of the largest listed investment holding companies on the Kuwait Stock Exchange and a leading industrial conglomerate in the GCC. NIG focuses on investment opportunities arising in the MENA region and Indian sub-continent within the infrastructure and industrials space, which includes petrochemicals, oil and gas services, utilities, building materials, real estate and financial services sectors. NIG has consolidated assets in excess of US$ 5 billion. Prior to joining NIG, he was an audit manager at Grant Thornton International, Kuwait, where he worked since He is currently a board member of the Karachi Electric Supply Company as well as National Combined Industries Holding Company for Energy, Kuwait. He graduated with a degree in mathematics and statistics from The University of Punjab, Pakistan and is a Chartered Certified Accountant UK (FCCA). He is also a Non-Executive Board Member in Proclad Group Limited, UAE, which has sales in excess of US$ 200 million and specialises in the manufacturing of Weld Overlay Clad products and in the manufacturing of Unibar continuous cast iron. Other Offices: Group Financial Controller, National Industries Group, Kuwait Board member, National Combined Industries Holding Company for Energy, Kuwait 20 Muhammad Tayyab Tareen Non-Executive Director Muhammad Tayyab Tareen joined KESC on May 27, 2009 and remained an Executive Director till June 10, 2013 in the position of Chief Financial Officer and Chief Strategy Officer. Currently, he is a Non-Executive Director of the company. Mr. Tareen joined The Abraaj Group in He has over 20 years of experience, mainly with multinationals, covering areas of business turnarounds, financial management, planning and business acquisitions. Prior to joining Abraaj, he was the Chief Financial Officer (CFO) of the Coca-Cola Company managed bottler in the UAE and Oman, a business that saw a successful turnaround from losses to sustained profitability within two years. From 1997 to 2001, he was with Coca-Cola Beverages Pakistan as CFO and Company Secretary. He started his career in 1995 with Packages Limited in Pakistan as Manager Project Financing, responsible for investment reviews and project financing. Mr. Tareen is a qualified Chartered Accountant and member of the Institute of Chartered Accountants of England and Wales. Muhammad Zargham Eshaq Khan Non-Executive Director (GoP nominee) Muhammad Zargham Eshaq Khan is a Non-Executive Director on the Board of the Company since April 26, Mr. Khan is a government-nominated director representing the position of Joint Secretary (Power), Ministry of Water and Power, GoP, Islamabad. Other Offices: Director, LESCO, PESCO, HESCO, MEPCO and GEPCO 21 Noor Ahmed Non-Executive Director (GoP nominee) Noor Ahmed is a Non-Executive Director on the Board of the Company appointed on September 10, Mr. Ahmed is a government-nominated director representing the position of Senior Joint Secretary (CF-II), Finance Division, Ministry of Finance, GoP, Islamabad. Prior to this position, he has worked in the capacity of: Senior Joint Secretary, Statistics Division; Chief (Administration), FBR (HQ); Director General, Privatisation Commission; Joint Secretary (Economic Affairs Wing), PM Secretariat; Deputy Secretary (Economic Affairs Wing), PM Secretariat; and Deputy Director, Public Procurement Regulatory. He has an M.A. in Development Studies (1996) from the Institute of Social Studies in Hague, Netherlands (Specialisation in Public Policy), and an M.A. in History (1988) from the University of Punjab, Lahore. Other Offices: PHPL, GENCO Holding (Pvt) Ltd., ISGSL and PARCO Omar Khan Lodhi Non-Executive Director Omar Khan Lodhi is a Non-Executive Director on KESC s Board since August 26, Mr. Lodhi is a Partner and Regional Head of The Abraaj Group for East Asia, based in Singapore. He has close to 20 years of investing and operating experience spread across a diverse range of sectors in Asia, Europe and MENA. Prior to joining The Abraaj Group in 2005, Mr. Lodhi spent the most part of his career with UBS, based in Lo
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