KARACHI, Feb 25: Pakistan PTA Limited, one of the international ICI group companies, posted an operational profit of Rs118 million for the first time in 2003. But the company executives expect to pay dividend "when circumstances allow".

In a briefing on Wednesday at the company office, PPTA chief executive Waqar A. Malik and chief financial officer and company secretary Aamer Malik informed reporters of how the management had been able to bring about an annual saving of Rs1.5 billion by way of amortization and revaluation of fixed assets.

In accordance with the International Accounting Standard 16, requiring assets will be shown in the balance sheet at fair value. This has to be achieved through revaluations every three to five years.

PPTA's plant and machinery were earlier valued in June 1998 at the time of commissioning, and in September 2000 at the time of de-merger from ICI Pakistan. In September last year, international valuers carried out valuation of the plant. A local company carried out valuation of lands, buildings and roads and pavements.

These two valuations resulted in a deficit of Rs12.6 billion. After adjusting the current revaluation against valuation reserve, a balance of Rs1.4 billion has now been charged to profit and loss account.

Aamer Malik indicated expected annual saving of Rs700 million from depreciation. He said the company ordinance allowed the discount to be written off in one go.

Accordingly, the unamortized balance of Rs3.22 billion was written off, which will reduce Rs800 million annual charge in future profit and loss accounts.

"The reduction in annual charges relating to depreciation and amortization will place the company in a better position to pay dividend when circumstances allow," Waqar Malik indicated.

The two executives attributed the achievement of operating profit for the first time in 2003 to higher production and sales, lower conversion cost and strict control over fixed costs. "Financing cost has been reduced to a level where it could be fully met through internal cash generation," Aamer Malik said.