ktml_annual_2010

Registered Office : 42 - Lawrence Road, Lahore Pakistan.

T : +92 - 42 - 3630 2261, 36302262 F : +92 - 42 - 3636 8721

w w w . k m l g . c o m

Kohinoor Textile Mills LimitedA KOHINOOR MAPLE LEAF GROUP COMPANY

Annual Report 2010

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Kohinoor Textile Mills Limited Annual Report 2010

CONTENTS

KOHINOOR TEXTILE MILLS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Company Profile 2Company Information 3Vision Statement 4Mission Statement 4Statement of Ethics and Business Practices 5Statement of Strategic Objectives 6Notice of Annual General Meeting 7Organization chartDirectors' Report 10Brief Profile of DirectorsKey Operating and Financial Data-Six Years Summary 20Calendar of Major EventsHorizontal Analysis of Financial Statements 21Vertical Analysis of Financial Statements 22Distribution of wealth 23 Statement of Compliance with Best Practices of

Code of Corporate Governance 24 Review Report to the Members on Statement of

Compliance with Best Practices of Code ofCorporate Governance 26

Auditors' Report 27Balance Sheet 28Profit and Loss Account 30Cash Flow Statement 31Statement of Changes in Equity 32Notes to the Financial Statements 33Pattern of Holding of the Shares 70

Directors' Report on Consolidated Financial Statements 74

Auditors' Report 75Balance Sheet 76Profit and loss Account 78Cash Flow Statement 79Statement of Changes in Equity 80Notes to the Consolidated Financial Statements 81FORM OF PROXY

01



02

COMPANY INFORMATION

BOARD OF DIRECTORS

MR. TARIQ SAYEED SAIGOL CHAIRMAN

MR. TAUFIQUE SAYEED SAIGOL CHIEF EXECUTIVE

MR. SAYEED TARIQ SAIGOL

MR. WALEED TARIQ SAIGOL

MR. KAMIL TAUFIQUE SAIGOL

MR. ZAMIRUDDIN AZAR

MR. ABDUL HAI MEHMOOD BHAIMIA

AUDIT COMMITTEE

CHIEF FINANCIAL OFFICER

COMPANY SECRETARY

INTERNAL AUDITOR

AUDITORS

REGISTERED OFFICE

SHARE REGISTRAR

MR. ZAMIRUDDIN AZAR CHAIRMANMR. SAYEED TARIQ SAIGOL MEMBERMR. WALEED TARIQ SAIGOL MEMBERMR. KAMIL TAUFIQUE SAIGOL MEMBER

MS. BUSHRA NAZ MALIK

MR. MUHAMMAD ASHRAF

MR. ZEESHAN AHMAD

M/S. RIAZ AHMAD & COMPANYCHARTERED ACCOUNTANTS

42-LAWRENCE ROAD, LAHORE.TEL: (92-042) 36302261-62FAX: (92-042) 36368721

VISION CONSULTING LTD 3-C, LDA FLATS, LAWRENCE ROAD, LAHORE.TEL: (92-042) 36375531-36375339FAX: (92-042) 36374839E-Mail: [email protected] & [email protected]: www.vcl.com.pk

BANKERS

MILLS

Note:

AL BARAKA ISLAMIC BANK B.S.C. (E.C.)

ALLIED BANK LIMITED

ASKARI BANK LIMITED

BANK ALFALAH LIMITED

FAYSAL BANK LIMITED

MCB BANK LIMITED

MEEZAN BANK LIMITED

NATIONAL BANK OF PAKISTAN

NIB BANK LIMITED

SILK BANK LIMITED

STANDARD CHARTERED BANK (PAKISTAN) LIMITED

HSBC BANK MIDDLE EAST LIMITED

THE BANK OF PUNJAB

UNITED BANK LIMITED

· PESHAWAR ROAD, RAWALPINDI

TEL: (92-051) 5473940-3 FAX: (92-051) 5471795th· 8 K.M., MANGA RAIWIND ROAD, DISTRICT KASUR.

TEL: (92-042) 35394133-35 FAX: (92-042) 35394132

· GULYANA ROAD, GUJAR KHAN, DISTRICT RAWALPINDI

TEL: (92-0513) 564472-74 FAX: (92-0513) 564337

WEB SITE: www.kmlg.com

KTML financial statements are also available at

the above website.


03

4,695

6,9047,140 7,558

8,459

10,693

0

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4,000

6,000

8,000

10,000

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2004 -2005 2005 -2006 2006 -2007 2007 -2008 2008 -2009 2009 -2010

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SALES TREND

THEN AND NOW

he Company commenced operation in 1953 as a private limited company and became a public limited company T

in 1968. The initial capacity of its Rawalpindi unit comprised 25,000 spindles and 600 looms. Later, fabric processing facilities were added and spinning capacity was augmented. Additional production facilities were acquired on the Raiwind-Manga Road near Lahore in District Kasur and on the Gulyana Road near Gujar Khan, by way of merger.

The Company's production facilities now comprise 151,902 ring spindles capable of spinning a wide rang of counts using cotton and Man-made fibers. The weaving facilities at Raiwind comprise 204 looms capable of weaving wide range of greige fabrics.

The processing facilities at the Rawalpindi unit are capable of dyeing and printing fabrics for the home textile market. The stitching facilities produce a diversified range of home textiles for the export market. Both the dyeing and stitching facilities are being augmented to take advantage of greater market access.

Fully equipped laboratory facilities for quality control and process optimization have been up at all three sites. The Company has been investing heavily in Information Technology, training of its human resources and preparing its management to meet the challenges of market integration.

Kohinoor Textile Mills Limited continues to ensure that its current competitive position is maintained as well as supporting the ongoing improvement process in our endeavour to maintain world best practice manufacturing.

COMPANY PROFILE

2,6663,561

3,971 3,973 4,140

6,496

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2004 -2005 2005 -2006 2006 -2007 2007 -2008 2008 -2009 2009 -2010

TANGIBLE FIXED ASSETS-NET

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The Kohinoor Textile Mills Limited Stated Vision

Is To Achieve And Then Remain As The Most

Progressive And Profitable Company In Pakistan

In Terms Of Industry Standards And

Stakeholders Interest.

Vision Statement

The Company Shall Achieve Its Mission Through A Continuous

Process Of Having Sourced, Developed, Implemented And

Managed The Best Leading Edge Technology, Industry Best

Practice, Human Resource And Innovative Products And Services

And Sold These To Its Customers, Suppliers And Stakeholders.

Mission Statement


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Statement Of Strategic Objectives

2010- 2011

Following are the main principles which constitute the strategic objectives of Kohinoor Textile Mills Limited:

1. Effective use of available resources and improved capacity utilization of the Company's production facilities;

2. Modernization of production facilities in order to ensure the most effective production;

3. Effective marketing and innovative concepts;

4. Implementation of effective technical and human resource solutions;

5. Strengthening independence in terms of secure supply of low-cost services and resources, including energy supply, transportation and logistics services;

6. Explore alternative energy resources;

7. Further improvements in corporate code governance through restructuring of assets and optimization of management processes;

8. Personnel development, creating proper environment for professional growth of highly skilled professionals, ensuring safe labour environment, competitive staff remuneration and social benefits in accordance with scope and quality of their work;

9. Compliance with local and international environmental and quality management standards, implementation of technologies allowing to comply with the limitations imposed on pollutant emissions; and

10.Implementation of projects in social and economic development of communities.

Statement of Ethics and Business Practices

2010 - 2011

The following principles constitute the code of conduct which all Directors and employees of Kohinoor Textile Mills Limited are required to apply in their daily work and observe in the conduct of Company's business. While the Company will ensure that all employees are fully aware of these principles, it is the responsibility of each employee to implement the Company's policies. Contravention is viewed as misconduct.

The code emphasizes the need for a high standard of honesty and integrity which are vital for the success of any business.

PRINCIPLES

1. Directors and employees are expected not to engage in any activity which can cause conflict between their personal interest and the interest of the Company such as interest in an organization supplying goods/services to the Company or purchasing its products. In case a relationship with such an organization exists the same must be disclosed to the Management.

2. Dealings with third parties which include Government officials, suppliers, buyers, agents and consultants must always ensure that the integrity and reputation of the Company is not in any way compromised.

3. Directors and employees are not allowed to accept any favours, gifts or kickbacks from any organization dealing with the Company.

4. Directors and employees are not permitted to divulge any confidential information relating to the Company to any unauthorized person. Nor should they issue any misleading statements pertaining to the affairs of the Company.

5. The Company has strong commitment to the health and safety of its employees and preservation of environment and the Company will persevere towards achieving continuous improvement of its HSE performance by reducing potential hazards preventing pollution and improving awareness. Employees are required to operate the Company's facilities and processes keeping this commitment in view.

6. Commitment and team work are key elements to ensure that the Company's work is carried out effectively and efficiently. Also all employees will be equally respected and actions such as sexual harassment and disparaging remarks based on gender, religion, race or ethnicity will be avoided.

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NOTICE OF ANNUAL GENERAL MEETING

ndNotice is hereby given that the 42 Annual General Meeting of the members of KOHINOOR TEXTILE MILLS LIMITED will be held on Saturday, October 30, 2010 at 3:00 p.m. at its Registered Office, 42-Lawrence Road, Lahore, to transact the following business: -

1. To confirm the minutes of the Extraordinary General Meeting held on May 03, 2010.

2. To receive, consider and adopt the audited accounts of the Company for the year ended June 30, 2010 together with the Directors' and Auditors' Reports thereon.

3. To appoint Auditors for the ensuing year and fix their remuneration. The present Auditors M/s. Riaz Ahmad & Company, Chartered Accountants, retire and being eligible offer themselves for re-appointment.

4. To transact any other business with the permission of the Chair.

BY ORDER OF THE BOARD

(MUHAMMAD ASHRAF)Lahore: October 09, 2010 Company Secretary

NOTES:

1. Share transfer books of the Company will remain closed from 23-10-2010 to 30-10-2010 (both days inclusive). Physical transfers/CDS Transaction IDs received in order at Share Registrar of the Company i.e. M/s. Vision Consulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore upto the close of business on October 22, 2010 will be considered in time.

2. A member eligible to attend and vote at this meeting may appoint another member as his/her proxy to attend and vote instead of him/her. Proxies in order to be effective must reach the Company's Registered Office not less than 48 hours before the time for holding the meeting.

3. CDC Shareholders, entitled to attend and vote at this meeting, must bring with them their National Identity Cards / Passports in original along with Participants' ID Numbers and their Account Numbers to prove his/her identity, and in case of Proxy, must enclose an attested copy of his/her NIC or Passport. Representatives of corporate members should bring the usual documents required for such purpose.

4. Shareholders are requested to immediately notify the change in their addresses, if any, to the Company's Share Registrar.

5. Members, who have not yet submitted photocopies of their computerized National Identity Cards to our Share Registrar, are requested to send the same at the earliest.

Locally, the Company continues to face cont inuous cost increases, especially in labour, gas and electricity. In addition, extremely high general inflation has raised the price of raw materials and inputs across the board. Inflation and most, if not all, costs are expected to rise in the future as supplies of basic necessities such as power and food grow tighter.

In order to mitigate the effects of these cost increases, the Company has initiated another major round of cost cutting efforts with a focus on increasing efficiency to reduce labour costs in the made-ups division and using lower-cost materials to create quality yarns with open-end and compact spinning equipment in the spinning units.

During the year under review, the Company's revenues increased by 26.42% toRs. 10,693.338 million (2009: Rs. 8,458.899 million), while costs of sales rose by 20.75% to Rs. 8,692.529 million (2009: Rs. 7,198.993 million). The resulting increase in gross profit to Rs. 2,000.809 million (2009: Rs. 1,259.906 million) is primarily due to the abnormally strong performance of the spinning units due to the factors outlined above.

Operating profit for the year under review was recorded at Rs. 1,449.216 million (2009: Rs. 723.554 million). The Company made an after tax profit of Rs. 277.861 million, a substantial improvement from a loss of Rs. 439.811 million during the previous year.

FINANCIAL REVIEW

DIRECTORS' REPORT TO THE SHAREHOLDERS

REVIEW OF OPERATIONS

ndThe Directors feel pleasure in presenting the 42 annual report along with audited financial statements for the year ended June 30, 2010.

The financial year ended June 30, 2010, was characterized by extremes of market conditions which led to varying degrees of success in the operating units of the Company, from windfall profits in the spinning division to only nominally positive performance in the processing and made-ups division. Extremely strong yarn markets due to high domestic demand in China and India, coupled with the purchase of raw materials at competitive prices, led to substantial profits for both of the Company's spinning units.

Weaving profit was satisfactory though reduced from the previous year because of the high price of yarn. Similarly, strong fabric prices were one of several challenges in the made-ups division.

The Company sold made-ups to major retailers, a market in which

price increases are not instantaneous and are rarely, if ever, at par with the increases in the yarn and raw material markets in terms of both timing and magnitude. While significant price increases were granted by the Company's customers, these were not on the same level as the cost increases incurred during the year which necessitated financing the made-ups division from some of the gains of the spinning units. These factors also contributed to the fabric division's sub-par performance relative to previous projections.


1110

The Directors have shown their inability to pay any dividend due to cash flow constraints. However, Management of the Company is committed to ensure efficient operation of the Company to deliver value to the customers and other stakeholders. Earning per Share for the year ended 30 June 2010 was Rs. 1.91.

The Directors recommend as under:

Rupees in Thousand

Profit before taxation 376,448

Provision for taxation (98,587)

Profit after taxation 277,861

Accumulated loss brought forward (429,748)

Accumulated loss carried forward (151,887)

INFORMATION TECHNOLOGY

SOCIAL COMPLIANCE AND HUMAN RESOURCE

HUMAN RESOURCE

Your company is equipped with highly advanced ERP solution (Oracle e-Business suite 11i) along with IT professionals who are involved in essential management of sensitive data, exclusive computer networking and systems-engineering. In your Company a diverse teams of business and technical experts are ready to help defining our business objectives, design a dynamic business to consumer and business to business solution and implement it timely and cost effectively.

The Company is in process of upgrading its ERP solution to next level i.e. Oracle e-Business suite R12 to adopt the best for its business reporting.

The Company is devoted to promoting the social and ethical accountability and taking a human-oriented approach towards its employees, consumers and all stakeholders, which is an intrinsic requirement for achieving sustainable development. The Company believes that our people are our asset. Therefore, the Company puts great stress on the Company values, good practices and the improvement of working conditions and the health and safety protection of its employees.

The Company has taken a number of measures to develop its employees to meet the challenges of today's competitive corporate world. The Company has invested extensively in employee development programs, health and safety training in our in-house training facility instead with the latest audio / visual equipment.

Complying with our human resource policies, the Company does not employ any child labour and is an equal opportunity employer. Company maintains a high standard of employees working and living conditions; providing free, safe and clean residential facilities, utilities, medical care, life insurance and education.


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2004 -2005 2005 -2006 2006 2008 2008 -2009 2009 -2010

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DEBT:EQUITY RATIO

DEBT EQUITY

14.26% 14.80% 14.64% 15.38% 14.89%

18.71%

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2004 -2005 2005 -2006 2006 -2007 2007 -2008 2008 -2009 2009 -2010

G.P % TO SALE

2,623 2,668

3726 3935

3059 3361

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2,000

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4,000

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-2007 2007 -

1312

The Company has taken a number of measures to develop its employees to meet the challenges of today's competitive corporate world. The Company has invested extensively in employee development programs by providing technical, computer, management, health & safety training in our in house training facility installed with the latest audio / visual equipment.

The Company is committed to comply with international standards and is a Social Accountability Standard SA-8000:2001 certified company.

By the grace of God, the management of your Company is pleased to inform that the construction of Sayeed Saigol Cardiac Complex at the Gulab Devi Chest Hospital, Lahore has now been completed and handed over to the administration of Gulab Devi Chest Hospital, Lahore. Your Company has contributed a sum of total Rs. 65.634 million as donors.

Kohinoor Maple Leaf Group has also received an award on account of its performance of th

various social obligations during the year 2008-09 at the 4 Corporate Social Responsibility st

(CSR) Award Ceremony held on 21 January, 2010 at Karachi.

SOCIAL SECTOR PROJECTS

thCORPORATE SOCIAL RESPONSIBILITY (4 CSR Award)


QUALITY MANAGEMENT SYSTEMS

You r Company i s I SO-9001:2008 certified. The surveillance audits are being regularly and successfully completed on six monthly bases.

Conforming to the Company's Quality Management Systems, Product quality is consistently maintained and monitored at every stage. Yarn and fabric is tested in most modern textile testing laboratories working at all divisions. These laboratories are equipped with latest equipments and are environmentally controlled to the most stringent of international standards. Quality control in made ups production facilities is based on AQL system, ensuring high control on quality of products. Internal / external audits and management reviews, clearly demonstrate control improvements and Company's long term commitment to improve its management systems to any reputed international standard.

Mr. Sohail Sadiq General Manager Finance is receiving 4th CSR National Excellence Award -2009

from Mr. Sheikh Muhammad Afzal Alias

Provincial Minister for Environment & Alternate Energy Government of Sindh.

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SECURITY

Your Company is well cognizant of its responsibilities in ensuring the health and safety of the workplace and its people. At your Company, health and safety policies and practices are monitored and reviewed regularly. We believe that Workplace safety is the responsibility of the management, which involves making the workplace safer for the employees and thus safeguarding their health. Workplace safety ensures that an employee can feel secure about undertaking his routine tasks with complete determination and confidence. Workplace safety aims at eliminating the health risks involves in a particular job and hence makes the job profile a secure option for interested candidates.

Therefore, KTML participates in all social responsibility education and monitoring activities. KTML supports United State's Customs Trade Partnership against Terrorism (C - TPAT) and is committed to improve security conditions within the organization as well as throughout its supply chain from the factory to overseas.

KTML is proud to be a partner of Customs Trade Partnership against Terrorism (C - TPAT) and is a certified Company and is meeting all requirements of this security standard.

SAFETY, HEALTH AND ENVIRONMENT

Your Company provides and maintains so far as practicable, equipment, systems and working conditions which are safe and without risk to the health of all employees, visitors, contractors and public. Management has maintained its strong commitment to a safe environment in its operations throughout the year.

The Company is well aware of the relationship between the textile production and related environment issues. Keeping in view the ethical obligations to the environment, the working on implementation of ISO-14001-2004 “Environment Management System” the documentation and environment monitoring p r o c e s s h a s b e e n c o m p l e t e d a n d certification process is targeted to be completed by the end of the current year.

Installation of effluent treatment plant (ETP) has been completed and results have been tested through internal lab tests and EPA approved external labs.

The Company takes care and applies appropriate procedures to design /manufacture textile products so as to ensure that no harmful substances are present in its products. It adopts recognized

“environment friendly” working methods and makes careful selection of dye stuffs, optimizes dye baths, uses chlorine free bleaching techniques, low formaldehyde finishing methods and heavy metal free materials. By employing these recognized methods, the Company produces safe products and has been able to comply with requirements of European legislation regarding use of azo dyes and been certified under OEKO Tex 100 Standard, confirming the Company's commitment to using harmless dyes and chemicals in its production processes.


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BUSINESS PROCESS RE-ENGINEERING

LIQUIDITY MANAGEMENT

FUTURE OUTLOOK

Your Company is in process to implement the methodologies to redesign business process. The methodology includes the five activities: Prepare for re-engineering, Map and analyze as-is-process, Design To-be process, Implement re-engineered process, learn and Improve continuously.

Management monitors forecasts of the Company's liquidity reserve and cash and cash equivalents on the basis of expected cash flow. In addition, the Company's liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these; monitoring balance sheet liquidity ratios against internal and external regulatory requirements; and maintaining debt financing plans.

The well-publicized hikes in the price of raw material have taken on extreme proportions worldwide. Locally, the recent floods have damaged and destroyed a large, but so far unmeasured, portion of the Pakistani cotton crop. Rains in China have also disturbed cotton production in that region. Combined with very intense and growing domestic demand in China and India, as well as Brazil's recent transformation into an importer of cotton, these factors seem to indicate continued high raw material

prices for the foreseeable future. This situation is further exacerbated by the continued ban on cotton exports by the Indian government, which has disturbed all aspects of the textile production chain. Future prospects therefore remain unclear for the time being. The Company hopes to clarify its position for the future before the end of November, when the cotton season is in full swing and the ultimate fate of the Indian export ban has been decided.


COMPLIANCE OF CODE OF CORPORATE GOVERNANCE

The Board of Directors periodically reviews the Company's strategic direction. Business plans and targets are set by the Chief Executive and reviewed by the Board. The Board is committed to maintain a high standard of corporate governance. The Board has reviewed the Code of Corporate Governance and confirms that:

A) The financial statements, prepared by the management of the Company, present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

b) Proper books of account of the Company have been maintained.c) Appropriate accounting policies have been consistently applied in preparation

of financial statements and accounting estimates are based on reasonable and prudent judgment.

d) International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from, has been adequately disclosed.

e) The system of internal control is sound in design and has been effectively implemented and monitored.

f) There are no significant doubts upon the Company's ability to continue as a going concern.

g) There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations of the stock exchanges.

h) Outstanding taxes and other government levies are given in related note(s) to the audited accounts.

i) Key operating and financial data of last six years is annexed.

Value of investment of provident fund trust, based on their unaudited accounts of June 30, 2010 is as under:

(Rs. in thousand) Provident fund 188,066

1918

DIRECTORS AND BOARD MEETINGS

CRITERIA TO EVALUATE BOARD PERFORMANCE

During the year under review, five meetings of the Board of Directors were held and the attendance of Directors was as under: -

Names of Directors Meetings Attended

Mr. Tariq Sayeed Saigol 5Mr. Taufique Sayeed Saigol 4Mr. Sayeed Tariq Saigol 4Mr. Waleed Tariq Saigol 5Mr. Kamil Taufique Saigol 3Mr. Zamiruddin Azar 5Mr. Abdul Hai Mehmood Bhaimia 5

Leave of absence was granted to Directors who could not attend the Board meetings. However, Mr. Taufique Sayeed Saigol and Mr. Kamil Taufique Saigol participated in the proceedings of Board of Directors' Meeting dated 28-04-2010 through teleconference.

Following are the main criteria:

1. Financial policies reviewed and updated;2. Capital and operating budgets approved annually;3. Board receives regular financial reports;4. Procedure for annual audit;5. Board approves annual business plan;6. Board focuses on goals and results;7. Availability of board's guideline to management;8. Regular follow up to measure the impact of board's decisions;9. Assessment to ensure compliance with code of ethics and corporate

governance.

During the financial year no share transfers involving Directors, Company Secretary, CFO and Executives of the Company (including their spouses and minor children) were reported.


Name Designation

Mr. Zamiruddin Azar Chairman (Non Executive / independent Director)Mr. Sayeed Tariq Saigol Member (Non Executive / independent Director) Mr. Waleed Tariq Saigol Member (Executive Director)Mr. Kamil Taufique Saigol Member (Executive Director)

The Main terms of reference of the Audit Committee of the Company include the following:

a. Determination of appropriate measures to safeguard the Company's assets;

b. Review of preliminary announcements of results prior to publication;

c. Review of quarterly, half-yearly and annual financial statements of the Company, prior to their approval by the Board of Directors, focusing on:� Major judgmental areas;� Significant adjustments resulting from the audit;� The going-concern assumption;� Any changes in accounting policies and practices;� Compliance with applicable accounting standards; and� Compliance with listing regulations and other statutory and regulatory

requirements.d. Ensuring coordination between the internal and external auditors of the Company;e. Review of the scope and extent of internal audit and ensuring that the internal audit

function has adequate resources and is appropriately placed within the Company;f. Ascertaining that the internal control system including financial and operational

controls, accounting system and reporting structure are adequate and effective;g. Instituting special projects, value for money studies or other investigations on any

matter specified by the Board of Directors;h. Monitoring compliance with the best practices of corporate governance and

identification of significant violations thereof; andi. Consideration of any other issue or matter as may be assigned by the Board of

Directors.

Further issuance of capital otherwise than right

In accordance with the approval of the valued shareholders in the Extra Ordinary General Meeting held on May 03, 2010 and subsequent sanction granted by the Securities and Exchange Commission of Pakistan under Section 86(1) of the Companies Ordinance, 1984, the Company has allotted 100 million ordinary shares of Rs. 10/- each otherwise than through a right issue at par value to the respective subscriber. In accordance with the covenant forming part of share subscription arrangement, the Company has despatched consent letters to the registered members whose names were born in the members register

AUDIT COMMITTEE

2120

as on April 26, 2010, for subscription of shares at par value in proportion to the paid up value of shares held by them out of the above mentioned 100 million shares.

Incorporation of wholly owned subsidiary company

The Company has set up a wholly owned subsidiary company namely Concept Trading (Private) Limited during the year incorporated on March 11, 2010 having authorised share capital of Rs. 500,000/- divided into 50,000 ordinary shares of Rs. 10/- each with issued, subscribed and paid up Capital of Rs. 200,000/- divided into 20,000 ordinary shares of Rs. 10/- each. Mr. Taufique Sayeed Saigol and Mr. Kamil Taufique Saigol are Directors of subsidiary company.

Pattern of Shareholding

The statement of shareholding of the Company in accordance with Code of Corporate Governance and Companies Ordinance, 1984 as at June 30, 2010 is annexed.

Auditors

The present auditors of the Company M/s. Riaz Ahmad & Company, Chartered Accountants audited the financial statements of the Company and have issued report to the members. The auditors will retire at the conclusion of the Annual General Meeting. Being eligible, they have offered themselves for re-appointment.

The Board has recommended the appointment of M/s. Riaz Ahmad & Company, Chartered Accountants, as auditors for the ensuing year as suggested by the Audit Committee subject to approval of the members in the forthcoming Annual General Meeting.

Acknowledgement

The Directors are grateful to the Company's members, financial institutions and customers for their cooperation and support. They also appreciate hard work and dedication of all the employees working at various divisions.

For and on behalf of the Board

Lahore TAUFIQUE SAYEED SAIGOLSeptember 29, 2010 Chief Executive


BRIEF PROFILE OF DIRECTORS

MR. TARIQ SAYEED SAIGOL

Mr. Tariq Sayeed Saigol is a member of the Saigol Family who pioneered in Textile manufacturing after partition and later ventured into the financial sector, chemicals, synthetic fibers, sugar, edible oil refining, civil engineering, construction, cement and energy.

Mr. Saigol was schooled at Aitchison College, Lahore and graduated from Government College, Lahore following which he studied Law at University Law College, Lahore.

He started his career in 1968 at Kohinoor’s Chemical Complex at Kala Shah Kaku. Upon trifurcation of the Group in 1976, he became Chief Executive of Kohinoor Textile Mills Limited, Rawalpindi. Since 1984, he has been Chairman of the Kohinoor Maple Leaf Group which has interests in textiles, cement manufacturing and energy.

He has been Chairman of All Pakistan Textile Mills Association in 1992-94, President of Lahore Chamber of Commerce and Industry for 1995-97 and Chairman, All Pakistan Cement Manufacturers Association from 2003-2006.

Mr. Saigol has been a member of the Federal Export Promotion Board and Central Board of State Bank of Pakistan. He has also served on several Government Commissions and Committees on a number of subjects, including Export Promotion, reorganization of WAPDA and EPB, Right Sizing of State owned Corporations and Resource Mobilization. He is the author of Textile Vision 2005 adopted by the Government in 2000 and also its critique prepared in 2006. He joined the Central Board of State Bank of Pakistan for a second term in 2007 and is a member of the Prime Minister’s Economic Advisory Council established in 2008.

He takes keen interest in the development of education and health care in Pakistan. He has been a member of the Board of Governors of Lahore University of Management Sciences, Founding Chairman of the Board of Governors of Chandbagh School, founder Trustee of Textile University of Pakistan, member of the Syndicate of University of Health Sciences and Member Board of Governors of Aitchison College, Lahore. He is conferred with Sitara-e-Isaar by President of Pakistan in 2006.

He is a keen golfer and has represented Pakistan at Golf in Sri Lanka and Pakistan in 1967.

MR. TAUFIQUE SAYEED SAIGOL

He is Chief Executive of Kohinoor Textile Mills Limited and director in all KMLG Group companies. Mr. Taufique Sayeed Saigol is a leading and experienced industrialist of Pakistan. He graduated as an Industrial Engineer from Cornell University, USA in 1974. He is widely traveled and his special forte is in the export business.

He is a business man of impeccable credibility and vision and has substantial experience of working in different environments.

Chairman / Chief Executive/DirectorKohinoor Maple Leaf Industries LimitedTarbela Hydro LimitedZimpex (Private) Limited

Chairman / DirectorKohinoor Textile Mills LimitedMaple Leaf Cement Factory Limited

Chief Executive/DirectorKohinoor Textile Mills Limited

DirectorMaple Leaf Cement Factory LimitedKohinoor Maple Leaf Industries LimitedTarbela Hydro LimitedZimpex (Private) Limited

2322

in different environments.

MR. SAYEED TARIQ SAIGOL

Mr. Sayeed Saigol is the Chief Executive of Maple Leaf Cement. He graduated from McGill University with a degree in management. Mr. Sayeed Saigol also has several years of work experience in the textile industry. Prior to joining Maple Leaf Cement he was involved in setting up and managing an apparel dyeing company. He is a member of the board of governors of the Lahore University of Management Sciences (LUMS).

MR. WALEED TARIQ SAIGOL

Mr. Waleed Saigol is the Managing Director of Kohinoor Raiwind Mills. He holds a bachelors

BRIEF PROFILE OF DIRECTORS

MR. TARIQ SAYEED SAIGOL

Mr. Tariq Sayeed Saigol is a member of the Saigol Family who pioneered in Textile manufacturing after partition and later ventured into the financial sector, chemicals, synthetic fibers, sugar, edible oil refining, civil engineering, construction, cement and energy.

Mr. Saigol was schooled at Aitchison College, Lahore and graduated from Government College, Lahore following which he studied Law at University Law College, Lahore.

He started his career in 1968 at Kohinoor’s Chemical Complex at Kala Shah Kaku. Upon trifurcation of the Group in 1976, he became Chief Executive of Kohinoor Textile Mills Limited, Rawalpindi. Since 1984, he has been Chairman of the Kohinoor Maple Leaf Group which has interests in textiles, cement manufacturing and energy.

He has been Chairman of All Pakistan Textile Mills Association in 1992-94, President of Lahore Chamber of Commerce and Industry for 1995-97 and Chairman, All Pakistan Cement Manufacturers Association from 2003-2006.

Mr. Saigol has been a member of the Federal Export Promotion Board and Central Board of State Bank of Pakistan. He has also served on several Government Commissions and Committees on a number of subjects, including Export Promotion, reorganization of WAPDA and EPB, Right Sizing of State owned Corporations and Resource Mobilization. He is the author of Textile Vision 2005 adopted by the Government in 2000 and also its critique prepared in 2006. He joined the Central Board of State Bank of Pakistan for a second term in 2007 and is a member of the Prime Minister’s Economic Advisory Council established in 2008.

He takes keen interest in the development of education and health care in Pakistan. He has been a member of the Board of Governors of Lahore University of Management Sciences, Founding Chairman of the Board of Governors of Chandbagh School, founder Trustee of Textile University of Pakistan, member of the Syndicate of University of Health Sciences and Member Board of Governors of Aitchison College, Lahore. He is conferred with Sitara-e-Isaar by President of Pakistan in 2006.

He is a keen golfer and has represented Pakistan at Golf in Sri Lanka and Pakistan in 1967.

MR. TAUFIQUE SAYEED SAIGOL

He is Chief Executive of Kohinoor Textile Mills Limited and director in all KMLG Group companies. Mr. Taufique Sayeed Saigol is a leading and experienced industrialist of Pakistan. He graduated as an Industrial Engineer from Cornell University, USA in 1974. He is widely traveled and his special forte is in the export business.

He is a business man of impeccable credibility and vision and has substantial experience of working

DirectorKohinoor Textile Mills LimitedMaple Leaf Cement Factory Limited

DirectorKohinoor Textile Mills LimitedMaple Leaf Cement Factory Limited

DirectorKohinoor Textile Mills LimitedShabbir Tiles & Ceramics LimitedPak Grease Mfg. Co. (Pvt) LimitedAskari General Insurance Limited

DirectorMaple Leaf Cement Factory Limited

Chief Financial OfficerKohinoor Textile Mills LimitedMaple Leaf Cement Factory Limited


Chief Executive/DirectorMaple Leaf Cement Factory Limited

DirectorKohinoor Textile Mills LimitedKohinoor Maple Leaf Industries Limited

DirectorKohinoor Textile Mills LimitedMaple Leaf Cement Factory LimitedSecurity General Insurance Company Ltd.

BOARD COMMITTEES

AUDIT COMMITTEE

The committee is responsible for assisting the board of directors in the board's oversight responsibilities relating to the integrity of the Company's financial statements, financial reporting process, and systems of internal accounting and financial controls; the qualifications, independence, and performance of the independent auditor and the performance of the Company's internal audit department; and the Company's legal and regulatory compliance.

The audit committee is appointed by the board to assist the board in monitoring and consists of following:

Mr. Zamiruddin Azar

Mr. Sayeed Tariq SaigolMr. Waleed Tariq SaigolMr. Kamil Taufique Saigol

Scope and Objectives

� The Integrity of the financial statements of the Company.

� The independent auditors' qualifications, independence, and performance.

� The performance of the Company's internal audit function.

� The compliance by the Company With Legal And Regulatory Requirements.

CHAIRMAN

MEMBERS

2524

Members

Director

Head of the Department Finance

Head of the Department Production

Head of the Department Information Technology

Head of the Department Marketing

Head of the Department Human Resource

Head of the Department Engineering


� Our BPR team implies specific business objectives such as cost reduction, time reduction, output quality improvement etc.

� We focus on the most important processes that reflect our business vision.

� Understand and measure the existing process to avoid repeating of old mistakes and to provide a baseline for future improvements.

� Design and build the prototype of new processes and ensure quick delivery of results and involvement and satisfaction of customers.

Management Information Systems (MIS) are the term given to the discipline focused on the integration of computer systems with the aims and objectives on an organization. The development and management of information technology assists executives and the general workforce in performing any tasks related to the processing of information.

Members

Director





Deputy Manager Information Technology

No. of Meetings Held: 08

MANAGEMENT INFORMATION SYSTEM COMMITTEE


PROJECT MANAGEMENT COMMITTEE

BUSINESS PROCESS RE-ENGINEERING COMMITTEE

Project Management Committee of senior representatives is formed to direct the organization to ensure the proper supervision and effectiveness of project operations .

Director





Head of the Department Commercial




The Scope and objective of the Project Management Committee is to:

� Steer and guide the project.

� Review progress and outputs.

� Review outcomes and their impact on the project.

� Agree important decisions and changes to plan.

� Discuss risks, problems, issues and explore solutions.

� Keep an eye on how things are going and what could be improved.

� The project work is performed on schedule and deliverables/reports are delivered on time.

� The project work is done within the allocated budget.

� The project team have well-defined roles and responsibilities.

� There are effective methods for planning, communicating, and making decisions.

� The project reflects on its work and takes a positive and flexible approach to updating plans.

Business Process Re-engineering team see that which technology allows you to do, and then determine if this helps you rethink the process by starting with the capabilities of modern information technology.

Members


2726


· MIS is especially useful in the collation of business data and the production of reports to be used as tools for decision making that would otherwise be broadly useless to decision makers.

· MIS supports financial statements and performance reports to assist in the planning, monitoring and implementation of strategy.

· MIS systems use raw data to run simulations hypothetical scenarios that answer a range of 'what if' questions for alterations in strategies.

Energy Management Committee (EMC) is formed to improve performance through wise energy use

Members

Director




Scope and Objective

Our team is committed for annual energy cost reductions from continuous improvements.

� Developed to minimize environmental impacts. It incorporates energy efficiency, water conservation, waste minimization, pollution prevention, resource efficient materials and indoor air quality in all phases of a building's life.

� EMC design plan that helps us meet our climate protection commitments.

� The appointment of a full time energy management coordinator ensures the plan proceeds.

� Responsible for energy procurement, monitoring and targeting energy savings, maintaining program of energy saving measures, raising energy awareness and corporate wide energy monitoring and reporting.



ENERGY MANAGEMENT COMMITTEE


2928

Net sale (Rs. 000)

Profitability(Rs.000)

Financial Position (Rs.000)

Share holders Equity

Represented By:

Investors information

Summary of Cash flows

Quantitative Data

Yarn (Kgs "000") :

Cloth (Linear meters "000"):

Gross ProfitOperating profitProfit / (Loss) before taxProvision for income taxProfit / (Loss) after tax

Tangible fixed assets-netInvestment & Other assets

Current assetsCurrent liabilitiesNet working capitalCapital employed

Less: Redeemable Capital, long term loan& other liabilitiesLess: Surplus on revaluation of property

Share capitalReserves & un-app. Profit

Gross Profit to sales (%age)Net Profit to sales (%age)Profit marginDebt : equity ratioCurrent ratioAcid test ratioBreakup value per share of Rs.10 eachEarning per shareDividend BonusAverage collection periodInventory turn overAverage age of inventory

Net cash flow from operating activitiesNet cash flow from investing activitiesNet cash flow from financing activitiesNet change in cash and cash equivalents

Production (cont. into 20s) KTM Division KGM Division

Sales/Tran.for wvg.(actual count) KTM Division KGM Division

Processing (Rawalpindi Division) Production Sales

Weaving (Raiwind Division) Production Sales


2009-2010

10,693,338

2,000,809 1,449,216

376,448 98,587

277,861

6,496,299 4,004,892

10,501,191

6,556,108 8,169,138

(1,613,030)8,888,161

1,853,068 3,673,825 3,361,268

1,455,262 1,906,006 3,361,268

18.71 2.60 0.03

34 : 660.80 0.47 23.10 1.91

- 40.60 4.17 87.53

(403,780)(310,582)712,916

(1,446)

35,211 31,295 66,506

7,202 4,104

11,306

34,653 34,065

21,489 21,691

2008-2009

8,458,899

1,259,906 723,554

(536,676)(96,865)

(439,811)

4,140,233 4,003,422 8,143,655

5,131,884 6,762,527

(1,630,643)6,513,012

2,190,079 1,263,592 3,059,341

1,455,262 1,604,079 3,059,341

14.89 (5.20)(0.05)42 : 580.76 0.45 21.02 (3.02)

- 51.58 4.17 87.53

106,116 (644,726)543,520

4,910

35,298 26,318 61,616

6,042 2,987 9,029

30,626 28,783

22,727 23,316

2007-2008

7,558,322

1,162,700 1,013,140

130,805 134,325

(3,520)

3,972,540 3,998,629 7,971,169

5,757,221 5,477,572

279,6498,250,818

3,052,1281,263,592 3,935,098

1,455,262 2,479,836 3,935,098

15.38 (0.05)(0.00)44 : 561.05 0.69 27.04 (0.02)

- 58.18 3.73 98.09

(51)(776,196)787,903

11,656

36,605 28,899 65,504

6,790 4,265

11,055

22,988 23,581

21,986 22,220

2006-2007

7,140,167

1,045,526 575,658 (28,293)11,529

(39,822)

3,971,021 3,661,682 7,632,703

4,547,065 4,231,049

316,016 7,948,719

2,959,093 1,263,592 3,726,034

1,455,262 2,270,772 3,726,034

14.64 (0.56)(0.01)44 : 561.07 0.59 25.60 (0.32)

-

49.83 3.62

100.70

(215,658)(1,155,933)

998,512 (373,079)

33,388 26,028 59,416

6,788 3,862

10,650

27,358 26,768

20,806 21,094

2005-2006

6,903,625

1,021,807 803,056 354,984 56,780

298,204

3,561,259 1,800,012 5,361,271

3,939,417 3,855,596

83,821 5,445,092

2,776,985 -

2,668,107

1,058,374 1,609,733 2,668,107

14.80 4.32 0.04

51 : 491.02 0.47 25.21 2.82

10.00 40.39 4.32 84.41

(226,700)(636,823)

1,151,994 288,471

31,223 23,680 54,903

7,595 3,639

11,234

30,855 21,860

20,090 20,942

2004-2005 9-Months

4,695,280

669,444 320,804 147,598 59,071 88,527

2,666,186 1,803,215 4,469,401

3,170,105 3,106,544

63,561 4,532,962

1,910,160 -

2,622,802

962,158 1,660,644 2,622,802

14.26 1.89 0.02

42 : 581.02 0.51 27.26 0.93

10.00 45.80 4.08 89.39

176,304 (1,320,706)1,147,547

3,145

22,675 15,026 37,701

5,461 2,192 7,653

17,623 16,991

16,409 16,267

Wealth Generated

Distribution of Wealth

Net sales

Other operating income

Cost of sales (excluding

employees' remuneration)

Marketing, selling and

administration expenses

Employees' remuneration

Financial charges

Government taxes

(Includes income tax)

Profit / (Loss) for the period

Rs " 000 "

10,693,33878,651

10,771,989

7,952,404

497,243

873,126

1,072,768

98,587

277,861

10,771,989

%age

99.27%

0.73%

100.00%

73.82%

4.62%

8.11%

9.96%

0.92%

2.58%

100.00%

Rs " 000 "

8,458,899

126,551

8,585,450

6,508,657

546,013

807,226

1,260,230

(96,865)

(439,811)

8,585,450

%Age

98.53%

1.47%

100.00%

75.81%

6.36%

9.40%

14.68%

-1.13%

-5.12%

100.00%

2010 2009

Cost of sales (excluding employees' remuneration)

Marketing, selling and administration expenses


Financial charges

Government taxes


73.82%

4.62%

8.11%

9.96%

0.92%

2.58%

Cost of sales (excluding employees' remuneration)

Marketing, selling and administration expenses


Financial charges

Government taxes


75.81%

6.36%

9.40%

14.68%

-1.13%

-5.12%

3130

Rs " 000 "

3,935,098

1,263,592

3,052,128

5,477,572

13,728,390

7,971,169

5,757,221

13,728,390

7,558,322

6,395,622

1,162,700

381,161

149,542

22,158

403,301

1,013,140

882,335

130,805

134,325

(3,520)

% change

w.r.t 2009

9.87

190.74

(15.39)

20.80

28.49

28.95

27.75

28.49

26.42

20.75

58.81

(14.42)

10.88

68.96

(37.85)

100.29

(14.88)

170.14

201.78

163.18

)

)

)

% change

w.r.t 2008

(14.58)

190.74

(39.29)

49.14

24.25

31.74

13.88

24.25

41.48

35.91

72.08

4.37

30.47

68.44

(80.50)

43.04

21.58

187.79

(26.61)

(7,993.78)

Rs " 000”

3,059,341

1,263,592

2,190,079

6,762,527

13,275,539

8,143,655

5,131,884

13,275,539

8,458,899

7,198,993

1,259,906

464,848

175,965

22,090

126,551

723,554

1,260,230

(536,676)

(96,865)

(439,811)

Balance Sheet

Profit and Loss Account

Total equity

Total surplus on revaluation of property

Total non-current liabilities

Total current liabilities

Total equity and liabilities

Total non-current assets

Total current assets

Total assets

Net sales

Cost of sales

Gross profit

Distribution cost

Administrative expenses

Other operating expenses


Profit from operations

Finance cost

Profit/ (Loss) before taxation

Provision for taxation

Loss after taxation


HORIZONTAL ANALYSIS OF FINANCIAL STATEMENTS VERTICAL ANALYSIS OF FINANCIAL STATEMENTS

2010 2009 2008

Rupees in thousand

Balance Sheet

Profit and Loss Account

Total equity

Total surplus on revaluation of property

Total non-current liabilities

Total current liabilities

Total equity and liabilities

Total non-current assets

Total current assets

Total assets

Net sales

Cost of sales

Gross profit

Distribution cost

Administrative expenses

Other operating expenses


Profit from operations

Finance cost

Profit/ (Loss) before taxation

Provision for taxation

Loss after taxation

Rs " 000 “

3,361,268

3,673,825

1,853,068

8,169,138

17,057,299

10,501,191

6,556,108

17,057,299

10,693,338

8,692,529

2,000,809

397,818

195,103

37,323

78,651

1,449,216

1,072,768

376,448

98,587

277,861

%

19.71

21.54

10.86

47.89

100.00

61.56

38.44

100.00

100.00

81.29

18.71

3.72

1.82

0.35

0.74

13.55

10.03

3.52

0.92

2.60

Rs " 000

3,059,341

1,263,592

2,190,079

6,762,527

13,275,539

8,143,655

5,131,884

13,275,539

8,458,899

7,198,993

1,259,906

464,848

175,965

22,090

126,551

723,554

1,260,230

(536,676)

(96,865)

(439,811)

%

23.04

9.52

16.50

50.94

100.00

61.34

38.66

100.00

100.00

85.11

14.89

5.50

2.08

0.26

1.50

8.55

14.90

(6.34)

(1.15)

(5.20)

Rs " 000 "

3,935,098

1,263,592

3,052,128

5,477,572

13,728,390

7,971,169

5,757,221

13,728,390

7,558,322

6,395,622

1,162,700

381,161

149,542

22,158

403,301

1,013,140

882,335

130,805

134,325

(3,520)

%

28.66

9.20

22.23

39.90

100.00

58.06

41.94

100.00

100.00

84.62

15.38

5.04

1.98

0.29

5.34

13.40

11.67

1.73

1.78

(0.05)

2010 2009 2008

Rupees in thousand

2010

3,361,268

3,673,825

1,853,068

8,169,138

17,057,299

10,501,191

6,556,108

17,057,299

10,693,338

8,692,529

2,000,809

397,818

195,103

37,323

78,651

1,449,216

1,072,768

376,448

98,587

277,861

3332

STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

FOR THE YEAR ENDED JUNE 30, 2010

This statement is being presented to comply with the Code of Corporate Governance contained in Listing Regulations of Stock Exchanges in Pakistan for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.

The Company has applied the principles contained in the Code in the following manner:-

1. The Company encourages the representation of non-executive Directors on its Board of Directors. At present the Board of Directors includes four independent non-executive Directors namely:

i.

2. The Directors have confirmed that none of them is serving as a Director in more than ten listed companies, including this Company.

3. All the resident Directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.

4. No casual vacancy occurred in the Board of Directors of the Company during the year ended June 30, 2010.

5. The Company has prepared a 'Statement of Ethics and Business Practices', which has been signed by all the Directors and employees of the Company.

6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO and other Executive Directors, have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and, in his absence, by a Director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

9. The Board had arranged Orientation Courses for its Directors during the preceding years to make them aware of their duties and responsibilities. The Directors have also provided declarations that they are aware of their duties, powers and responsibilities under the Companies Ordinance, 1984 and the listing regulations of the Stock Exchanges.

There was no need felt by the Directors for any further Orientation Courses in this regard.

10. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment, as determined by the CEO.

11. The Directors' Report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.

13. The Directors, CEO and executives do not hold any interest in the shares of the Company other than that

Mr. Tariq Sayeed Saigol

ii. Mr. Sayeed Tariq Saigol

iii. Mr. Zamiruddin Azar

iv. Mr. Abdul Hai Mehmood Bhaimia

disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code.

15. The Board has formed an Audit Committee. It comprises four members. Two of them are non-executive Directors including the Chairman of the Committee.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code. The terms of reference of the Committee have been formed and advised to the Committee for compliance.

17. The Board has set-up an effective internal audit function.

18. The Statutory Auditors of the Company have confirmed that they have been given a satisfactory rating under the Quality Control Review programme of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan.

19. The Statutory Auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Listing Regulations and the Auditors have confirmed that they have observed IFAC guidelines in this regard.

20. We confirm that all other material principles contained in the Code have been complied with.


(Taufique Sayeed Saigol)

Lahore: September 29, 2010 Chief Executive

3534

AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed balance sheet of KOHINOOR TEXTILE MILLS LIMITED as at 30 June 2010 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

(a) in our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984;

(b) in our opinion:

i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for the changes as stated in Notes 2.1(d)(i), 2.5 and 2.8 (d) with which we concur;

ii) the expenditure incurred during the year was for the purpose of the company's business; and

iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company;

(c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the company's affairs as at 30 June 2010 and of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended; and

(d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

RIAZ AHMAD & COMPANY

Chartered Accountants

Name of engagement partner:Atif Bin Arshad

ISLAMABAD

Date: September 29, 2010

REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of KOHINOOR TEXTILE MILLS LIMITED ("the Company") for the year ended 30 June 2010, to comply with the Listing Regulations of the respective Stock Exchanges, where the Company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the statement of compliance reflects the status of the Company's compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code.

As part of our audit of financial statements, we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board's statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.

Further, Listing Regulations of the Karachi, Lahore and Islamabad Stock Exchanges require the Company to place before the Board of Directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price recording proper justification for using such alternate pricing mechanism. Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the audit committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not.

Based on our review, nothing has come to our attention, which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the Company for the year ended 30 June 2010.

RIAZ AHMAD & COMPANY

Chartered Accountants


ISLAMABAD


3736

2010

3,700,000

300,000

4,000,000

1,455,262

1,906,006

3,361,268

3,673,825

1,628,067

67,005

-

157,996

1,853,068

1,040,257

289,987

6,070,435

768,459

8,169,138

10,022,206

17,057,299

1,700,000

300,000

2,000,000

1,455,262

1,604,079

3,059,341

1,263,592

1,918,571

100,919

35,922

134,667

2,190,079

849,755

185,259

4,810,471

917,042

6,762,527

8,952,606

13,275,539

2009

BALANCE SHEET

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized share capital

Issued, subscribed and paid up share capital

Reserves

Total equity

Surplus on revaluation of property

NON-CURRENT LIABILITIES

CURRENT LIABILITIES

TOTAL LIABILITIES

CONTINGENCIES AND COMMITMENTS

TOTAL EQUITY AND LIABILITIES

370,000,000 ( 2009: 170,000,000)

ordinary shares of Rupees 10 each

30,000,000 ( 2009: 30,000,000) preference

shares of Rupees 10 each

Long term financing

Liabilities against assets subject to finance lease

Lease finance advance

Deferred tax

Trade and other payables

Accrued mark-up

Short term borrowings

Current portion of non-current liabilities

NOTE

3

4

5

6

7

8

9

10

11

12

13

(Rupees in thousand)

The annexed notes form an integral part of these financial statements.

CHIEF EXECUTIVE

(Restated)

2010

6,496,299

1,720,835

2,249,170

34,887

10,501,191

345,798

2,393,113

1,329,065

596,795

15,578

141

401,928

642,111

99,805

78,851

5,903,185

652,923

6,556,108

17,057,299

4,140,233

1,720,835

2,248,970

33,617

8,143,655

303,947

1,779,826

1,050,101

303,362

28,383

122

301,732

607,610

74,842

80,297

4,530,222

601,662

5,131,884

13,275,539

2009

ASSETS

NON-CURRENT ASSETS

CURRENT ASSETS

TOTAL ASSETS

Property, plant and equipment

Investment properties

Long term investments

Long term deposits

Stores, spare parts and loose tools

Stock-in-trade

Trade debts

Advances

Security deposits and short term prepayments

Interest accrued

Other receivables

Short term investments

Taxation recoverable

Cash and bank balances

Non-current assets classified as held for sale

NOTE

14

15

16

17

18

19

20

21

22

23

24

25

26

DIRECTOR


(Restated)AS AT 30 JUNE 2010

3938

2010

10,693,338

(8,692,529)

2,000,809

(397,818)

(195,103)

(37,323)

(630,244)

1,370,565

78,651

1,449,216

(1,072,768)

376,448

(98,587)

277,861

1.91

8,458,899

(7,198,993)

1,259,906

(464,848)

(175,965)

(22,090)

(662,903)

597,003

126,551

723,554

(1,260,230)

(536,676)

96,865

(439,811)

(3.02)

2009

SALES

COST OF SALES

DISTRIBUTION COST

ADMINISTRATIVE EXPENSES

OTHER OPERATING EXPENSES

OTHER OPERATING INCOME

PROFIT FROM OPERATIONS

FINANCE COST

PROFIT / (LOSS) BEFORE TAXATION

PROVISION FOR TAXATION

PROFIT/ (LOSS) AFTER TAXATION

GROSS PROFIT

EARNING/ (LOSS) PER SHARE - BASIC AND DILUTED (Rupees)

NOTE

27

28

29

30

31

32

33

34


CHIEF EXECUTIVE DIRECTOR


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2010

2010

277,861

32,632

8,566

24,066

-

-

-

24,066

301,927

(439,811)

(409,506)

(107,495)

(302,011)

(206,054)

(72,119)

(133,935)

(435,946)

(875,757)

2009

PROFIT/ (LOSS) AFTER TAXATION

OTHER COMPREHENSIVE INCOME/ (LOSS)

TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE YEAR

Surplus / (deficit) on remeasurement of available for sale investment

Deferred tax on remeasurement of available for sale investment

Adjustment of cross currency interest rate swap

Deferred tax on adjustment of cross currency interest rate swap

Other comprehesive income / (loss) for the year - net of tax




STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2010

4140

2010

674,317

(968,040)

-

(108,787)

(1,270)

(403,780)

(281,042)

(51,261)

(200)

934

7,765

-

-

13,222

(310,582)

-

(420,840)

1,259,964

-

(90,286)

(35,922)

712,916

(1,446)

80,297

78,851

1,500,213

(1,311,367)

(25)

(77,912)

(4,793)

106,116

(490,255)

(190,230)

(20,225)

2,230

4,817

7,395

25,000

16,542

(644,726)

200,000

(408,395)

815,947

35,922

(99,954)

-

543,520

4,910

75,387

80,297

2009

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations

Net cash generated from / (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Finance cost paid

Workers' profit participation fund paid

Income tax paid

Net increase in long term deposits

Capital expenditure on property, plant and equipment

Payment for non-current assets classified as held for sale

Investments made

Return on bank deposits received

Proceeds from sale of property, plant and equipment

Proceeds from sale of investments

Proceeds from sale of non current-assets classified as held for sale

Dividends received

Proceeds from long term financing

Repayment of long term financing

Short term borrowings - net


Repayment of liabilities against assets subject to finance lease

Repayment of lease finance advance

Net cash from financing activities


NOTE

35



CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2010

1,45

5,26

2

1,45

5,26

2

-

-

1,45

5,26

2

-

1,

455,

262

144,

919

144,

919

-

-

144,

919

-

14

4,91

9

Bal

ance

as

at 3

0 Ju

ne

2008

Bal

ance

as

at 3

0 Ju

ne

2008

-Res

tate

d

Bal

ance

as

at 3

0 Ju

ne

2009

Bal

ance

as

at 3

0 Ju

ne

2010

Effe

ct o

f cha

nge

in a

ccou

ntin

g po

licy

-Not

e 2.

8 (d

)

Tran

sfer

to a

ccum

ulat

ed lo

ss

Tota

l com

preh

ensi

ve lo

ss fo

r th

e ye

aren

ded

30 J

une

2009

Tota

l com

preh

ensi

ve in

com

e fo

r th

e ye

ar

ende

d 30

Jun

e 20

10

The

ann

exed

not

es fo

rm a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.

CH

IEF

EX

EC

UT

IVE

DIR

EC

TOR

(Rup

ees

in th

ousa

nd)

STA

TE

ME

NT

OF

CH

AN

GE

S IN

EQ

UIT

Y

FO

R T

HE

YE

AR

EN

DE

D 3

0 JU

NE

201

0

Sh

are

Cap

ital

Res

erve

s

Tota

lE

qu

ity

Cap

ital R

eser

ves

Rev

enue

Res

erve

s

Tota

l R

eser

ves

Sha

re

prem

ium

Fai

r va

lue

rese

rve

Hed

ging

Res

erve

Sub

-To

tal

Gen

eral

Res

erve

A

ccum

ulat

edlo

ssS

ubTo

tal

527

,360

213,

068

740,

428

-

(

302,

011)

438,

417

24,0

66

462,

483

133,

935

133,

935

-

(

133,

935)

-

-

-

806,

214

213,

068

1,01

9,28

2

-

(435

,946

)

583

,336

24,0

66

607

,402

1,49

0,49

1

1,49

0,49

1 (4

0,00

0)

-

1,45

0,49

1

-

1,45

0,49

1

(29,

937)

(29,

937)

40,0

00

(439

,811

)

(429

,748

)

277,

861

(151

,887

)

1,46

0,55

4

1,46

0,55

4

-

(439

,811

)

1,02

0,74

3

277,

861

1,29

8,60

4

2,26

6,76

8

213,

068

2,47

9,83

6

-

(875

,757

)

1,60

4,07

9

301,

927

1,90

6,00

6

3,72

2,03

0

213,

068

3,93

5,09

8

-

(875

,757

)

3,05

9,34

1

301,

927

3,36

1,26

8

4342

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

1. THE COMPANY AND ITS OPERATIONS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

a) Statement of Compliance

b) Accounting Convention

c) Critical accounting estimates and judgments

Financial instruments

Useful lives, patterns of economic benefits and impairments

Kohinoor Textile Mills Limited is a public limited company incorporated in Pakistan under the Companies Act,1913 (now Companies Ordinance, 1984) and listed on the Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Company is situated at 42-Lawrence Road, Lahore. The principal activity of the Company is manufacturing of yarn and cloth, processing and stitching the cloth and trade of textile products.

The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated:

These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

These financial statements have been prepared under the historical cost convention, except for the certain financial instruments, investment properties and freehold land which are carried at their fair values. These financial statements represent separate financial statements of the Company. The consolidated financial statements of the Group are being issued separately.

The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Company's financial statements or where judgments were exercised in application of accounting policies are as follows:

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques based on assumptions that are dependent on conditions existing at balance sheet date.

Estimates with respect to residual values, useful lives and pattern of flow of economic benefits are based on the analysis of the management of the Company. Further, the Company reviews the value of assets for possible impairment on an annual basis. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with a corresponding effect on the depreciation charge and impairment.

In making the estimates for income tax currently payable by the Company, the management takes into account the current income tax law and the decisions of appellate authorities on certain issues in the past.

The Company reviews its receivable against any provision required for any doubtful balances on an ongoing basis. The provision is made while taking into consideration expected recoveries, if any.

In making an estimate of recoverable amount of the company's investments in subsidiary companies, the management considers future cash flows.

IAS 1 (Revised) 'Presentation of Financial Statements' (effective for annual periods beginning on or after 01 January 2009).The revised standard prohibits the presentation of items of income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the Company presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

IFRS 7 (Amendment) ‘Financial instruments: Disclosures’ (effective for annual periods beginning on or after 01 January 2009). This amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share.

IFRS 8 'Operating Segments' (effective for annual periods beginning on or after 01 January 2009). It introduces the "management approach" to segment reporting. IFRS 8 requires presentation and disclosure of segment information based on the internal reports regularly reviewed by the Company's chief operating decision makers in order to assess each segment's performance and to allocate resources to them. Previously, the Company did not present segment information as IAS 14 limited reportable segments to those that earn a majority of their revenue from sales to external customers and therefore did not require the different stages of vertically integrated operations to be identified as separate segments. Under the management approach, the Company has determined operating segments on the basis of business activities i.e. Spinning, Weaving, Processing and Home Textile. As the change in accounting policy only results in additional disclosures of segment information, there is no impact on earnings per share.

IAS 23 (Amendment) 'Borrowing Costs' (effective for annual periods beginning on or after 01 January 2009). It requires an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for its intended use or sale) as part of the cost of that asset. The Company's accounting policy on borrowing cost, as disclosed in note 2.13, complies with the above mentioned requirements to capitalize borrowing cost and hence this change has not impacted the Company's accounting policy.

Taxation

Provisions for doubtful debts

Impairment of investments in subsidiary companies

d) Standards and amendments to published approved accounting standards that are effective in current year

i) Changes in accounting policies and disclosures arising from standards and amendments to published approved accounting standards that are effective in the current year

ii) Other amendment to published approved accounting standards that is effective in the current year

4544

There are other new standards, interpretations and amendments to the published approved accounting standards that are mandatory for accounting periods beginning on or after 01 July 2009 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements.

Following standard and amendments to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after 01 July 2010 or later periods:

IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after 01 January 2013). IFRS 9 has superseded the IAS 39 'Financial Instruments: Recognition and Measurement'. It requires that all equity investments are to be measured at fair value while eliminating the cost model for unquoted equity investments. Certain categories of financial instruments available under IAS 39 will be eliminated. Moreover, it also amends certain disclosure requirements relating to financial instruments under IFRS 7. The management of the Company is in the process of evaluating impacts of the aforesaid standard on the Company's financial statements.

There are other amendments resulting from annual Improvements projects initiated by International Accounting Standards Board in April 2009 and May 2010, specifically in IFRS 7 'Financial Instruments: Disclosures', IFRS 8 'Operating Segments', IAS 1 'Presentation of Financial Statements', IAS 7 'Statement of Cash Flows', IAS 24 'Related Party Disclosures' and IAS 36 'Impairment of Assets' that are considered relevant to the Company's financial statements. These amendments are unlikely to have a significant impact on the Company's financial statements and have therefore not been analyzed in detail.

There are other accounting standards, amendments to published approved accounting standards and new interpretations that are mandatory for accounting periods beginning on or after 01 July 2010 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements.

The Company operates an approved funded provident fund scheme covering all permanent employees. Equal monthly contributions are made both by the Company and employees at the rate of 8.33 percent of basic salary and cost of living allowance to the fund. The Company's contributions to the fund are charged to profit and loss account.

Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years.

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets to the extent that it is probable that

e) Standards, interpretations and amendments to published approved accounting standards that are effective in current year but not relevant

f) Standard and amendments to published approved accounting standards that are not yet effective but relevant

g) Standards, interpretations and amendments to published approved accounting standards that are not effective in current year and not considered relevant

2.2 Employee benefit

2.3 Taxation

Current

Deferred

taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the profit and loss account, except to the extent that it relates to items recognized in other comprehensive income are directly in equity. In this case the tax is also recognized in other comprehensive income or directly in equity, respectively.

Provisions are recognized when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and a reliable estimate of the amount can be made.

Property, plant and equipment except freehold land and capital work in progress are stated at cost less accumulated depreciation and accumulated impairment losses (if any). Cost of property, plant and equipment consists of historical cost, borrowing cost pertaining to erection/construction period of qualifying assets and other directly attributable cost of bringing the asset to working condition. Freehold land is stated at revalued amount less any identified impairment loss. Capital work in progress is stated at cost less any identified impairment loss.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit and loss account during the period in which they are incurred.

During the current year, the Company has changed its accounting policy for measurement of freehold land from cost model to revaluation model. Freehold land is now stated at revalued amount less any identified impairment loss. Previously, freehold land was stated at cost less any identified impairment loss. The effect of revaluation of freehold land has been dealt with in accordance with the requirements of International Accounting Standard (IAS) 16 "Property, Plant and Equipment". Had there been no change in this accounting policy, property, plant and equipment would have been lower by Rupees 2,410.233 million. This change in accounting policy has not impact on profit or loss.

Depreciation on all property, plant and equipment is charged to profit and loss account applying the reducing balance method so as to write off the cost / depreciable amount of the asset over their estimated useful lives at the rates given in Note 14.1. Depreciation on additions is charged from the month the assets are available for use while no depreciation is charged in the month in which the assets are disposed off. The residual values and useful lives of assets are reviewed by the management, at each financial year end and adjusted if impact on depreciation is significant.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit and loss account in the year the asset is derecognized.

Leases where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Assets subject to finance lease are capitalized at the commencement of the lease term at the lower of

2.4 Provisions

2.5 Property, plant and equipment

Owned

Depreciation

Derecognition

Leased

Finance lease

4746

present value of minimum lease payments under the lease agreements and the fair value of the leased assets, each determined at the inception of the lease.

The related rental obligation, net of finance cost, is included in liabilities against assets subject to finance lease. The liabilities are classified as current and long term depending upon the timing of payments.

Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on the balance outstanding. The finance cost is charged to profit and loss account over the lease term.

Depreciation of assets subject to finance lease is recognized in the same manner as for owned assets. Depreciation of the leased assets is charged to profit and loss account.

Land and buildings held for capital appreciation or to earn rental income are classified as investment properties. Investment properties are carried at fair value which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. The valuation of the properties is carried out with sufficient regularity.

Gains or losses arising from a change in the fair value of investment properties are included in the profit and loss account currently.

Intangible assets, which are non-monetary assets without physical substance, are recognized at cost, which comprise purchase price, non-refundable purchase taxes and other directly attributable expenditure relating to their implementation and customization. After initial recognition an intangible asset is carried at cost less accumulated amortization and impairment losses, if any. Intangible assets are amortized from the month, when these assets are available for use, using the straight line method, whereby the cost of the intangible asset is amortized over its estimated useful life over which economic benefits are expected to flow to the Company. The useful life and amortization method is reviewed and adjusted, if appropriate, at each balance sheet date.

Classification of investment is made on the basis of intended purpose for holding such investment.

Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such designation on regular basis.

Investments are initially measured at fair value plus transaction costs directly attributable to acquisition, except for "investment at fair value through profit and loss " which is measured initially at fair value.

The Company assesses at the end of each reporting period whether there is any objective evidence that investments are impaired. If any such evidence exists, the Company applies the provisions of IAS 39 'Financial Instruments: Recognition and Measurement' to all investments, except investments in subsidiary companies, which are tested for impairment in accordance with the provisions of IAS 36 'Impairment of Assets'.

Investment classified as held-for-trading and those designated as such are included in this category. Investments are classified as held-for-trading if they are acquired for the purpose of selling in the short term. Gains or losses on investments held-for-trading are recognised in profit and loss account.

Investments with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long term investments that are intended to be held to maturity are subsequently measured at amortized cost. This cost is computed as the

2.6 Investment properties

2.7 Intangible assets

2.8 Investments

a) Investment at fair value through profit or loss

b) Held-to-maturity

amount initially recognised minus principal repayments, plus or minus the cumulative amortisation, using the effective interest method, of any difference between the initially recognized amount and the maturity amount. For investments carried at amortised cost, gains and losses are recognized in profit and loss account when the investments are derecognized or impaired, as well as through the amortisation process.

Investments intended to be held for an indefinite period of time, which may be sold in response to need for liquidity, or changes to interest rates or equity prices are classified as available-for-sale. After initial recognition, investments which are classified as available-for-sale are measured at fair value. Gains or losses on available-for-sale investments are recognized directly in statement of other comprehensive income until the investment is sold, de-recognized or is determined to be impaired, at which time the cumulative gain or loss previously reported in statement of other comprehensive income is included in profit and loss account. These are sub-categorized as under:

For investments that are actively traded in organized capital markets, fair value is determined by reference to stock exchange quoted market bids at the close of business on the balance sheet date.

Fair value of unquoted investments is determined on the basis of appropriate valuation techniques as allowed by IAS 39 "Financial Instruments: Recognition and Measurement".

During the current year ended, the Company has changed the accounting estimate for valuation of its unquoted available for sale investment. Fair value of unquoted, available for sale investment is now determined by using net assets based valuation method. Previously, valuation was carried out using dividend stream method. Effect of this change in accounting estimate is recognized prospectively in accordance with the requirements of International Accounting Standard (IAS) 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Had there been no change in this accounting estimate, short term investments, fair value reserve and deferred taxation would have been lower by Rupees 32.633 million, Rupees 24.067 million and Rupees 8.566 million respectively with no effect on the profit or loss.

Investments in subsidiary companies are stated at cost less impairment loss, if any, in accordance with the provisions of IAS 27 'Consolidated and Separate Financial Statements'.

During the current year, the Company has changed its accounting policy for measurement of its investments in subsidiary companies. Investment in subsidiary companies are now measured at cost less impairment loss, if any. Previously investment in subsidiary companies was classified as available for sale and measured at fair value. Effect of this change in accounting policy is recognized retrospectively in accordance with the requirements of International Accounting Standard (IAS) 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Had there been no change in this accounting policy, fair value reserve and investment in subsidiary companies would have been lower by Rupees 1,668.617 million.

Inventories, except for stock in transit and waste stock/ rags are stated at lower of cost and net realizable value. Cost is determined as follows:

Useable stores, spare parts and loose tools are valued principally at moving average cost, while items considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other charges paid thereon.

c) Available-for-sale

Quoted

Unquoted

d) Investment in Subsidiary Companies

2.9 Inventories


4948

Cost of raw material, work-in-process and finished goods is determined as follows:.

(i) For raw materials: Annual average basis.

(ii) For work-in-process and finished goods: Average manufacturing costincluding a portion of production overheads.

Materials in transit are valued at cost comprising invoice value plus other charges paid thereon. Waste stock / rags are valued at net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessarily to make a sale.

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as cash flow hedges.

The Company documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the profit and loss account.

Amounts accumulated in statement of other comprehensive income are recognized in profit and loss account in the periods when the hedged item will affect profit or loss.

Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values.

Non-current assets are classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than continuous use. These are measured at lower of carrying amount and fair value less costs to sell.

Interest, mark-up and other charges on long-term finances are capitalized up to the date of commissioning of respective qualifying assets acquired out of the proceeds of such long-term finances. All other interest, mark-up and other charges are recognized in profit and loss account.

Revenue from difference sources is recognized as under:

Revenue from local sales is recognized on dispatch of goods to customers while in case of export sales it is recognized on the date of bill of lading.

Dividend on equity investments is recognized when right to receive the dividend is established.

` Profit on deposits with banks is recognized on time proportion basis taking into account the amounts

Stock-in-trade

2.10 Derivative financial instruments

2.11 Cash and cash equivalents

2.12 Non current assets classified as held for sale

2.13 Borrowing cost

2.14 Revenue recognition

a)

b)

c)

outstanding and rates applicable thereon.

These financial statements are presented in Pak Rupees, which is the Company’s functional currency. All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date, while the transactions in foreign currency during the year are initially recorded in functional currency at the rates of exchange prevailing at the transaction date. All non-monetary items are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. Exchange gains and losses are included in the income currently.

Financial instruments carried on the balance sheet include investments, deposits, trade debts, advances, interest accrued, other receivables, cash and bank balances, long-term financing, liabilities against assets subject to finance lease, lease finance advance, short-term borrowings, accrued mark-up and trade and other payables etc. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of instrument. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition, except for “financial instrument at fair value through profit or loss” which is measured initially at fair value.

Financial assets are de-recognized when the Company loses control of the contractual rights that comprise the financial asset. The Company loses such control if it realizes the rights to benefits specified in contract, the rights expire or the Company surrenders those rights. Financial liabilities are de-recognized when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on subsequent measurement (except available for sale investments) and de-recognition is charged to the profit or loss currently. The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy of investments.

Trade debts and other receivables are carried at original invoice value less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified.

Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. Any difference between the proceeds and the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest method.

Liabilities for trade and other amounts payable are initially recognized at fair value, which is normally the transaction cost.

A financial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on the estimated future cash flow of that asset.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as a difference between its carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of available for sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on a individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

` 2.15 Foreign currencies

2.16 Financial instruments

a) Trade and other receivables

b) Borrowings

c) Trade and other payables

2.17 Impairment

a) Financial assets

5150

The carrying amount of assets are reviewed at each balance sheet date for impairment whenever events are changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amounts. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset.

Transactions and contracts with related parties are carried out at an arm's length price determined in accordance with comparable uncontrolled price method.

Segment reporting is based on the operating (business) segments of the Company. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to the transactions with any of the Company's other components. An operating segment's operating results are reviewed regularly by the chief executive officer to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the chief executive officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Those income, expenses, assets, liabilities and other balances which can not be allocated to a particular segment on a reasonable basis are reported as unallocated.

The Company has three reportable business segments. Spinning (Producing different quality of yarn using natural and artificial fibers), Weaving (Producing different quality of greige fabric using yarn) and Processing and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles) .

Transaction among the business segments are recorded at arm's length prices using admissible valuation methods. Inter segment sales and purchases are eliminated from the total.

Dividend distribution to the Company's shareholders is recognized as a liability in the Company's financial statements in the period in which the dividends are declared and other appropriations are recognized in the period in which these are approved by the Board of Directors.

Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is a legal enforceable right to set off and the Company intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously.

b) Non financial assets

2.18 Related party transactions and transfer pricing

2.19 Segment reporting

2.20 Dividend and other appropriations

2.21 Off setting

3. ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL

2010 20092010 2009

1,596,672 1,596,672

15,967

15,967

26,156,000 26,156,000

261,560

261,560

26,858,897 26,858,897

268,589

268,589

38,673,628 38,673,628

386,736

386,736

52,241,019 52,241,019

522,410 522,410

145,526,216 145,526,216

1,455,262 1,455,262

(Rupees in thousand)(Number of shares)

3.1 Zimpex (Private) Limited which is an associated company held 22,510,635 (2009: 22,510,635) ordinary shares of Rupees 10 each as at 30 June 2010.

4. RESERVES

Composition of reserves is as follows:Capital

Revenue

Share premium Fair value reserve - net of deferred tax

General reserveAccumulated loss

2010

144,919 462,483 607,402

1,450,491 (151,887)1,298,604 1,906,006

2009

144,919438,417583,336

1,450,491(429,748)

1,020,7431,604,079

NOTE

4.14.2

This reserve can be utilized by the Company only for the purposes specified in section 83(2) of the Companies Ordinance, 1984.

4.1

Balance as at 01 July

Add/ (less) : Fair value adjustment on investment in Security General Insurance Company Limited during the year

Less: Related deferred tax asset/ liability on investment in Security General Insurance Company Limited

Balance as at 30 June

4.2 Fair value reserve - net of deferred tax

438,417

32,632

8,566

462,483

740,428

(409,506)

(107,495)

438,417


Ordinary shares of Rupees 10 each allotted on reorganisation of Kohinoor Industries Limited

Ordinary shares allotted under scheme of arrangement of merger of Part II of Maple Leaf Electric Company Limited

Ordinary shares allotted under scheme of arrangement of merger of Kohinoor Raiwind Mills Limited and Kohinoor Gujar Khan Mills Limited.

Ordinary shares of Rupees 10 each issued as bonus shares

Ordinary shares of Rupees 10 each issued for cash

(Restated)

5352

6.1 The Bank of Punjab - (BOP-1)

6.2 NIB Bank Limited (NIB - 1)


6.4 Albaraka Islamic Bank B.S.C (E.C) (AIB)

6.5 Allied Bank Limited (ABL-1)

6.6 Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL - 1)

This represents demand finance facility of Rupees 400 million, obtained for import of state of art machinery and is allowed for a period of four years with a grace period of six months. The loan is repayable in 7 equal half yearly installments commenced after conclusion of grace period. It is secured by bank's exclusive hypothecation charge on machinery imported and personal guarantees of sponsor directors. Facility amounting to Rupees 300 million carries mark up at the rate of 6 months average KIBOR plus 100 basis points (bps) and additional facility of Rupees 100 million carries mark up at the rate of 6 months average KIBOR plus 275 bps with a floor of 5% per annum, payable quarterly. On November 29, 2006 loans amounting to Rupees 150.431 million were converted to LTF-EOP consisting of Rupees 61.725 million at 6 % per annum and Rupees 88.706 million at 7 % fixed rate of mark up.

This represents LTF-EOP facility of Rupees 157 million obtained for import of textile machinery for a period of three years including a grace period of six months. It is repayable in ten equal quarterly installments. It is secured by first exclusive hypothecation charge on the imported machinery and allied equipment, including installation and local component costs. It carries mark up at fixed rate of 6 % per annum.

This represents a term finance facility of Rupees 300 million under State Bank of Pakistan (LTF-EOP) scheme for a period of five years with a grace period of one year. The financing is for import of 72 Picanol Omni Plus wide width Air Jet Looms and Tying & Knotting machine plus five (5) Gen Set gas generators being part of BMR. It is repayable in equal quarterly installments, commencing after expiry of grace period. The facility is secured against first pari passu charge over fixed assets of Raiwind Division and personal guarantees of the sponsor directors. It carries fixed mark up at the rate of 7% per annum.

This represents murabaha finance facility of Rupees 100 million, obtained for construction of buildings. The facility is allowed for a period of four years including a grace period of one year. The facility is repayable in sixteen equal quarterly installments commenced with first payment due at the end of 15th month from the date of disbursement. It is secured by pari passu charge and hypothecation on fixed assets i.e. land and building constructed for ring spinning and stitching. It carries mark up at the rate of 3-years KIBOR plus 2% per annum with floor of 12.75% per annum.

This represents term finance facility of Rupees 300 million , obtained for import of state of art machinery and is allowed for a period of five years with a grace period of one year. The facility is repayable in sixteen (16) equal quarterly installments commenced after conclusion of grace period. It is secured by first exclusive charge on machinery imported. Facility amounting to Rupees 100 million carries mark up at the rate of 6 months KIBOR plus 1.25% per annum, facility of Rupees 125 million carries mark up at the rate of 6 months KIBOR plus 1.75% per annum and facility of Rupees 75 million carries mark up at the rate of 6 months KIBOR plus 2.50% per annum with no floor and cap. On December 28, 2006 loans amounting to Rupees 124.732 million were converted to LTF-EOP at 7% per annum fixed rate of mark up.

This represents the LTF-EOP facility of Rupees 65 million for import of textile machinery and is allowed for a

Freehold land is now stated at revalued amount as a result of change in accounting policy from cost model to revaluation model. The revaluation of freehold lands were carried out by Independent valuer M/s ARCH-e'-decon (Evaluators, Surveyors, Architects & Engineers) as at 30 March 2010. The value of land has increased by Rupees 2,410.233 million due to revaluation.

5.1

5. SURPLUS ON REVALUATION OF PROPERTY

Investment properties

Freehold land

2010

1,263,592

2,410,233

3,673,825

1,263,592

-

1,263,592

2009NOTE

5.1

6. LONG TERM FINANCING From banking companies and other financial institutions - Secured

The Bank of Punjab (BOP - 1)NIB Bank Limited (NIB - 1)NIB Bank Limited (NIB - 2)Albaraka Islamic Bank B.S.C (E.C) (AIB)Allied Bank Limited (ABL -1 )Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICPL-1)Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICPL-2)Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICPL-3)Standard Chartered Bank (Pakistan) Limited (SCB-2)Standard Chartered Bank (Pakistan) Limited - Syndicated term financeAllied Bank Limited - Syndicated term financeThe Bank of Khyber - Syndicated term financePak Libya Holding Company - Syndicated term financeBank Al Falah Limited - Syndicated term financeFaysal Bank Limited - Syndicated term financeStandard Chartered Bank (Pakistan) Limited (SCB-1)Faysal Bank Limited (FBL - 1)

Less: Current portion shown under current liabilities

Other loans - Unsecured

Kohinoor Sugar Mills Limited (KSML)

Kohinoor Industries Limited (KIL)

2010

26,623 107,716 198,803

8,333 65,094

18,055

10,000

156,250 100,000

186,500 543,150 95,500 47,750 477,500 279,750

- -

2,321,024 700,434 1,620,590

4,794

2,683 7,477 1,628,067

46,598 139,815 223,200

41,666 113,067

21,666

20,000

187,500 175,000

200,000 568,750 100,000

50,000 500,000 300,000

20,226 34,376

2,741,864 830,770 1,911,094

4,794

2,683 7,477 1,918,571

2009

6.16.26.36.46.5

6.6

6.7

6.86.9

6.106.106.106.106.106.10

12

6.11

6.12



5554

period of five years with a grace period of six months. The facility is repayable in eighteen (18) equal quarterly installments commenced from February 19, 2006. It is secured by first exclusive charge on imported machinery. It carries mark up at a fixed rate of 7% per annum.

This represents a term finance of Rupees 40 million under State Bank of Pakistan (LTF-EOP) scheme at subsidized and fixed rate of mark up of 7% per annum. The financing is for import of warping and sizing machines being part of BMR. This facility for a period of five years with a grace period of one year and is repayable in equal quarterly installments.

This represents term finance facility of Rupees 250 million obtained for debt reprofiling for a period of five years including grace period of one year. The facility is repayable in 8 equal six monthly installments. It is secured by first pari passu charge by way of hypothecation on all present and future plant and machinery of the Company and by way of mortgage on land measuring 121 acres, 2 kanals and 1 marla, situated at main Peshawar Road, Rawalpindi with 25% margin. Initially ranking charge will be created which will be upgraded within 90 days from the date of disbursement. The facility carries mark up at the rate of 3 months KIBOR plus 170 bps per annum with quarterly repricing effective from March 03, 2008.

This represents the term finance facility of Rupees 200 million, obtained for the purpose of financing the unwinding cost of cross currency swap deal with the bank and is allowed for a period of two years. The facility is payable in eight equal quarterly installments. It is secured by ranking charge of Rupees 266.666 million on land of Kohinoor Textile Mills Limited situated at Rawalpindi. It carries mark up at the rate of 3-months average KIBOR plus 2.75% per annum with no floor and cap.

Syndicated Finance of Rupees 1.750 billion was arranged through Standard Chartered Bank (Pakistan) limited (SCBL) to swap highly priced loans. Long term facility was arranged and availed in Islamic and conventional mode of financing. Standard Chartered Bank (Pakistan) Limited (Arranger), Allied Bank Limited and Bank of Khyber disbursed Rupees 868.750 million under Islamic mode of financing whereas Bank Alfalah Limited, Faysal Bank Limited and Pak Libya Holding Company disbursed Rupees 850 million under conventional means of financing. Tenor of the loan was 5 years including one year grace period and was repayable in 16 equal quarterly installments. During the year, the Company has entered into supplimental to its syndicated term finance facility agreement where by the repayment schedule of the purchase price has been modified. Now the loan is repayble in twenty four installments within a tenor of six years . It is secured by first pari passu charge over the fixed assets of the Company including surplus land and buildings at Peshawar Road, Rawalpindi. It carries mark-up at 3 months average KIBOR plus 150 bps to be repriced at the end of each quarter.

A civil suit has been filed by KSML for recovery of disputed liability which is being contested by the Company.

The balance is an old one, un-reconciled, unconfirmed and disputed.

Current portion of long term liabilities include overdue installments amounting to Rupees 134.816 million (2009: Nil)



6.9 Standard Chartered Bank (Pakistan) Limited (SCB-2)

6.10 Syndicated Term Finance

6.11 Kohinoor Sugar Mills Limited (KSML)

6.12 Kohinoor Industries Limited (KIL)

6.13

7. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

Less:

Less:

Minimum lease payments

Un-amortized finance charges

Present value of minimum lease payments

Current portion shown under current liabilities

2010

155,263

20,233

135,030

68,025

67,005

2009

207,348

20,157

187,191

86,272

100,919

NOTE

12

7.1

7.2

The minimum lease payments has been discounted at implicit interest rates which range from 6.00 % to 18.00% (2009: from 6.00% to 17.64%) per annum to arrive at their present values. The lease rentals are payable in monthly and quarterly installments. In case of any default an additional charge at the rate of 0.1 percent per day shall be payable. Taxes, repairs, replacements and insurance costs are to be borne by the Company. The lease agreements carry renewal and purchase option at the end of the lease term. There are no financial restrictions in lease agreements. These are secured by deposit of Rupees 21.065 million (2009: Rupees 24.841 million) included in long term security deposits, demand promissory notes, personal guarantees and pledge of sponsors' shares in public limited companies.

Minimum lease payments and present value of minimum lease payments are regrouped as under:

8. DEFERRED TAX

Deferred tax liability on taxable temporary differences in respect of :

Deferred tax asset on deductible temporary differences in respect of:

This comprises of following :

- Accelerated tax depreciation allowance

- Surplus on revaluation of investment

Unused tax losses

Minimum lease

payments

88,922

118,426

207,348

Present value of minimum

lease payments

86,272

100,919

187,191


------------------------(Rupees in thousand)----------------------

Minimum lease

payments

85,937

69,326

155,263

Present value of

minimum lease

payments

68,025

67,005

135,030

30 June 2010 30 June 2009

Due not later than one year

Due later than one year but not later than five years

2010

329,260

164,613

493,873

335,877

157,996

2009

289,245

156,047

445,292

310,625

134,667


5756

356,607

(67,362)

289,245

-

40,015

329,260

263,542

(107,495)

-

156,047

8,566

-

164,613

72,119

(72,119)

-

-

-

-

-

692,268

(179,614)

(67,362)

445,292

8,566

40,015

493,873

225,369

-

85,256

310,625

-

25,252

335,877

225,369

-

85,256

310,625

-

25,252

335,877

466,899

(179,614)

(152,618)

134,667

8,566

14,763

157,996

8.1 The movement in deferred tax assets and liabilities during the year without taking into consideration the off setting balances within the same tax jurisdiction is as follows:

The running finance facilities sanctioned by various banks aggregate to Rupees 2,390 million (2009: Rupees 1,255 million). The rates of mark-up range from 3.23% to 25% (2009: from 3.63% to 18.50%) per annum. These arrangements are secured by pledge of raw material, charge on current assets of the Company including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors.

The other short term finance facilities sanctioned by various banks aggregate to Rupees 3,638 million (2009: Rupees 2,348 million). The rates of mark-up range from 6.63% to 18.00% (2009: from 6.08% to 18.48%) per annum. These arrangements are secured by pledge of raw material, charge on current assets of the Company including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors.

The export refinance facilities sanctioned by various banks aggregate to Rupees 1,665 million (2009: Rupees 2,950 million). The rates of mark-up range from 6.50% to 8.50%(2009: 7.50%) per annum. These arrangements are secured by way of charge on current assets of the Company and personal guarantees of the sponsor directors.

11.1

11.2

11.3

Balance as at 01July 2008

Charged to other comprehensive income

Charged to profit and loss account

Balance as at 30 June 2009

Charged to other comprehensive income


Balance as at 30 June 2010

Acceleratedtax

depreciation allowance

Surplus on revaluation

of investment

Unrealized gain on

derivative financial

instrument

TotalUnused

tax losses

Total

Net liability(asset)

Deferred tax liabilities Deferred tax assets

------------------------------------------(Rupees in thousand)----------------------------------------

9. TRADE AND OTHER PAYABLES

9.1 Workers' profit participation fund

CreditorsAccrued liabilitiesAdvances from customersWorkers' profit participation fundWorkers' welfare fundUnclaimed dividendWithholding tax payablePayable to employees' provident fund trustOthers

Balance as on 01 JulyAdd: Provision for the yearAdd: Interest for the yearLess: Payments during the year

2010

788,562 151,067 18,593 21,669 7,686 2,681 2,715 - 47,284 1,040,257

1,254 20,227

188 - 21,669

2009

700,490 99,980 32,839 1,254 - 2,681 2,388 5,138 4,985 849,755

1,279 - 164 189 1,254

NOTE

9.131

31


9.1.1 The Company retains workers’ profit participation fund for its business operations till the date of allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers Participation) Act, 1968 on funds utilized by the Company till the date of allocation to workers.

10. ACCRUED MARK-UP

11. SHORT TERM BORROWINGS

From banking companies - Secured

Long term financing



Short term running finance

Other short term finances

State Bank of Pakistan (SBP) refinances

Temporary bank overdraft

2010

119,580

167,594

2,813

289,987

2,285,452

2,200,553

1,555,000

29,430

6,070,435

62,793

120,542

1,924

185,259

1,253,594

1,968,863

1,580,000

8,014

4,810,471

2009

NOTE

11.1

11.2

11.3


12. CURRENT PORTION OF NON-CURRENT LIABILITIES

Long term financing - secured


2010

700,434

68,025

768,459

2009

830,770

86,272

917,042

NOTE

6

7


5958

14.1

OP

ER

AT

ING

FIX

ED

AS

SE

TS

At

30 J

un

e 20

08

Cos

t

14,

836

1

2,27

2

747,

738

7

2,97

0

4,

520,

668

3

0,58

2

54,

133

6

1,94

9

21,

176

9

5,86

7

408,

248

7,6

60

6,04

8,09

9

Acc

umul

ated

dep

reci

atio

n

-

(4,

673)

(31

2,13

3)

(32,

421)

(

1,57

8,68

2)

(20,

095)

(3

4,08

7)

(31,

608)

(1

0,51

9)

(43,

315)

(7

8,91

0)

(1,

779)

(

2,14

8,22

2)

Net

boo

k va

lue

1

4,83

6

7

,599

435,

605

4

0,54

9

2,

941,

986

1

0,48

7

20,

046

3

0,34

1

10,

657

5

2,55

2

329,

338

5,8

81

3,89

9,87

7

Yea

r en

ded

30

Jun

e 20

09O

peni

ng n

et b

ook

valu

e

14,

836

7,5

99

43

5,60

5

40,

549

2,94

1,98

6

10,

487

2

0,04

6

30,

341

1

0,65

7

52,

552

32

9,33

8

5

,881

3,

899,

877

Add

ition

s-

462

12

2,42

1

25,8

38

28

4,41

7

271

1,

821

5,32

3

2,

430

7,19

8

71

,441

521,

622

Tran

sfer

Cos

t

-

-

-

-

(4,

418)

-

-

-

-

-

-

-

(

4,41

8)

Acc

umul

ated

dep

reci

atio

n

-

-

-

-

3

,379

-

-

-

-

-

-

-

3

,379

-

-

-

-

(

1,03

9)

-

-

-

-

-

-

-

(1,

039)

Dis

posa

ls:

Cos

t-

-

-

-

(7

,443

)

-

(45)

(142

)

(121

)

(4,6

46)

-

-

(12,

397)

Acc

umul

ated

dep

reci

atio

n-

-

-

-

6,

409

-

-

117

75

2,84

9

-

-

9,

450

-

-

-

-

(

1,03

4)

-

(45

)

(25

)

(46

)

(1,

797)

-

-

(

2,94

7)

Dep

reci

atio

n ch

arge

-

(4

05)

(3

9,83

9)

(2,6

81)

(273

,270

)

(1,0

46)

(6,0

47)

(3,1

75)

(1,0

42)

(8,7

20)

(32,

459)

(9

32)

(3

69,6

16)

Clo

sing

net

boo

k va

lue

1

4,83

6

7

,656

518,

187

6

3,70

6

2,

951,

060

9,7

12

1

5,77

5

32,

464

1

1,99

9

49,

233

36

8,32

0

4

,949

4,

047,

897

At

30 J

un

e 20

09

-

Cos

t

14,

836

1

2,73

4

870,

159

9

8,80

8

4,

793,

224

3

0,85

3

55,

909

6

7,13

0

23,

485

9

8,41

9

479,

689

7,6

60

6,55

2,90

6

Acc

umul

ated

dep

reci

atio

n

-

(5,

078)

(35

1,97

2)

(35,

102)

(

1,84

2,16

4)

(21,

141)

(4

0,13

4)

(34,

666)

(1

1,48

6)

(49,

186)

(11

1,36

9)

(2,

711)

(

2,50

5,00

9)

Net

boo

k va

lue

1

4,83

6

7

,656

518,

187

6

3,70

6

2,

951,

060

9,7

12

1

5,77

5

32,

464

1

1,99

9

49,

233

36

8,32

0

4

,949

4,

047,

897

Yea

r en

ded

30

Jun

e 20

10

Ope

ning

net

boo

k va

lue

1

4,83

6

7

,656

518,

187

6

3,70

6

2,

951,

060

9,7

12

1

5,77

5

32,

464

1

1,99

9

49,

233

36

8,32

0

4

,949

4,

047,

897

Rev

alua

tion

2,41

0,23

3

-

-

-

-

-

-

-

-

-

-

-

2,

410,

233

Add

ition

s-

1,44

2

28

,949

7,92

4

21

6,68

9

39

2,

341

2,65

5

3,

387

5,06

1

56

,692

-

32

5,17

9

Tran

sfer

:

Cos

t17

3,26

0

6,11

8

(1

73,2

60)

(6

,118

)

-

Acc

umul

ated

dep

reci

atio

n(6

0,02

9)

(2,4

50)

60,0

29

2,

450

-

-

-

-

-

113,

231

-

-

-

-

3,

668

(113

,231

)

(3,6

68)

-

Dis

posa

ls:

Cos

t-

-

-

-

(9

,425

)

-

-

-

(45)

(3,2

78)

(12,

748)

Acc

umul

ated

dep

reci

atio

n-

-

-

-

8,

680

-

-

-

39

2,31

3

11

,032

-

-

-

-

(74

5)

-

-

-

(6

)

(

965)

-

-

(

1,71

6)

Dep

reci

atio

n ch

arge

-

(4

44)

(4

3,07

5)

(3,9

12)

(273

,014

)

(954

)

(4,9

44)

(3,2

75)

(1,3

45)

(7,9

79)

(32,

226)

(4

50)

(3

71,6

18)

Clo

sing

net

boo

k va

lue

2,42

5,06

9

8

,654

504,

061

6

7,71

8

3,

007,

221

8,7

97

1

3,17

2

31,

844

1

4,03

5

49,

018

27

9,55

5

831

6,

409,

975

At

30 J

un

e 20

10

Cos

t / r

eval

ued

amou

nt

2,

425,

069

1

4,17

6

899,

108

10

6,73

2

5,

173,

748

3

0,89

2

58,

250

6

9,78

5

26,

827

10

6,32

0

363,

121

1,5

42

9,27

5,57

0

Acc

umul

ated

dep

reci

atio

n

-

(5,

522)

(39

5,04

7)

(39,

014)

(

2,16

6,52

7)

(22,

095)

(4

5,07

8)

(37,

941)

(1

2,79

2)

(57,

302)

(8

3,56

6)

(

711)

(

2,86

5,59

5)

Net

boo

k va

lue

2,42

5,06

9

8

,654

504,

061

6

7,71

8

3,

007,

221

8,7

97

1

3,17

2

31,

844

1

4,03

5

49,

018

27

9,55

5

831

6,

409,

975

Dep

reci

atio

n R

ate

(%)

-

5

5 -

10

5

10

10

30

10

10

20

10

20

Ow

ned

Ass

ets

Lea

sed

Ass

ets

Tota

lP

lan

t &

Mac

hin

ery

Ser

vice

s &

Oth

er

Eq

uip

men

t

Off

ice

Eq

uip

men

tV

ehic

les

Pla

nt

&

Mac

hin

ery

Veh

icle

s

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

--(R

UP

EE

S IN

TH

OU

SA

ND

)---

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

--

Fac

tory

&

Oth

er

Bu

ildin

g

Fre

eho

ld

lan

d

Off

ice

Bu

ildin

g

Res

iden

tial

&

Oth

er

Bu

ildin

g

Co

mp

ute

r &

IT

Inst

alla

tio

ns

Fu

rnit

ure

&

Fix

ture

13. CONTINGENCIES AND COMMITMENTS

13.1 Contingencies

a)

b)

c).

d)

e)

f)

13.2 Commitments in respect of:

a)

b)

The Company has filed an appeal before Honorable Appellate Tribunal Inland Revenue, Lahore for tax year 2003 under section 129/132 of Income Tax Ordinance, 2001, which is pending adjudication. The tax loss was restricted to Rupees .27.540 million against declared loss of Rupees 122.933 million.

In addition to the above, another appeal for tax year 2003 against order under section 221 dated 24 January 2009, on the disallowance of depreciation expense of Rupees 62.665 million has been filed before Honorable Appellate Tribunal Inland Revenue which is pending adjudication. This is a cross appeal. Although the learned Commissioner Inland Revenue (Appeals) has already annulled the order under section 221 of the Income Tax Ordinance, 2001, vide order dated 30 July 2009, the Taxation Officer has illegally repeated the original assessment. Therefore, an appeal has also been filed before Commissioner Inland Revenue under section 187 of Income Tax Ordinance, 2001 for tax year 2003, the appellate order of which is pending. The revenue involved on account of penalty was Rupees.17.484 million. The Company has strong gounds and is expecting favourable outcome.

The Company has filed an appeal before the Honorable Appellate Tribunal Inland Revenue under section 122(5A) / 122(1) / 129 of Income Tax Ordinance, 2001 for tax year 2004 which is pending adjudication. The loss for the year has been assessed at Rupees.255.684 million creating refund of Rupees 7.498 million.

The Company and the tax authorities have filed appeals before different appellate authorities regarding sales tax matters. Pending the outcome of appeals filed by the Company and tax authorities, no provision has been made in these financial statements which on the basis adopted by the authorities would amount to Rupees 33.473 million (2009: 33.473 million), since the Company has strong grounds against the assessments framed by the tax authorities.

The Company has filed recovery suits in civil courts of Rupees 4.589 million against various suppliers and customers for goods supplied by/ to them. Pending the outcome of the cases, no provision there against has been made in these financial statements since the Company is confident about favourable outcome of the cases.

Four cases are pending before the Punjab Labour Appellate Tribunal, Shadman 1, Lahore regarding the reinstatement into service of four employees dismissed from their jobs. No provision has been made in these financial statements since the Company is confident about favourable outcome of the cases.

Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Company, to various institutions and corporate bodies aggregate Rupees 248.962 million as at 30 June, 2010 (2009: Rupees 319.430 million)

Letters of credit for capital expenditure amount to Rupees 38.865 million (2009: Rupees 43.996 million).

Letters of credit other than for capital expenditure amount to Rupees 325.393 million (2009: Rupees 235.345 million).

14 PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets (Note 14.1)

Capital work in progress (Note 14.4)

2010

6,409,975

86,324

6,496,299

2009

4,047,897

92,336

4,140,233

NOTE

14.1

14.4


6160

Based on value in use calculations as at 30 June 2010, there was no impairment loss on investments in

subsidiary companies (tested for impairment under IAS 36 "Impairment of Assets").

Concept Trading (Private) Limited (Subsidiary Company) was incorporated on 11 March 2010 with authorized

share capital of 50,000 shares of Rupees 10 each amounting to Rupees 500,000. Issued, subscribed and paid

up capital of the Company is 20,000 ordinary shares of Rupees 10 each amounting to Rupees 200,000.

Concept Trading (Private) Limited has not commenced business till 30 June 2010.

16.1

16.2

14.2

DE

TAIL

OF

DIS

PO

SA

L O

F O

PE

RA

TIN

G F

IXE

D A

SS

ET

S

Des

crip

tio

n C

ost

A

ccu

mu

late

d

Dep

reci

atio

nS

ale

Pro

ceed

sG

ain

Mo

de

of

dis

po

sal

Par

ticu

lars

of

pu

rch

aser

Toyo

ta C

orol

la L

RR

-223

3

Suz

uki C

ultu

s LE

D-

840.

07

Hon

da C

ity R

IY-6

720

Mod

el 2

002

Mac

hine

-Dra

win

g To

yoda

Har

a D

YH

500

-c C

ompl

ete

Mod

el

Mac

hine

-Dra

win

g To

yoda

Har

a D

YH

500

-c C

ompl

ete

Mod

el

Mac

hine

-Dra

win

g To

yoda

Har

a D

YH

500

-c C

ompl

ete

Mod

el

Cro

sol M

K 4

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ard

Mod

el 1

990

Agr

egat

e of

oth

er it

ems

of

prop

erty

, pla

nt &

equ

ipm

ent w

ithin

divi

dual

boo

k va

lues

not

ex

ceed

ing

Rup

ees.

50,0

00

2

010

2

009

849

650

799

2,63

9

880

1,75

9

4,14

7

1,02

5

12,7

48

12,3

97

N

egot

iatio

n

Neg

otia

tion

Neg

otia

tion

Neg

otia

tion

Neg

otia

tion

Neg

otia

tion

Neg

otia

tion

Mr

Fua

d Z

afar

, R/O

H

ouse

# 2

7-E

, Pha

se-1

, DH

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ahor

e C

antt

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le L

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emen

t Fac

tory

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ited

Ghu

lam

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as

s/o

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azim

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sain

Nor

th S

tar T

extil

es,

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re

Zah

idJe

e Te

xtile

Mill

s Lt

d,

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sala

bad

Gha

zi F

abric

s In

tern

atio

nal L

td, L

ahor

e

Baj

aj E

nter

pris

es, 5

8-B

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oom

#16

2- M

ozan

g R

oad,

Lah

ore

----

----

----

--(

R u

p e

e s

i n

t

h o

u s

a n

d)-

----

----

--

557

2

31

610

2,3

26

7

75

1,5

56

4

,023

9

54

11,

032

9,45

0

292

419

189

313

105

203

124 71

1,71

6

2,94

7

600

419

591

1,56

7 53

9 1,

617

1,80

0 63

2

7,76

5 4,

817

308 -

402

1,25

4 43

4 1,

414

1,67

6 56

1 6,

049

1,87

0

Net

Bo

ok

Val

ue

16. LONG TERM INVESTMENTS

Investment in subsidiary companiesQuoted

Un-quoted

Maple Leaf Cement Factory Limited186,608,808 (2009: 186,608,808) ordinary shares of Rupees 10 each fully paid Equity held 50.13% (2009: 50.13%)

Concept Trading (Private) Limited19,998 (2009:Nil) ordinary shares of Rupees 10 each fully paid Equity held 99.99% (2009:Nil)

2010

2,248,970

200

2,249,170

2009

2,248,970

-

2,248,970

NOTE

16.1

16.2


14.3 Depreciation charged during the year has been allocated as follows:

14.4 CAPITAL WORK IN PROGRESS

Cost of salesAdministrative expenses

Civil works and buildingsPlant and machinery

2010

350,778 20,840

371,618

67,593 18,731

86,324

2009

347,202 22,414

369,616

15,897 76,439

92,336

NOTE

2830


15. INVESTMENT PROPERTIES

The fair value of investment properties comprising land and building situated at Lahore have been determined by

Messers Hasib Associates (Private) Limited at Rupees 769.192 million as at 26 June 2008. Fair value of land

situated at Rawalpindi has been determined by Messers Asrem (Private) Limited at Rupees 951.643 million as at 20

May 2008. The fair value was determined on the basis of professional assessment of the current prices in an active

market for similar properties in the same location and condition. The valuers have certified that there is no material

change in fair value during the current financial year and as on the balance sheet date.(Restated)

6362

24. SHORT TERM INVESTMENTS

Available for saleAssociated Company - unquoted

Investments at fair value through profit and loss - Held for tradingQuoted companiesLoss on remeasurement of fair value during the year

Security General Insurance Company Limited6,398,541 (2008 : 6,398,541) Ordinary shares of Rupees 10

each fully paid.Equity held 9.40% (2008 : 9.40%)Surplus on revaluation of investment

13,611 (5,595) 8,016

7,000

627,095 634,095 642,111

13,611 (7,464) 6,147

7,000

594,463 601,463 607,610

NOTE

24.1

This represents amount receivable against allocation of pool expenses.23.1

19.1 This includes raw material in transit of Rupees 55.351 million (2009: Rupees 60.232 million)

20. TRADE DEBTS

Considered good:

Secured (against letters of credit)Unsecured

2010

747,285 581,780

1,329,065

2009

592,941 457,160

1,050,101

20.1 As at 30 June 2010, trade debts of Rupees 568.309 million (2009 : Rupees 225.526 million) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default. The ageing analysis of these trade debts is as follows:


17. LONG TERM DEPOSITS

18. STORES, SPARE PARTS AND LOOSE TOOLS

Security deposits

Less: current portion shown under current assets

Stores

Spare parts

Loose tools

2010

41,124

6,237

34,887

250,003

95,795

-

345,798

2010

764,549

891,595

736,969

2,393,113

2009

2009

44,901

11,284

33,617

215,516

87,871

560

303,947

618,265

546,792

614,769

1,779,826

NOTE

22

18.1

NOTE

19.1


This includes stores in transit of Rupees 14.333 million (2009: Rupees 8.484 million).18.1

Raw material

Work-in-process

Finished goods

19. STOCK-IN-TRADE

Upto 1 month1 to 6 monthsMore than 6 months

2010

433,697

116,664

17,948

568,309

2009

190,322 20,427 14,777

225,526


21. ADVANCES - considered good

22. SECURITY DEPOSITS AND SHORT TERM PREPAYMENTS

23. OTHER RECEIVABLES

Advances to : - Executives - Other employees - Suppliers

Letters of credit

Current portion of security depositsShort term prepayments

Sales tax refundableCustom duty receivableExport rebateInsurance claimsDue from subsidiary company

(Maple Leaf Cement Factory Limited)Research and development supportDraw back of taxes and leviesCotton claimOthers

2010

621 1,040 593,555 595,216

1,579 596,795

6,237 9,341 15,578

260,161 3,642 47,561 175

14,987 473 25,808 28,745 20,376 401,928

2,255 466 299,019 301,740

1,622 303,362

11,284 17,099 28,383

215,877 3,642 32,302 181

10,657 25,735 - - 13,338 301,732

2009NOTE

17

23.1



6564

25. CASH AND BANK BALANCES

Cash in handCash at bank: - On current accounts - On saving accounts

The Company intends to dispose off land located at Raiwind Road and M.M Alam Road, Lahore after final negotiations with its intended buyers. An active programme commenced to locate a buyer at a reason price. During the year ended 30 June 2009, land could not be disposed of due to unusually adverse investment scenario of the country resulting in slump in property market. During the current year, due to continued stressed property market, the company was still unable to liquidate these land at its target price. These events precluded that disposal of land during the year, however, the management considers that these events were beyond its control and remains committed to disposal of these land at a reasonable price. The proceeds of disposal are expected to exceed the carrying amount of the land.

28.2 Salaries, wages and other benefits include provident fund contribution of Rupees 16.813 million (2009: Rupees 15.893 million) by the Company.

Fair value per share of Rupees 99.10 (2009: Rupees 94) is calculated by independent valuer on the basis of net assets based valuation method. Security General Insurance Company Limited is associated Company due to common directorship.

Maple Leaf Cement Factory Limited, a subsidiary of the Company holds 4,570,389 (2009:4,570,389) ordinary shares of Security General Insurance Company representing 6.71% (2009 : 6.71%) equity.

24.1

24.2

2010

961

65,217 12,673 77,890 78,851

721

65,685 13,891 79,576 80,297

2009

The balances in current and saving accounts carry interest ranging from 0.40% to 13% (2009: from 0.20% to 12%) per annum.

The balances in current and deposit accounts include US $ 37,000 (2009: US $ 72,465)

25.1

25.2

26. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

Land

Advance against land

2010

552,923

100,000

652,923

2009

551,662

50,000

601,662



27. SALES

Export

Local

Duty drawback

Export rebate

2010

6,406,061

4,189,295

54,845

43,137

10,693,338

2009

5,452,211

2,971,466

-

35,222

8,458,899


Exchange gain due to currency rate fluctuations relating to export sales amounting to Rupees 35.245 million (2009: Rupees 105.328 million) has been included in export sales.

28. COST OF SALES

Work-in-process

Finished goods

28.1 Raw material consumed

Raw materials consumed

Cloth and yarn procured and consumed

Salaries, wages and other benefits

Dyes and chemicals consumed

Processing charges

Stores, spare parts and loose tools consumed

Packing materials consumed

Fuel and power

Repair and maintenance

Insurance

Other factory overheads

Depreciation

Opening stock

Closing stock

Cost of goods manufactured

Opening stock

Closing stock

Cost of sales

Opening stock

Add: Purchased during the year

Less: Closing stock

2010

3,347,817

2,464,620

740,125

518,965

12,267

608,508

374,847

619,450

59,445

22,915

39,795

350,778

9,159,532

546,792

(891,618)

(344,826)

8,814,706

614,769

(736,946)

(122,177)

8,692,529

558,033

3,498,981

4,057,014

709,197

3,347,817

2009

3,192,060

1,405,218

690,336

505,493

22,452

234,522

322,317

453,899

36,086

19,717

36,562

347,202

7,265,864

471,943

(546,792)

(74,849)

7,191,015

622,747

(614,769)

7,978

7,198,993

470,160

3,279,933

3,750,093

558,033

3,192,060

NOTE

28.1

28.2

14.3


6766

2010

39,011

30,549

227,943

17,911

348

3,252

808

2,832

16,726

54,501

3,937

397,818

2009

33,876

28,492

160,317

18,651

405

3,699

679

3,201

17,370

190,877

7,281

464,848

Salaries, wages and other benefits include provident fund contribution of Rupees 1.284 million (2009: Rupees 1.009 million) by the Company.

29.1

Donation includes Rupees 7.882 million paid to Gulab Devi Hospital, Lahore. None of the directors and their spouses have any interest in the donees' fund.

31.2

30. ADMINISTRATIVE EXPENSES


Travelling and conveyance

Repairs and maintenance

Rent, rates and taxes

Insurance

Vehicles' running expenses

Printing, stationery and periodicals

Electricity, gas and water

Postage, telephone and fax

Legal and professional

Security, gardening and sanitation

Depreciation

Miscellaneous expenses

93,990

5,587

8,280

9,001

4,600

7,296

4,359

2,589

4,878

4,433

19,813

20,840

9,437

195,103

83,014

4,382

9,743

2,908

4,483

7,099

4,795

1,175

3,987

2,995

18,915

22,414

10,055

175,965

30.1

14.3


29. DISTRIBUTION COST


Outward freight and handling

Clearing and forwarding


Insurance

Vehicles' running expenses

Electricity, gas and water

Postage, telephone and fax

Sales promotion and advertisement

Commission to selling agents

Miscellaneous expenses

NOTE

29.1

Salaries, wages and other benefits include provident fund contribution of Rupees 2.800 million (2009: Rupees 2.220 million) by the Company.

30.1

31. OTHER OPERATING EXPENSES

Auditors' remuneration

Donations

Workers' profit participation fund

Workers' welfare fund

Miscellaneous

2010

1,265

8,100

20,227

7,686

45

37,323

2009

1,045

21,000

-

-

45

22,090

NOTE

31.1

31.2

9.1

Statutory audit fee

Certifications

31.1 Auditors' remuneration

2010

1,000

265

1,265

2009

750

295

1,045

32. OTHER OPERATING INCOME

Income from financial assets:

Income from associated company :

Income from non-financial assets:

33. FINANCE COST

Mark-up/finance charges/ interest on:

Bank charges and commission

Exchange loss

Exchange gain

Gain/ (loss) on disposal of investments

Gain/ (loss) on remeasurement of fair value of investments at

fair value through profit and loss

Return on bank deposits

Dividend income

Dividend income : Security General Insurance Company Limited

Scrap sales

Gain on disposal of property, plant and equipment

Gain on sale of land classified as held for sale

Miscellaneous

Long term financing



Loss on cross currency swap

Workers' profit participation fund (WPPF)

Provident fund

2010

19,261

-

1,869

953

425

22,508

12,797

29,175

6,049

-

8,122

43,346

78,651

329,679

677,043

21,169

-

188

2,968

1,031,047

35,248

6,473

1,072,768

2009

78,350

(4,727)

(7,464)

2,237

546

68,942

15,996

30,479

1,870

8,190

1,074

41,613

126,551

397,809

575,378

24,842

196,057

164

322

1,194,572

24,616

41,042

1,260,230

NOTE

14.2

9.1




6968

Provision for current year income tax represents final tax on export sales, minimum tax on local sales and tax on income from other sources under the relevant provisions of the Income Tax Ordinance, 2001.Numeric tax reconciliation has not been presented, being impracticable.

34.1

The Chief Executive Officer and directors are provided with the Company's maintained vehicles, free medical facilities and residential telephone facilities for both business and personal use. Chief executive is also provided free furnished accommodation alongwith utilities.

Executives are provided with the Company's maintained vehicles in accordance with the Company policy.

The aggregate amount charged in these financial statements in respect of directors' meeting fee paid to 2 (2009: 2) directors was Rupees 70,000 (2009: Rupees 60,000).

The related parties comprise of subsidiaries, associated undertakings, directors of the company and their close relatives, key management personnel and staff retirement fund. Detail of transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements are as follows:

37. TRANSACTIONS WITH RELATED PARTIES

34. PROVISION FOR TAXATION

Current year:

Current

Deferred

2010

83,824

14,763

98,587

55,753

(152,618)

(96,865)

2009

NOTE

34.1


35. CASH GENERATED FROM OPERATIONS

Adjustment for non-cash charges and other items:

35.1 Working capital changes

(Increase)/ decrease in current assets:

Increase in current liabilities

Profit / (loss) before taxation

Depreciation

Finance cost

Gain on sale of property, plant and equipment

Loss on disposal of investments - at fair value through profit and

loss account

Dividend income


Gain on sale of non-current assets classified as held for sale

Gain/ (loss) on remeasurement of investments at fair value

through profit and loss

Working capital changes


Stock-in-trade

Trade debts

Advances


Other receivables


2010

376,448

371,618

1,072,768

(6,049)

-

(13,222)

(953)

-

(1,869)

(1,124,424)

674,317

(41,851)

(613,287)

(278,964)

(293,433)

12,805

(100,196)

(1,314,926)

190,502

(1,124,424)

(536,676)

369,616

1,260,230

(1,870)

4,727

(16,542)

(2,237)

(8,190)

7,464

423,691

1,500,213

(13,000)

(106,764)

290,359

67,060

(19,269)

(7,475)

210,911

212,780

423,691

2009

NOTE

35.1


36. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amounts charged in these financial statements in respect of remuneration including certain benefits to the chief executive, directors and executives of the Company are given below:

Number of persons

Managerial remuneration

Contribution to provident

Fund

Housing and utilities

Medical

Group insurance

Club subscription

Others

4,800

308

-

84

-

64

185

5,441

2010 2009 2010 2009 2010 2009

1 1 3 3 31 31

Chief Executive

-----------------------------------------------( Rupees in Thousand )------------------------------------

ExecutivesDirectors

4,800

308

-

-

185

73

-

5,366

5,157

154

87

1,246

92

-

-

6,736

4,297

99

87

1,246

59

-

-

5,788

44,856

3,005

9,021

2,586

252

-

6,096

65,816

32,715

2,410

5,458

1,849

122

-

4,132

46,686

Purchase of goods and services

Sale of goods and services

Purchase of property, plant and equipment

Sale of property, plant and equipment

Purchase of shares

Dividend income

Contribution to provident fund

Interest on provident fund

Transaction with Subsidiary Companies

Transaction with Associated Company

Post employment benefit plan

2010

484

147

1,770

419

200

12,797

20,897

2,968

2009

4,523

1,485

-

-

-

15,996

19,122

322


7170

Stitching

REASONS FOR LOW PRODUCTION

40. POST BALANCE SHEET EVENT

The plant capacity of this division is indeterminable due to multi product plants involving varying processes

of manufacturing and run length of order lots.

- Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality, interruption in gas

andelectricity supply.

- Cloth processing units working capacity was limited to actual export / local orders in hand.

- The generation of power was limited to actual demand.

In accordance with the approval of the shareholders in their Extraordinary General Meeting held on 03 May 2010 and

subsequent permission granted by the Securities and Exchange Commission of Pakistan (SECP), the Company

has, after the reporting period, issued 100,000,000 ordinary shares of Rupees 10 each otherwise than through a right

issue to Mercury Management Incorporated, Hutton Properties Limited and Zimpex (Private) Limited in accordance

with the agreement dated 10 March 2010 between the three allottees, the Company and Maple Leaf Cement Factory

Limited – subsidiary company.

38. EARNINGS / (LOSS) PER SHARE - BASIC AND DILUTED

39. PLANT CAPACITY AND ACTUAL PRODUCTION

SPINNING:

- Rawalpindi Division

There is no dilutive effect on the basic earning/ (loss) per share which is

based on:

Profit/ (loss) attributable to ordinary shares

Weighted average number of ordinary shares

Earnings/ (loss) per share

Spindles (average) installed / worked;

100% Plant capacity converted into 20s count based on 3 shifts per day

for 1,095 shifts (2009: 1,095 shifts)

Actual production converted into 20s count based on 3 shifts per day for

1,095 shifts (2009: 1,095 shifts)


100% Plant capacity converted into 20s count based on 3 shifts per day

for 1,095 shifts (2009: 1,095 shifts )

Actual production converted into 20s count based on 3 shifts per day for

1,095 shifts (2008: 1,095 shifts)

Looms installed / worked

100% Plant capacity at 60 picks based on 3 shifts per day for 1,095 shifts

(2009: 1,095 shifts)

Actual production converted to 60 picks based on 3 shifts per day for

1,072 shifts (2009: 1,092 shifts)

- Gujar Khan Division

WEAVING:

- Raiwind Division

2010

277,861

145,526,216

1.91

85,680

37,950

35,211

70,848

33,313

31,295

204

72,568

68,605

2009

(439,811)

145,526,216

(3.02)

85,834

37,945

35,298

66,068

27,732

26,318

204

72,568

68,271

(Kilograms in thousand)

(Numbers)

(Meters in thousand)

Rupees in thousand

Numbers

Rupees

Capacity at 3 shifts per day for 1,095 shifts (2009: 1,095 shifts)

Actual at 3 shifts per day for 1,095 shifts (2009: 1,095 shifts)

Annual rated capacity (based on 365 days)

Actual generation

Main engines

Gas engines

-


Actual generation

Gas engines

PROCESSING OF CLOTH :


POWER PLANT:


Raiwind Division

41,975

34,653

207,787

2,198

78,080

54,460

26,212

41,975

30,626

207,787

7,124

64,663

54,312

28,166


(Numbers)


(Numbers)

(Mega Watts)

7372

41.3 Geographical Information

41.3.1 The Company's revenue from external customers by geographical location is detailed below:

41.

SE

GM

EN

T IN

FO

RM

AT

ION

41.1

30 J

un

e 20

1030

Ju

ne

2009

30 J

un

e 20

1030

Ju

ne

2009

30 J

un

e 20

1030

Ju

ne

2009

30 J

un

e 20

1030

Ju

ne

2009

30 J

un

e 20

1030

Ju

ne

2009

SA

LES

4,82

2,12

8

3,

049,

558

3,07

9,52

3

2,

571,

181

5,47

4,51

4

4,

756,

984

(2,6

82,8

27)

(1,9

18,8

24)

10,6

93,3

38

8,

458,

899

CO

ST

OF

SA

LES

(3,5

99,1

36)

(2,8

44,8

40)

(2,6

98,0

19)

(2,1

60,6

89)

(5,0

78,2

01)

(4

,112

,288

)

2,

682,

827

1,91

8,82

4

(8

,692

,529

)

(7

,198

,993

)

GR

OS

S P

RO

FIT

1,22

2,99

2

20

4,71

8

381,

504

41

0,49

2

396,

313

644,

696

-

-

2,

000,

809

1,25

9,90

6

DIS

TR

IBU

TIO

N C

OS

T(1

6,23

4)

(1

8,12

9)

(5

7,07

6)

(5

3,78

2)

(3

24,5

08)

(392

,937

)

-

-

(397

,818

)

(464

,848

)

AD

MIN

IST

RAT

IVE

EX

PE

NS

ES

(64,

130)

(55,

961)

(60,

939)

(51,

207)

(70,

034)

(6

8,79

7)

-

-

(1

95,1

03)

(1

75,9

65)

(80,

364)

(74,

090)

(118

,015

)

(104

,989

)

(394

,542

)

(4

61,7

34)

-

-

(5

92,9

21)

(6

40,8

13)

P

RO

FIT

BE

FO

RE

TA

X A

ND

UN

ALL

OC

ATE

D IN

CO

ME

AN

D E

XP

EN

SE

S1,

142,

628

130,

628

26

3,48

9

305,

503

1,

771

182,

962

-

-

1,

407,

888

619,

093

UN

ALL

OC

ATE

D IN

CO

ME

AN

D E

XP

EN

SE

S

FIN

AN

CE

CO

ST

(1,0

72,7

68)

(1,2

60,2

30)

OT

HE

R O

PE

RAT

ING

EX

PE

NS

ES

(37,

323)

(22,

090)

OT

HE

R O

PE

RAT

ING

INC

OM

E78

,651

126,

551

PR

OV

ISIO

N F

OR

TA

XAT

ION

(98,

587)

96,8

65

(1,1

30,0

27)

(1,0

58,9

04)

PR

OF

IT /

(LO

SS

) AF

TE

R T

AX

ATIO

N27

7,86

1

(439

,811

)

41.2

Rec

on

cilia

tio

n o

f re

po

rtab

le s

egm

ent

asse

ts a

nd

liab

iliti

es

30 J

un

e 20

1030

Ju

ne

2009

30 J

un

e 20

1030

Ju

ne

2009

30 J

un

e 20

1030

Ju

ne

2009

30 J

un

e 20

1030

Ju

ne

2009

TOTA

L A

SS

ET

S F

OR

RE

PO

RTA

BLE

SE

GM

EN

T2,

399,

058

2,51

4,72

4

1,

211,

488

1,70

1,35

2

2,

973,

709

2,97

8,47

4

6,

584,

255

7,19

4,55

0

UN

ALL

OC

ATE

D A

SS

ET

S

10,

473,

044

6

,080

,989

1

7,05

7,29

9

13,

275,

539

All

segm

ent a

sset

s ar

e al

loca

ted

to r

epor

tabl

e se

gmen

ts o

ther

than

thos

e di

rect

ly r

elat

ing

to c

orpo

rate

and

tax

asse

ts.

TOTA

L LI

AB

ILIT

IES

FO

R R

EP

OR

TAB

LE S

EG

ME

NT

689,

813

84

2,79

7

2,00

5,93

7

1,

725,

080

2,60

4,78

6

5,

429,

033

5,30

0,53

6

7,

996,

910

UN

ALL

OC

ATE

D L

IAB

ILIT

IES

11,7

56,7

63

5,

278,

629

1

7,05

7,29

9

13,

275,

539

All

segm

ent l

iabi

litie

s ar

e al

loca

ted

to r

epor

tabl

e se

gmen

ts o

ther

than

trad

e an

d ot

her

paya

bles

, cor

pora

te b

orro

win

gs a

nd c

urre

nt a

nd d

efer

red

tax

liabi

litie

s.

Wea

vin

gP

roce

ssin

g a

nd

ho

me

text

ileC

om

pan

y

----

----

----

----

----

----

----

----

----

----

----

----

----

----

---

( R

u p

e e

s i

n t

h o

u s

a n

d )

---

----

----

----

----

----

----

----

----

----

----

----

----

----

----

--

Sp

inn

ing

Elim

inat

ion

of

inte

r-se

gm

ent

tran

sact

ion

s

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

-(R

u p

e e

s i

n t

h o

u s

a n

d)-

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

---

Sp

inn

ing

Wea

vin

gP

roce

ssin

g a

nd

ho

me

text

ileC

om

pan

y

Europe

America

Asia, Africa, Australia

Pakistan

2010

1,664,667

4,040,326

799,050

4,189,295

10,693,338

2009

1,714,770

3,407,655

365,008

2,971,466

8,458,899


All non current assets as at reporting date are located and operated in Pakistan.

The Company's revenue is earned from a large mix of customers.

The Company's activities expose it to a variety of financial risks: market risk (including currency risk, other

price risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk management

programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse

effects on the Company's financial performance. The Company uses derivative financial instruments to hedge

certain risk exposures.

Risk management is carried out by the Company's finance department under policies approved by the Board

of Directors. The Company's finance department evaluates and hedges financial risks. The Board provides

principles for overall risk management, as well as policies covering specific areas such as currency risk, other

price risk, interest rate risk, credit risk, liquidity risk, use of derivative financial instruments and non derivative

financial instruments and investment of excess liquidity.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in foreign exchange rates. Currency risk arises mainly from future commercial

transactions or receivables and payables that exist due to transactions in foreign currencies.

The Company is exposed to currency risk arising from various currency exposures, primarily with

respect to the United States Dollar (USD), Euro and GBP. Currently, the Company's foreign exchange

risk exposure is restricted to bank balances, the amounts receivable / payable from / to the foreign

entities. The Company uses forward exchange contracts to hedge its foreign currency risk, when

considered appropriate. The Company's exposure to currency risk was as follows:

41.3.2

41.4 Revenue from major customers

42. FINANCIAL RISK MANAGEMENT

42.1 Financial risk factors

(a) Market risk

(i) Currency risk

7574

If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD, Euro and GBP with all other variables held constant, the impact on profit after taxation for the year would have been Rupees 46.633 million, Rupees 3.993 million and Rupees Nil respectively higher / lower and the impact on loss after taxation for the previous year was Rupees 42.655 million, Rupees 1.403 million and Rupees 0.122 million respectively lower / higher, mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. In management's opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year.

Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instrument traded in the market. The Company is not exposed to commodity price risk.

The table below summarises the impact of increase / decrease in the Karachi Stock Exchange (KSE) Index on the Company's profit after taxation for the year and on equity (fair value reserve). The analysis is based on the assumption that the equity index had increased / decreased by 5% with all other variables held constant and all the Company's equity instruments moved according to the historical correlation with the index:

Sensitivity analysis

(ii) Other price risk


This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company has no significant long-term interest-bearing assets. The Company's interest rate risk arises from long term financing, liabilities against assets subject to finance lease, lease finance advance and short term borrowings. Borrowings obtained at variable rates expose the Company to cash flow interest rate risk. Borrowings obtained at fixed rate expose the Company to fair value interest rate risk.

At the balance sheet date the interest rate profile of the Company’s interest bearing financial instruments was:

(iii) Interest rate risk

Cash at banks - USD

Trade debts - USD

Trade debts - Euro

Trade debts - GBP

Trade and other payable - USD

Net exposure - USD

Net exposure - Euro

Net exposure - GBP

The following significant exchange rates were applied during the year:

Average rate

Reporting date rate

verage rate

Reporting date rate

Average rate

Reporting date rate

Rupees per US Dollar

Rupees per Euro

Rupees per GBP

2010

37

11,864

832

-

30

11,871

832

-

83.55

85.40

107.92

104.33

132.08

128.66

2009

72

10,473

245

18

26

10,519

245

18

78.73

81.10

107.74

114.54

126.45

135.05


2010 2009 2010 2009

KSE 100 (5% increase)

KSE 100 (5% decrease)

401

(401)

307

(307)

- -

- -

Index Impact on profit/ (loss) after taxationImpact on statement of other

comprehensive income

-------------------------------- (RUPEES IN THOUSAND) ------------------------------------

Long term financing



Bank balances- saving accounts

Long term financing




Fixed rate instruments

Financial liabilities

Floating rate instruments

Financial assets


2010

407,742

1,555,000

-

12,673

1,920,759

4,515,435

135,030

-

2009

549,141

1,580,000

8,017

13,891

2,200,200

3,230,471

179,174

35,922


The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rate at the balance sheet date would not affect profit or loss of the Company.

If interest rate at the year end date, fluctuates by 1% higher / lower with all other variables held constant, profit after taxation for the year would have been Rupees 65.712 million lower / higher and loss after taxation for the previous year was Rupees 56.458 million higher / lower, mainly as a result of higher / lower interest expense on floating rate borrowings. This analysis is prepared assuming the amounts of liabilities outstanding at balance sheet dates were outstanding for the whole year.

Fair value sensitivity analysis for fixed rate instruments

Cash flow sensitivity analysis for variable rate instruments

7776

(b) Credit risk

Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

Investments

Deposits

Trade debts

Accrued interest

Other receivables

Bank balances

2010

642,111

41,124

1,329,065

141

20,551

77,890

2,110,882

2009

607,610

20,060

1,050,101

122

24,176

79,576

1,781,645


The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate:

Banks

National Bank of Pakistan

Allied Bank Limited

Askari Bank Limited

Bank Alfalah Limited

Faysal Bank Limited

Habib Bank Limited

MCB Bank Limited

NIB Bank Limited

The Royal Bank of Scotland Limited

My Bank Limited

The Bank of Punjab

Meezan Bank Limited

Silk bank Limited

Standard Chartered Bank (Pakistan) Limited

United Bank Limited

Al-Baraka Islamic Bank Limited

Bank Al Habib Limited

754

32,531

7,822

1,421

4,108

67

9,907

12,313

88

30

540

319

2,945

2,309

133

2,565

38

77,890

4,656

31,292

5,703

2,536

1,872

103

12,611

11,106

76

30

1,763

-

30

837

2,611

4,350

-

79,576

AAA

AA

AA

AA

AA

AA+

AA+

AA-

AA

A-

AA-

AA-

A-

AAA

AA+

A

AA+

JCR-VIS

PACRA

PACRA

PACRA

JCR-VIS

JCR-VIS

PACRA

PACRA

PACRA

PACRA

PACRA

JCR-VIS

JCR-VIS

PACRA

JCR-VIS

JCR-VIS

PACRA

A-1+

A1+

A1+

A1+

A-1+

A-1+

A1+

A1+

A1+

A2

A1+

A-1

A-3

A1+

A-1+

A-1

A-1+

Rating 2010 2009

Short Term Long term Agency (Rupees in thousand)

InvestmentsSecurity General Insurance Company Limited

JCR-VIS 634,095 601,463

711,985 681,039

A

The Company's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 20.

Due to the Company's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing, management does not expect non-performance by these counter parties on their obligations to the Company. Accordingly the credit risk is minimal.

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. At 30 June 2010, the Company had Rupees 7.533 million available borrowing limits from financial institutions and Rupees 78.851 million cash and bank balances. Inspite the fact that the Company is in a negative working capital position at the year end, management believes the liquidity risk to be low. Following are the contractual maturities of financial liabilities, including interest payments. The amount disclosed in the table are undiscounted cash flows:

Contractual maturities of financial liabilities as at 30 June 2010

(c) Liquidity risk

1-2

Year

699,117

45,157

-

-

-

744,274

More than

2 Years

1,310,446

24,169

-

-

-

1,334,615

6 month

or less

542,361

53,450

989,594

185,259

5,796,162

7,566,826

6-12

month

398,510

32,487

-

-

471,947

902,944

Contractual

Cash

Flows

2,950,434

155,263

989,594

185,259

6,268,109

10,548,659

Carrying

Amount

-

2,328,501

135,030

989,594

289,987

6,070,435

9,813,547

------------------------------------ (Rupees in thousand) ------------------------------

Non derivative financial

liabilities:

Long term financing

Liabilities against assets

subject to finance lease


Accrued mark-up



1-2

Year

1,031,773

50,812

-

-

-

-

1,082,585

More than

2 Years

1,268,786

67,614

-

-

-

-

1,336,400

6 month

or less

506,992

35,963

36,460

989,594

185,259

4,438,253

6,192,521

6-12

month

606,169

52,959

-

-

-

553,479

1,212,607

Contractua

l Cash

Flows

3,413,720

207,348

36,460

989,594

185,259

4,991,732

9,824,113

Carrying

Amount

-

2,749,341

187,191

35,922

808136

185,259

4,810,471

8,776,320

Non derivative financial

Liabilities

Long term financing

Liabilities against assets

subject to



Accrued mark-up


------------------------------------ (Rupees in thousand) ------------------------------

7978

-

-

634,095

601,463

-

-

634,095

601,463

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial instruments held by the Company is the current bid price. These financial instruments are classified under level 1 in above referred table. The Company has no such type of financial instruments as on 30 June 2010.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value a financial instrument are observable, those financial instruments are classified under level 2 in above referred table.

If one or more of the significant inputs is not based on observable market data, the financial instrument is classified under level 3.The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments. The Company has no such type of financial instruments as on 30 June 2010.

The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at 30 June. The rates of interest / mark up have been disclosed in note 6, note 7, and note 11 to these financial statements.

The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values. The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped in to levels 1 to 3 based on the degree to which fair value is observable:

42.2 Fair values of financial assets and liabilities

42.4 a) Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders through repurchase of shares, issue new shares or sell assets to reduce debt. Consistent with others in the industry and the requirements of the lenders, the Company monitors the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital

Available for sale financial assets


As at 30 June 2010

Assets

As at 30 June 2009

Assets

Level 1 Level 2 Level 3 Total

-----------------------------(Rupees in thousand)----------------------------

Investments

Deposits

Trade debts

Interest accrued

Other receivables


As at 30 June 2010

Assets as per balance sheet

-

41,124

1,329,065

141

20,551

78,851

1,469,732

8,016

-

-

-

-

8,016


634,095

-

-

-

-

634,095

642,111

41,124

1,329,065

141

20,551

78,851

2,111,843

Loans and receivables

Through profit and

loss

Available for sale

Total

Long term financing



Accrued mark-up


Liabilities as per balance sheet


2,328,501

135,030

989,594

289,987

6,070,435

9,813,547

Financial liabilities at amortized cost

As at 30 June 2009


Investments

Deposits

Trade debts

Interest accrued

Other receivables


-

20,060

1,050,101

122

24,176

80,297

1,174,756

6,147

-

-

-

-

6,147


601,463

-

-

-

-

601,463

607,610

20,060

1,050,101

122

24,176

80,297

1,782,366

Loans and receivables

Through profit and

loss

Available for sale

Total

Long term financing




Accrued mark-up




2,749,341

187,191

35,922

808,136

185,259

4,810,471

8,776,320

Financial liabilities at amortized cost

8180

employed. Borrowings represent long-term financing, liabilities against assets subject to finance lease, lease finance advance and short-term borrowings obtained by the Company as referred to in note 6, note 7and note 11 respectively. Total capital employed includes ‘total equity’ as shown in the balance sheet plus ‘borrowings’. The gearing ratio as at year ended 30 June 2010 and 30 June 2009 is as follows:

Borrowings

Total equity

Total capital employed

Gearing Ratio

2010

8,533,966

3,361,268

11,895,234

72%

2009

,782,925

3,059,341

10,842,266

72%


43. DATE OF AUTHORIZATION FOR ISSUE

44. CORRESPONDING FIGURES

45. GENERAL

These financial statements were authorised for issue on September 29, 2010 by the Board of Directors of the Company.

No significant reclassification/ rearrangement of corresponding figures has been made.

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.

__________________ __________________


82 83

2,6281,066

406650132

45302213

767835723215231211111111111121211

1. CUIN (Incorporation Number)

2. Name of the Company KOHINOOR TEXTILE MILLS LIMITED

3. Pattern of holding of the shares held by the shareholders as at 30.06.2010

100500

1,0005,000

10,00015,00020,00025,00030,00035,00040,00045,00050,00055,00060,00065,00070,00075,00090,00095,000

100,000105,000110,000115,000125,000130,000135,000150,000155,000165,000170,000205,000210,000215,000220,000250,000255,000280,000295,000305,000320,000340,000

1101501

1,0015,001

10,00115,00120,00125,00130,00135,00140,00145,00150,00155,00160,00165,00170,00185,00190,00195,001

100,001105,001110,001120,001125,001130,001145,001150,001160,001165,001200,001205,001210,001215,001245,001250,001275,001290,001300,001315,001335,001

TotalShares Held

From ToNo. of

Shareholders

S i z e o f H o l d i n g4.

73,362310,476304,401

1,713,151990,944547,146548,833515,611353,850228,179234,446297,802387,153152,384290,604439,734132,208217,998178,21494,700

495,088201,227321,077110,074245,000126,529133,317149,999150,223160,085169,838201,156208,272215,000218,000246,081251,293553,549293,000605,291315,847338,510

0002805

PATTERN OF SHAREHOLDING

6.8993

7.4401

0.2170

0.0144

0.0017

0.0041

0.0163

0.3094

14.9023

10,040,331

10,827,332

315,847

20,937

2,500

5,930

23,643

450,216

21,686,736

84

11111211111111111111111111111

345,000400,000450,000455,000485,000495,000500,000525,000565,000650,000695,000785,000845,000880,000910,000

1,120,0001,285,0002,035,0002,365,0003,240,0003,330,0005,080,0008,045,0008,265,0009,050,000

10,045,00010,830,00022,515,00035,210,000

340,001395,001445,001450,001480,001490,001495,001520,001560,001645,001690,001780,001840,001875,001905,001

1,115,0011,280,0012,030,0012,360,0013,235,0013,325,0015,075,0018,040,0018,260,0019,045,001

10,040,00110,825,00122,510,00135,205,001

340,584400,000447,218450,216483,000988,483500,000525,000560,500645,500691,753784,047841,200877,134905,062

1,116,0001,283,0072,031,4822,362,0663,238,8713,326,3685,077,5008,040,0818,261,3669,045,940

10,040,33110,827,33222,510,63535,205,888

T O T A L

Note : The Slabs not applicable above have not been shown.

5,105 145,526,216

5 Categories of Shareholders

5.1 Directors, CEO and their spouses & minor children

Mr. Tariq Sayeed Saigol, Chairman/Director

Mr. Taufique Sayeed Saigol, Chief Executive/Director

Mr. Sayeed Tariq Saigol, Director

Mr. Waleed Tariq Saigol, Director

Mr. Kamil Taufique Saigol, Director

Mr. Zamiruddin Azar, Director

Mr. Abdul Hai Mehmood Bhaimia, Director

Mrs. Shehla Tariq Saigol, spouse of Mr. Tariq Sayeed Saigol

5.2. Associated Companies, undertakings and related parties

5.3 NIT and ICP

5.4 Banks, Development Financial Institutions, Non-Banking

Financial Institutions

5.5 Insurance Companies

5.6 Modarabas, Leasing and Mutual Funds

5.7 Shareholders holding Ten Percent or

more voting interest in the Company

5.8 General Public

5.9 Joint Stock Companies

5.10 Public Sector Companies and Corporations

5.11 Executives

5.12 Others

Grand Total :

Zimpex (Private) Limited

National Bank of Pakistan, Trustee Deptt.

IDBP (ICP UNIT)

refer 5.2 & 5.8 b

a. Individuals

b. Foreign Investor (s)

Artal Restaurant Int Limited Employees Provident Fund

Fikree Development Corporation Limited

Hussain Trustees Limited

Manage Committee of Tameer-e-Millat Foundation

Securities & Exchange Commission of Pakistan

The Deputy Administrator. Abandoned Properties

The Ida Rieu Poor Welfare Association

The Karachi Stock Exchange (Guarantee) Limited-Future Cont.

The Okhai Memon Madressah Association

Trustees Al-Abbas Sugar Mills Limited Employees Gratuity Fund

Trustees Artal Restaurants Intl Employees Provident Fund

Trustees Moosa Lawai Foundation

Trustees Nestle Pakistan Limited Employees Provident Fund

Trustees Nestle Pakistan Limited Managerial Staff Pension

United Executers & Trustee Company Limited

University of Sindh8

22,510,635

3,326,368

18,247

3,344,615

3,627,578

1,305,345

2,245,333

29,723,755

43,575,197

17,082,061

300,405

-

1,815

2,794

260

506

1

3,045

354

61,425

1

9,075

760

3,751

20,000

20,000

173

596

124,556

145,526,216

15.4684

2.2858

0.0125

2.2983

2.4927

0.8970

1.5429

20.4251

29.9432

11.7381

0.2064

-

0.0856

100.0000

1

2

21

6

8

4,944

10

88

1

-

16

5,105

No. ofShareholders Shares Held

Percentageof Capital

85

TotalShares Held

From ToNo. of

Shareholders

S i z e o f H o l d i n g

No. ofShareholders Shares Held

Percentageof Capital

Consolidated Financial Statements ofKohinoor Textile Mills Limited

86 87

We have audited the annexed consolidated financial statements comprising consolidated balance sheet of Kohinoor Textile Mills Limited (the Holding Company) and its subsidiary companies (together referred to as Group) as at 30 June 2010 and the related consolidated profit and loss account, consolidated statement of comprehensive income, consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof, for the year then ended. We have also expressed separate opinion on the financial statements of Kohinoor Textile Mills Limited. The financial

statements of the Subsidiary Companies were audited by other firms of auditors, whose

reports have been furnished to us and our opinion, in so far as it relates to the amounts included for such companies, is based solely on the reports of such other auditors. These financial statements are the responsibility of the Holding Company's management. Our responsibility is to express an opinion on these financial statements based on our audit

Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests of accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the consolidated financial statements present fairly the financial position of Kohinoor Textile Mills Limited and its subsidiary companies as at 30 June 2010 and the results of their operations for the year then ended.

As stated in note 2.1(d)(i) and 2.5 to the consolidated financial statements, the Group has changed its accounting policies and disclosures arising from standards and amendments to published approved accounting standards, with which we concur.

RIAZ AHMAD & COMPANYChartered Accountants


ISLAMABAD


AUDITORS' REPORT TO THE MEMBERSDIRECTORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

The Directors are pleased to present the audited consolidated financial statements thof the group for the year ended 30 June, 2010.

The Group has earned gross profit of Rs. 5,056 million as compared to Rs. 6,323 million of corresponding year. The group has suffered pre-tax loss of Rs. 2,193 million this year as compared to Rs. 1,454 million during the last year.

GROUP RESULTS

The overall group financial results are as follows:

2010 2009


24,440,0665,056,138

939,0613,132,244

23,812,7516,322,8183,206,1304,660,471

Gross salesGross profitProfit from operationsFinancial Charges

The subsidiary company of Kohinoor Textile Mills Limited has shown gross profit of 21.56% as compared to 32.49% of previous year.

Maple Leaf Cement Factory Limited

The Directors are grateful to the Group's members, financial institutions, customers and employees for their cooperation and support. They also appreciate the hard work and dedication of the employees working at various divisions.

ACKNOWLEDGEMENT


Taufique Sayeed SaigolChief ExecutiveLahore: September 29, 2010

88 89

2010 2009NOTE

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Surplus on revaluation of property 6 3,673,825 1,263,592Share deposit money 7 1,000,000 -

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE


CONSOLIDATED BALANCE SHEET

Issued, subscribed and paid up share capital 3 1,455,262 1,455,262Reserves 4 1,462,928 2,456,202Shareholders' equity 2,918,190 3,911,464Non controlling interest 5 2,405,263 3,669,866Equity attributable to equity holders of the Group 5,323,453 7,581,330

Authorized share capital370,000,000 ( 2009: 170,000,000)

ordinary shares of Rupees 10 each 3,700,000 1,700,000

30,000,000 ( 2009: 30,000,000) preferenceshares of Rupees 10 each 300,000 300,000

4,000,000 2,000,000

NON-CURRENT LIABILITIESLong term financing 8 4,227,075 2,745,185Redeemable capital 9 8,289,800 7,200,000Liabilities against assets subject to finance lease 10 767,748 963,133Lease finance advance - 35,922Long term deposits 11 2,739 2,580Employees' benefits 12 26,493 18,990Deferred tax 13 157,996 204,422

13,471,851 11,170,232

CURRENT LIABILITIESTrade and other payables 14 4,439,979 3,193,658Accrued mark-up 15 1,211,799 626,453Short term borrowings 16 10,131,273 9,192,793Current portion of non-current liabilities 17 1,635,888 3,648,540

17,418,939 16,661,444TOTAL LIABILITIES 30,890,790 27,831,676

CONTINGENCIES AND COMMITMENTS 18

TOTAL EQUITY AND LIABILITIES 40,888,068 36,676,598

2010 2009NOTE

ASSETS

DIRECTOR


AS AT 30 JUNE 2010

NON-CURRENT ASSETS

Property, plant and equipment 19 27,531,515 24,521,559Investment properties 20 1,720,835 1,720,835Intangible assets 21 1,774 7,332Long term loans to employees 22 3,293 5,666Long term deposits and prepayments 23 86,460 85,102

29,343,877 26,340,494

CURRENT ASSETSStores, spare parts and loose tools 24 2,753,208 3,240,141Stock -in- trade 25 2,897,831 2,430,740Trade debts 26 2,080,465 1,732,345Loans and advances 27 863,437 398,158Due from gratuity fund trust 42 - 8,184Security deposits and short term prepayments 28 137,402 171,689Interest accrued 797 1,105Other receivables 29 494,916 320,778Short term investments 30 1,114,449 1,014,173Taxation recoverable 31 396,310 236,900Cash and bank balances 32 152,453 180,229

10,891,268 9,734,442

Non-current assets classified as held for sale 33 652,923 601,66211,544,191 10,336,104

TOTAL ASSETS 40,888,068 36,676,598

90 91

CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2010

2010 2009

NOTE

DIRECTORCHIEF EXECUTIVE


SALES 34 24,440,066 23,812,751

COST OF SALES 35 (19,383,928) (17,489,933)

GROSS PROFIT 5,056,138 6,322,818

DISTRIBUTION COST 36 (3,667,408) (2,912,955)

ADMINISTRATIVE EXPENSES 37 (388,042) (326,873)

OTHER OPERATING EXPENSES 38 (197,309) (60,807)

(4,252,759) (3,300,635)

803,379 3,022,183

OTHER OPERATING INCOME 39 135,682 183,947

PROFIT FROM OPERATIONS 939,061 3,206,130

FINANCE COST 40 (3,132,244) (4,660,471)

LOSS BEFORE TAXATION (2,193,183) (1,454,341)

PROVISION FOR TAXATION 41 (113,034) 31,546

LOSS AFTER TAXATION (2,306,217) (1,422,795)

NON CONTROLLING INTEREST

Dividend on preference shares 52,794 52,794

Share in loss for the year (1,315,024) (516,554)

(1,262,230) (463,760)

LOSS AFTER TAXATION AND NON CONTROLLING INTEREST (1,043,987) (959,035)

46 (7.17) (6.59)


LOSS PER SHARE - BASIC AND DILUTED (Rupees)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2010

2010 2009




LOSS AFTER TAXATION (2,306,217) (1,422,795)

OTHER COMPREHENSIVE LOSS

104,708 (737,065)

(27,486) 193,478

77,222 (543,587)

- (571,802)

- 72,119

- (499,683)

77,222 (1,043,270)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR (2,228,995) (2,466,065)

Total comprehensive loss attributable to :

Equity holders of parent (993,274) (1,699,421)

Non controlling interest (1,235,721) (766,644)

(2,228,995) (2,466,065)

Other comprehensive income / (loss) for the year - net of tax

Adjustment of cross currency interest rate swap

Surplus / (deficit) on remeasurement of available for sale investmentDeferred tax on remeasurement of available for sale investment

Deferred tax on adjustment of cross currency interest rate swap

92 93


CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditure on property, plant and equipment (1,980,444) (1,840,294)

Payment for non current assets classified as held for sale (51,261) (190,230)

Long term loans to employees 2,373 455

Investments made (65,775) (30,225)

Return on bank deposits received 6,589 12,079

Proceeds from sale of property, plant and equipment 13,644 10,143

Proceeds from sale of investments 3,664 13,792

Sale of non current assets classified as held for sale - 25,000

Dividend received 22,653 28,259

Net cash used in investing activities (2,048,557) (1,971,021)

Cash generated from operations 43 2,717,867 5,080,447

Finance cost paid (2,546,898) (4,464,982)

Compensated absences paid (10,021) (3,744)

Workers' Profit Participation Fund paid - (25)

Funds received/ paid to gratuity fund trust 8,184 -

Long term deposits (1,358) (2,264)

Income taxes paid (346,357) (259,384)

Net cash generated from / (used in) operating activities (178,583) 350,048

CASH FLOWS FROM OPERATING ACTIVITIES

2010 2009

NOTE

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing 625,536 913,964

Redeemable capital 300,000 -

Repayment of long term financing (420,840) (1,023,619)

Lease finance advance (35,922) 35,922

Short term borrowings - net 938,480 1,828,531

Repayment of liabilities against assets subject to finance lease (175,168) (80,576)

Proceeds from share deposit money 1,000,000 -

Redeemable capital (3,400) -

Repayment of term finance certificates (599) -

Long term deposits from stockist - net 159 (2)

Dividend paid (28,882) (52,539)

Net cash from financing activities 2,199,364 1,621,681

Net increase / (decrease) in cash and cash equivalents (27,776) 708Cash and cash equivalents at the beginning of the year 180,229 179,521

Cash and cash equivalents at the end of the year 152,453 180,229


( Rupees in thousand)

CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2010

Bal

ance

as

at 3

0 Ju

ne 2

008

Tran

sfer

from

gen

eral

rese

rve

Tota

l com

preh

ensi

ve lo

ss

Div

iden

d pa

id to

non

-con

trolli

ng in

tere

st h

olde

rs

Bal

ance

as

at 3

0 Ju

ne 2

009

Tota

l com

preh

ensi

ve lo

ss

Div

iden

d pa

id to

non

-con

trolli

ng in

tere

st h

olde

rs

Bal

ance

as

at 3

0 Ju

ne 2

010

The

anne

xed

note

s fo

rm a

n in

tegr

al p

art o

f the

se c

onso

lidat

ed fi

nanc

ial s

tate

men

ts.

CH

IEF

EX

EC

UTI

VE

DIR

EC

TOR

1,45

5,26

2

- - -

1,45

5,26

2

- -

1,45

5,26

2

144,

919

- - -

144,

919

- -

144,

919

1,00

0,47

3

-

(423

,109

)

-

577,

364

50,7

13

-

628,

077

317,

277

-

(317

,277

)

- -

- - -

1,46

2,66

9

-

(740

,386

)

-

722,

283

50,7

13

-

772,

996

1,49

0,49

1

(40,

000)

- -

1,45

0,49

1

- -

1,45

0,49

1

1,20

2,46

3

40,0

00

(959

,035

)

-

283,

428

(1,0

43,9

87)

-

(760

,559

)

2,69

2,95

4

-

(959

,035

)

-

1,73

3,91

9

(1,0

43,9

87)

-

689,

932

4,15

5,62

3

-

(1,6

99,4

21)

-

2,45

6,20

2

(993

,274

)

-

1,46

2,92

8

5,61

0,88

5

-

(1,6

99,4

21)

-

3,91

1,46

4

(993

,274

)

-

2,91

8,19

0

4,48

8,98

8

-

(766

,644

)

(52,

478)

3,66

9,86

6

(1,2

35,7

21)

(28,

882)

2,40

5,26

3

10,0

99,8

73

-

(2,4

66,0

65)

(52,

478)

7,58

1,33

0

(2,2

28,9

95)

(28,

882)

5,32

3,45

3

Tota

l re

serv

esH

edgi

ng

rese

rves

Gen

eral

re

serv

e U

n-ap

prop

riate

dpr

ofit

/(los

s)

Sub

-Tot

al

Sha

re

prem

ium

Fair

valu

e re

serv

eS

ub-T

otal

Sha

re

capi

tal

Rev

enue

rese

rves

(Rup

ees

in th

ousa

nd)

Tota

l

Non

co

ntro

lling

In

tere

st

Tota

l eq

uity

Sha

re h

olde

rs' E

quity

Res

erve

sC

apita

l res

erve

s

CO

NS

OL

IDA

TE

D S

TAT

EM

EN

T O

F C

HA

NG

ES

IN E

QU

ITY

FO

R T

HE

YE

AR

EN

DE

D 3

0 JU

NE

201

0

94 95

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2010

1. THE GROUP AND ITS OPERATIONS

Holding Company1.1

Kohinoor Textile Mills Limited ("the Holding Company") is a public limited company incorporated in Pakistan under the Companies Act,1913 (now Companies Ordinance, 1984) and listed on the Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Company is situated at 42-Lawrence Road, Lahore. The Holding Company holds 50.13% (2009: 50.13%) shares of Maple Leaf Cement Factory Limited, 99.99% (2009: Nil) shares of Concept Trading (Private) Limited and indirectly holds 50.12% (2009: Nil) shares of Vital Trading (Private) Limited. The principal activity of the Holding Company is manufacturing of yarn and cloth, processing and stitching the cloth and trade of textile products.

Subsidiary Companies1.2

a) Maple Leaf Cement Factory Limited ("the Subsidiary") was incorporated in Pakistan on 13 April, 1960 under the Companies Act, 1913 (now the Companies Ordinance, 1984) as a public company limited by shares and was listed on stock exchanges in Pakistan on 17 August, 1994. The registered office of the Subsidiary is situated at 42-Lawrence Road, Lahore. The Subsidiary is engaged in production and sale of cement.

b) Concept Trading (Private) Limited ('the Subsidiary') was incorporated in Pakistan on March 11, 2010 as a trading concern. The registered office of the Company is situated at 42-Lawrence Road, Lahore.

c) Vital Trading (Private) Limited ('the Subsidiary') was incorporated in Pakistan on March 11, 2010 as a trading concern. The registered office of the Company is situated at 42-Lawrence Road, Lahore.

Basis of consolidation1.3

The financial statements of the Subsidiaries are included in the consolidated financial statements from the date control commences until the date that control ceases.

The assets and liabilities of the Subsidiaries have been consolidated on a line by line basis and the carrying value of investment held by the Holding Company is eliminated against Holding Company's share in paid up capital of the Subsidiaries.

Material intra-group balances and transactions have been eliminated.

Non controlling interest is that part of net results of the operations and of net assets of the Subsidiaries attributable to interests which are not owned by the Holding Company. Non controlling interest is presented as a separate item in the consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated:

Basis of Preparation2.1

Statement of Compliance a)

These consolidated financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

Accounting Conventionb)

These consolidated financial statements have been prepared under the historical cost convention, except for:

- modification of foreign currency translation adjustments;- revaluation of free hold land at fair value;- revaluation of investment properties at fair value;- recognition of employee retirement benefits at present value; and- measurement at fair value of certain financial assets.

Critical accounting estimates and judgmentsc)

The preparation of consolidated financial statements in conformity with the approved accounting standards require the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Group's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectation of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Group's financial statements or where judgments were exercised in application of accounting policies are as follows:

Financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques based on assumptions that are dependent on conditions existing at balance sheet date.

Useful lives, patterns of economic benefits and impairments

Estimates with respect to residual values, useful lives and pattern of flow of economic benefits are based on the analysis of the management of the Group. Further, the Group reviews the value of assets for possible impairments on an annual basis. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with a corresponding effect on the depreciation charge and impairment.

Taxation

In making the estimates for income tax currently payable by the Group, the management takes into account the current income tax law and the decisions of appellate authorities on certain issues in the past.

96 97

Impairment of investments in associated companies

In making an estimate of recoverable amount of the Group's investments in associated companies, the management considers future cash flows.

Standards and amendments to published approved accounting standards that are effective in current year

d)

IAS 1 (Revised) 'Presentation of Financial Statements' (effective for annual periods beginning on or after 01 January 2009).The revised standard prohibits the presentation of items of income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the Group presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

IFRS 7 (Amendment) ‘Financial instruments: Disclosures’ (effective for annual periods beginning on or after 01 January 2009). This amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share.

IFRS 8 'Operating Segments' (effective for annual periods beginning on or after 01 January 2009). It introduces the "management approach" to segment reporting. IFRS 8 requires presentation and disclosure of segment information based on the internal reports regularly reviewed by the Group's chief operating decision makers in order to assess each segment's performance and to allocate resources to them. Previously, the Group did not present segment information as IAS 14 limited reportable segments to those that earn a majority of their revenue from sales to external customers and therefore did not require the different stages of vertically integrated operations to be identified as separate segments. Under the management approach, the Group has determined operating segments on the basis of business activities i.e. Spinning, Weaving, Processing, Home Textile and cement. As the change in accounting policy only results in additional disclosures of segment information, there is no impact on earnings per share.

Changes in accounting policies and disclosures arising from standards and amendments to published approved accounting standards that are effective in the current year

i)

Provisions for doubtful debts

The Group reviews its receivable against any provision required for any doubtful balances on an ongoing basis. The provision is made while taking into consideration expected recoveries, if any. IAS 23 (Amendment) 'Borrowing Costs' (effective for annual periods beginning on or after 01

January 2009). It requires an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for its intended use or sale) as part of the cost of that asset. The Group's accounting policy on borrowing cost, as disclosed in note 2.14, complies with the above mentioned requirements to capitalize borrowing cost and hence this change has not impacted the Group's accounting policy.

IFRS 3 (Revised) 'Business combinations' (effective from July 1, 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisitions date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non- controlling interest in all the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. All acquisition-related costs should be expensed. This amendment does not have any effect on the Group's financial statements.

IAS 27 (Revised) 'Consolidated and separate financial statements' (effective from July 1,2009). The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in good will or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. This amendment does not have any effect on the Group's financial statements.

IAS 28 (Amendment) 'Investment in associates' (effective from January 1, 2009). An investment in associate is treated as a single asset for the purpose of impairment testing. Any impairment loss is not allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment are recorded as an adjustment to the investment balance to the extent that the recoverable amount of the associate increases. This amendment do not have any effect on the Group's financial statements.

Other amendment to published approved accounting standards that is effective in the current year

ii)

Standards, interpretations and amendments to published approved accounting standards that are effective in current year but not relevant

e)

There are other new standards, interpretations and amendments to the published approved accounting standards that are mandatory for accounting periods beginning on or after 01 July 2009 but are considered not to be relevant or do not have any significant impact on the Group's financial statements and are therefore not detailed in these consolidated financial statements.

Standard and amendments to published approved accounting standards that are not yet effective but relevant

f)

Following standard and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 01 July 2010 or later periods:

98 99

IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after 01 January 2013). IFRS 9 has superseded the IAS 39 'Financial Instruments: Recognition and Measurement'. It requires that all equity investments are to be measured at fair value while eliminating the cost model for unquoted equity investments. Certain categories of financial instruments available under IAS 39 will be eliminated. Moreover, it also amends certain disclosure requirements relating to financial instruments under IFRS 7. The management of the Group is in the process of evaluating impacts of the aforesaid standard on the Group's financial statements.

There are other amendments resulting from annual Improvements projects initiated by International Accounting Standards Board in April 2009 and May 2010, specifically in IFRS 7 'Financial Instruments: Disclosures', IFRS 8 'Operating Segments', IAS 1 'Presentation of Financial Statements', IAS 7 'Statement of Cash Flows', IAS 24 'Related Party Disclosures' and IAS 36 'Impairment of Assets' that are considered relevant to the Group's financial statements. These amendments are unlikely to have a significant impact on the Group's financial statements and have therefore not been analyzed in detail.

There are other accounting standards, amendments to published approved accounting standards and new interpretations that are mandatory for accounting periods beginning on or after 01 July 2010 but are considered not to be relevant or do not have any significant impact on the Group's financial statements and are therefore not detailed in these consolidated financial statements.

g) Standards, interpretations and amendments to published approved accounting standards that are not effective in current year and not considered relevant

Employee benefits2.2

Holding Company

The Holding Company operates an approved funded contribution provident fund covering all of its permanent employees. Equal monthly contributions are made both by the Holding Company and employees at the rate of 8.33 percent of basic salary and cost of living allowance to the fund. The Holding Company's contributions to the fund are charged to profit and loss account.

Subsidiary Company - Maple Leaf Cement Factory Limited

a)

The Subsidiary operates a defined contributory approved provident fund for all of its employees. Equal monthly contributions are made both by the Subsidiary and employees at the rate of 10% of the basic salary to the fund.

Defined contribution plan

b)

The Subsidiary operates un-funded gratuity scheme for all workers of the Company who have completed minimum qualifying period of service as defined under the respective scheme. Provisions are made to cover the obligations under the schemes on the basis of actuarial valuation and are charged to income.

Defined benefit plan

The amount recognized in the balance sheet represents the present value of defined benefit obligations as adjusted for unrecognized actuarial gains and losses.

Cumulative net unrecognized actuarial gains and losses at the end of previous year which exceeds 10% of the present value of the Company’s gratuity is amortized over the average expected remaining working lives of the employees.

c)

The Subsidiary accounts for the liability in respect of employees' compensated absences in the year in which these are earned. Provision to cover the obligations is made using the current salary level of employees.

Liability for employees' compensated absences

Taxation2.3

Current

Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years.

Deferred

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary timing differences arising from difference between the carrying amount of the assets and liabilities in the consolidated financial statements and corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the profit and loss account, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Provisions2.4

Provisions are recognized when the Group has a legal or constructive obligation as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.

100 101

Property, plant and equipment 2.5

Holding Company

Owned

Property, plant and equipment except freehold land and capital work in progress are stated at cost less accumulated depreciation and accumulated impairment losses (if any). Cost of property, plant and equipment consists of historical cost, borrowing cost pertaining to erection/construction period of qualifying assets and other directly attributable cost of bringing the asset to working condition. Freehold land is stated at revalued amount less any identified impairment loss. Capital work in progress is stated at cost less any identified impairment loss.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Holding Company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit and loss account during the period in which they are incurred.

During the current year, the Holding Company has changed its accounting policy for measurement of freehold land from cost model to revaluation model. Freehold land is now stated at revalued amount less any identified impairment loss. Previously, freehold land was stated at cost less any identified impairment loss. The effect of revaluation of freehold land has been dealt with in accordance with the requirements of International Accounting Standard (IAS) 16 "Property, Plant and Equipment". Had there been no change in this accounting policy, property, plant and equipment would have been lower by Rupees 2,410.233 million. This change in accounting policy has no impact on profit or loss.

Depreciation

Depreciation on all property, plant and equipment is charged to profit and loss account applying the reducing balance method so as to write off the cost/ depreciable amount of the asset over their estimated useful lives at the rates given in Note 19.1. Depreciation on additions is charged from the month the assets are available for use while no depreciation is charged in the month in which the assets are disposed off. The residual values and useful lives of assets are reviewed by the management, at each financial year end and adjusted if impact on depreciation is significant.

Derecognition

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit and loss account in the year the asset is derecognized.

Leased

Finance lease

Leases where the Holding Company has substantially all the risks and rewards of ownership are classified as finance lease. Asset subject to finance lease are capitalized at the commencement of the lease term at the lower of present value of minimum lease payments under the lease agreements and the fair value of the leased assets, each determined at the inception of the lease.

The related rental obligation, net of finance cost, is included in liabilities against assets subject to finance lease. The liabilities are classified as current and long term depending upon the timing of payments.

Subsidiary Company - Maple Leaf Cement Factory Limited

Owned

Property, plant and equipment, except freehold land and capital work-in-progress, are stated at cost less accumulated depreciation and impairment losses, if any. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and cost of the item can be measured reliably.

Freehold land and capital work-in-progress are stated at cost less impairment losses, if any. All expenditure connected with specific assets incurred during installation and construction period are carried under capital work-in-progress. These are transferred to specific assets as and when these are available for use.

Cost in relation to certain plant and machinery represents historical cost, exchange differences capitalized upto June 30, 2004 and the cost of borrowings during the construction period in respect of loans and finances taken for the specific projects.

Transactions relating to jointly owned assets with Pak American Fertilizers Limited (PAFL), as stated in note 19.4, are recorded on the basis of advices received from the housing colony.

All other repair and maintenance costs are charged to income during the period in which these are incurred.

Gains / losses on disposal or retirement of property, plant and equipment, if any, are taken to profit and loss account.

Depreciation is calculated at the rates specified in note 19.1 on reducing balance method except that straight-line method is used for the plant and machinery and buildings relating to dry process plant after deducting residual value. Depreciation on additions is charged from the month in which the asset is put to use and on disposals upto the month of disposal. The assets' residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.

Leased

Finance lease

Assets held under finance lease arrangements are initially recorded at the lower of present value ofminimum lease payments under the lease agreements and the fair value of the leased assets.

Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on the balance outstanding. The finance cost is charged to profit and loss account over the lease term.

Depreciation on assets subject to finance lease is recognized in the same manner as for owned assets. Depreciation of the leased assets is charged to profit and loss account.

102 103

Depreciation on leased assets is charged applying reducing balance method at the rates used for similar owned assets, so as to depreciate the assets over their estimated useful lives in view of certainty of ownership of assets at the end of lease term.

Un-allocated capital expenditure2.6

All cost or expenditure attributable to work-in-progress are capitalized and apportioned to buildings and plant and machinery at the time of commencement of commercial operations.

Investment Properties2.7

Land and buildings held for capital appreciation or to earn rental income are classified as investment properties. Investment properties are carried at fair value which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. The valuation of the properties is carried out with sufficient regularity.

Gain or losses arising from a change in the fair value of investment properties are included in the profit and loss account currently.

Intangible assets2.8

Intangible assets, which are non-monetary assets without physical substance, are recognized at cost, which comprise purchase price, non-refundable purchase taxes and other directly attributable expenditure relating to their implementation and customization. After initial recognition an intangible asset is carried at cost less accumulated amortization and impairment losses, if any. Intangible assets are amortized from the month, when these assets are available for use, using the straight line method, whereby the cost of the intangible asset is amortized over its estimated useful life over which economic benefits are expected to flow to the Group. The useful life and amortization method is reviewed and adjusted, if appropriate, at each balance sheet date.

Currently, intangible asset (computer software) is amortised using the straight-line method over a period of three years. Amortisation on additions to intangible assets is charged from the month in which an asset is put to use and on disposal upto the month of disposal.

2.9 Investments

Classification of investment is made on the basis of intended purpose for holding such investment. Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such designation on regular basis.

Investments are initially measured at fair value plus transaction costs directly attributable to acquisition, except for "investment at fair value through profit or loss" which is measured initially at fair value.

The Group assesses at the end of each reporting period whether there is any objective evidence that investments are impaired. If any such evidence exists, the Group applies the provisions of IAS 39 'Financial Instruments: Recognition and Measurement' to all investments, except investments in subsidiary companies, which are tested for impairment in accordance with the provisions of IAS 36 'Impairment of Assets'.

a)

Investments classified as held-for-trading and those designated as such are included in this category. Investments are classified as held-for-trading if they are acquired for the purpose of selling in the short term. Gains or losses on investments held-for-trading are recognised in profit and loss account.

Investments at fair value through profit or loss

b)

Investments with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long term investments that are intended to be held to maturity are subsequently measured at amortized cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation, using the effective interest method, of any difference between the initially recognized amount and the maturity amount. For investments carried at amortised cost, gains and losses are recognized in profit and loss account when the investments are derecognized or impaired, as well as through the amortisation process.

Held-to-maturity

c)

Investments intended to be held for an indefinite period of time, which may be sold in response to need for liquidity, or changes to interest rates or equity prices are classified as available-for-sale. After initial recognition, investments which are classified as available-for-sale are measured at fair value. Gains or losses on available-for-sale investments are recognized directly in statement of other comprehensive income until the investment is sold, de-recognized or is determined to be impaired, at which time the cumulative gain or loss previously reported in statement of other comprehensive income is included in profit and loss account. These are sub-categorized as under:

Available-for-sale

For investments that are actively traded in organized capital markets, fair value is determined by reference to stock exchange quoted market bids at the close of business on the balance sheet date.

Quoted

Fair value of unquoted investments is determined on the basis of appropriate valuation techniques as allowed by IAS 39 "Financial Instruments: Recognition and Measurement".

Unquoted

During the current year ended, the Holding Company has changed the accounting estimate for valuation of its unquoted available for sale investment. Fair value of unquoted, available for sale investment is now determined by using net assets based valuation method. Previously, valuation was carried out using dividend stream method. Effect of this change in accounting estimate is recognized prospectively in accordance with the requirements of International Accounting Standard (IAS) 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Had there been no change in this accounting estimate, short term investments, fair value reserve and deferred taxation would have been lower by Rupees 32.633 million, Rupees 24.067 million and Rupees 8.566 million respectively with no effect on the profit or loss.

Change in Accounting Estimate

104 105

2.13 Non-current assets classified as held for sale

Non-current assets are classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than continuous use. These are measured at lower of carrying amount and fair value less costs to sell.

2.14 Borrowing costs

Interest, mark-up and other charges on long-term finances are capitalized up to the date of commissioning of respective qualifying assets acquired out of the proceeds of such long-term finances. All other interest, mark-up and other charges are recognized in profit and loss account.

a) Revenue from local sales is recognized on dispatch of goods to customers while in case of export sales it is recognized on the date of bill of lading.

2.15 Revenue recognition

b) Dividend on equity investments is recognized when the Group's right to receive payment is established.

c) Profit on deposits with banks is recognized on time proportion basis taking into account the amounts outstanding and rates applicable thereon.

2.16 Foreign currencies

These financial statements are presented in Pak Rupees, which is the Group’s functional currency. All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date, while the transactions in foreign currency during the year are initially recorded in functional currency at the rates of exchange prevailing at the transaction date. All non-monetary items are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. Exchange gains and losses are included in the income currently.

a) Trade and other receivables

Trade debts and other receivables are carried at original invoice value less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified.

2.17 Financial instruments

Financial instruments carried on the balance sheet include investments, deposits, trade debts, advances, interest accrued, other receivables, cash and bank balances, long-term financing, liabilities against assets subject to finance lease, lease finance advance, short-term borrowings, accrued mark-up and trade and other payables etc. Financial assets and liabilities are recognized when the Group becomes a party to the contractual provisions of instrument. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition, except for “financial instrument at fair value through profit or loss” which is measured initially at fair value.

Financial assets are de-recognized when the Group loses control of the contractual rights that comprise the financial asset. The Group loses such control if it realizes the rights to benefits specified in contract, the rights expire or the Group surrenders those rights. Financial liabilities are de-recognized when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on subsequent measurement (except available for sale investments) and de-recognition is charged to the profit or loss currently. The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy of investments.

2.10 Inventories

Inventories, except for stock in transit and waste stock / rags are stated at lower of cost and net realizable value. Cost is determined as follows:

2.11 Derivative financial instruments

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are re-measured to fair value at subsequent reporting dates. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as cash flow hedges.

The Group documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the profit and loss account.

Amounts accumulated in statement of other comprehensive income are recognized in profit and loss account in the periods when the hedged item will affect profit or loss.

2.12 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values.


Useable stores, spare parts and loose tools are valued principally at moving average cost, while items considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other charges paid thereon.

Stock-in-trade

Cost of raw material, work-in-process and finished goods is determined as follows:

(i)(ii)

For raw materials: Annual average basis.For work-in-process and finished goods: Average manufacturing cost including

Materials in transit are valued at cost comprising invoice value plus other charges paid thereon. Waste stock / rags are valued at net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessarily to make a sale.

106 107

b)

Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. Any difference between the proceeds and the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest method.

Borrowings

c)

Liabilities for trade and other amounts payable are initially recognized at fair value, which is normally the transaction cost.


Impairment2.18

A financial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on the estimated future cash flow of that asset.

a) Financial Assets

An impairment loss in respect of a financial asset measured at amortized cost is calculated as a difference between its carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of available for sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

The carrying amount of assets are reviewed at each balance sheet date for impairment whenever events changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amounts. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset.

b) Non financial assets

Related party transactions2.19

Transactions and contracts with related parties are carried out at an arm's length price determined in accordance with comparable uncontrolled price method.

Segment reporting2.20

Segment reporting is based on the operating (business) segments of the Group. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to the transactions with any of the Group's other components. An operating segment's operating results are reviewed regularly by the chief executive officer to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the chief executive officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Those income, expenses, assets, liabilities and other balances which can not be allocated to a particular segment on a reasonable basis are reported as unallocated.

The Group has four reportable business segments. Spinning (Producing different quality of yarn using natural and artificial fibers), Weaving (Producing different quality of greige fabric using yarn), Processing and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles) and cement .

Transaction among the business segments are recorded at arm's length prices using admissible valuation methods. Inter segment sales and purchases are eliminated from the total.

Dividend and other appropriations2.21

Dividend distribution to the Group's shareholders is recognized as a liability in the Group's financial statements in the period in which the dividends are declared and other appropriations are recognized in the period in which these are approved by the Board of Directors.

Off setting of financial assets and liabilities2.22

Financial assets and liabilities are set off and the net amount is reported in the financial statements when there is legally enforceable right to set off and the Group intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Equity instruments2.23

These are recorded at their face value.

3. ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL

2010 2009Number of shares

2010 2009


1,596,672 1,596,672 Ordinary shares of Rupees 10 each allotted onreorganization of Kohinoor Industries Limited

26,156,000 26,156,000 Ordinary shares allotted under scheme of arrangement ofmerger of Part II of Maple Leaf Electric Company Limited

26,858,897 26,858,897 Ordinary shares allotted under scheme of arrangement ofmerger of Kohinoor Raiwind Mills Limited and KohinoorGujar Khan Mills Limited.

38,673,628 38,673,628

52,241,019 52,241,019 Ordinary shares of Rupees 10 each issued for cash

145,526,216 145,526,216

Ordinary shares of Rupees 10 each issued as bonus shares

15,967 15,967

261,560 261,560

268,589 268,589

386,736 386,736

522,410 522,4101,455,262 1,455,262

3.1 Zimpex (Private) Limited, which is an associated company, held 22,510,635 (2009:22,510,635) ordinary shares of Rupees 10 each at 30 June 2010.

108 109

4. RESERVES

Composition of reserves is as follows:

Capital:

Share premium

Fair value reserve - net of deferred tax

4.1 144,919 144,919

4.2 628,077 577,364

772,996

2010 2009NOTE (Rupees in thousand)

Revenue:

General reserve

Unappropriated profit / (loss)

1,450,4911,450,491

(760,559) 283,428

689,932 1,733,9191,462,928 2,456,202

722,283

4.1 This reserve can be utilized by the Group only for the purposes specified in section 83(2) of the Companies Ordinance, 1984.

4.2 Fair value reserve - net of deferred taxBalance as at 01 July

Add/ (less) : Fair value adjustment on investment in Security General Insurance Company Limited during the yearRelated deferred tax asset/ liability on investment in Security General Insurance Company Limited

Balance as at 30 June

577,364

68,763

(18,050)50,713

628,077

1,000,473

(573,706)

150,597(423,109)

577,364

5. NON-CONTROLLING INTEREST

Opening balance

Add: Share during the year

- Hedging reserve

- Surplus on revaluation of investment to fair value

- Loss for the year

Less : Dividend paid on preference shares

3,669,866 4,488,988

- (182,406)

26,509 (120,478)

(1,262,230) (463,760)(1,235,721) (766,644)

(28,882) (52,478)

2,405,263 3,669,866

Freehold land is now stated at revalued amount as a result of change in accounting policy from cost model to revaluation model. The revaluation of freehold land was carried out by Independent valuer M/s ARCH-e'-decon (Evaluators, Surveyors, Architects & Engineers) as at 30 March 2010. The value of land has increased by Rupees 2,410.233 million due to revaluation.

6.1

6 SURPLUS ON REVALUATION OF PROPERTY

Investment propertiesFreehold land

1,263,5926.1 2,410,233

3,673,825

1,263,592-

1,263,592


This represents amount received by Subsidiary from sponsors against future issue of shares, as per conditions of restructuring agreements as disclosed in note 8.14 and 9 to these consolidated financial statements. Security and Exchange Commission of Pakistan through its letter June 30, 2010 has allowed the Company to issue 153,846,153 shares at Rupees 6.5 per share at a discount of Rupees 3.50 per share otherwise than right upto extent of Rupees 1.00 billion to Kohinoor Textile Mills Limited, Holding company.

7.1

8 LONG TERM FINANCING

Holding company

The Bank of Punjab (BOP - 1)NIB Bank Limited (NIB - 1)NIB Bank Limited (NIB - 2)Albaraka Islamic Bank B.S.C (E.C) (AIB)Allied Bank Limited (ABL - 1) Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-1)Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-2)Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-3)Standard Chartered Bank (Pakistan) Limited (SCB-2)Standard Chartered Bank (Pakistan) Limited - Syndicated term financeAllied Bank Limited - Syndicated term financeThe Bank of Khyber - Syndicated term financePak Libya Holding Company - Syndicated term financeBank Al Falah Limited - Syndicated term financeFaysal Bank Limited - Syndicated term financeStandard Chartered Bank (Pakistan) Limited (SCB-1)Faysal Bank Limited (FBL)

46,598

139,815

223,200

41,666 113,067

21,666

20,000

187,500

175,000

200,000

568,750

100,000 50,000

500,000

300,000

20,22634,376

8.18.28.38.48.5

8.6

8.7

8.88.9

8.108.108.108.108.108.10

--

26,623107,716198,803

8,33365,094

18,055

10,000

156,250100,000

186,500543,150

95,50047,750

477,500279,750


7 SHARE DEPOSIT MONEY 1,000,000 -


7.1

110 111

Less:

Current portion shown under current liabilities 17 1,181,865 2,459,659

4,219,598 2,737,708


Subsidiary Company

Habib Bank Limited (HBL - 1)


Long term finance facility

Syndicated term finance

8.11 580,000 955,503

8.12 210,519 -

8.13 790,520 -

8.14 1,499,400 1,500,000

5,401,463 5,197,367

Other loans - Unsecured



8.15 4,794 4,794

8.16 2,683 2,683

7,477 7,477

4,227,075 2,745,185

This represents demand finance facility of Rupees 400 million, obtained for import of state of art machinery and is allowed for a period of four years with a grace period of six months. The loan is repayable in 7 equal half yearly installments commenced after conclusion of grace period. It is secured by bank's exclusive hypothecation charge on machinery imported and personal guarantees of sponsor directors. Facility amounting to Rupees 300 million carries mark up at the rate of 6 months average KIBOR plus 100 basis points (bps) and additional facility of Rupees 100 million carries mark up at the rate of 6 months average KIBOR plus 275 bps with a floor of 5% per annum, payable quarterly. On November 29, 2006 loans amounting to Rupees. 150.431 million were converted to LTF-EOP consisting of Rupees 61.725 million at 6 % per annum and Rupees 88.706 million at 7 % fixed rate of mark up.

8.1 The Bank of Punjab - (BOP-1)

This represents LTF-EOP facility of Rupees 157 million obtained for import of textile machinery for a period of three years including a grace period of six months. It is repayable in ten equal quarterly installments. It is secured by first exclusive hypothecation charge on the imported machinery and allied equipment, including installation and local component costs. It carries mark up at fixed rate of 6 % per annum.


This represents a term finance facility of Rupees 300 million under State Bank of Pakistan (LTF-EOP) scheme for a period of five years with a grace period of one year. The financing is for import of 72 Picanol Omni Plus wide width Air Jet Looms and Tying & Knotting machine plus five (5) Gen Set gas generators being part of BMR. It is repayable in equal quarterly installments, commencing after expiry of grace period. The facility is secured against first pari passu charge over fixed assets of Raiwind Division and personal guarantees of the sponsor directors. It carries fixed mark up at the rate of 7% per annum.


This represents Murabaha finance facility of Rupees 100 million, obtained for construction of buildings. The facility is allowed for a period of four years including a grace period of one year. The facility is

repayable in sixteen equal quarterly installments commenced with first payment due at the end of 15th month from the date of disbursement. It is secured by pari passu charge and hypothecation on fixed assets i.e. land and building constructed for ring spinning and stitching. It carries mark up at the rate of 3-years KIBOR plus 2% per annum with floor of 12.75% per annum.

8.4 Albaraka Islamic Bank B.S.C (E.C) (AIB)

This represents term finance facility of Rupees 300 million , obtained for import of state of art machinery

and is allowed for a period of five years with a grace period of one year. The facility is repayable in sixteen (16) equal quarterly installments commenced after conclusion of grace period. It is secured by first exclusive charge on machinery imported. Facility amounting to Rupees 100 million carries mark up at the rate of 6 months KIBOR plus 1.25% per annum, facility of Rupees 125 million carries mark up at the rate of 6 months KIBOR plus 1.75% per annum and facility of Rupees 75 million carries mark up at the rate of 6 months KIBOR plus 2.50% per annum with no floor and cap. On December 28, 2006 loans amounting to Rupees 124.732 million were converted to LTF-EOP at 7% per annum fixed rate of mark-up.

8.5 Allied Bank Limited (ABL-1 )

This represents the LTF-EOP facility of Rupees 65 million for import of textile machinery and is allowed

for a period of five years with a grace period of six months. The facility is repayable in eighteen (18) equal quarterly installments commenced from February 19, 2006. It is secured by first exclusive charge on imported machinery. It carries mark up at a fixed rate of 7% per annum.


This represents a term finance of Rupees 40 million under State Bank of Pakistan (LTF-EOP) scheme at

subsidized and fixed rate of mark up of 7% per annum. The financing is for import of warping and sizing machines being part of BMR. This facility for a period of five years with a grace period of one year and is repayable in equal quarterly installments.


This represents term finance facility of Rupees 250 million obtained for debt reprofiling for a period of

five years including grace period of one year. The facility is repayable in 8 equal six monthly installments. It is secured by first pari passu charge by way of hypothecation on all present and future plant and machinery of the Company and by way of mortgage on land measuring 121 acres, 2 kanals and 1 marla, situated at main Peshawar Road, Rawalpindi with 25% margin. Initially ranking charge will be created which will be upgraded within 90 days from the date of disbursement. The facility carries mark up at the rate of 3 months KIBOR plus 170 bps per annum with quarterly repricing effective from March 03, 2008.


This represents the term finance facility of Rupees 200 million, obtained for the purpose of financing the

unwinding cost of cross currency swap deal with the bank and is allowed for a period of two years. The facility is payable in eight equal quarterly installments. It is secured by ranking charge of Rupees 266.666 million on land of Kohinoor Textile Mills Limited situated at Rawalpindi. It carries mark up at the rate of 3-months average KIBOR plus 2.75% per annum with no floor and cap.

8.9 Standard Chartered Bank (Pakistan) Limited (SCB-2)

112 113

Syndicated Term Finance Syndicated Finance of Rupees 1.750 billion was arranged through Standard Chartered Bank (Pakistan) limited (SCBL) to swap highly priced loans. Long term facility was arranged and availed in

Islamic and conventional mode of financing. Standard Chartered Bank (Pakistan) Limited (Arranger), Allied Bank Limited and Bank of Khyber disbursed Rupees 868.750 million under Islamic mode of financing whereas Bank Alfalah Limited, Faysal Bank Limited and Pak Libya Holding Company disbursed Rupees 850 million under conventional means of financing. Tenor of the loan was 5 years including one year grace period and was repayable in 16 equal quarterly installments. During the year, the Company has entered into supplimental to its syndicated term finance facility agreement where by the repayment schedule of the purchase price has been modified. Now the loan is repayable in twenty four installments within a tenor of six years . It is secured by first pari passu charge over the fixed assets of the Company including surplus land and buildings at Peshawar Road, Rawalpindi. It carries mark-up at 3 months average KIBOR plus 150 bps to be repriced at the end of each quarter.

Original term finance facility amounting to Rupees 1.160 billion (equivalent to Japanese Yens 1.974 billion approximately) was obtained from HBL by Subsidiary, in different tranches as per agreement

entered into February 11, 2008, to finance the Waste Heat Recovery Plant. During the current financial year the Subsidiary, under the Long Term Finance Facility - Export Oriented Project (LTFF-EOP) Scheme of State Bank of Pakistan, has entered into restructuring agreement with HBL dated February 18, 2010. As per terms of restructuring agreement HBL has transferred amounting Rupees 580 million to new Long Term Finance Facility (LTFF) as disclosed in note 8.13 to these consolidated financial statements. The remaining principal balance amounting Rupees 580 million is repayable in nine semi annual installments commencing from June 2010.

This facility carries mark-up at the rate of 6-months KIBOR plus 1.00%, effective mark up rate ranging from 13.43% to 14.26% (2009: 15.69% to 18.20%) per annum payable on quarterly basis in arrears. The finance facility is secured against first pari passu equitable mortgage/hypothecation charge of Rupees 2.250 billion on all present and future fixed assets of the Subsidiary (including land measuring 2,097 Kanals and 5 Marlas situated at Dadu Khel Pakka Sharki, Mianwali) and personal guarantees of directors of the Subsidiary.


During current financial year, the Subsidiary has obtained this term finance facility having sanctioned limit amounting Rupees 500.000 million from HBL for financing the Waste Heat Recovery Plant. The

tenor of this term finance facility is six years including a grace period of one year. The Subsidiary, under the Long Term Finance Facility - Export Oriented Project (LTFF-EOP) Scheme of State Bank of Pakistan, has entered into restructuring agreement with HBL dated February 18, 2010. As per terms of restructuring agreement HBL has transferred amounting to Rupees 210.519 million to new Long Term Finance Facility (LTFF) as disclosed in note 8.13 to these consolidated financial statements. The remaining principal balance of this term finance facility amounting to Rupees 210.519 million is repayable in nine semi annually installments commencing from July 2010.

This facility carries mark-up at the rate of 6-months KIBOR plus 1.00% (effective mark-up rate ranging from 12.88% to 20.00%) per annum payable on quarterly basis in arrears. This finance facility is secured against first pari passu hypothecation/mortgage charge of Rupees 2.250 billion on all present and future assets of the Subsidiary (including land measuring 2,097 Kanals and 5 Marlas situated at Dadu Khel Pakka Sharki, Mianwali) and personal guarantees of directors of the Subsidiary Company.


8.10

8.11

8.12

This facility has been created under the terms of restructuring agreement with HBL as disclosed in note 8.11 and 8.12 to these consolidated financial statements. Tenor of this LTFF is four and a half years. The principal amount of this LTFF is repayable in nine semi annual installments commencing from June 2010. The facility carries mark-up at the rate of 9.7% per annum payable on quarterly basis in arrears. This finance facility is secured against first pari passu equitable hypothecation/mortgage charge of Rupees 2.250 billion on all present and future fixed assets of the Subsidiary (including land measuring 2,097 Kanals and 5 Marlas situated at Dadu Khel Pakka Sharki, Mianwali) and personal guarantees of the directors of the Subsidiary.

Long term finance facility

The Subsidiary has obtained syndicated term finance facility during the year ended June 30, 2008. During the current financial year the Company has arranged restructuring of syndicated term finance facility and entered into Second Addendum dated March 30, 2010 through lead arranger and investment agent Allied Bank Limited (ABL).

The salient terms of this syndicated term finance facility, as per Second addendum, are as follows:

Syndicated Term Finances

Allied Bank Ltd. (ABL)

Banks and DFIs

Rupees 1.500 billion

9 Years including Grace period

Grace period 2.75 years ; Repayment- 6.25 years

For half year ended December 2009 at mark up rate 15.4%

From December 2009 onwards: 3 months KIBOR plus 100 bps

Mark up to increase to 3 months KIBOR plus 170 bps after 5 years or complete settlement of deferred

mark up, whichever is later.

Mark up due in December 2009 to be paid by the Subsidiary on completion of the restructuring

agreement.

Accrued mark up from December 2009 to March 2011 will be converted into interest free debt and

will be paid in 24 equal quarterly installments starting in March 2012 and ending in December 2017.

Token mark up payment of 0.5% of the deferred mark up amount will be paid on installment amount.

- Lead arranger and agent bank

- Lenders

- Facility amount

- Tenor

- Mark-up rate

Restructuring conditions:

(a)

(b)

8.13

8.14

Accrued mark up from March 2011 to June 2011 will be paid in September 2011.

Regular mark up payments will commence from September 2011 and will be payable on due dates.

114 115

36 quarterly installments will be paid as per following schedule. First 10 quarterly installments are just

token payments.

- Principal repayment

Rupees in million

0.30

37.50

44.50

56.00 70.00

181.00

Period

September 2015 - June 2016



September 2018 - December 2018

March 2010 - June 2012


December 2018

- Final maturity

First pari passu charge over all present and future fixed assets of the Company amounting to Rupees

3.333 billion and pledge of investment in shares of Security General Insurance Company Limited.

- Security

Redeemable Capital Sukuk / Syndicate members would be represented on board by one seat. The

process would be initiated right after completion of restructuring agreement and depending upon

regulatory formalities the process would be completed as soon as possible but not later than the next

elections due in December 2010. The representative shall have a minimum of 10 years of professional

experience to add depth to the board. The representative would be the member of the audit committee

of the board and would be considered to be its Chairman at the discretion of the board.

(b)

- Faysal Bank Limited

- Pak Libya Holding Company (Private) Limited

- MCB Bank Limited

- Arif Habib Bank Limited

- Pak Brunei Investment Company Limited

- Askari Bank Limited

- Soneri Bank Limited

- HSBC Bank Middle East Limited (formerly The Hong Kong and Shanghai Banking Corporation Limited)

2010 2009

359,856 360,000

239,904 240,000

149,940 150,000

104,958 105,000

- 105,000

89,964 90,000

89,964 90,000

- 90,000


PKR 1.000 billion to be injected at the completion of restructuring agreement as sponsor's loan

which may be converted into Equity / Preference Shares following regulatory approvals. Preference

dividend to be capped at 10% per annum. Please refer to note 7 to these consolidated financial

statements.

(a)

- Further conditions as per rescheduling

A civil suit has been filed by KSML for recovery of disputed liability which is being contested by the Holding Company.


- Saudi Pak Industrial and Agricultural Investment Company Limited

- The Bank of Punjab

- First Women Bank Limited

- Atlas Bank Limited.

- Allied Bank Limited

- The Bank of Khyber 59,976 60,000

59,976 60,000

59,976 60,000

59,976 60,000

29,988 30,000

194,922 -

1,499,400 1,500,000

2010 2009


The balance is an old one, un-reconciled, unconfirmed and disputed.


Current portion of long term liabilities include overdue installments amounting to Rupees 263.696 million (2009: Nil)

9 REDEEMABLE CAPITAL - Secured

Islamic Sukuk certificates under musharaka agreement

Opening balance

Add: Sukuk certificates issued during the year

Less: Sukuk certificates paid during the year

Less: Current portion shown under current liabilities 17

2010 2009

(Rupees in thousand)NOTE

8,000,000

300,000

8,300,000

3,400

6,800

8,289,800

8,000,000

-

8,000,000

800,000

7,200,000

The Company has issued Islamic Sukuk Certificates under Musharaka agreement amounting to Rupees 8.000 billion during the year ended June 30, 2008. During the current financial year the Company has arranged restructuring of issued Sukuk Certificates and entered into First Addendum with Investment Agent Allied Bank Limited (ABL). During the year, the Company has issued new Sukuk Certificates (as Bridge Finance) to existing Sukuk lenders amounting to Rupees 300.000 million.

8.15

8.16

8.17

116 117

Rentals are payable quarterly in arrears calculated on a 365 days year basis on

the outstanding Musharaka Investment of the investors. The first such rental

payment will fell due of six months from the date of first contribution and after

rescheduling , after every 3 months. Rentals, during the year, have been

calculated at mark-up rates ranging from 13.20% to 15.44% (2009: 14.85% to

17.37%) per annum.

The Sukuk have been issued under section 120 "issue of securities and

redeemable capital not based on interest" of the Companies Ordinance 1984.

The Sukuk Certificates have been registered and inducted into the Central

Depository System ("CDS") of the Central Depository Company of Pakistan

("CDC").

First Pari passu charge over all present and future fixed assets of the Company

amounting to Rupees 10.667 billion and pledge of investment in shares of

Security General Insurance Company Limited.

Allied Bank Limited

The facility as approved by Meezan Bank Limited, shariah advisor of the issue,

is as follows:

Investors (as Investor Co-owners) and the Company (as managing Co-

owner) have entered into a Musharaka Agreement as partners for the

purpose of acquiring Musharaka assets from the Company (acting as

Seller) and jointly own these Musharaka assets.

Investors have appointed ABL to act as Investor Agent for the Sukuk Issue.

Investor co-owners have contributed their share in the Musharaka in cash

that has been utilised by managing co-owner for acquiring Musharaka

assets. Managing co-owner has contributed its Musharaka share in kind.

Upon acquisition of Musharaka assets, Investor Agent and managing co-

owner have executed Assets Purchase Agreement with the Company

(acting as Seller).

The Company (as Issuer) has issued Sukuk Certificates to Investors that

represent latter's undivided share in the Musharaka assets.

Investors have made the usufruct of their undivided share in the

Musharaka assets available to the Company against rental payments

linked to the rental bench marked.

The Company will purchase Musharaka share of investors on quarterly

basis after expiry of 2.75 years from the rescheduling date.

As Sukuks have been induced into Central Depository Company (CDC),

transfers are made in accordance with Central Depository Act , 1997 and

other applicable CDC regulations.

- Transaction structure

(a)

(b)

(c)

(d)

(e)

(f)

(g

- Sell Down/ Transferability

Allied Bank Limited (ABL)

Meezan Bank Limited

Balance sheet reprofiling and replacement of conventional debts with

Shariah Compliant Financing.

Banks, DFIs, NBFIs and any other persons.

Rupees 8.000 billion9 Years including grace period of 2.75 years and repayment is to be

made in 6.25 years.

Rupees 300.000 million2 years

For half year ended December 2009 at the rate 15.4%From December 2009 onwards: 3 months KIBOR plus 100 basis point per cent

(bps)Mark up to increase to 3 months KIBOR plus 170 bps after 5 years or complete

settlement of deferred mark-up, whichever is later.

Mark up due in December 2009 has been paid by the Company on

completion of the restructuring agreement. Accrued mark up from December 2009 to March 2011 will be converted into

interest free debt and will be paid in 24 equal quarterly installments starting

March 2012 ending December 2017. Token mark up payment of 0.5% of the

deferred mark up amount will be paid on the installment amount.

Accrued mark up from March 2011 to June 2011 will be paid in September 2011.

Regular mark up payments will commence from September 2011 and will be payable on due dates.

Base rate is average 3 months KIBOR prevailing on the base rate setting date.

36 quarterly installments will be paid as per following schedule. 1st 10 quarterly installments are just token payments.

(a)

(b)

1.70

200.00

237.50

300.00

375.00

966.50

Rupees in million


March 2010 - June 2012



September 2017 - June 2018September 2018 - December 2018

Period

The salient terms and conditions of secured Sukuk issue of Rupees 8.300 billion made by the Company are detailed below:

118 119

2010 2009

NOTE

10. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE


1,406,886 1,601,249

161,915 214,505

30,000 34,730

1,214,971 1,352,014

Minimum lease payments

Less: Un-amortized finance charges

Less: Security deposits of subsidiary

Present value of minimum lease payments

Less: Current portion shown under current liabilities 17 447,223 388,881

767,748 963,133

The present value of minimum lease payments has been discounted at an implicit interest rate ranges from 6.00% to 18.18% (2009: from 4.72% to 18.18%) per annum to arrive at their present value.

10.1

The lease rentals are payable in monthly, quarterly and half yearly installments. In case of any default an additional charge at the rate of 0.1 percent per day shall be payable. Taxes, repairs, replacements and insurance costs are to be borne by the Group. The lease agreements carry renewal and purchase option at the end of the lease term. There are no financial restrictions in lease agreements. These are secured by deposit of Rupees 54.841 million (2009: Rupees 59.571 million) included in long term security deposits, demand promissory notes, personal guarantees and pledge of sponsors' shares in public limited companies.

10.2

PKR 1.000 billion to be injected at the completion of restructuring

agreement as sponsor's loan which may be converted into Equity /

Preference Shares following regulatory approvals. Preference dividend to

be capped at 10% per annum. Please refer note 7 to these consolidated

financial statements.

To cover partial cash deficit projected in half year ended June 2010,

existing Sukuk lenders to disburse 2 years bridging of PKR 300.000 million

(as Bridge Finance) simultaneously with the payment of December 2009

mark up. This would be repaid in bullet in 2 years at the rate of 3 months

KIBOR plus 100 bps, however, mark up payment would be current and on

quarterly basis. It will be secured against ranking charge on fixed assets

and specific properties comprising of 393 kanals at Kala Shah Kaku and

additional piece of land at Faisalabad. The security outside the Subsidiary

will have a minimum value of PKR 400.000 million.

Redeemable Capital Sukuk / Syndicate members would be represented

on board by one seat. The process would be initiated right after completion

of restructuring agreement and depending upon regulatory formalities the

process would be completed as soon as possible but not later than

the next election due in December 2010. The representative shall have a

minimum of 10 years of professional experience to add depth to the board.

The representative would be the member of the audit committee of the

board and would be considered to be its Chairman at the discretion of the

board.

(a)

(b)

(c)

- Further conditions as per rescheduling

Minimum lease payments and present value of minimum lease payments are regrouped as under:10.3

Minimum Minimum

lease lease

payments payments

Present value Present value

of minimum of minimum

lease lease

paymentspayments

20092010

Due not later than one year

Due later than one year but not later than five years

--------------------- (Rupees in thousand)---------------------

388,881

963,133

1,352,014

483,973

1,117,276

1,601,249

447,223

767,748

1,214,971

541,505

865,381

1,406,886

11. LONG TERM DEPOSITS

These represent interest-free security deposits from stockists and are repayable on cancellation or withdrawal of the dealerships. These are being utilized by the Subsidiary in accordance with the terms of dealership agreements.

These represent amounts payable against un-availed leaves of employees.12.1

13. DEFERRED TAX

This comprises of following :

Deferred tax liability on taxable temporary differences in respect of :

- Accelerated tax depreciation allowance- Surplus on revaluation of investment

2,844,401 282,194

2,927,122254,708

3,126,595 3,181,830

2010 2009

NOTE

12. EMPLOYEES' BENEFITS


19,629 18,990

6,864 -

Employees' compensated absences

Gratuity fund

12.1

42

26,493 18,990

Deferred tax asset on deductible temporary differences in respect of:

- Lease finances- Unused tax losses- Employees' compensated absences- Minimum tax recoverable against normal tax charge in future years

63,8262,818,229

2,968,599

2,977,408

56,1542,782,588

4,459125,398

4,54790,806

157,996 204,422

120 121

14. TRADE AND OTHER PAYABLES

Creditors

Bills payable - secured

Accrued liabilities

Security deposits, repayable on demand

Advances from customers

Contractors' retention money

Royalty and excise duty payable

Workers' profit participation fund

Workers' welfare fund

Excise duty payable

Payable to employees' provident fund trust

Unclaimed dividend

Withholding tax payable

Sales tax payable

Others

2010 2009

NOTE

1,736,200 1,272,913

785,705 837,321

647,792 311,536

41,705 33,153

239,813 170,392

45,813 10,376

69,688 11,345

14.1 21,669 1,254

7,686 -

717,549 442,106

2,831 7,856

4,214 4,214

12,761 5,163

48,846 71,512

57,707 14,517

4,439,979 3,193,658


The movement in deferred tax assets and liabilities during the year without taking into consideration the off setting balances within the same tax jurisdiction is as follows:

13.1

Accelerated

tax

depreciation

allowance

Surplus on

revaluation of

investment

Unrealized

gain on

derivative

financial

instrument

TotalLease

finances

Unused tax

losses

Employees'

compensated

absences

Minimum

tax

recoverable

against

normal tax

charge

Total

Balance as at July 01, 2008 3,328,669

448,187

72,119

3,848,975

132,131

2,976,535

4,536

114,133

3,227,335

621,640

Charged to other comprehensive income -

(193,479)

(72,119)

(265,598)

-

-

-

-

(265,598)

Charged to profit and loss account (401,547)

-

-

(401,547)

(68,305)

(158,306)

11

(23,327)

(249,927)

(151,620)

Balance as at June 30, 2009 2,927,122

254,708

-

3,181,830

63,826

2,818,229

4,547

90,806

2,977,408

204,422

Charged to other comprehensive income -

27,486

-

27,486

-

-

-

-

27,486

Charged to profit and loss account (82,721) - - (82,721) (7,672) (35,641) (88) 34,592 (8,809) (73,912)

Balance as at June 30, 2010 2,844,401 282,194 - 3,126,595 56,154 2,782,588 4,459 125,398 2,968,599 157,996

Deferred tax liability Deferred tax assets

Net liability/

(asset)

----------------------------------------------------------------Rupees in thousand--------------------------------------------------------------

1,254 1,279

20,227 -

188 164 - (189)

21,669 1,254

14.1 Workers' profit participation fund

Balance as on 01 July

Add: Provision for the year

Less: Payment during the yearAdd: Interest for the year

The Group retains workers’ profit participation fund for its business operations till the date of allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers Participation) Act, 1968 on funds utilized by the Group till the date of allocation to workers.

14.2

15. ACCRUED MARK-UP

Long term financing

Redeemable capital



2010 2009

NOTE

276,739 104,617

622,378 237,007

261,088 240,698

51,594 44,131

1,211,799 626,453


16.1

16.2

16.3

16.4

From banking companies - Secured

16. SHORT TERM BORROWINGS

Short term running finance

Other short term finances

State Bank of Pakistan (SBP) refinances

Temporary bank overdraft

6,047,173 5,244,278

2,200,553 1,968,863

1,555,000 1,580,000

328,547 399,652

10,131,273 9,192,793

The running finance facilities are sanctioned by various banks aggregate to Rupees 6,152 million (2009: Rupees 5,713 million). The rates of mark-up range from 3.23% to 25.00% (2009: from 7.50% to 18.50%). These arrangements are secured by pledge of raw material, charge on current assets of the Group including hypothecation of work-in-process, stores and spare parts, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors.

16.1

The other finance facilities are sanctioned by various banks aggregate to Rupees 3,638 million (2009: Rupees 2,348 million). The rates of mark-up range from 6.63% to 18.00% (2009: from 6.08% to 18.48%). These arrangements are secured by pledge of raw material, charge on current assets of the Holding Company including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors.

16.2

The export refinance facilities sanctioned by various banks aggregate to Rupees 1,665 million (2009: Rupees 2,950 million). The rates of mark-up range from 6.50% to 8.50% (2009: 7.50% per annum). These arrangements are secured by way of charge on current assets of the Holding Company and personal guarantees of the sponsor directors.

16.3

These have arisen due to issuance of cheques for amounts in excess of the balance with banks which will be presented for payment in subsequent period.

16.4

122 123

17. CURRENT PORTION OF NON-CURRENT LIABILITIES

Long term financing - Secured 8 1,181,865 2,459,659

Redeemable capital 9 6,800 800,000

Liabilities against assets subject to finance leases 10 447,223 388,881

1,635,888 3,648,540

2010 2009

NOTE (Rupees in thousand)

18. CONTINGENCIES AND COMMITMENTS

Holding company

18.1 Contingencies

a) The Company has filed an appeal before Honorable Appellate Tribunal Inland Revenue, Lahore for tax year 2003 under section 129/132 of Income Tax Ordinance, 2001, which is pending adjudication. The tax loss was restricted to Rupees 27.540 million against declared loss of Rupees 122.933 million.

In addition to the above, another appeal for tax year 2003 against order under section 221 dated 24 January 2009, on the disallowance of depreciation expense of Rupees 62.665 million has been filed before Honorable Appellate Tribunal Inland Revenue which is pending adjudication. This is a cross appeal. Although the learned Commissioner Inland Revenue (Appeals) has already annulled the order under section 221 of the Income Tax Ordinance, 2001, vide order dated 30 July 2009, the Taxation Officer has illegally repeated the original assessment. Therefore, an appeal has also been filed before Commissioner Inland Revenue under section 187 of Income Tax Ordinance, 2001 for tax year 2003, the appellate order of which is pending. The revenue involved on account of penalty was Rupees 17.484 million. The Company has strong grounds and is expecting favourable outcome.

b) The Company has filed an appeal before the Honorable Appellate Tribunal Inland Revenue under section 122(5A) / 122(1) / 129 of Income Tax Ordinance, 2001 for tax year 2004 which is pending adjudication. The loss for the year has been assessed at Rupees 255.684 million creating refund of Rupees 7.498 million.

c) The Company and the tax authorities have filed appeals before different appellate authorities regarding sales tax matters. Pending the outcome of appeals filed by the Company and tax authorities, no provision has been made in these financial statements which on the basis adopted by the authorities would amount to Rupees 33.473 million (2009: 33.473 million), since the Company has strong grounds against these assessments framed by the tax authorities.

d) The Company has filed recovery suits in civil courts of Rupees 4.589 million against various suppliers and customers for goods supplied by/ to them. Pending the outcome of the cases, no provision there against has been made in these financial statements since the Company is confident about favourable outcome of the cases.

e) Four cases are pending before the Punjab Labour Appellate Tribunal, Shadman 1, Lahore regarding the reinstatement into service of four employees dismissed from their jobs. No provision has been made in these financial statements since the Company is confident about favourable outcome of the cases.

f) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Company, to various institutions and corporate bodies aggregate Rupees 248.962 million as at 30 June, 2010 (2009: Rupees 319.430 million)

Subsidiary company

a) The Subsidiary has filed writ petitions before the Lahore High Court (LHC) against the legality of judgment passed by the Customs, Excise & Sales Tax Appellate Tribunal whereby the Company was held liable on account of wrongful adjustment of input sales tax on raw materials and electricity bills; the amount involved pending adjudication before the LHC amounting to Rupees13.252 million. No provision has been made in these consolidated financial statements in respect of the aforementioned matter as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

b) The Subsidiary has filed an appeal before the Customs, Central Excise and Sales Tax Appellate Tribunal, Karachi against the order of the Deputy Collector Customs whereby the refund claim of the Subsidiary amounting to Rupees 12.350 million was rejected and the Subsidiary was held liable to pay an amount of Rupees 37.051 million by way of 10% customs duty allegedly leviable in terms of SRO 584(I)/95 and 585(I)/95 dated July 01, 1995. The impugned demand was raised by the Department on the alleged ground that the Subsidiary was not entitled to exemption from payment of customs duty and sales tax in terms of SRO 279(I)/94 dated April 02, 1994.

The LHC, upon the Company's appeal, vide its order dated November 06, 2001 has decided the matter in favour of the Subsidiary; however, the Collector of Customs has preferred a petition before the Supreme Court of Pakistan, which is pending adjudication. No provision has been made in these consolidated financial statements in respect of the above stated amount as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

c) The Federal Board of Revenue (FBR) has filed an appeal before the Supreme Court of Pakistan against the judgment delivered by the LHC in favour of the Subsidiary in a writ petition. The Subsidiary, through the said writ petition, had challenged the demand raised by the FBR for payment of duties and taxes on the plant and machinery imported by the Company pursuant to the exemption granted in terms of SRO 484 (I) / 92 dated May 14, 1992. The FBR, however, alleged that the said plant & machinery could be locally manufactured and duties and taxes were therefore not exempt. A total demand of Rupees 1.387 billion was raised by the FBR out of which an amount of Rupees 269.328 million was deposited by the Subsidiary as undisputed liability.

As regards the balance disputed amount, the matter was decided in favour of the Subsidiary as per the judgment of LHC. After preferring the appeal before the Supreme Court of Pakistan, the matter has been referred to ADRC, Islamabad. No provision has been made in these consolidated financial statements in respect of the aforementioned disputed demands aggregating Rupees 1.118 billion as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

d) The Customs Department has filed an appeal before the Supreme Court of Pakistan against the judgment of Sindh High Court, which held that dump trucks were part of plant and machinery and the Tribunal had rightly subjected them to concessionary rate of duty. The Subsidiary had paid excess customs duties amounting Rupees 7.347 million on these trucks. The appeal is pending adjudication before the Supreme Court of Pakistan. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

124 125

e) The Subsidiary has filed an appeal before the Supreme Court of Pakistan against the judgment of the Division Bench of the High Court of Sindh at Karachi. The Division Bench, by judgment dated September 15, 2008, has partly accepted the appeal by declaring that the levy and collection of infrastructure cess / fee prior to December 28, 2006 was illegal and ultra vires and after December 28, 2006, it was legal and the same was collected by the Excise Department in accordance with law. The appeal has been filed against the declaration that after December 28, 2006, the Excise Department has collected the infrastructure cess / fee in accordance with law. The Province of Sindh and Excise and Taxation Department has also preferred appeal against the judgment decided against them. The Supreme Court has consolidated both the appeals.

The total financial exposure of the Subsidiary involved in the case amounts to Rupees 144.378 million. In the event of an adverse decision in appeal, the guarantees aggregating Rupees 145.700 million furnished by the Company will be encashed by the Government of Sindh. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

f) Competition Commission of Pakistan (the Commission), vide order dated August 27, 2009, has imposed penalty on 20 cement factories of Pakistan at the rate of 7.5% of the turnover value as disclosed in the last financial statements. The Commission has imposed penalty amounting Rupees 586.187 million on the Company. The Commission has alleged that provisions of section 4(1) of the Competition Commission Ordinance, 2007 have been violated. However, after the abeyance of Islamabad High Court pursuant to the judgment of Hon'ble Supreme Court of Pakistan dated July 31, 2009, the titled petition has become in fructuous and the Subsidiary has filed a writ petition no. 15618/2009 before the Lahore High Court and the next date of hearing is September 16, 2010. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

g) The Additional Collector, Karachi has issued show cause notice alleging therein that the Subsidiary has wrongly claimed the benefits of SRO No. 575(I)/2006 dated June 05, 2006 on the import of pre-fabricated buildings structure. Consequently, the Subsidiary is liable to pay Government dues amounting Rupees 5.552 million. The Subsidiary has submitted reply to the show cause notice and currently proceedings are pending before the Additional Collector. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

h) The custom department has filed an appeal against the judgment dated 19/05/2009 passed in favour of the Subsidiary pursuant to which the Subsidiary is not liable to pay custom duty amount of Rupees 589,998/- relating to import of some machinery vide L/C No. 0176-01-46-518-1201 in terms of SRO 484(1)/92 dated 14/05/1992 and SRO 978(1)/95 dated 04/10/1995. The appeal is pending before the Honourable Lahore High Court.

i) The Subsidiary has preferred an appeal against the order in original No. 576/99 dated 18/09/1999 whereby the company was denied the benefit of SRO 484(1)/92 dated 14/05/1992 and SRO 978(1)/95 dated 04-10-1995. Accordingly the demand of Rupees 806,558/- was raised against the Subsidiary. Appeal was dismissed by Central Excise and Sales Tax Tribunal on 19/05/2009. The Subsidiary has filed petition before the Honourable Lahore High Court, which is pending adjudication. A rectification application under section 194 is also pending before the Customs Federal Excise and Sales Tax, Appellate Tribunal beside the customs reference. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

j) Through order in original No. 18/2009 dated December 24, 2009 ('ONO'), the Additional Commissioner Inland Revenue, (Legal), Large Taxpayers Unit, Lahore ('ACIR - Legal') finalized the adjudication proceedings in respect of audit conducted by departmental auditors and raised a demand of principal Sales Tax and Federal Excise duty ('FED') aggregating to Rupees 336.738 million along with default surcharge and penalties. The company has preferred appeals against this exparte order under the applicable provisions of Sales Tax Act and Federal Excise Act before Commissioner Inland Revenue, Appeals CIR(A). Such appeals have not yet been taken up for hearing by Commissioner Inland Revenue, Appeals [CIR(A)]. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary.

k) The Subsidiary had challenged the levy of Neelum-Jhelum Hydro Power Development Fund for the alleged construction of Neelum-Jhelum Hydro Power Project. The titled petition was disposed off by the Hon'ble Lahore High Court in view of its earlier order, whereby it has been held that the Respondents shall forthwith grant refund/adjustment of the amount charged without authority from the Subsidiary for the period of February 2008 to June 2008. The Company is in the process of filling writ petition before High Court for the remaining period.

l) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Subsidiary, to various institutions and corporate bodies aggregate Rupees 343.179 million as at 30 June 2010 (2009: Rupees 332.363 million).

m) Also refer note 31.1 to these consolidated financial statements for contingencies relating to tax matters.

Claims

n) Claims against the Subsidiary not acknowledged as debt aggregated Rupees 3.750 million as at 30 June 2010 (2009: Rupees 3.750 million).

18.2 Commitments in respect of

a) Commitments for capital expenditure other than letter of credit amount to Rupees 178.127 million (2009: Rupees 340.973 million).

b) Letters of credit for capital expenditure amount to Rupees 668.696 million (2009: Rupees 678.346 million).

c) Letters of credit other than for capital expenditure amount to Rupees 440.577 million (2009: Rupees 367.146 million).

d) Bills discounted amounting to Rupees 40.143 million (2009: Rupees 177.854 million)

e) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Subsidiary, to various institutions and corporate bodies aggregate Rupees 343.179 million as at 30 June 2010 (2009: Rupees 332.363 million).

126 127

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24,0

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2009

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5,28

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,143

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128 129

The Subsidiary has given on lease, land measuring 8 Kanals and 16 Marlas (2009: 6 Kanals and 16 Marlas) to Sui Northern Gas Pipelines Limited at an annual rent of Rupees 4,267 (2009: Rupees 4,267).

19.3

Ownership of the housing colony assets included in the operating fixed assets is shared by the Subsidiary jointly with Pak American Fertilizer Limited in the ratio of 101:245 since the time when both the companies were managed by Pakistan Industrial Development Corporation (PIDC). These assets are in possession of the housing colony establishment for mutual benefits. The cost of these assets at the year-end were as follows:

19.4

- buildings

- roads and bridge

- air strip

2010 2009


- plant and machinery

- furniture, fixtures and equipment

- vehicles

4,105

202

16

273

1,233

170

5,999

3,990

202

16

273

1,219

166

5,866

19.5 Depreciation charged during the year has been allocated as follows:

Cost of sales 35 1,379,838 1,382,070

Administrative expenses 37 35,755 35,231

1,415,593 1,417,301

19.6 CAPITAL WORK IN PROGRESS

Tangible assets

Civil works

Plant and machinery

Un-allocated capital expenditure

Advances to suppliers against:

Plant and machinery

Purchase of land

Vehicles

Civil works

Intangible assets

Computer software and consultancy cost

17,897

1,250,009

59,581

286,080

2,000

2,944

1,505

1,620,016

26,384

1,646,400

67,593

2,644,753

274,540

206,579

2,000

1,414

3,505

3,200,384

19.6.1

26,384

3,226,768

19.6.1 Un-allocated capital expenditure - net

20. INVESTMENT PROPERTIES

The fair value of investment properties comprising land and building situated at Lahore have been determined by Messers Hasib Associates (Private) Limited at Rupees 769.192 million as at 26 June 2008. Fair value of land situated at Rawalpindi has been determined by Messers Asrem (Private) Limited at Rupees 951.643 million as at 20 May 2008. The fair value was determined on the basis of professional assessment of the current prices in an active market for similar properties in the same location and condition. The valuers have certified that there is no material change in fair value during the current financial year and as on the balance sheet date.

Opening balance 59,581 3,367

Add: Expenditure incurred during the year:

Salaries, wages and other benefits 5,619 2,899

1,328 1,615

115 16

201,620 51,639


Vehicles' running and maintenance

Finance cost

Legal and professional 50 -

Communication 160 45

Insurance expenses 5,797

Miscellaneous expenses 270 -

274,540 59,581

-

2010 2009


21. INTANGIBLE ASSETS (computer softwares)

7,332 15,082

35 (5,558) (7,750)

1,774 7,332

23,250 23,250

21,476 15,918

1,774 7,332

33.33% 33.33%

Gross carrying value

Cost

Accumulated amortization

Book value

Amortization rate

Opening balance

Book value as at 30 June

Less: Amortization for the year

2010 2009


130 131

22.

LONG TERM LOANS TO EMPLOYEES - Secured

House building 3,566 5,926

Vehicles 1,863 2,860

Others 287 301

5,716 9,087

27 2,423 3,421

3,293 5,666

Less : Current portion of long term loans to employees

2010 2009


These loans are secured against charge / lien on employees' retirement benefits and carry interest at the rates ranging from 6% to 12% per annum (2009: 6% to 12% per annum). These loans are recoverable in monthly installments ranging from 30 to 120. No amount was due from directors and chief executive at the year-end (2009: Rupees Nil).

22.1

STORES, SPARES PARTS AND LOOSE TOOLS

Stores 24.1 865,902 1,509,872

Spares parts 24.2 1,853,852 1,697,133

38,454 33,136

2,758,208 3,240,141

5,000 -

2,753,208 3,240,141

Less: Provision for slow moving and obsolete items

Loose tools

24.

This includes stores in transit of Rupees 129.243 million (2009: Rupees 234.884 million)24.1

This includes spare parts in transit of Rupees 80.540 million (2009: Rupees 22.045 million)24.2

Stores having carrying value amounting to Rupees 62.423 million (2009: Nil) pledged as security against borrowings.

24.3

23.

LONG TERM DEPOSITS AND PREPAYMENTS

Security deposits 94,093 96,339

Prepayments 333 1,333

94,426 97,672

Less: current portion of long term deposits and prepayments shown under current assets 28 7,966 12,570

86,460 85,102

2010 2009


25. STOCK-IN-TRADE

2010 2009


Raw material 25.1 783,595 641,577

65,302 70,614

983,697 915,368

1,065,237 803,181

2,897,831 2,430,740

Packing material

Finished goods

Work in process

This includes raw material in transit of Rupees 55.351 million (2009: Rupees 60.232 million)25.1

As at 30 June 2010, trade debts of Rupees 819.745 million (30 June 2009 : Rupees 653.568 million) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default. The ageing analysis of these trade debts is as follows:

27. LOANS AND ADVANCES - Considered good

22 2,423 3,421

621

7,844

850,970

- Executives

- Other employees

- Suppliers

Current portion of long term loans to employees

Advances to :

2,255

6,161

368,157

376,573859,435

Letters of credit 1,579 18,164

863,437 398,158

26. TRADE DEBTS

Considered good:

1,251,743

855,031

2,106,774

26,309

2,080,465

986,420

745,925

1,732,345

-

1,732,345

Secured (against letters of credit)

Less: Provision for doubtful debts

Unsecured

2010 2009


Upto 1 month 593,127 531,245

1 to 6 months 156,108 33,795

More than 6 months 70,510 88,528

819,745 653,568


132 133

28.

23

2010 2009


SECURITY DEPOSITS AND SHORT TERM PREPAYMENTS

Current portion of security deposits 7,966 12,570

Margin against letter of credit 25,120 68,163

Margin against bank guarantee 31,458 27,376

Prepayments 72,858 63,580

137,402 171,689

Sales tax refundable 276,958 232,674

Custom duty receivable 3,642 3,642

Export rebate 47,561 32,302Insurance claims 175 181Research and development support 473 25,735

Cotton claim 28,745

Duty drawback of taxes and levies 25,808

Inland freight subsidy receivable 62,060

Others 49,494 26,244494,916 320,778

29. OTHER RECEIVABLES

30. SHORT TERM INVESTMENTS

Holding company

Investments at fair value through profit and loss - Held for trading

Quoted companies

Fair value adjustment

13,611 13,611

(5,595) (7,464)

8,016 6,147

Available for sale

Associated company - Unquoted

30.1Security General Insurance Company Limited

6,398,541 (2009 : 6,398,541) Ordinary shares of Rupees 10 each fully paid

Equity held 9.40% (2009 : 9.40%)


7,000

627,095

634,095

7,000

594,463

601,463

Subsidiary company

Investments at fair value through profit or loss

Quoted Companies


12,115

(8,763)

3,352

12,115

(7,736)

4,379

-

-

-

2010 2009


16,000

60

16,060

25,000

(3,666)

21,334

Mutual funds


Available for sale

Associated company - Unquoted

Security General Insurance Company Limited

4,570,389 (2009: 4,570,389) Ordinary shares of Rupees. 10 each fully paid.

5,000

375,850

5,000

Equity held: 6.71% (2009: 6.71%)


380,850

1,014,173

447,926

452,926

1,114,449

30.2

Fair value per share of Rupees 99.10 (2009: Rupees 94) is calculated by independent valuer on the basis of net assets based valuation method. Security General Insurance Company Limited is associated Company due to common directorship.

30.1

Fair value of the investment as at June 30, 2010 was determined based on the valuation report prepared by the Messers Maqbool Haroon and Company, Chartered Accountants.

30.2

These shares are pledged by Subsidiary with Allied Bank Limited as collateral against short term finance facility of Rupees 400 million.

30.2.1

97,591

(120,563)

488

(120,075)

2010 2009


31. TAXATION RECOVERABLE

396,310

236,900

(186,061)

(885)

(186,946)

346,356

236,900

Opening Balance as 01 July

Add : Provision for taxation

- Current year

- Prior year

Tax deducted at source / advance tax 259,384

a) Income tax assessments of the Subsidiary up till tax year 2009, except for the tax years 2003 and 2006 which have been selected for tax audit, are deemed assessments in terms of section 120(1) of the Income Tax Ordinance, 2001. The tax audit for the tax year 2003 and 2006 have not yet been finalised.

31.1

134 135

b) Provision for current year, in view of available tax losses, represents minimum tax due on turnover under section 113 and tax deducted at source under section 5,15 and 154 of the Income Tax Ordinance, 2001.

c) In consequence of tax audit conducted by income tax department (the Department) for tax year 2003, the Department, vide order dated December 31, 2008, has amended the deemed assessment in respect of tax year 2003 under section 122(5) of the Income Tax Ordinance and the Company's taxable income has been enhanced by Rupees 177.750 million. The Company has preferred an appeal against aforesaid amendment order before the commissioner of Inland Revenue (Appeals), which was disposed off through order dated November 1, 2009.Through such order, while CIR(A) upheld the departmental contentions on certain issues, a substantial relief was extended, reducing the taxable income for the year by an amount of Rupees 107 million as against the additions towards taxable income aggregating to Rupees 173 million contested by the Subsidiary. The Subsidiary has preferred further appeal before the Appellate Tribunal Inland Revenue (ATIR) against the order of CIR(A) against the disallowances confirmed by him through order. Subsidiary's appeal is pending for hearing by ATIR.

d) Additional Commissioner Inland Revenue passed an order u/s 122(5A) and made additions of Rupees 21.600 million in Company's taxable income and raised a tax demand Rupees 1.900 million against the Subsidiary. The Subsidiary has preferred an appeal before Commissioner Inland Revenue (Appeals) against the above addition in taxable income which relates to the admissibility of initial allowance on exchange loss capitalized under section 76(5) of the Income Tax Ordinance. The Subsidiary has also challenged the inclusion of 'scrap sales' and 'profit on sale of fixed assets' in turnover for the purpose of computing minimum tax liability under section 113 of the Income Tax Ordinance.

e) The Deputy Commissioner (Adjudication) has passed an order in original no. 42/2009 dated August 08, 2008 for late filing of return and delayed deposit of dues for the tax period October 2009 against the Subsidiary, raising demand Rupees 34,420 being default surcharge u/s 34 and Rupees 1,500 being penalty u/s 33(5) of Sales Tax Act 1990 and Rupees 148,894 being default surcharge u/s 8 and Rupees 7,444,666 being penalty u/s 19(1) of Federal Excise Act 2005.

f) The Deputy Commissioner (Adjudication) has passed an order in original no. 51/2009 dated October 10, 2009 for late filing return and delayed deposit of dues for the tax period November 2008 against the Company, raising demand Rupees 158,675 being default surcharge u/s 34 and Rupees 3,500 being penalty u/s 33(5) of Sales Tax Act, 1990 and Rupees 453,427 being default surcharge under section 8 and Rupees 7,809,004 being penalty u/s 19(1) of Federal Excise Act 2005.

In reference to above both orders appeals are pending before the Appellate Tribunal of Inland Revenue.

g) The Department has initiated proceedings under section 161 and 205 of the Ordinance against the Company in respect of tax years 2003 to 2007.The Company has challenged initiation of the aforementioned proceedings by filing a writ petition before the Lahore High Court, which, vide order dated 30 December, 2008 has granted stay of proceedings in respect of tax year 2003. The main petition is pending adjudication before the court.

h) Numerical reconciliation between the average tax rate and applicable tax rate has not been presented in these financial statements as the Subsidiary is chargeable to minimum tax under section 113 of the Income Tax Ordinance, 2001.

i) Tax losses available for carry forward to Subsidiary as at June 30, 2010 aggregated Rupees 10.424 billion (2009: Rupees 7.959 billion).

2010 2009

(Rupees in thousand)32. CASH AND BANK BALANCES

5,710

95,262

Cash in hand

Cash at bank: - On current accounts

- On saving accounts 79,257

174,519

2,141

93,010

57,302

150,312

152,453 180,229

The balances in current and saving account carry interest ranging from 0.40% to 13% (2009: From 0.20% to 12%) per annum.

32.1

The balances in current and deposit accounts include US $ 37,000 (2009: US $ 72,465).32.2

33. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

Land 552,923 551,662

100,000 50,000

652,923 601,662

Advance against land

The Company intends to dispose off land located at Raiwind Road and M.M Alam Road, Lahore after final negotiations with its intended buyers. An active programme commenced to locate a buyer at a reasonable price. During the year ended 30 June 2009, land could not be disposed off due to unusually adverse investment scenario of the country resulting in slump in property market. During the current year, due to continued stressed property market, the company was still unable to liquidate these land at its target price. These events precluded that disposal of land during the year, however, the management considers that these events were beyond its control and remains committed to disposal of these land at a reasonable price. The proceeds of disposal are expected to exceed the carrying amount of the land.

34. SALES

Export 13,234,879 11,937,475

Local - net of sales tax and excise duty 34.1 11,107,205 11,840,054

Duty drawback 54,845 -

Rebate 43,137 35,22224,440,066 23,812,751

2010 2009


Local sales are exclusive of sales tax amounting to Rupees 1,349.218 million (2009: Rupees 1,708.158 million) and excise duty amounting to Rupees 1,618.793 million (2009: Rupees 1,901.663 million).

34.1

NOTE

136 137

35. COST OF SALES2010 2009


Raw materials consumed

Cloth and yarn procured and consumed


Dyes and chemicals consumed

Processing charges

Stores, spare parts and loose tools consumed

Packing materials

Fuel and power

Repair and maintenance

Insurance

Other factory overheads

Depreciation

Amortization

35.1

35.2

19.5

21

3,923,408

2,464,620

1,056,915

518,965

12,267

1,119,658

1,460,026

7,351,678

151,766

67,432

202,182

1,379,838

5,558

19,714,313

3,657,167

1,405,218

991,885

505,493

22,452

696,619

1,364,752

7,402,291

123,841

57,897

157,585

1,382,070

7,750

17,775,020

Work-in-process

Opening stock

Closing stock

Cost of goods manufactured

915,368

(983,720)

(68,352)

19,645,961

687,683

(915,368)

(227,685)

17,547,335

Finished goods

Opening stock

Closing stock

Cost of sales 19,383,928

803,181

(1,065,214)

(262,033)

745,779

(803,181)

(57,402)

17,489,933

35.1 Raw material consumed

581,345 484,086

4,070,306 3,754,426

4,651,651 4,238,512

Opening stock

Add: Purchases

Less: Closing stock 728,243 581,345

3,923,408 3,657,167

Salaries, wages and other benefits include provident fund contribution of Rupees 28.225 million (2009: Rupees 24.351 million) and employee benefits (gratuity) amounting to Rupees 5.386 million (2009: Rupees 1.536 million).

35.2


36.1

36. DISTRIBUTION COST2010 2009


Salaries, wages and other benefits 36.1 62,565

Outward freight and handling 2,299,401

Clearing and forwarding 160,317

Travelling and conveyance 24,460

Insurance 405

Vehicles' running expenses 7,795

Electricity, gas and water 679

Postage, telephone and fax 5,267

Sales promotion and advertisement 24,308

Commission to selling agents 299,280

Miscellaneous expenses 28,478

73,637

3,118,158

227,943

26,685

348

8,057

808

6,247

23,732

171,202

10,591

3,667,408 2,912,955

Salaries, wages and other benefits 37.1 164,365 153,428

Travelling and conveyance 16,234 16,617 Repairs and maintenance 12,745 13,734 Rent, rates and taxes 9,133 3,049 Insurance 4,600 4,483 Vehicles' running expenses 17,979 17,216

Printing, stationery and periodicals 13,193 11,503

Electricity, gas and water 2,589 1,175

Postage, telephone and fax 10,624 10,824

Legal and professional 16,105 12,437

Security, gardening and sanitation 19,813 18,915

Provision for doubtful debts 26,309 - Provision for slow moving and obsolete items 5,000 -

Depreciation 19.5 35,755 35,231 Miscellaneous expenses 33,598 28,261

388,042 326,873

37. ADMINISTRATIVE EXPENSES2010 2009


138 139

Provision of current year income tax represents final tax on export sales, minimum tax on local sales and tax on income from other sources under the relevant provisions of the Income Tax Ordinance, 2001. Numeric tax reconciliation has not been presented, being impracticable.

41.1

40. FINANCE COST2010 2009


Mark-up/finance charges/ interest on:

Long term financing 540,266 668,611

Redeemable capital 1,151,738 1,311,908

Short term borrowings 1,164,673 1,134,648

Liabilities against assets subject to finance lease 87,177 119,445

Provident fund 3222,968

Workers' Profit Participation Fund (WPPF) 14.1 188 164

2,947,010 3,235,098

Bank charges and commission 129,883 115,208

Loss on cross currency swap 13,970 830,747

Exchange loss 41,381 479,418

3,132,244 4,660,471

Deferred

Prior year

Current

(73,912)

112,149

885

113,034

Current 186,061 120,563

(151,621)

(31,058)

(488)

(31,546)

Current year

41. PROVISION FOR TAXATION

2010 2009

- discount rate 12% 12%

- expected return on plan assets 12% 12%

- expected rate of growth per annum in future salaries 11% 11%

- average expected remaining working life time of employees 10 years 10 years

42. EMPLOYEE BENEFITS - Gratuity

The future contribution rates of this scheme include allowance for deficit and surplus. Projected unit credit method, based on the following significant assumptions, is used for valuation of this plan:

38. OTHER OPERATING EXPENSES2010 2009


Auditors' remuneration

Donations

38.1 2,610 1,850

38.2 14,502 43,543

Workers' profit participation fund 14.1 20,227 -

Workers' welfare fund 14 7,686 -

Miscellaneous 152,284 15,414

197,309 60,807

Statutory audit fee 2,060 1,300

Certifications 550 550

2,610 1,850

38.1 Auditors' remuneration:

Donations include Rupees 13.882 million paid to Gulab Devi hospital, Lahore. None of the directors and their spouses have any interest in the donees' fund.

38.2


37.1

39. OTHER OPERATING INCOME

Income from financial assets:

Exchange gain 19,261

Gain/ (loss) on disposal of investments 3,664

Gain/ (loss) on remeasurement of fair value of investments at fair value through profit and loss account 1,869Return on bank deposits 6,281

Dividend income 715

31,790

78,350

(3,330)

(13,200)

12,306

837

74,963

Dividend income : Security General Insurance Company Limited 21,938 27,422

Income from associated company:

Income from non-financial assets:

Scrap sales 57,860 41,523

Gain on disposal of property, plant and equipment 19.2 10,392 4,858

Gain on sale of land classified as held for sale - 8,190Miscellaneous 13,702 26,991

81,954 81,562

135,682 183,947

2010 2009(Rupees in thousand)NOTE

140 141

2010 2009(Rupees in thousand)

43,201

(77,070)

-

(33,869)

27,005

(6,864)

47,997

(60,082)

-

-

(12,085)

20,269

8,184

The amounts recognized in the balance sheet are as follows:

Fair value of plan assets

Present value of defined benefit obligation

Benefits payable to outgoing Members

(Deficit)/ surplus

Unrecognized actuarial (gain)/ loss

Net asset/ (liability) as at 30 June

8,184

(6,864)

1,929

(10,113)

(6,864)

9,768

(2,042)

458

8,184

Amount paid to the Subsidiary

Payments to fund during the year

Net asset/ (liability) as at 30 June

Net asset/ (liability) as at 01 July,


Movement in the present value of defined benefit obligation is as follows:

Present value of defined benefit obligation as at 01 July 60,082 50,663

Current service cost 3,987 3,328

Interest cost 7,210 6,080

Benefits paid (1,959) (3,205)

Actuarial (gain)/ loss 7,750 3,216

Present value of defined benefit obligation as at 30 June 77,070 60,082

Movement in the fair value of plan assets is as follows:

Fair value of plan assets as at 01 July 47,997 61,382

Expected return on plan assets 5,759 7,366

Contributions 1,929 458

Benefits paid (1,959) (4,069)

Payment to outgoing members (10,113) -

Actuarial (loss) / gain (412) (17,140)

Fair value of plan assets as at 30 June 43,201 47,997

Actual return/ (loss) on plan assets as at 30 June 5,348 (9,774)

- 24,778

17,886 20,777

1,914 2,442

23,431 -

Plan assets comprise of:

Defence Saving Certificates

(including accrued interest less zakat)

National Investment Trust Units

Cash at bank

Term deposit receipts - KASB Bank

Benefit payments due, but not paid (30) -

43,201 47,997

2010 2009

(Rupees in thousand)Charged to profit and loss are as follows:

Current service cost

Interest cost

Expected return on plan assets

Acturial losses charge

3,987

7,210

(5,759)

1,426

6,864

3,328

6,080

(7,366)

-

2,042

Comparison of present value of defined benefit obligation

The fair value of plan assets and the surplus or deficit of gratuity fund for five years is as follows:

2010 2009 2008 2007 2006

Present value of defined benefit obligation (77,070) (60,082) (50,663) (46,512) (45,937)

Fair value of plan assets 43,201 47,997 61,382 60,785 100,830

(Deficit)/ surplus (33,869)

(12,085) 10,719

14,273 54,893

Experience adjustment on obligation 7,750

3,216 (1,653) (3,825) 12,381

Experience adjustment on plan assets (412)

(17,140) (6,697) 2,603 7,007

----------------------- Rupees in thousand -----------------------

The Subsidiary's policy with regard to actuarial gains / losses is to follow the minimum recommended approach under IAS 19: "Employee Benefits".

The latest actuarial valuation of the gratuity scheme has been carried out on 30 June 2010.

2010 2009


43. CASH GENERATED FROM OPERATIONS

(2,193,183) (1,454,341) Loss before taxation

Loss on remeasurement of investments

Adjustment for non-cash charges and other items:

Depreciation

Amortization of intangible assets

Provision for doubtful debts

Provision for slow moving and obsolete items

Finance cost

Gain on sale of fixed assets

(Gain) / Loss on sale of investments

Gain on sale of land classified as held for sale

1,415,593 1,417,301

5,558 7,750

26,309 -

5,000 -

3,132,244 4,660,471

(10,392) (4,858)

(3,664) 3,330

70,207 13,200

- (8,190)

142 143

481,933

(467,091)

(374,429)

(481,821)

-

34,287

(161,926)

(969,047)

1,250,651

281,604

(323,726)

(93,283)

376,550

351,481

71,620

1,584

25,829

410,055

70,248

480,303

43.1 Working capital changes

(Increase) / decrease in current assets:


Stock-in-trade

Trade debts

Loans and advances

Gratuity fund trust


Other receivables

Increase/ (decrease) in current liabilities


Employees' compensated absences

Provision for employee benefits

Dividend income


Working capital changes

10,661

6,864

(22,653)

(6,281)

281,604

2,717,867

6,046

-

(28,259)

(12,306)

480,303

5,080,447

43.1

2010 2009


44. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amount charged in the financial statements for the year for remuneration including certain benefits to the chief executive, directors and executives of the Group is as follows:

2010 2009 2010 2009 2010 2009

2 2 5 5 61 63

Number of persons

Managerial remuneration


Housing and utilities

Medical

Group insurance

Club subscription

Others

9,337

691

504

467

-

64

185

11,248

9,337

691

466

383

185

73

-

11,135

11,412

377

1,992

1,362

92

-

-

15,235

9,791

262

1,701

1,258

59

-

-

13,071

72,529

5,325

26,575

3,086

252

-

6,096

113,863

64,113

4,608

24,170

2,441

122

-

4,132

99,586

----------------( Rupees in thousand )---------------

Chief Executive Directors Executives

The Chief Executive Officer and directors are provided with the Company's maintained vehicles, free medical facilities and residential telephone facilities for both business and personal use. Chief executive is also provided free furnished accommodation alongwith utilities.

Executives are provided with free use of company maintained vehicles in accordance with the Group policy.The aggregate amount charged in the financial statements in respect of directors' meeting fee paid to 4 (2009: 4) directors was Rupees 205 thousand (2009: Rupees 190 thousand).

45. TRANSACTIONS WITH RELATED PARTIES

The related parties comprise of subsidiaries, associated undertakings, directors of the Group and their close relatives, key management personnel and staff retirement fund. Detail of transactions with related parties, other than those which have been specifically disclosed elsewhere in these consolidated financial statements are as follows:

21,938

1,000,000

23,823

2,968

15,048

27,422

-

30,949

322

1,584

Dividend income

Share deposit money received

Post employment benefits plan


Interest on provident fund

Funds received from gratuity fund

Associated company

2010 2009


47. PLANT CAPACITY AND ACTUAL PRODUCTION

85,680 85,834

SPINNING:



37,950 37,945

35,211 35,298Actual production converted into 20s count based on 3 shifts per day for 1,095 shifts (2009:1,095 shifts).

100% Plant capacity converted into 20s count based on 3 shifts per day for 1,095 shifts (2009: 1,095 shifts).


(Numbers)

46. LOSS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic loss per share which is based on:Loss attributable to ordinary shares

Weighted average number of ordinary shares

Loss per share

Rupees in thousand

Numbers

Rupees

(1,043,987)

145,526,216

(7.17)

(959,035)

145,526,216

(6.59)

2010 2009

144 145

2010 2009


(Numbers) - Gujar Khan Division

Spindles (average) installed / worked; 70,848 66,068

33,313 27,732

100% Plant capacity converted into 20s count based on

3 shifts per day for 1,095 shifts (2009: 1,095 shifts).

31,295 26,318

Actual production converted into 20s count based on


WEAVING:

Looms installed / worked 204 204

- Raiwind Division (Numbers)

100% Plant capacity at 60 picks based on

3 shifts per day for 1,095 shifts (2009: 1,095 shifts). 72,568 84,875

68,27168,605

Actual production converted to 60 picks based on


(Square meters in thousand)

41,975

34,653

41,975

30,626

(Meters in thousand)

PROCESSING OF CLOTH :


Actual at 3 shifts per day for 1,095 shifts (2009: 1,095 shifts)

Capacity at 3 shifts per day for 1,095 shifts (2009: 1,095 shifts)

207,787

2,198

78,080

207,787

7,124

64,663

(Mega Watts)

POWER PLANT:


Actual generation

Gas engines

Main engines


STITCHING:

The plant capacity of this division is indeterminable due to multi-product plants involving varying

processes of manufacturing and run length of order lots.

48. POST BALANCE SHEET EVENT

In accordance with the approval of the shareholders in their Extraordinary General Meeting held on 03 May

2010 and subsequent permission granted by the Securities and Exchange Commission of Pakistan (SECP),

the Holding Company has, after the reporting period, issued 100,000,000 ordinary shares of Rupees 10 each

otherwise than through a right issue to Mercury Management Incorporated, Hutton Properties Limited and

Zimpex (Private) Limited in accordance with the agreement dated 10 March 2010 between the three allottees,

the Holding Company and Maple Leaf Cement Factory Limited – Subsidiary Company.

54,460

26,212

54,312

28,166

- Raiwind Division


Actual generation

Gas engines

3,690 3,690

CEMENT:

Clinker:

Annual rated capacity (Based on 300 days)

Annual production for the year 3,130 3,137

(Metric tons in thousand)

2010 2009

REASONS FOR LOW PRODUCTION

- Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality,

interruption in gas and electricity supply.

- Cloth processing units working capacity was limited to actual export / local orders in hand.

- The generation of power was limited to actual demand.

- Shortfall in production of cement was mainly due to break-down in cement mills and market

146 147

49.

SE

GM

EN

T IN

FOR

MA

TIO

N

49.1

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

SA

LES

4,82

2,12

83,

049,

558

3,07

9,52

32,

571,

181

5,47

4,51

44,

756,

984

13,7

47,2

1215

,359

,777

(2,6

83,3

11)

(1,9

24,7

49)

24,4

40,0

6623

,812

,751

CO

ST

OF

SA

LES

(3,5

99,1

36)

(2,8

44,8

40)

(2,6

98,0

19)

(2,1

60,6

89)

(5,0

78,2

01)

(4,1

12,2

88)

(10,

691,

883)

(10,

296,

865)

2,68

3,31

11,

924,

749

(19,

383,

928)

(17,

489,

933)

GR

OS

S P

RO

FIT

1,22

2,99

220

4,71

838

1,50

441

0,49

239

6,31

364

4,69

63,

055,

329

5,06

2,91

2-

-5,

056,

138

6,32

2,81

8

DIS

TRIB

UTI

ON

CO

ST

(16,

234)

(18,

129)

(57,

076)

(53,

782)

(324

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)(3

92,9

37)

(3,2

69,5

90)

(2,4

48,2

36)

--

(3,6

67,4

08)

(2,9

13,0

84)

AD

MIN

ISTR

ATIV

E E

XP

EN

SE

S(6

4,13

0)(5

5,96

1)(6

0,93

9)(5

1,20

7)(7

0,09

7)(6

8,79

7)(1

92,8

76)

(150

,779

)-

-(3

88,0

42)

(326

,744

)

(80,

364)

(74,

090)

(118

,015

)(1

04,9

89)

(394

,605

)(4

61,7

34)

(3,4

62,4

66)

(2,5

99,0

15)

--

(4,0

55,4

50)

(3,2

39,8

28)

PR

OFI

T B

EFO

RE

TA

X A

ND

UN

ALL

OC

ATE

D IN

CO

ME

AN

D

EX

PE

NS

ES

1,14

2,62

813

0,62

826

3,48

930

5,50

31,

708

182,

962

(407

,137

)2,

463,

897

--

1,00

0,68

83,

082,

990

UN

ALL

OC

ATE

D IN

CO

ME

AN

D E

XP

EN

SE

S

FIN

AN

CE

CO

ST

(3,1

32,2

44)

(4,6

60,4

71)

OTH

ER

OP

ER

ATIN

G E

XP

EN

SE

S(1

97,3

09)

(60,

807)

OTH

ER

OP

ER

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G IN

CO

ME

135,

682

183,

947

PR

OV

ISIO

N F

OR

TA

XAT

ION

(113

,034

)31

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(3,3

06,9

05)

(4,5

05,7

85)

PR

OFI

T / (

LOS

S) A

FTE

R T

AX

ATIO

N(2

,306

,217

)(1

,422

,795

)

49.2

Rec

onci

liatio

n of

rep

orta

ble

segm

ent a

sset

s an

d lia

bilit

ies

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

30 J

une

2010

30 J

une

2009

TOTA

L A

SS

ETS

FO

R R

EP

OR

TAB

LE S

EG

ME

NT

2,39

9,05

82,

514,

724

1,21

1,48

81,

701,

352

2,

973,

709

2,97

8,47

423

,830

,834

23,4

01,0

5930

,415

,089

30,5

95,6

09

UN

ALL

OC

ATE

D A

SS

ETS

1

0,47

2,98

0

6

,080

,989

4

0,88

8,06

9

36,

676,

598

All

segm

ent a

sset

s ar

e al

loca

ted

to re

porta

ble

segm

ents

oth

er th

an th

ose

dire

ctly

rela

ting

to c

orpo

rate

and

tax

asse

ts.

TOTA

L LI

AB

ILIT

IES

FO

R R

EP

OR

TAB

LE S

EG

ME

NT

689,

813

842,

797

2,00

5,93

71,

725,

080

2,60

4,78

65,

429,

033

23,8

30,8

3423

,401

,059

29,1

31,3

7031

,397

,969

UN

ALL

OC

ATE

D L

IAB

ILIT

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11,7

56,6

995,

278,

629

4

0,88

8,06

9

36,

676,

598

All

segm

ent l

iabi

litie

s ar

e al

loca

ted

to re

porta

ble

segm

ents

oth

er th

an tr

ade

and

othe

r pay

able

s, c

orpo

rate

bor

row

ings

and

cur

rent

and

def

erre

d ta

x lia

bilit

ies.

49.3

Geo

grap

hica

l Inf

orm

atio

n

49.3

.1Th

e G

roup

's re

venu

e fro

m e

xter

nal c

usto

mer

s by

geo

grap

hica

l loc

atio

n is

det

aile

d be

low

:

2010

2009

Eur

ope

1,66

4,66

71,

714,

770

Am

eric

a4,

040,

326

3,40

7,65

5

Asi

a, A

frica

, Aus

tralia

7,62

7,86

86,

850,

272

Pak

ista

n11

,107

,205

11,8

40,0

54

24,4

40,0

6623

,812

,751

49.3

.2A

ll no

n cu

rren

t ass

ets

as a

t rep

ortin

g da

te a

re lo

cate

d an

d op

erat

ed in

Pak

ista

n.

49.4

Rev

enue

from

maj

or c

usto

mer

s

The

Gro

up's

reve

nue

is e

arne

d fro

m a

larg

e m

ix o

f cus

tom

ers.

(RU

PE

ES

IN T

HO

US

AN

D)

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

-(R

u p

e e

s i

n t

h o

u s

a n

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----

----

----

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----

----

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--

Spi

nnin

gW

eavi

ngP

roce

ssin

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d ho

me

text

ileG

roup

Wea

ving

Pro

cess

ing

and

hom

e te

xtile

Gro

up

----

----

----

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p e

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t

Cem

ent

50.

50.1 Financial risk factors

FINANCIAL RISK MANAGEMENT

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, other price risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by the Group's finance department under policies approved by the Board of Directors. The Group's finance department evaluates and hedges financial risks. The Board provides principles for overall risk management, as well as policies covering specific areas such as currency risk, other price risk, interest rate risk, credit risk, liquidity risk, use of derivative financial instruments and non derivative financial instruments and investment of excess liquidity.

(a) Market risk

(i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies.

The Group is exposed to currency risk arising from various currency exposures, primarily with respect to the United States Dollar (USD), Euro, GBP and Yen. Currently, the Group's foreign exchange risk exposure is restricted to bank balances, the amounts receivable / payable from / to the foreign entities. The Group uses forward exchange contracts to hedge its foreign currency risk, when considered appropriate. The Group's exposure to currency risk was as follows:

2010 2009

(Amounts in thousand)

72

15,388

245

18

11,163

1,168

17,200

11,879

80

37

17,770

832

-

9,119

1,003

-

10,667

7,341

Cash at banks - USD

Trade debts - USD

Trade debts - Euro

Trade debts - GBP

Trade and other payable - USD

Trade and other payable - Euro

Trade and other payable - Yen

Finance lease liability - USD

Outstanding Letters of credit - USD 1,226

725,520

1,056

4,884

Outstanding Letters of credit - Euro

Outstanding Letters of credit -Yen

148 149

7,662

2,149

18

742,720

78.81

81.10

107.87

114.54

126.45

135.05

0.7867

0.8475

9,320

1,227

-

4,884

83.78

85.60

112.10

104.58

132.08

128.66

0.9241

0.9662

Net exposure - USD

Net exposure - Euro

Net exposure - GBP

Net exposure - Yen

Rupees per US Dollar

Rupees per Euro

Rupees per GBP

Rupees per Yen

Average rate

Reporting date rate

The following significant exchange rates were applied during the year:

Average rate

Reporting date rate

Average rate

Reporting date rate

Average rate

Reporting date rate

2010 2009


If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD, Euro, GBP and Yen with all other variables held constant, the impact on loss after taxation for the year would have been Rupees 39.890 million, Rupees 6.416 million, Rupees NIL and Rupees 0.236 million (30 June 2009: Rupees 31.069 million, Rupees 12.302 million, Rupees 0.122 million and Rupees 31.473 million) respectively higher / lower, mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. In management's opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year.


(ii) Other Price risk

Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instrument traded in the market. The Group is not exposed to commodity price risk.

The table below summarises the impact of increase / decrease in the Karachi Stock Exchange (KSE) Index on the Group's loss after taxation for the year and on equity (fair value reserve). The analysis is based on the assumption that the equity index had increased / decreased by 5% with all other variables held constant and all the Group's equity instruments moved according to the historical correlation with the index:


2010 2009 2010 2009

KSE 100 (5% increase) 1,371 1,593 - -

KSE 100 (5% decrease) (1,371) (1,593) - -

IndexImpact on loss after taxation

Impact on statement of other

comprehensive income

--------------------- (RUPEES IN THOUSAND) ---------------------

This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

(iii) Interest rate risk

The Group has no significant long-term interest-bearing assets. The Group's interest rate risk arises from long term financing, redeemable capital, liabilities against assets subject to finance lease, lease finance advance and short term borrowings. Borrowings obtained at variable rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rate expose the Group to fair value interest rate risk.

At the balance sheet date the interest rate profile of the Group’s interest bearing financial instruments was:

2010 2009


Fixed rate instruments

Financial Assets

Loans to employees

Bank Balances at PLS account


Long term financing



5,429

44,629

407,742

3,201,896

-

8,786

65,366

549,141

2,942,000

8,017

150 151

Floating rate instruments

Financial assets

Bank balances- saving accounts


Long term financing

Redeemable capital




13,891

4,655,703

8,000,000

6,250,793

1,343,997

35,922

12,673

5,001,198

8,296,600

6,929,377

1,214,971

-

2010 2009


Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rate at the balance sheet date would not affect loss of the Group.

Cash flow sensitivity analysis for variable rate instruments

If interest rate at the year end date, fluctuates by 1% higher / lower with all other variables held constant, loss after taxation for the year would have been Rupees 214.421 million (30 June 2009: Rupees 202.864 million) lower / higher, mainly as a result of higher / lower interest expense on floating rate borrowings. This analysis is prepared assuming the amounts of liabilities outstanding at balance sheet dates were outstanding for the whole year.

(b) Credit risk

Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

2009

1,114,449

125,551

2,106,774

797

49,669

264,219

150,312

3,811,771

1,014,173

98,874

1,732,345

1,105

37,082

5,695

174,519

3,063,793

Deposits

Trade debts

Accrued Interest

Other receivables

Loans and advances

Bank balances

Investments

2010


The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate:

Holding Company

2010 2009

Short Term

Long term

Agency (Rupees in thousand)

Rating

4,656

31,292

5,703

2,536

1,872

103

12,611

11,106

76

30

1,763

-

30

837

2,611

4,350

-

79,576

JCR-VIS

PACRA

PACRA

PACRA

PACRA

JCR-VIS

PACRA

PACRA

PACRA

PACRA

PACRA

JCR-VIS

JCR-VIS

PACRA

JCR-VIS

JCR-VIS

PACRA

AAA

AA

AA

AA

AA

AA+

AA+

AA-

AA

A-

AA-

A+

A-

AAA

AA+

A

AA+

A-1+

A1+

A1+

A1+

A1+

A-1+

A1+

A1+

A1+

A2

A1+

A-1

A-3

A1+

A-1+

A-1

A-1+

77,890

754

32,531

7,822

1,421

4,108

67

9,907

12,313

88

30

540

319

2,945

2,309

133

2,565

38

Banks

National Bank of Pakistan

Allied Bank Limited

Askari Bank Limited

Bank Alfalah Limited

Faysal Bank Limited

Habib Bank Limited

MCB Bank Limited

NIB Bank Limited

The Royal Bank of Scotland Limited

My Bank Limited

The Bank of Punjab

Meezan Bank Limited

Silkbank Limited

Standard Chartered Bank (Pakistan) Limited

United Bank Limited

Al-Baraka Islamic Bank Limited

Bank Al Habib Limited

Subsidiary Companies

Total bank balance of Rupees 72.422 million (2009: Rupees 94.943 million) placed with banks have a short term credit rating of at least A1+ (2009: A1+).

Group's investments

Security General Insurance Company Limited

United Composite Islamic Fund

Faysal Saving Growth Fund

NAFA Government Securities Liquid Fund

Noman Abid Reliance Inome Fund

Alfalah GHP cash fund

Fauji Cement Company Limited

Highnoon Laboratories Limited

1,087,021

-

-

-

14,053

2,008

539

2,744

1,106,364

982,313

12,800

4,267

4,267

-

-

-

-

1,003,647

Rating

N/A

N/A

AM 3-

AM 3

A

N/A

N/A

N/A

2010 2009


152 153

The Group's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 26.

Due to the Group's long standing business relationships with these counterparties and after giving

due consideration to their strong financial standing, management does not expect non-performance

by these counterparties on their obligations to the Group. Accordingly the credit risk is minimal.

(c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with

financial liabilities.

The Group manages liquidity risk by maintaining sufficient cash and the availability of funding through an

adequate amount of committed credit facilities. At 30 June 2010, the Group had Rupees 4,313.53 million

available borrowing limits from financial institutions and Rupees 152.453 million cash and bank

balances. Inspite the fact that the Group is in a negative working capital position at the year end,

management believes the liquidity risk to be low. Following are the contractual maturities of financial

liabilities, including interest payments. The amount disclosed in the table are undiscounted cash flows:

Contractual maturities of financial liabilities as at 30 June 2010:

Holding Company

More than2 Years

-

1,310,446

24,169

-

-

1,334,615

1-2 Years

699,117

45,157

-

-

-

744,274

6-12 months

398,510

32,487

-

-

471,947

902,944

6 months

or less

542,361

53,450

989,594

185,259

5,796,162

7,566,826

Contractual

Cash Flows

2,950,434

155,263

989,594

185,259

6,268,109

10,548,659

Carrying

Amount

2,328,501

135,030

989,594

289,987

6,070,435

9,813,547

Non derivative financial liabilities:

Long term financing


Accrued mark-up


---------------------------------- (Rupees in thousand) -----------------------------



Long term financing

Redeemable capital


Accrued mark-up


Long term deposits


Subsidiary Company

More than5 Years

1 to 5 Years

----------------------------- (Rupees in thousand) -------------------------

Less than

one year

Contractual

Cash Flows

Carrying

Amount

3,080,439

8,296,600

2,739

2,642,912

921,812

4,060,838

20,085,281

4,527,362

13,959,857

2,739

2,642,912

921,812

4,060,838

27,319,363

718,231

283,820

-

2,642,912

921,812

4,060,838

9,056,799

2,413,858

6,231,669

2,739

-

-

-

9,422,923

1,395,273

7,444,368

1,079,941 1,203,843 429,186 774,657 -

-

-

-

-

8,839,641


Holding Company

More than2 Years

-

1,268,786

67,614

-

-

1,336,400

1-2 Years

1,031,773

50,812

-

-

-

1,082,585

6-12 months

606,169

52,959- - -

-

-

553,479

1,212,607

6 months

or less

506,992

35,963

808,136

36,460

185,259

4,438,253

6,011,063

Contractual

Cash Flows

3,413,720

207,348

808,136

36,460

185,259

4,991,732

9,642,655

Carrying

Amount

2,749,341

187,191

808,136

35,922

185,259

4,810,471

8,776,320


Long term financing


Accrued mark-up


---------------------------------- (Rupees in thousand) -----------------------------



154 155


Long term financing

Redeemable capital


Accrued mark-up


Long term deposits


Subsidiary Company

More than5 Years

1 to 5 Years

----------------------------- (Rupees in thousand) -------------------------

Less than

one year

Contractual

Cash Flows

Carrying

Amount

2,455,503

8,000,000

2,580

1,675,984

441,194

4,382,322

18,122,406

3,365,222

11,646,716

2,580

1,675,984

441,194

4,831,813

23,322,680

662,012

2,035,200

-

1,675,984

441,194

4,831,813

10,036,524

2,703,210

9,611,516

2,580

-

-

-

13,286,156

1,164,823 1,359,171 390,321 968,850 -

-

-

-

-

-

-

-

The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at 30 June. The rates of interest / mark up have been disclosed in note 8, note 9 and note 10 to these financial statements.

50.2 Fair values of financial assets and liabilities

The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values. The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped in to levels 1 to 3 based on the degree to which fair value is observable:

Assets

Assets

Level 1 Level 2 Level 3 Total

- 1,087,021 - 1,087,021

- 982,313 - 982,313 Available for sale financial assets

As at 30 June 2010


As at 30 June 2009

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial instruments held by the Group is the current bid price. These financial instruments are classified under level 1 in above referred table. The Group has no such type of financial instruments as on 30 June 2010.

------------------- (Rupees in thousand) -----------------

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value a financial instrument are observable, those financial instruments are classified under level 2 in above referred table.

If one or more of the significant inputs is not based on observable market data, the financial instrument is classified under level 3.The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. The Group has no such type of financial instruments as on 30 June 2010.

50.3 Financial instruments by categories

Loans andreceivables

Throughprofit or

loss

Availablefor sale

Total

As at 30 June 2010


Investments

Deposits

Trade debts

Accrued interest

Other receivables

Loans and advances


-

125,551

2,106,774

797

49,669

264,219

152,453

2,699,463

27,428

-

-

-

-

-

-

27,428

1,087,021

-

-

-

-

-

-

1,087,021

1,114,449

125,551

2,106,774

797

49,669

264,219

152,453

3,813,912



Long term financing 5,408,940

Redeemable capital 8,296,600

Liabilities against assets subject to finance lease 1,214,971

Lease finance advance -

Short term borrowings 10,131,273

Trade and other payables 3,632,506

Accrued mark-up 1,211,799

29,896,089

Financial liabilitiesat amortized cost


156 157

Loans andreceivables

Throughprofit or

loss

Availablefor sale

Total

As at 30 June 2009


Investments

Deposits

Trade debts

Other receivables

Loans and advances



-

98,874

1,732,345

37,082

5,695

180,229

2,054,225

31,860

-

-

-

-

-

31,860

982,313

-

-

-

-

-

982,313

1,014,173

98,874

1,732,345

37,082

5,695

180,229

3,068,398


Long term financing

Redeemable capital





Accrued mark-up

Financial liabilitiesat amortized cost


5,204,844

8,000,000

1,352,014

35,922

9,192,793

2,484,030

626,453

26,896,056

50.4 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders through repurchase of shares, issue new shares or sell assets to reduce debt. Consistent with others in the industry and the requirements of the lenders, the Group monitors the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital employed. Borrowings represent long-term financing, redeemable capital, liabilities against assets subject to finance lease, lease finance advance and short-term borrowings obtained by the Group as referred to in note 8, note 9 and note 10 respectively. Total capital employed includes ‘total equity’ as shown in the

balance sheet plus ‘borrowings’. The gearing ratio as at year ended 30 June 2010 and 30 June 2009 is as follows:

25,051,784

5,323,453

30,375,237

82.47%

23,785,573

7,581,330

31,366,903

75.83%

Total capital employed

Gearing Ratio

2010 2009

Rupees in thousands

Borrowings

Total equity

51. FINANCIAL RISK MANAGEMENT

These financial statements were authorised for issue on September 29, 2010 by the Board of Directors of the Holding Company.

52. CORRESPONDING FIGURES

No significant reclassification/ rearrangement of corresponding figures has been made.

53. GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.


158 159

KOHINOOR TEXTILE MILLS LIMITED

42-LAWRENCE ROAD, LAHORE

PROXY FORM

I/We

of

being a member of KOHINOOR TEXTILE MILLS LIMITED hereby appoint

(NAME)

of another member of the Company

or failing him/her (NAME)

of another member of the Company

As witnessed given under my/our hand(s) day of 2010.

1.

Signature of Member

2.

Shares Held

CDC A/c No.

CNIC No.

________________________________________________________________________________________________ Notes:

AffixRevenue

Stamps of Rs. 5/

-

Witness:

Signature:

Name:

Address:

Witness:

Signature:

Name:

Address:

Shareholder's Folio No.

1. Proxies, in order to be effective, must be reached at the Companys Registered Office, not less than 48 hours before the time for holding the meeting and must be duly stamped, signed and witnessed.

2. CDC Shareholders, entitled to attend and vote at this meeting, must bring with them their National Identity Cards/Passports in original to prove his/her identity, and in case of Proxy, must enclose anattested copy of his/her NIC or Passport. Representatives of corporate members should bring the usual documents required for such purpose.

(being a member of the Company) as my/our proxy to attend and vote for and on my/our behalf, at the Annual General Meeting of the Company to be held at its Registered Office, 42-Lawrence Road, Lahore on Saturday, October 30, 2010 at 3:00 p.m. and any adjournment thereof.

Fold Here

Fol

d H

ere

Fold Here

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ere

AFFIXCORRECT POSTAGE

The Company SecretaryKohinoor Textile Mills Limited42-Lawrence Road, Lahore.Phone No's: (042) 36302261 - 62

ktml_annual_2010

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