COMPANY INFORMATION

Board of Directors Sh. Naseem Ahmad Chairman & Chief Executive Officer

Mrs. Mahnaz Amir Sheikh

Mr. Rehman Naseem

Mr. Fazal Ahmad Sheikh

Mr. Faisal Ahmad

Mr. Fahd Mukhtar

Mr. Jamal Nasim Nominee NIT Ltd.

Audit Committee Mr. Rehman Naseem Chairman

Mrs. Mahnaz Amir Sheikh Member

Mr. Faisal Ahmad Member

Human Resource and Remuneration Committee

Mr. Faisal Ahmad Chairman

Mrs. Mahnaz Amir Sheikh Member

Mr. Rehman Naseem Member

Company Secretary Mr. M.D. Kanwar

Chief Financial Officer Mr. Faizan-ul-Haq

Auditors KPMG Taseer Hadi & Co., Chartered Accountants

Bankers Habib Bank Limited

United Bank Limited

MCB Bank Limited

Askari Bank Limited

National Bank of Pakistan

Soneri Bank Limited

Allied Bank Limited

Meezan Bank Limited

Faysal Bank Limited

Standard Chartered Bank Pakistan Limited

Bank Al-Falah Limited

Dubai Islamic Bank Pakistan Limited

Barclays Bank PLC, Pakistan

Saudi Pak Industrial and Agriculture Investment Company Limited

The Bank of Punjab

The Bank of Khyber

Habib Metropolitan Bank Limited

Samba Bank Limited

Pak Kuwait Investment Company (Pvt) Limited

Pak Brunei Investment Company Limited

Pak Oman Investment Company Limited

NIB Bank Limited

KASB Bank Limited

Silk Bank Limited

Head Office &

Shares Department: 129/1 Old Bahawalpur Road, Multan.

Phone: (92) 61-4587632, 4781637 Fax: (92) 61-4541832

e-mail: kanwar@fazalcloth.com

Website: www.fazalcloth.com

Shares Registrar: Vision Consulting Ltd.

3-C, LDA Flats, Lawrence Road, Lahore

Phone: (92) 42-36375531, 36375339 Fax: (92) 42-36374839

Registered Office: 69/7, Abid Majeed Road, Survey No. 248/7, Lahore Cantt, Lahore.

Phone: (92) 300-8631543

Mills: i) Fazal Nagar, Jhang Road, Muzaffargarh - Pakistan

Ph. (92) 66-2422216-18 Fax: (92) 66-2422217

ii) Qadirpur Rawan Bypass, Khanewal Road, Multan - Pakistan

Ph. (92) 61-6740041-43, Fax : (92) 61-6740052

CORPORATE VISION/ MISSION STATEMENT

Vision

The Company aims at becoming a Complete Textile unit, which can explore local and

international market of very high value products. The Company would keep its emphasis

on product and market diversification, value addition and cost effectiveness. We want

to fully equip the Company to play a meaningful role on the sustainable basis in the

economic development of the Country.

Mission

The Company should provide a secure and rewarding investment to its shareholders and

investors, quality products to its customers, a secure place of work to its employees and

an ethical partner to all its business associates.

STATEMENT OF ETHICS

INTRODUCTION

The Company's policy is to conduct business with honesty and integrity and be ethical in all its dealing,

showing respect for the interest of those with whom it has relationships.

EMPLOYEES

1. This Code of Ethics is established on the basis that unless a limitation is specifically stated the

objectives and fundamental principles are equally valid for all employees, whether they are at mills

or at head office.

2. An employee is distinguished by certain characteristics including :

2.1. Master of particular intellectual skill, acquired by training and education.

2.2. Acceptance of duty to society as a whole in addition to duties to the organization and

employer.

2.3. Rendering personal services to a high standard of conduct and performance.

3. The specialized knowledge, skills, training and experience required to be a proficient employee.

4. The efforts of the services of superiors to train those working directly and indirectly under them

would be appreciated.

THE PUBLIC INTEREST

5. A distinguishing mark of a profession is acceptance of its responsibility to the organization. The

organization is responsible towards customer, credit grantors, governments, employees, investors,

the business and financial community and others who rely on the objectivity and integrity of the

organization to maintain the orderly functioning of commerce and industry. This reliance imposes a

public interest responsibility on the organization. The public interest is defined as the collective well

being of the community of people and institution served by the organization.

6. An organization's responsibility is not exclusively to satisfy the needs of an individual customer or

director. The standards of service are heavily determined by the public interest for example:

6.1. Transparent dealings help to maintain the integrity and efficiency of the Organization

presented to the shareholders, financial institutions, customers, employees, government

regulations and tax authorities. The transparent dealings would help to secure loans and to

obtain capital from share holders.

6.2. Financial planning serves in efficient and effective use of the organization's resources.

6.3. Internal auditors provide assurance about a sound internal control system, which enhances the

reliability of the external financial information of the organization.

6.4. Directors help to establish confidence and efficiency for fair resolution Organization's affairs.

6.5. Management has responsibility toward the organization in advocating sound management

decision making.

7. The organization has an important role towards society, shareholders, creditors, employees and

other sectors of the business community, as well as the government and the public at large for

sound financial accounting, reporting effective financial management and variety of business and

taxation matters. Sound business practices of the organization have an impact on the economic well

being of the country.

8. It is in the best interest of the organization that services are provided at the highest level of

performance and in accordance with ethical standards to ensure continued good performance.

9. In formulating this code of ethics, the Board of Directors has considered the public service and

employees expectations of the ethical standards of the organization.

OBJECTIVES OF THE ORGANIZATION

10. The code recognizes that the objectives of the organization are to work to highest standards of

professionalism, to attain the highest levels of performance and generally to meet the interested

group requirements set out above. These objectives require four basic needs to be met:

10.1. Credibility

In the whole society there is a need for credibility in information and information systems.

10.2. Professionalism

The customers, employees and other interested parties can rely on the professionalism of the

organization.

10.3. Quality of Services

There is a need for assurance that all services provided are carried out to the highest standards of

performance.

10.4. Confidence

Interested groups should be able to feel confident that there exists a framework of professional

ethics, which governs the provision of services provided by the organization to the community and

the country.

FUNDAMENTAL PRINCIPLES

11. In order to achieve the objectives of the organization, employer and employees have to observe a

number of prerequisites or fundamental principles.

The fundamental principles are:

11.1. Integrity

An interested group connected with the organization should be straight forward and honest in

performing professional services.

11.2. Objectivity

The organization should be fair and should not allow prejudice or bias or influence of other to

override objectivity.

11.3. Professional Competence, Due Care and Timeliness

An organization should perform and provide goods and services with due care, competence and

diligence and has a continuing duty to maintain a level required to ensure that a customer or an

employee receives goods and service based on up to date product line. Further all industrial

obligations should be adhered to for timely compliance.

11.4. Confidentiality

The organization should respect the confidentiality of information acquired during the course of

providing goods and services and should not use or disclose any such information without proper

and specific authority or unless there is a legal or professional right or duty to disclose.

11.5. Organizational Behaviour

The organization should act in a manner consistent with the good reputation of the industry and

refrain from any conduct, which might bring discredit to the company.

11.6. Technical Standards

The organization should provide goods and services in accordance with the relevant technical and

professional standards. The organization has a duty to carry out with care and skill, the instructions

of the customers in so far as they are compatible with the requirements of commercial trade

practice. In addition they should conform with the technical and professional standards

promulgated by:

– PCSIR (Pakistan Council for Scientific & Industrial Research)

– International Standards

– Relevant Legislation

12. In addition to observing the fundamental principles listed above; the organization should be and

appear to be free of any interest, which might be, regarded, whatever its actual effect, as being

incompatible with integrity, objectivity and independence.

13. The objectives as well as the fundamental principles are of a general nature and are not intended to

be used to solve the organization's ethical problems in a specific case. However, the code provides

some guidance as to the application in practice of the objectives and the fundamental principles

with regard to a number of typical situations occurring in the industrial process and company

procedure.

Corporate Values & Code of Conduct

The Company has adopted the following corporate values:

To fulfill customer needs by producing quality products;

To act with good governance;

To achieve sustainable and equitable growth;

To promote diversity and ethical behavior;

To develop a dynamic team of professionals to achieve excellence and innovation.

Fazal Cloth Mills Limited ("the company") promulgated the code of conduct ("the Code") on

October 05, 2012. The Company is committed to maintain the highest level of ethical conduct

among its directors and employees. Therefore separate codes were framed for directors and

employees, which include the acceptable business practices, source of guidance and principles of

behavior.

Salient Features for the Code of Conduct for Directors

Compliance with Laws

Directors must comply with the laws, rules and regulations applicable to business of the Company in

and outside Pakistan.

Conflict of interest

A conflict of an interest is a situation where a director would be in a position to make personal

gains by influencing the decision making. Conflict of interest might not be easily identifiable.

Whenever a director feels that the conflict of interest exists, he should inform about it to the

chairman of the Board of Directors.

Corporate Opportunity

Directors should not use the Company's property, information and their position for personal

benefit. He should not establish competing business and divert the Company's business

opportunities for personal gains.

Confidentiality

Directors must always maintain confidentially of the confidential information. He should not

make public such information which would harm the interests of the Company. He should

consult with Chairman of the Board or compliance officer if he has to disclose any information

due to his legal obligation.

Fair Dealing

A director must deal with all the stakeholders of the Company fairly. He should not provide

unfair advantage to any customer, supplier, banker etc. due to his position.

Protection and Proper Use of the Company Assets

Directors should ensure that all assets of the Company must be used for the benefit of the

Company. They are required to exercise best of their abilities and judgment to put the assets of

the company for efficient use and benefit of the Company.

Reporting any Illegal or Unethical Behavior

A director must inform the Compliance officer or chairman of the Board of Directors if he finds

any employee or other director committing the violation of the Code and any law of the land.

He should take all possible measures which could help prevent illegal or unethical behavior of

fellow directors or employees.

Public Company Reporting

Directors are responsible for the timely and accurate reporting to the SECP, FBR, stock

exchanges and other regulatory bodies. They should make possible that the financial statements

of the Company are published and circulated among shareholders in time.

Disclosure of Interest

The directors should disclose their interest in the shareholding of other companies. They must

inform within four days to the Company Secretary if any director or his spouse trades in the

shares of the other Company.

Insider Trading

No director or his spouse will transact in the shares of the Company after the start of close

period. The Company secretary will inform about the close period that will start when the

documents and financial statements are circulated among the directors. Directors should also

inform the Company Secretary immediately about transactions performed by them and their

spouse in the shares of the Company other than close period.

Salient Features for the Code of Conduct for Employees

Safety

The Company is highly concerned with the safety of both employees and non-employees on its

premises and maintains standard operating procedures in case of emergencies. All the

employees must follow these procedures and are required to inform their seniors in case of

any mishap.

Fitness for Duty

An employee should be mentally and physically fit when he is on work. He should not use any

drugs. Even if he is using any prescribed medicine which might affect his performance at work

he should inform about it to his senior.

Attendance Report

An employee should have contact information of his senior and inform him if he is not able to

report on work.

Work Place Harassment and Discrimination

The Company treats all its employees equally and maintains an environment free from workplace

harassment and discrimination. The policy of equal treatment applies to hiring, career

prospects, promotions, training, remuneration and dismissal as well.

Environment

All the employees are required to promote culture of environmental protection among

employees, customers, suppliers, public authorities and communities. They must use the

Company's facilities and processes in an environmentally sustainable way.

Workplace Violence

Employees must restraint themselves from any form of violence at the Company premises

otherwise he will be terminated from his job.

Weapons in Workplace

All the employees, other than those who are authorized, cannot carry any weapon whether on

or off duty if they are using premises, vehicle or any other property of the Company.

Protection and proper use of the Company Assets

Employees should ensure that all assets of the Company must be used for the benefit of the

Company. They are required to exercise best of their abilities and judgment to put the assets of

the company for efficient use and benefit of the Company.

Computer and System Security

All the employees of the Company are required to use computer and information technology

system of the Company according to the Company information technology policy and

guidelines.

Fair Dealing

All employees must deal with all the stakeholders of the Company fairly. He should not provide

unfair advantage to any customer, supplier, banker etc. due to his position.

Bribery

The payment of bribery and kickbacks in any form is strictly prohibited because the Company

does not allow anyone to promote its business by compromising the integrity and ethical

practices.

Confidential Information

All the employees must keep the company information on its premises and should not make

copies of documents, papers, statements and record for an unauthorized use. Employees are

not permitted to share the information about Company business outside the Company unless

authorized.

Regulatory Compliance and Corporate governance

The company maintains an environment of good governance. All the employees are required to

follow the Company's policies, rules and regulations.

Financial Integrity

No employee should indulge himself in any fraudulent activity. If he believes and finds anyone

engaged in a fraudulent activity he should inform about it to his seniors.

Alcohol, Drugs and Gambling

The use of alcohol, drugs, other than for medication, and gambling is prohibited on the location or

premises of the Company.

Insider Trading

No employee or his spouse will transact in the shares of the Company after the start of close

period prior to the announcement of financial results. Employees categorized as executives

according to the requirements of Code of Corporate Governance 2012 should also inform the

Company Secretary immediately about transactions performed by them and their spouse in the

shares of the Company other than close period.

Board Committees

Audit Committee

Members

1. Mr. Rehman Naseem Chairman

2. Mrs. Mahnaz Amir Sheikh Member

3. Mr. Faisal Ahmad Member

Terms of Reference

The terms of reference of the Audit Committee shall include the following:

A. Recommending to the Board of Directors the appointment of external auditors, their

remuneration and audit fees;

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

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;

Compliance with listing regulations and other statutory and regulatory

requirements; and

Significant related party transactions.

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

E. Facilitating the external audit and discussion with external auditors of major

observations arising from interim and final audits and any matter that the auditors may

wish to highlight (in the absence of management, where necessary);

F. Review of management letter issued by external auditors and management's response

thereto;

G. Ensuring coordination between the internal and external auditors of the Company;

H. 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;

I. Consideration of major findings of internal investigations of activities characterized by

fraud, corruption and abuse of power; and management's response thereto;

J. Ascertaining that the internal control systems including financial and operational controls,

accounting systems for timely and appropriate recording of purchases and sales, receipts

and payments, assets and liabilities and the reporting structure are adequate and effective;

K. Review of the Company's statement on internal control systems prior to endorsement by

the Board of Directors and internal audit reports;

L. Instituting special projects, value for money studies or other investigations on any matter

specified by the Board of Directors, in consultation with the CEO and to consider remittance

of any matter to the external auditors or to any other external body;

M. Determination of compliance with relevant statutory requirements;

N. Monitoring compliance with the best practices of corporate governance and identification

of significant violations thereof; and

O. Consideration of any other issue or matter as may be assigned by the Board of Directors.

Human Resource & Remuneration (HR & R) Committee

Members

1. Mr. Faisal Ahmad Chairman

2. Mrs. Mahnaz Amir Sheikh Member

3. Mr. Rehman Naseem Member

Terms of Reference

The Human Resource and Remuneration Committee was constituted on October 05, 2012 and

its terms of reference were defined as follows:

The Committee shall be responsible for recommending the following to the Board: -

Human resource management policies

Selection, evaluation, compensation (including retirement benefits) and succession

planning of the Chief Executive Officer, Chief Financial Officer, Company Secretary and Head

of Internal Audit.

Key management positions who directly report to CEO.

NOTICE OF MEETING Notice is hereby given that the 48

th Annual General Meeting of the Shareholders of the Company

M/S. FAZAL CLOTH MILLS LIMITED will be held on Thursday, the 31st day of October,

2013 at 11:00 a.m. at 129/1, OLD BAHAWALPUR ROAD, MULTAN to transact the following

business:

ORDINARY BUSINESS

1. To confirm the minutes of the last Extra Ordinary General Meeting of the Company held on 29-01-2013.

2. To receive, consider and adopt the Audited Accounts of the Company for the year ended 30th

June, 2013 together with the Auditors’ and Director’s Report thereon.

3. To consider and approve payment of final Cash Dividend for the year ended 30th June 2013 at

the rate of Rs.2.50 (Rupees Two and Paisa Fifty Only) per Ordinary Share of Rs.10.00 each (25%) as recommended by the Board of Directors.

4. To appoint External Auditors of the Company for the Financial Year Ending 30th

June, 2013 and fix their remuneration. M/s. KPMG Taseer Hadi & CO., Chartered Accountants, Lahore,

External Auditors of the Company retired and being eligible offer themselves for re-

appointment.

SPECIAL BUSINESS

5. To consider and approve issuance of Bonus Shares in proportion of 1 bonus share for every 5

ordinary shares held i.e. 20 % as recommended by the Board of Directors.

6. The Directors have recommended to consider and if thought fit to pass with or with-out

modification the following resolution as Ordinary Resolution:

“RESOLVED that a sum of Rs.50,000,000.00 out of the free reserves of the Company be

capitalized and applied towards the issue of 5,000,000 ordinary shares of Rs.10/- each, to be

allotted as bonus shares in proportion of 1 bonus share for every 5 existing ordinary shares held by the members who are registered in the books of the Company as on 25

th October

2013, and that such new shares shall rank pari passu in all respects with the existing ordinary

shares of the Company”.

“Members entitled to fractions of shares as a result of their holding either being less than 5

Ordinary Shares or in excess of an exact multiples of 5 Ordinary Shares be given the sale proceeds of their fractional entitlements for which purpose the fractions be considered and

sold in the stock exchange. For the purpose of giving effect to the foregoing, Mr. M.D.

KANWAR, Company Secretary be and is hereby authorized to take all necessary actions

under the law and file necessary returns, documents, as required under the provisions of Companies Ordinance, 1984 and to settle any questions or difficulties that may arise in the

distribution of the said bonus shares or in the disposal of fractions and payment of proceeds

thereof”.

7. To discuss the matter and seek approval of the shareholders of the following resolutions, with or without modifications, in compliance with section 208 of the Companies Ordinance, 1984,

regarding investment of Rs. 1,900 (M) in Associated Company Fatima Energy Ltd:

“Resolved to make an investment approximately up to Rs.1,900,000,000/- (Rupees One

Billion and Nine Hundred million only) within a period of three years in the form of an advance, which is to be used to acquire equivalent ordinary shares of Rs. 10/- each, as

recommended by the Board of Directors, in FATIMA ENERGY LTD, an associated

undertaking of the Company having its Plant at SANAWAN, Tehsil Kot Addu, District

Muzaffargarh. This investment will represent 30% of the total equity of Fatima Energy Ltd (equivalent to US $ 17.610 Million or Rupees 1.900 Billion. The Rupee amount may change

due to exchange rate fluctuation). The Company will charge markup until the date, shares are

issued against the advance. The proposed investment shall comply with the requirements of section 208 of the Companies Ordinance, 1984”.

8. “RESOLVED THAT the compliance of section 172 of the Companies Ordinance, 1984 be

made by filing Form 26 with the Joint Registrar of Companies, Securities & Exchange

Commission of Pakistan, LAHORE for registration”.

“FURTHER RESOLVED THAT Mr. M.D KANWAR, Company Secretary singly be and is

hereby authorized to take all such steps as may be necessary or incidental for complying with

mandatory requirements of the law in connection with the above Ordinary/Special Resolutions on behalf of the Company”.

9. To transact any other business with the permission of the Chairman.

BY ORDER OF THE BOARD

MULTAN. Sd/-

Dated: 05th October, 2013. ( M.D. KANWAR )

Company Secretary

NOTES.

BOOK CLOSURE FOR ORDINARY SHARES I. The Share Transfer Books of the Company will remain closed from 26

th October, 2013 to

03rd

November, 2013 (both days inclusive).

BOOK CLOSURE FOR THE ENTITLEMENT OF DIVIDEND @14.56% FOR THE YEAR

ENDED 30TH

JUNE 2013 AND @11.59% FOR PERIOD ENDED 31ST

OCT 2013 ON

PREFERENCE SHARES (NON VOTING)

II. The share transfer Books of preference shares (non voting) of the Company will remain

closed from 26th October, 2013 to 31

st October, 2013 (both days inclusive) for entitlement

of preference Dividend @ 14.56% per annum with effect from 1st July, 2012 to 30

th June,

2013 and @ 11.59% for the period from 1st July 2013 to 31 October 2013. Physical

transfers/CDS Transactions IDs received at Company’s Share Department at 129/1 Old

Bahawalpur Road, MULTAN or Company’s Share Registrar VISION

CONSULTING LIMITED, 3-C, LDA Flats, Lawrence Road, LAHORE at the close of business on 25

th October, 2013 will be treated in time for entitlement purpose of

preferred Dividend. The preference shareholders are not entitled to attend meeting.

III. A member entitled to attend and vote at the meeting may appoint another member as

his/her proxy to attend and vote instead of him/her. A corporate Body being a member of

the Company may appoint its proxy either under its seal or under the hand of any officer or attorney duly authorized. The instrument of appointing proxy must be deposited with

Company’s Share Department at 129/1 Old Bahawalpur Road, MULTAN or

Company’s Share Registrar VISION CONSULTING LIMITED,

IV. 3-C, LDA Flats, Lawrence Road, LAHORE not later than 48 hours before the time of

meeting.

V. CDC Accountholders will further have to follow the under mentioned guidelines as laid

down by the Securities and Exchange Commission of Pakistan:-

a. For attending the meeting In case of individuals, the account holders or sub-account holders whose registration

details are uploaded as per regulations shall authenticate their identity by showing their original National Identity Cards (NIC) or original Passport at the time of

attending the meeting.

In case of corporate entities, the Board of Directors’ resolution/power of attorney

with specimen signature of the nominees shall be produced (unless it has been

provided earlier) at the time of the meeting.

b. For appointing proxies

In case of individuals, the account holders or sub-account holders whose

registration details are uploaded as per regulations shall submit the proxy form as

per the above requirements.

The proxy form shall be witnessed by two persons whose names, addresses and

NIC numbers shall be mentioned on the form.

Attested copies of NIC or the passport of the beneficial owners and the proxy

shall be furnished with the proxy form.

The proxies shall produce their original NIC or original passport at the time of

meeting.

In case of corporate entities, the Board of Directors’ resolution/power of attorney

with specimen signature of the person nominated to represent and vote on behalf

of the corporate entity, shall be submitted (unless it has been provided earlier)

along with proxy form to the Company.

V. Shareholders are requested to promptly notify any change in their addresses.

STATEMENT UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984

REGARDING SPECIAL BUSINESS

BONUS SHARES – ITEM NO. 5 – 6 OF THE NOTICE

The present Capital base of the Company needs to be expanded to meet the future growth and expansion needs of business. It will not only improve Company’s leverage position but will also

enable the management to increase the paid up capital of the Company. Directors have no interest

whatsoever in the matter except as shareholders.

INVESTMENT IN ASSOCIATED UNDERTAKING (FATIMA ENERGY LIMITED) – ITEM

NO. 7 & 8 OF THE NOTICE.

Fatima Energy Limited, which is public unquoted company engaged in the business of generation of

electricity, is an associated company of Fazal Cloth Mills Limited (the “Company”) by virtue of

common directorship and shareholding. Management of the Company is hopeful that this would be a good investment and can pay healthy return in shape of mark up and dividends.

In Compliance of Companies (Investment in Associated Companies and Associated

Undertakings) Regulation, 2012 the following information is required to be annexed with the

special resolution for approval of the investment for the purpose of Section 208 of the

Companies Ordinance.

UNDERTAKING In respect of proposed investment of Rs.1.9 Billion in M/s. Fatima Energy Ltd, your Directors declare

that they have carried out necessary due diligence based on their experience and professional

judgment.

ADVANCE

(i) Name of Investee Company: Fatima Energy Limited Registration No and date: 0047770, Dated: 22.06.04

Registered Office Address: E-110, Khyaban-e-Jinah Lahore

Authorized Share capital: Rs. 10 (M)

Paid up Capital: Rs. 350,000

Shareholders:

Sr. No. Name of shareholder No. of Shares 1. Mr. Fawad Ahmed Mukhtar 5,000 2. Mr. Fazal Ahmed Sheikh 5,000 3. Mr. Faisal Ahmed Mukhtar 5,000 4. Mrs. Ambreen Fawad 5,000 5. Mrs. Fatima Fazal 5,000 6. Mrs. Farah Faisal 5,000 7. Mr. Iftikhar Baig 5,000

Investee Company is an associated company of the Company as it, inter alia, has the following

common directors:

Mr. Fazal Ahmed Sheikh Mr. Faisal Ahmed Mukhtar

(ii) Amount of loans or advances;

Rs 1.9 Billion advance for shares of Investee Company which will be given with in the period of three years

(iii) Purpose of loans or advances and benefits likely to accrue to the investing company and

its members from such loans or advances;

Fazal Cloth Mills Limited (“FCML”), Fatima Sugar Mills Limited (“FSML”), along with

Reliance Weaving Mills Limited (“RWML”) (collectively the “Sponsors”) - group companies

of the Fatima Group (“Fatima Group”), intends to set up a 120 MW co-generation power

project (“the Project”), through Fatima Energy Limited (“FEL”), a special purpose company,

based on bagasse and imported coal. Out of the total weighted average net capacity of 100.53

MW, electricity will be sold directly to the Fatima Group companies as per their requirement.

Main benefit of such investment is to supply the Company, electricity without any interruption

which will boost profitability of the company because company is using alternative power

generation sources which cost approx. Rs. 26/- per unit. On the other hand WAPDA already is

suffering from 4,000 MW shortfalls and costing to Rs. 16/- approx. per unit after recent tariff

hike. That is why management of Fatima Group initiated such step to avoid enslavement on

WAPDA.

Company will be benefited as it will earn mark up until shares are issued against its investment

and also benefit in the form of Dividends once shares are issued.

(iv) In case any loan has already been granted to the said associated company or associated

undertaking, the complete details thereof;

NA

(v) Financial position, including main items of balance sheet and profit and loss account of

the associated company or associated undertaking on the basis of its latest financial

statements;

LIABILITIES Rs.

Paidup capital 0.35 (M)

Accumulated profit/(Loss) (4.70) (M) Loans from related parties 248.50 (M)

Markup payable to related parties 48.10 (M)

Other payable 2.50 (M)

Total 294.80 (M)

ASSETS Property & Equipment 293.90 (M)

Prepayments, cash & bank balance 0.90 (M)

Total 294.80 (M)

Profit & (Loss) as at 30.06.12 (3.40) (M)

(vi) Average borrowing cost of the investing company or in case of absence of borrowing the

Karachi Inter Bank Offered Rate for the relevant period;

KIBOR + 1.25%

(vii) Rate of interest, mark up, profit, fees or commission etc. to be charged;

2.5% above KIBOR

(viii) Sources of funds from where loans or advances will be given;

Retained earnings and cash flow of the Company during three years

(ix) Where loans or advances are being granted using borrowed funds,-

NA

(I) Justification for granting loan or advance out of borrowed funds;

NA

(II) Detail of guarantees / assets pledged for obtaining such funds, if any; and NA

(III) Repayment schedules of borrowing of the investing company; NA

(x) Particulars of collateral security to be obtained against loan to the borrowing company or

undertaking, if any; N/A, as the investment is an advance for shares

(xi) If the loans or advances carry conversion feature i.e. it is convertible into securities, this

fact along with complete detail including conversion formula, circumstances in which the

conversion may take place and the time when the conversion may be exercisable;

Total investment amount will be converted into shares of Investee Company. Shares will be

issued as soon as the company proceeds to a rights issue. Until that time, mark up will be charged on the investment. Fazal Cloth Mills Ltd. will purchase the shares of M/s. Fatima

Energy Ltd. maximum @ Rs. 10/- per share against entire outstanding amount. Conversion will

take place post financial close of Project and will continue until the Project begins commercial operations.

(xii) Repayment schedule and terms of loans or advances to be given to the investee company;

Total investment amount will be converted into shares of Investee Company. Shares will be issued as soon as the company proceeds to a rights issue. Until that time, markup will be

charged on the investment.

(xiii) Salient feature of all agreements entered or to be entered with its associated company or

associated undertaking with regards to proposed investment;

Draft attached

(xiv) Direct or indirect interest of directors, sponsors, majority shareholders and their relatives,

if any, in the associated company or associated undertaking or the transaction under

consideration; The Directors are sponsors of the investee Co.

(xv) Any other important details necessary for the members to understand the transaction;

and NA

(xvi) In case of investment in a project of an associated company or associated undertaking that

has not commenced operations, in addition to the information referred to above, the

following further information is required, namely,-

a. A description of the project and its history since conceptualization; Project Information Memorandum is attached herewith.

Starting date and expected date of completion;

Construction starting date November 01, 2013 Completion of work date (TENTATIVE) Early, 2016

b. Time by which such project shall become commercially operational;

Commercial Operation Date (TENTATIVE) Early, 2016

c. Expected return on total capital employed in the project; and

The rate of return of 16% in case of coal generation and 18% in case of generation on bagasse.

d. Funds invested or to be invested by the promoters distinguishing between cash and

non-cash amounts Total Cash

EQUITY

(i) Name of Investee Company: Fatima Energy Limited Registration No and date: 0047770, Dated: 22.06.04

Registered Office Address: E-110, Khyaban-e-Jinah Lahore

Authorized Share capital: Rs. 10 (M)

Paid up Capital: Rs. 350,000

Shareholders:

Sr. No. Name of shareholder No. of Shares 1. Mr. Fawad Ahmed Mukhtar 5,000 2. Mr. Fazal Ahmed Sheikh 5,000 3. Mr. Faisal Ahmed Mukhtar 5,000 4. Mrs. Ambreen Fawad 5,000 5. Mrs. Fatima Fazal 5,000 6. Mrs. Farah Faisal 5,000 7. Mr. Iftikhar Baig 5,000

Investee Company is an associated company of the Company as it, inter alia, has the following

common directors:

Mr. Fazal Ahmed Sheikh Mr. Faisal Ahmed Mukhtar

(ii) Purpose, benefits and period of investment;

Fazal Cloth Mills Limited (“FCML”), Fatima Sugar Mills Limited (“FSML”), along with

Reliance Weaving Mills Limited (“RWML”) (collectively the “Sponsors”) - group companies

of the Fatima Group (“Fatima Group”), intends to set up a 120 MW co-generation power

project (“the Project”), through Fatima Energy Limited (“FEL”), a special purpose company,

based on bagasse and imported coal. Out of the total weighted average net capacity of 100.53

MW, electricity will be sold directly to the Fatima Group companies as per their requirement.

Main benefit of such investment is to supply the Company, electricity without any interruption

which will boost profitability of the company because company is using alternative power

generation sources which cost approx. Rs. 26/- per unit. On the other hand WAPDA already is

suffering from 4,000 MW shortfalls and costing to Rs. 16/- approx. per unit after recent tariff

hike. That is why management of Fatima Group initiated such step to avoid enslavement on

WAPDA.

Company will be benefited as it will earn mark up until shares are issued against its

investment and also benefit in the form of Dividends once shares are issued.

(iii) Maximum amount of investment;

Rs. 1.9 Billion which will be given with in the period of three years

(iv) Maximum price at which securities will be acquired; Rs. 10/- per share

(v) Maximum number of securities to be acquired;

190 (M) number of share

(vi) Number of securities and percentage thereof held before and after the proposed

investment;

Presently Nil 0% - & 190 (M) Shares, 30% after equity investment

(vii) In case of investment in listed securities, average of the preceding twelve weekly average

price of the security intended to be acquired;

NA

(viii) In case of investment in unlisted securities, fair market value of such securities determined

in terms of regulation 6(1);

Rs. (125.20) per share

(ix) Break-up value of securities intended to be acquired on the basis of the latest audited

financial statements; Rs. (125.20) per share

(x) Earning per share of the associated company or associated undertaking for the last three

years; NA

(xi) Sources of fund from which securities will be acquired; Retained Earnings and cash flow of the Company during three years

(xii) Where the securities are intended to be acquired using borrowed funds,-

NA

(I) Justification for investment through borrowings; and

NA

(II) Detail of guarantees and assets pledged for obtaining such funds;

NA

(xiii) Salient features of the agreement(s), if any, entered into with its associated company or

associated undertaking with regards to the proposed investment;

Enclosed

(xiv) Direct or indirect interest of directors, sponsors, majority shareholders and their relatives,

if any, in the associated company or associated undertaking or the transaction under

consideration; The Directors are sponsors of the investee Co.

(xv) Any other important details necessary for the members to understand the transaction;

NA

(xvi) In case of investment in securities of a project of an associated company or associated

undertaking that has not commenced operations, in addition to the information referred

to above, the following further information, is required, namely,-

(I) A description of the project and its history since conceptualization;

Project Information Memorandum is attached herewith.

(II) Starting date and expected date of completion;

Construction starting date November 01, 2013 Completion of work date (TENTATIVE) Early, 2016

(III) Time by which such project shall become commercially operational;

Commercial Operation Date (TENTATIVE) Early, 2016

(IV) Expected time by which the project shall start paying return on investment;

Early, 2016

(IV) Expected return on total capital employed in the project; and

The rate of return of 16% in case of coal generation and 18% in case of generation on bagasse.

(V) Funds invested or to be invested by the promoters distinguishing between cash and non-

cash amounts

Total Cash

Fatima Energy Limited

Project

Fatima Sugar Mills Limited (“FSML”), along with Fazal Cloth Mills Limited (“FCML”) and Reliance Weaving Mills Limited (“RWML”) (collectively the “Sponsors”) - group companies of the

Fatima Group (“FGroup”), intends to set up a 120 MW co-generation power project (“the Project”),

through Fatima Energy Limited (“FEL” or the “Company”), a special purpose company, based on

bagasse and imported coal. The Project will be located at Sanawan, Tehsil KotAdu, District Muzaffargarh in the province of Punjab, on approximately 62 acres of land adjacent to FSML.

The Project generation will be based on fuel mix of bagasse/biomass and imported coal, while ensuring that all requisite measures are in place to ensure that the Project is environmentally

compliant. During 120 days of crushing season, bagasse being a by-product of sugar will be the

primary fuel for the Project for power generation, which will be mainly procured from one of the Sponsors, i.e. FSML.

FEL has made a strategic decision to sell electricity to Bulk Power Consumers, instead of the national

grid, in view of the growing viability posed by private sale of electricity. With the gradual elimination of subsidies (as envisioned under the new energy policy) and expected price hikes for inter alia

industrial users, the tariff charged by the relevant DISCOs will increase – thereby enhancing viability

of FEL’s project.

The Company intends to enter into long term, private off-take arrangements with BPCs, both affiliates

and non-affiliated companies, for the total weighted average net capacity of [100.53] MW. This weighted average net capacity of [100.53] MW shall be sold to BPCs throughout the year at 88%

plant availability factor. . FEL would supply the power generated at its facilities to the BPCs through

a wheeling arrangement with MEPCO (using MEPCO’s Network).

For BPCs that are weary of entering into a long term power purchase agreement FEL can devise

short-term off-take arrangements. The off-take agreement to be executed between FEL and the BPC shall be structured such that (i) Energy Charge is paid to FEL on the basis of delivered electricity; and

(ii) Capacity Charge is paid on the basis of available capacity, irrespective of whether the BPC off-

takes or not, thus guaranteeing all of the Company’s fixed costs. Furthermore, to secure the BPC’s

payment obligations they shall provide an SBLC (for an amount of x months of CPP) at COD which shall be drawn upon non-payment by the BPC.

The total cost for the Project is USD 234.72 million, which is expected to be financed in a debt to equity ratio of 70:30. The total debt which amounts to USD 164.304 million is intended to be raised

through both local and foreign currency financing facilities.

The broad parameters of the Project are depicted below:

Project Capacity 118.8 MW

Net Capacity Non Crushing Season: 107.54 MW Crushing Season: 88.78 MW Annual Weighted Average Capacity: 100.53 MW

Project Location Sanawan, Tehsil Kot Adu, District Muzaffargarh, Punjab Land Area 62 acres Construction Period 30 months

Power Purchaser Bulk Power Consumers – affiliates (Fatima Group companies) and non-

affiliated companies

EPC Contractor Shanghai Marine Diesel Engineering Research Institute, a subsidiary of

China Shipbuilding Industry Corporation

Steam Turbines 2 x 60 MW condensing and extraction Siemens ST 600 EP steam

turbines

Boilers 2 x 215 ton per hour Foster Wheeler (Spain) high temperature/pressure boilers

Total Project Cost * USD 234.72 million Capital Structure 30% Equity (USD 70.416 million)and 70% Debt (USD 164.304 million)

Weighted Average

Efficiency 28%

Annual Availability 88% Levelized Tariff (based on

petition filed ) US Cents 12.214 per kWh or PKR 11.847per KWh (tariff is based on

100% local currency financing) *based on USD/PKR parity of 97

The Sponsors

Expected shareholding structure of FEL is as follows:

FGroup Company Shareholding Percentage Fatima Sugar Mills Limited 25% Fazal Cloth Mills Limited 30% Reliance Weaving Mills Limited 25% Others including IPO 20%

The main sponsor of the company/project is Fazal Cloth Mills Ltd. The Company was incorporated

in 1966. At present, the company owns and operates 7 Spinning units comprising 216,792 Spindles, 1740 Rotors and 117 looms. 108 looms will be operational by the end of 2014. The company

produces 6250 tons of Yarns and 2 million meters of fabric per month. All units have captive gas fired

power generation with a capacity of 32.2 MW. The company provides employment to more than 4000

people.

FSML is a public limited company, belonging to the prestigious FGroup. FSML has enjoyed

successful operations since 1988 and is primarily engaged in the production and sale of refined sugar with a current crushing capacity of 10,500 tons per day (“TPD”) and is moving towards achieving

15,000 TPD crushing capacity before start of commercial operations of FEL.

RWML, the flagship company of the FGroup was established in 1991. The principal business of the RWML is manufacture/sale of cotton yarn and grey woven fabrics. RWML has a production facility

of 35,520 spindles (two units) and 296 looms (two units).

Key consolidated financials of the Sponsors for the year2012 are as follow:

Particulars (USD Mn) Total Assets 377 Shareholders’ Equity 170 Net Sales 341 Gross Profit 44 Long term debt to equity 22:78

FCML, RWML and FSML are group companies of FGroup. Please refer to “Annexure-A” for brief

profile of FGroup.

EPC Arrangement

The Company has Engineering, Procurement and Construction (“EPC”) arrangement with Shanghai

Marine Diesel Engineering Research Institute (“SMDERI” or the “EPC Contractor”).

SMDERI is a subsidiary of China Shipbuilding Industry Corporation (“CSIC”). CSIC is a major

state-owned enterprise group and one of China's largest shipbuilding and energy equipment groups. CSIC has 43 industrial subsidiaries and 28 R&D institutes, with a workforce of 150,000. Furthermore,

CSIC is an entity directly under the state government with state authorization for investment and

capital management. The CSIC group has a total asset base of USD 38 billion; and in 2011 the total

revenue of the CSIC group was USD 29 billion.

The Project shall be based on Spreader Stoker boiler technology for efficient burning of dual fuel,

namely biomass and coal. Foster Wheeler of Spain will supply the boilers based on this technology. For the boiler combustion system, Detroit Stoker Company of USA has been selected for providing its

special Rotograte System, which is considered as one of the best in the world. For steam turbines,

Siemens Germany has been selected for supply of two full condensing/extraction steam turbines for

the Project.

The Company is in the process of finalizing the terms and conditions of Operations and Maintenance

arrangement, which is expected to be a comprehensive arrangement with a credible operator.

Project Cost & Funding Plan

The breakup of the Project Cost is summarized as follows:

Sources (USD Mn) Uses (USD Mn)

Senior Debt - 70% 164.304 EPC 173.62

- Foreign Debt * 53.30 Non EPC Costs 8.29 - Local Debt* 122.74 Custom Duties & Taxes 8.40

Project Development Cost 8.18

Equity - 30% 70.416 Insurance 2.34

Other costs 9.47

Interest during construction** 24.42

Total Sources 234.72 Total Project Cost 234.72

* Tentative foreign debt amount. Local debt amount will increase or decrease depending on the

foreign debt arranged ** Based on 100% local currency financing

In addition to the aforementioned funding plan, working capital facility of around USD 19 million (“WCF”) is envisaged to fund the costs corresponding to the long lead time associated with coal

procurement, requirement for maintaining a minimum inventory, advance payments to the fuel

supplier as well as limitations associated with shipment size, receivables, etc.

Levelized Tariff

The generation tariff worked out is US Cents 12.214 per KWh1. The proposed tariff of the Project

will be based on minimum take or pay, and would consist of a two-part structure with a Capacity Charge (“CC”), payable based on the available capacity and an Energy Charge (“EC”), payable based

on the energy actually dispatched.

The CC will cover fixed costs, such as Debt servicing, Return on Equity, Return on Equity during

Construction, Fixed O&M, Insurance and Working Capital Financial Charges, whereas the EC will

cover fuel cost (bagasse and coal) and Variable O&M. All components shall be appropriately indexed.

Project Status After selection of EPC Contractor the Company filed an application for the grant of a generation

license. The Company is in the process of developing a PPA to be signed with each BPC and a Electricity Wheeling Agreement to be signed with MEPCO for the supply and distribution of

electricity to the BPCs.

MULTAN. Sd/-

Dated: 05th October, 2013. ( M.D. KANWAR )

Company Secretary

1Based on 100% local currency financing

Annexure – A (Fatima Group Profile)

Established in 1936, the success story of FGroup is spread over seven decades, which has expanded

its businesses from trading to manufacturing. Today, the FGroup is engaged in trading of

commodities, manufacturing of fertilizers, textiles, sugar, mining and energy. The FGroup has made exceptional progress in the last two decades by achieving a turnover of about USD 733 million and

EBITDA of USD 275 million for 2012.

Key consolidated financials of selected FGroup companies for the year 2012 are as follow:

Particulars (USD Mn)* Total Assets 1,792 Shareholders’ Equity 731 Net Sales 733 Gross Profit 243 Long term debt to equity 34:66

*Based on Fatima Group’s selected fertilizer, textile, sugar and

international trade companies

DIRECTORS' REPORT

Dear Shareholders,

Assalam-o-Alaikum,

It is a pleasure to welcome you to the 48th Annual General Meeting of the Company and place before you

the Audited Financial Statement of the Company for the year ended June 30, 2013.

FINANCIAL AND OPERATING RESULTS: Sales for the year were Rs.20,559 Million as compared to Rs. 19,750 Million last year. This represents an

increase of 4.09%. Profit for the year after tax is Rs. 1,151.122 Million after charging depreciation of Rs.

534.553 Million and contribution to Workers Profit Participation Fund of Rs. 78.787 Million. Earnings per

share (EPS) are Rs. 46.04 (2012: Rs. 47.40 Restated). EBITDA of Rs. 3,057.137 Million was generated.

EBITDA per ordinary share is Rs. 122.29 (2012:Rs. 140.00 Restated).

Your Directors and Chief Executive Officer, Chief Financial Officer, Company Secretary, their spouses

and minor children have made following transaction in Company's shares.

Description Sh.Naseem

Ahmad &

Mst.Nighat

Naseem

Mst.

Mahnaz

Amir Sh.,

Amir

Naseem

Sh. &

Minor

Childern

Rehman

Naseem

& Minor

Childern

Fazal

Ahmed

Sheikh

Fahad

Mukhtar

Faisal

Ahmed

Company

Secretary

CFO

Opening

Balance as on

01.07.2012 229,861 2,153,989 2,177,648 1,538,015

32,776 1,536,699 1,055 732

Purchase - - - - - - - -

Bonus 24,409 228,739 231,252 163,328 3,480 163,189 112 77

Inherited - - - - - - - -

Gift - - 246,920 - - - - -

Transfer as

Gift (246,920) - - -

-

- - -

Closing

Balance as on

30.06.2013 7,350 2,382,728 2,655,820 1,701,343

36,256 1,699,888 1,167 809

During the year 2012-2013, four board meetings were held which were attended as follow:

Sh. Naseem Ahmad Chairman/Chief Executive 4

Mr. Jamal Nasim Nominee of NIT Ltd. 3 Mr. Amir Naseem 1

Mr. Rehman Naseem 4

Mr. Fazal Ahmad Sheikh 2

Mr. Faisal Ahmad 2

Mr. Fahd Mukhtar 2

Mst. Mahnaz Amir Sheikh 3

COMPARISON OF LAST SIX YEARS OF OPERATIONS:

Salient features of the financial performance of the company for the last six years are reproduced below:

2013 2012 2011 2010 2009 2008

Production in Kgs Spinning (000)

Production in Meters Fabric (000)

53,013

24,570

53,251

12,210

46,454

-

43,723

-

41,995

-

38,422

-

Sales net (Rs. In millions) 20,559 19,750 18,934 11,211 8,651 7,021

Gross Profit (Rs. In millions) 2,890 2,831 2,026 1,573 1,196 944

Net Profit before tax (Rs. In

millions)

1,462 1,648

Restated

1,001

Restated

845

Restated

550

Restated

318

Restated

Provision for taxation including

deferred tax (Rs. In millions)

311 463

Restated

225

Restated

198

Restated

92

Restated

165

Restated

Profit after taxation (Rs. In

million)

1,151 1,184

Restated

776

Restated

648

Restated

458

Restated

154

Restated

Un-appropriated profit brought

forward (Rs. In million)

3,600 3,100

Restated

2,447

Restated

1,761

Restated

1,270

Restated

872

Restated

Appropriation (Rs. In million) 4,959 3,691

Restated

3,016

Restated

2,358

Restated

1,669

Restated

1,173

Restated

Cash Dividend 25% 20% Nil Nil Nil Nil

Specie Dividend %age Nil Nil 50% 100% Nil Nil

Bonus Shares %age 20% 10.62% 20.50% Nil Nil Nil

Gross Profit ratio 14.06% 14.33% 10.70% 14.03% 13.83% 13.44%

Net profit to sale ratio

5.60% 6.00% 4.36% 4.70% 2.08% 4.85%

Earnings before interest, tax,

depreciation and amortization

(EBITDA) (Rs. In million)

3,057 3,164

Restated

2,106

Restated

1,734

Restated

1,565

Restated

1,145

Restated

CORPORATE GOVERNANCE:

As required by the code of corporate governance the board of directors hereby declares that:

The financial statements for the year ended June 30, 2013 present fairly the state of affairs, the

result of its operations, cash flows and changes in equity; Proper books of account have been maintained; Appropriate accounting policies have been consistently applied in preparation of financial

statements for the year ended June 30, 2013 and accounting estimates are based on reasonable and

prudent judgment; International Accounting Standards (IAS) as applicable in Pakistan, have been followed in

preparation of financial statements; The system of internal control is sound in design and has been effectively implemented and

monitored; There is no doubt about the Company to continue as going concern; There has been no material departure from best practices of corporate governance as detailed in

listing regulations;

PATTERN OF SHAREHOLDING:

The pattern of share holding as on June 30, 2013 is annexed.

FUTURE OUTLOOK:

Since August 2013, electricity tariff has been increased by a massive 50% and gas tariff by 17.64%.

Further increase in gas tariff is expected. Power and fuel cost for the Company will register a sharp increase

during the current year. This will squeeze profit margins.

However, supply of electricity and gas for textile industry has been rationalized by the new Government

resulting in full operations and no downtime due to load shedding. If this policy continues, as expected, it

will result in higher utilization of installed capacity mitigating the negative effects of tariff increase. During

the current year expansion of spinning and weaving capacities of the Company will also come online. This

will result in an increase in turnover and increase in profit margins due to economies of scale.

Cotton prices have increased to Rs. 7,000 from Rs. 5,800 last year. Yarn and fabric prices, however, have

not increased proportionately. However, due to the steady devaluation of Pakistani Rupee and expected

increase in demand from China, your management expects yarn and fabric prices to rise. Overall impact on

profit margins due to these factors cannot be ascertained at this time.

Financial performance for the first quarter ending September 30, 2013 remains satisfactory, although due to

the factors mentioned above, full year performance is difficult to forecast.

DIVIDEND ANNOUNCEMENT

Your Directors have proposed to distribute @ 25% cash dividend and “Bonus Shares” in the proportion of

20 shares for every 100 ordinary shares held i.e. 20%. (2012: 20% cash dividend and Bonus Shares in the

Proportion of 10.61947 shares for every 100 shares held).

Subsidiary Company

The Company has annexed its consolidated financial statements along with its separate financial statements

in accordance with the requirements of International Accounting Standard-27 (Consolidated and Separate

Financial Statements).

Following is a brief description of subsidiary company of Fazal Cloth Mills Limited.

The Company owns and controls 100% shares of this subsidiary. The registered office of the Company is

69/7, Abid Majeed Road, Survey # 248/7, Lahore Cantt, Lahore and the manufacturing facility of the

Company is located at Mauza Khairabad, Qadirpur Rawan bypass, Khanewal Road, Multan. The Principal

activity of the Company is to carry business of textile spinning and weaving. During the year, the Company

has started installation of textile machinery and plans to commence its commercial operations by the month of February, 2014.

AUDITORS:

M/s.KPMG Taseer Hadi & Co., Chartered Accountants, auditors of the Company retires and being eligible

offers themselves for reappointment for the year 2013-2014.

MANAGEMENT/LABOUR RELATIONS:

The management/labour relations remained warm and cordial throughout the year under review. We place

great importance on our employees. We continue to invest in the professional development and

improvement of skills of our human resources, since we believe that by investing in our people we invest in our future. Company’s human resource policy is based on the underlying values of fairness, merit, equal

opportunity and social responsibility. Complying with our human resource policies we do not hire any child

labour.

The employees and management of the company continued to make joint efforts to keep up high standards

of productivity. By the grace of Allah the Almighty, relationship of management and employees continued

to remain in total harmony.

The board wishes to place on record its deep appreciation to all of them for their hard work and dedication

to achieve these results.

Dated: October 05, 2013

Sd/-

(SH. NASEEM AHMAD)

Chairman / Chief Executive Officer

STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE

GOVERNANCE

(See Clause (XI).

This statement is being presented to comply with the Code of Corporate Governance contained

in Regulation # 35 (Chapter XI) of Listing Regulations of the Karachi and Lahore Stock

Exchanges (Guarantee) Limited 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 CCG in the following manner:

1. The Company encourages representation of independent non-executive directors and

directors representing minority interests on its board of directors. At present the board

includes:

Category Names

Executive Directors Sh. Naseem Ahmad

Mrs. Mahnaz Amir Sheikh

Mr. Fazal Ahmad Sheikh

Mr. Fahd Mukhtar

Non Executive

Directors

Mr. Rehman Naseem

Mr. Faisal Ahmad

Mr. Jamal Nasim

(Nominee Director NIT).

The compliance regarding independent director will be made during next election of

Directors due on 30th May 2014.

2. The directors have confirmed that none of them is serving as a director on more than

seven 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. One vacancy is created and dully fulfilled during the year on the board.

5. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps

have been taken to disseminate if throughout the company along-with its supporting

policies and procedures.

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, other executive directors, have been taken by the

board/shareholders.

8. The meetings of the board of directors 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 will arrange training programs for its directors in accordance with the

provisions of CCG.

10. The board has approved [Nil] appointment of CFO, Company Secretary and Head of

Internal Audit, including their remuneration and terms and conditions of employment.

11. The directors‟ report for this year has been prepared in compliance with the requirements

of the CCG 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 disclosed in the pattern of shareholding.

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

the CCG.

15. The board has formed an Audit Committee. It comprises three members, of whom two are

non-executive directors and the chairman of the committee is an executive director.

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 CCG. The

terms of reference of the committee have been formed and advised to the committee for

compliance.

17. The board has formed an HR and Remuneration Committee. It comprises three members,

of whom two are non-executive directors and the chairman of the committee is

a non executive director.

18. The board has set up an effective internal audit function.

19. The statutory auditors of the company have confirmed that they have been given

a satisfactory rating under the quality control review program of the ICAP, 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 the ICAP.

20. 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.

21. The „closed period‟, prior to the announcement of interim/final results, and business

decisions, which may materially affect the market price of company‟s securities, was

determined and intimated to directors, employees and stock exchange(s).

22. Material/price sensitive information has been disseminated among all market participants

at once through stock exchange(s).

23. We confirm that all other material principles enshrined in the CCG have been complied

with.

Sd/-

(SH. NASEEM AHMAD)

Dated: October 05, 2013 Chairman / Chief Executive Officer

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 for the year ended 30 June 2013 prepared by the Board of

Directors of Fazal Cloth Mills Limited (“the Company”) to comply with the Listing

Regulation No. 35 of Karachi, Lahore and Islamabad 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, sub-regulation (x) of Listing Regulation No. 35 of Karachi, Lahore and

Islamabad Stock Exchanges requires the Company to place before the Board of Directors

for their consideration and approval of 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 2013.

Sd/

Lahore

KPMG Taseer Hadi & Co.

Date: 05 October, 2013 Chartered Accountants

(Kamran Iqbal Yousafi)

Auditors' Report to the Members

We have audited the annexed balance sheet of Fazal Cloth Mills Limited (“the

Company”) as at 30 June 2013 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;

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 2013 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).

The financial statements of the Company for the year ended 30 June 2012 were

audited by M. Yousuf Adil Saleem & Co., Chartered Accountants; whose report dated

05 October 2012 expressed a qualified opinion.

Sd/

Lahore KPMG Taseer Hadi & Co.

Chartered Accountants

Date: October 05,2013 (Kamran Iqbal Yousafi)

Fazal Cloth Mills Limited (The Company)

Financial Statements for the year ended

30 June 2013

Fazal Cloth Mills LimitedBalance Sheet

As at 30 June 2013

2013 2012 2011 2013 2012 2011

Restated Restated Restated Restated

Note Note

ASSETS EQUITY AND LIABILITIES

Non-current assets Share capital and reserves

Property, plant and equipment 4 12,271,377,241 11,255,073,203 7,064,862,691 Authorized share capital 700,000,000 700,000,000 700,000,000

Intangible assets 5 2,258,439 3,398,483 4,538,527

Long term investments 6 2,067,108,496 1,743,404,016 1,156,821,571 Issued, subscribed and paid-up capital

Long term loans to employees - - Ordinary shares 15 250,000,000 226,000,000 187,551,940

secured - 64,000 399,270 - Preference shares 15 - 175,000,000 175,000,000

Long term deposits 20,228,306 25,710,156 25,638,156 250,000,000 401,000,000 362,551,940

14,360,972,482 13,027,649,858 8,252,260,215

Reserves 16 252,616,000 252,616,000 227,616,000

Fair value reserve - available for sale

financial assets 795,960,133 784,049,931 246,163,636

Current assets Unappropriated profits 4,826,925,335 3,600,039,246 2,618,136,296

6,125,501,468 5,037,705,177 3,454,467,872

Stores, spares and loose tools 7 305,172,591 330,910,264 306,844,778

Stock-in-trade 8 5,928,618,601 3,774,011,125 3,410,214,097 Surplus on revaluation of property,

Trade debts 9 1,995,627,804 2,012,188,252 1,767,710,377 plant and equipment 17 3,695,889,962 3,790,322,138 2,192,499,393

Loans and advances 10 140,777,880 136,506,798 264,132,165

Trade deposits and short term Non-current liabilities

prepayments 11 6,655,581 6,754,211 7,678,585

Interest / markup accrued - - 16,265,203 Long term financing 18 4,392,121,833 3,641,788,504 1,956,200,180

Other receivables 4,778,084 102,862,038 3,796,190 Long term musharika 19 325,000,000 225,000,000 273,755,451

Short term investments 12 190,495,126 176,496,671 125,142,836 Bills payables - - 155,210,331

Tax refunds due from government 13 313,235,074 128,961,011 90,941,983 Deferred liabilities 20 1,787,295,452 1,574,329,516 960,455,903

Cash and bank balances 14 156,000,176 71,988,355 191,635,465 6,504,417,285 5,441,118,020 3,345,621,865

9,041,360,917 6,740,678,725 6,184,361,679 Current liabilities

Trade and other payables 21 1,602,138,962 799,192,313 720,686,943

Accrued profit / interest / mark-up 22 249,516,726 252,971,251 176,362,211

Short term borrowings 23 4,337,180,633 3,798,190,475 4,016,584,511

Current portion of non-current liabilities 24 887,688,363 648,829,209 530,399,099

7,076,524,684 5,499,183,248 5,444,032,764

Contingencies and commitments 25

23,402,333,399 19,768,328,583 14,436,621,894 23,402,333,399 19,768,328,583 14,436,621,894

The annexed notes from 1 to 46 form an integral part of these financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

--------------------------------------(Rupees)-------------------------------------- --------------------------------------(Rupees)--------------------------------------

Fazal Cloth Mills LimitedProfit and Loss Account For the year ended 30 June 2013

2013 2012

Restated

Note

Sales - net 26 20,558,587,886 19,750,444,507

Cost of sales 27 (17,668,351,141) (16,919,254,033)

Gross profit 2,890,236,745 2,831,190,474

Distribution cost 28 (256,769,780) (242,624,632)

Administrative expenses 29 (213,839,620) (175,315,940)

Other operating expenses 30 (118,819,703) (104,476,619)

(589,429,103) (522,417,191)

Other operating income 31 220,636,413 442,984,430

Profit from operations 2,521,444,055 2,751,757,713

Finance cost 32 (1,059,121,058) (1,103,134,269)

Profit before taxation 1,462,322,997 1,648,623,444

Taxation 33 (311,201,203) (463,723,286)

Profit after taxation 1,151,121,794 1,184,900,158

Basic earnings per share 34 46.04 47.40

Diluted earnings per share 35 45.84 47.28

The annexed notes from 1 to 46 form an integral part of these financial statements.

`

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

-------------(Rupees)-------------

Fazal Cloth Mills LimitedStatement of Comprehensive IncomeFor the year ended 30 June 2013

2013 2012

Restated

Profit after taxation 1,151,121,794 1,184,900,158

Other comprehensive income - net of tax:

Items that are or may be reclassified subsequently

to profit or loss:

Net change in fair value of available for

sale financial assets 11,910,202 537,886,295

Total comprehensive income for the period 1,163,031,996 1,722,786,453

The annexed notes from 1 to 46 form an integral part of these financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

-------------(Rupees)-------------

Fazal Cloth Mills LimitedCash Flow StatementFor the year ended 30 June 2013

2013 2012

Restated

Cash flow from operating activities

Profit before taxation 1,462,322,997 1,648,623,444

Adjustments for:

Depreciation of property, plant and equipment 534,552,964 411,215,812

Amortization of intangible assets 1,140,044 1,140,044

Gain on re-measurement of other financial assets (13,998,455) (51,599,911)

Loss on disposal of property, plant and equipment 900,000 -

Provision for gratuity 39,740,889 37,521,467

Provision for infrastructure cess 29,987,431 29,965,410

Gain on disposal of property, plant and equipment (4,016,994) (9,809,407)

Gain on disposal of other financial asset - (14,180)

Dividend income (208,996,022) (381,085,931)

Finance cost 1,059,121,058 1,103,134,269

Cash generated from operations before working capital changes 2,900,753,912 2,789,091,017

(Increase) / decrease in current assets

Stores, spares and loose tools 25,737,673 (24,065,486)

Stock in trade (2,154,607,476) (363,797,028)

Trade debts 16,560,448 (244,477,875)

Loans and advances (4,271,082) 121,234,500

Trade deposits and short term prepayments 98,630 924,374

Tax refunds due from the government (39,910,975) (50,962,817)

Interest / markup accrued - 16,265,203

Other receivables 98,083,954 (99,065,848)

Increase / (decrease) in trade and other payables 552,584,218 (38,951,647)

(1,505,724,610) (682,896,624)

Cash generated from operations 1,395,029,302 2,106,194,393

Gratuity paid (25,430,151) (23,370,505)

Customs duty paid - (67,718,724)

Income tax paid (206,376,968) (183,500,676)

Finance cost paid (1,062,575,565) (1,026,525,229)

100,646,618 805,079,259

Cash generated from operating activities

Long term loans to employees - net 64,000 335,270

Long term deposits 5,481,850 (72,000)

Net cash used in operating activities 106,192,468 805,342,529

Cash flow from investing activities

Purchase of property, plant and equipment (1,620,394,916) (2,580,135,748)

Proceeds from disposal of property, plant and equipment 22,654,908 16,784,898

Investment in subsidiary (199,825,000) -

Dividend received 147,201,720 101,232,016

Other financial assets - 260,256

(1,650,363,288) (2,461,858,578)

Net cash used in investing activities

Cash flow from financing activities

Long term financing obtained 1,587,692,633 2,299,487,339

Long term financing repaid (599,744,699) (496,713,448)

Long term musharika obtained 150,000,000 -

Long term musharika repaid (48,755,451) (47,510,916)

Short term borrowings - net 538,990,158 (218,394,036)

1,628,182,641 1,536,868,939

Net cash generated from financing activities

Net increase in cash and cash equivalents 84,011,821 (119,647,110)

Cash and cash equivalents at the beginning of the period 71,988,355 191,635,465

Cash and cash equivalents at the end of the period 156,000,176 71,988,355

The annexed notes from 1 to 46 form an integral part of these financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

-----------(Rupees)-----------

Fazal Cloth Mills LimitedStatement of Changes in Equity For the year ended 30 June 2013

Balance as at 01 July 2011 187,551,940 175,000,000 77,616,000 150,000,000 - 3,100,929,710 3,691,097,650

Effect of rectification of prior period error - - - - 246,163,636 (482,793,414) (236,629,778)

Balance as at 01 July 2011 - restated 187,551,940 175,000,000 77,616,000 150,000,000 246,163,636 2,618,136,296 3,454,467,872

Total comprehensive income

Profit for the year - restated - - - - 1,184,900,158 1,184,900,158

Other comprehensive income - restated - - - 537,886,295 - 537,886,295

- - - - 537,886,295 1,184,900,158 1,722,786,453

Incremental depreciation arising due to surplus

on revaluation of property, plant and

equipment - net of deferred tax - - - - - 91,608,618 91,608,618

Specie dividend - - - - - (231,157,766) (231,157,766)

Bonus shares issued 38,448,060 - - - - (38,448,060) -

Transfer to capital redemption reserve fund from

unappropriated profit - - - 25,000,000 - (25,000,000) -

Balance as at 30 June 2012 - restated 226,000,000 175,000,000 77,616,000 175,000,000 784,049,931 3,600,039,246 5,037,705,177

Total comprehensive income

Profit for the period - - - - - 1,151,121,794 1,151,121,794

Other comprehensive income - - - - 11,910,202 - 11,910,202

- - - - 11,910,202 1,151,121,794 1,163,031,996

Incremental depreciation arising due to surplus

on revaluation of property, plant and

equipment - net of deferred tax - - - - - 133,391,944 133,391,944

Preference shares transferred to current liability - (175,000,000) - - - - (175,000,000)

Surplus transferred on disposal of a revalued asset - - - - - 11,572,351 11,572,351

Bonus shares issued 24,000,000 - - - - (24,000,000) -

Cash dividend @ Rs.2 per share - - - - - (45,200,000) (45,200,000)

Balance as at 30 June 2013 250,000,000 - 77,616,000 175,000,000 795,960,133 4,826,925,335 6,125,501,468

The annexed notes from 1 to 46 form an integral part of these financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

Ordinary sharesPreference

shares

Share

premium

Capital

redemption

reserve

----------------------------------------------------------------------------------------(Rupees)----------------------------------------------------------------------------------------

Share capital Capital reserves Fair value reserve-

available for sale

financial assets

Un-appropriated

profits Total

Fazal Cloth Mills LimitedNotes to the Financial StatementsFor the year ended 30 June 2013

1 Legal status and nature of business

2 Basis of preparation

2.1 Statement of compliance

2.2 Standards, interpretations and amendments to published approved accounting standards

2.2.1

-

-

Fazal Cloth Mills Limited (the Company) was incorporated in Pakistan in 1966 as a public limited company under

the Companies Act, 1913 (now the Companies Ordinance, 1984) and its shares are quoted on Karachi and Lahore

Stock Exchanges. The registered office of the Company is situated at 69/7, Abid Majeed Road, Survey # 248/7,

Lahore Cantt, Lahore. The Company is engaged in manufacture and sale of yarn and fabric. The manufacturing

facilities are located at Fazal Nagar, Jhang Road, Muzaffargarh and Qadirpur Rawan Bypass, Khanewal Road,

Multan in the province of Punjab.

These financial statements have been prepared in accordance with the 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 notified under the provisions

of the Companies Ordinance, 1984, the requirements of the Companies Ordinance, 1984 and the directives

issued by the Securities and Exchange Commission of Pakistan (SECP). Wherever the requirements of the

Companies Ordinance, 1984 or the directives issued by the SECP differ with the requirements of the

IFRS, the requirements of the Companies Ordinance, 1984, and the said directives shall prevail.

Standards and interpretations to existing standards that are effective and applicable to the

Company

During the current period, the Company has adopted the following amendments to IFRS which became

effective for the current period:

Presentations of items of Other Comprehensive Income (Amendments to IAS 1) - (effective for

annual periods beginning on or after 1 July 2012). The amendments require that an entity present

separately the items of other comprehensive income that would be reclassified to profit or loss in

the future if certain conditions are met from those that would never be reclassified to profit or loss.

The amendments do not address which items are presented in other comprehensive income or

which items need to be reclassified. The requirements of other IFRSs continue to apply in this

regard.

Amendments to IAS 12 - deferred tax on investment property (effective for annual periods

beginning on or after 1 January 2012). The 2012 amendment provides an exception to the

measurement principle in respect of investment property measured using the fair value model in

accordance with IAS 40 Investment Property. The measurement of deferred tax assets and

liabilities, in this limited circumstance, is based on a rebuttable presumption that the carrying

amount of the investment property will be recovered through sale. The presumption can be rebutted

only if the investment property is depreciable and held within a business model whose objective is

to consume substantially all of the asset's economic benefits over the life of the asset.

2.3

2.3.1 Standards, amendments or interpretations which became effective during the year

2.3.2

-

-

-

-

-

The adoption of the above amendments did not have any effect on these financial statements.

The following standards, amendments and interpretations of approved accounting standards will

be effective for accounting periods beginning on or after 01 July 2013

IAS 19 Employee Benefits (amended 2011) - (effective for annual periods beginning on or after 1

January 2013). The amended IAS 19 includes the amendments that require actuarial gains and

losses to be recognized immediately in other comprehensive income; this change will remove the

corridor method and eliminate the ability for entities to recognize all changes in the defined benefit

obligation and in plan assets in profit or loss, which currently is allowed under IAS 19; and that the

expected return on plan assets recognized in profit or loss is calculated based on the rate used to

discount the defined benefit obligation. The Company‟s policy was to account for actuarial gains

and losses using the corridor method and with the change unrecognized actuarial gains / losses

amounting to Rs. 30.5 million at 30 June 2013 would need to be recognized in other comprehensive

income.

IAS 27 Separate Financial Statements (2011) - (effective for annual periods beginning on or after 1

January 2013). IAS 27 (2011) supersedes IAS 27 (2008). Three new standards IFRS 10 -

Consolidated Financial Statements, IFRS 11- Joint Arrangements and IFRS 12- Disclosure of

Interest in Other Entities dealing with IAS 27 would be applicable effective 1 January 2013. IAS

27 (2011) carries forward the existing accounting and disclosure requirements for separate financial

statements, with some minor clarifications. The amendments have no impact on financial statements

of the Company.

IAS 28 Investments in Associates and Joint Ventures (2011) - (effective for annual periods

beginning on or after 1 January 2013). IAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011)

makes the amendments to apply IFRS 5 to an investment, or a portion of an investment, in an

associate or a joint venture that meets the criteria to be classified as held for sale; and on cessation

of significant influence or joint control, even if an investment in an associate becomes an

investment in a joint venture. The amendments have no impact on financial statements of the

Company.

Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) – (effective for

annual periods beginning on or after 1 January 2014). The amendments address inconsistencies in

current practice when applying the offsetting criteria in IAS 32 Financial Instruments: Presentation.

The amendments clarify the meaning of „currently has a legally enforceable right of set-off‟; and

that some gross settlement systems may be considered equivalent to net settlement.

Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) – (effective for

annual periods beginning on or after 1 January 2013). The amendments to IFRS 7 contain new

disclosure requirements for financial assets and liabilities that are offset in the statement of

financial position or subject to master netting agreement or similar arrangement.

Standards, interpretations and amendments to published approved accounting standards that are

not yet effective

During the year, certain amendments to Standards or new interpretations became effective, however, the

amendments or interpretation did not have any material effect on the financial statements of the Company.

-

o

o

o

o

-

-

-

IFRIC 20 - Stripping cost in the production phase of a surface mining (effective for annual periods

beginning on or after 1 January 2013). The interpretation requires production stripping cost in a

surface mine to be capitalized if certain criteria are met. The amendments have no impact on

financial statements of the Company.

IFRIC 21- Levies „an Interpretation on the accounting for levies imposed by governments‟

(effective for annual periods beginning on or after 1 January 2014). IFRIC 21 is an interpretation of

IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the

recognition of a liability, one of which is the requirement for the entity to have a present obligation

as a result of a past event (known as an obligating event). The interpretation clarifies that the

obligating event that gives rise to a liability to pay a levy is the activity described in the relevant

legislation that triggers the payment of the levy.

IAS 39 Financial Instruments: Recognition and Measurement- Novation of Derivatives and

Continuation of Hedge Accounting (Amendments to IAS 39) (effective for annual periods

beginning on or after 1 January 2014). The narrow-scope amendments will allow hedge accounting

to continue in a situation where a derivative, which has been designated as a hedging instrument, is

novated to effect clearing with a central counterparty as a result of laws or regulation, if specific

conditions are met (in this context, a novation indicates that parties to a contract agree to replace

their original counterparty with a new one).

Annual Improvements 2009–2011 (effective for annual periods beginning on or after 1 January

2013). The new cycle of improvements contains amendments to the following four standards, with

consequential amendments to other standards and interpretations.

IAS 1 Presentation of Financial Statements is amended to clarify that only one comparative

period – which is the preceding period – is required for a complete set of financial

statements. If an entity presents additional comparative information, then that additional

information need not be in the form of a complete set of financial statements. However, such

information should be accompanied by related notes and should be in accordance with

IFRS. Furthermore, it clarifies that the „third statement of financial position‟, when required,

is only required if the effect of restatement is material to statement of financial position.

IAS 16 Property, Plant and Equipment is amended to clarify the accounting of spare parts,

stand-by equipment and servicing equipment. The definition of „property, plant and

equipment‟ in IAS 16 is now considered in determining whether these items should be

accounted for under that standard. If these items do not meet the definition, then they are

accounted for using IAS 2 Inventories.

IAS 32 Financial Instruments: Presentation - is amended to clarify that IAS 12 Income

Taxes applies to the accounting for income taxes relating to distributions to holders of an

equity instrument and transaction costs of an equity transaction. The amendment removes a

perceived inconsistency between IAS 32 and IAS 12.

IAS 34 Interim Financial Reporting is amended to align the disclosure requirements for

segment assets and segment liabilities in interim financial reports with those in IFRS 8

Operating Segments. IAS 34 now requires the disclosure of a measure of total assets and

liabilities for a particular reportable segment. In addition, such disclosure is only required

when the amount is regularly provided to the chief operating decision maker and there has

been a material change from the amount disclosed in the last annual financial statements for

that reportable segment.

The amendments have no impact on financial statements of the Company.

-

2.4

- modification of foreign currency translation adjustments as stated in note 2.5,

- recognition of employee retirement benefits at present value,

- long term investments classified as available for sale which are stated at fair value,

- revaluation of certain property, plant and equipment,

- certain financial instruments at fair value

2.5 Functional and presentation currency

2.6 Use of estimates and judgments

2.6.1 Fixed assets

Property, plant and equipments

Amendment to IAS 36 “Impairment of Assets” Recoverable Amount Disclosures for Non-Financial

Assets (effective for annual periods beginning on or after 1 January 2014). These narrow-scope

amendments to IAS 36 Impairment of Assets address the disclosure of information about the

recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

Basis of measurement

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

These consolidated financial statements are presented in Pak Rupees, which is the Company's functional

and presentation currency. All financial information has been rounded to the nearest rupee, except when

otherwise indicated.

The preparation of financial statements in conformity with approved accounting standards, as applicable in

Pakistan, requires management to make judgments, estimates and assumptions that affect the application

of policies and the reported amounts of assets, liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that

are believed to be reasonable under the circumstances, the results of which form the basis of making the

judgments about the carrying values of assets and liabilities that are not readily apparent from other

sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the period in which the estimates are revised if the revision affects only that

period, or in the period of the revision and future periods if the revision affects both current and future

periods.

The areas where assumptions and estimates are significant to the Company's financial statements or where

judgment was exercised in application of accounting policies are as follows:

The Company‟s management determines the estimated useful lives and related depreciation charge for its

plant and equipment. The Company also reviews the value of the assets for possible impairment on an

annual basis. Any change in the estimates in future years might affect the carrying amounts of the

respective items of property, plant and equipments with a corresponding affect on the depreciation charge

and impairment.

Intangible assets

2.6.2 Inventory

2.6.3 Provision for doubtful debts, advances and other receivables

2.6.4 Employee benefits

2.6.5 Taxation

2.6.6 Contingencies

The Company has disclosed significant contingent liabilities for the pending litigations and claims against

the Company based on its judgment and the advice of the legal advisors for the estimated financial

outcome. The actual outcome of these litigations and claims can have an effect on the carrying amounts of

the liabilities recognized at the balance sheet date. However, based on the best judgment of the Company

and its legal advisors, the likely outcome of these litigations and claims is remote and there is no need to

recognize any liability at the balance sheet date.

The Company reviews the rate of amortization and value of intangible assets for possible impairment on

an annual basis. Any change in the estimates in future years might affect the carrying amounts of

intangible assets with a corresponding effect on the amortization charge and impairment.

The Company reviews the net realizable value of stock-in-trade and stores, spares and loose tools to assess

any diminution in their respective carrying values. Any change in the estimates in future years might affect

the carrying amounts of stock-in-trade and stores, spares and loose tools with a corresponding effect in

profit and loss account of those future years. Net realizable value is determined with respect to estimated

selling price less estimated expenditure to make the sale.

The Company reviews the recoverability of its trade debts, advances and other receivables at each

reporting dates to assess whether provision should be recorded in the profit and loss account. In particular,

judgment by management is required in the estimates of the amount and timing of future cash flows when

determining the level of provision required. Such estimates are based on certain assumptions whereas

actual results may differ, resulting in future changes to the provisions.

The Company operates an un-funded gratuity scheme covering all eligible employees completing the

minimum qualifying period of service as specified by the scheme. Annual provision is made on the basis

of actuarial valuation to cover obligations under the scheme for all employees eligible to gratuity benefits

respective of the qualifying period. The projected unit credit method used for the valuation of the scheme

is based on assumptions stated in note 20.1.

In making the estimates for income taxes currently payable by the Company, the management looks at the

current income tax laws and the decisions of appellate authorities on certain issues in the past. In making

the provision for deferred taxes, estimates of the Company‟s future taxable profits are taken into account.

3 Summary of significant accounting policies

3.1 Property, plant and equipment

Owned

Capital work-in-progress

Leased

Surplus arising on revaluation of operating assets is credited to surplus on revaluation of property, plant

and equipment account. The surplus on revaluation of operating assets to the extent of incremental

depreciation charged on the related assets is transferred by the Company to its un-appropriated profit.

The assets‟ residual values and useful lives are continually reviewed by the Company and adjusted if

impact on depreciation is significant. The Company‟s estimate of residual values of property, plant and

equipment as at 30 June 2013 has not required any adjustment as its impact is considered insignificant.

Capital work-in-progress are stated at cost less identified 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.

The Company accounts for property, plant and equipment obtained under finance leases by recording the

asset and the related liability. These amounts are determined on the basis of discounted value of minimum

lease payments at inception of lease or fair value whichever is lower. Financial charges are allocated to the

accounting period in a manner so as to provide a constant periodic rate of charge on the outstanding

liability. Depreciation on lease assets is charged, on a systematic basis over the useful life of the assets, on

reducing balance method, which reflects the patterns in which the asset‟s economic benefits are consumed

by the Company.

Furniture and fixtures, office equipment and vehicles are stated at cost less accumulated depreciation and

accumulated impairment losses, if any. Operating assets except mentioned above are stated at revalued

amount being the fair value at the date of revaluation, less any subsequent accumulated depreciation and

impairment losses while freehold land is stated at revalued amount being the fair value at the date of

revaluation, less any subsequent impairment losses, if any. Any revaluation increase arising on the

revaluation of such assets is credited in 'Surplus on Revaluation of Property, Plant and Equipment'. A

decrease in the carrying amount arising on revaluation is charged to profit or loss to the extent that it

exceeds the balance, if any, held in the surplus on revaluation account relating to a previous revaluation of

that asset. Cost includes borrowing cost in respect of qualifying assets as stated in note 3.12.

Depreciation is charged on a systematic basis over the useful life of the assets, on reducing balance

method, which reflects the patterns in which the economic benefits are consumed by the Company, at the

rates specified in note 4.1. Depreciation on additions is charged on a pro-rata basis from the date the asset

is available for use upto the date the asset is disposed of.

The gain or loss on disposal or retirement of an asset represented by the difference between the sale

proceeds and the carrying amount of the asset is recognized as an income or expense.

Major renewals and improvements to an item of property, plant and equipment are recognized in the

carrying amount of the item if it is probable that the embodied future economic benefits will flow to the

Company and the cost of renewal or improvement can be measured reliably. The cost of the day-to-day

servicing of property, plant and equipment are recognized in profit or loss as incurred.

3.2 Intangible assets

3.3 Impairment

3.4 Borrowings

3.5 Functional and presentation currency

Amortization is charged from the month of acquisition and up to the month preceding the disposal

respectively. Gain/ loss on disposal of intangible assets are taken to profit and loss account.

Major improvements and modifications are capitalized. Minor maintenance are taken to profit and loss

account.

Intangible assets are stated at cost less accumulated amortization and identified impairment losses, if any.

Amortization is charged to income on straight line basis during the estimated useful life. The useful life is

reviewed periodically to ensure that it is consistent with the expected pattern of economic benefits.

Interest bearing borrowings are recognized initially at fair value less attributable transaction cost.

Subsequent to initial recognition, these are stated at amortized cost with any difference between cost and

redemption value being recognized in the profit and loss over the period of the borrowings on an effective

interest basis.

Items included in the financial statement of the Company are measured using the currency of the primary

economic environment in which the Company operates (the functional currency). The financial statements

are presented in Pak Rupees which is the Company's functional and presentation currency.

A financial asset is assessed at each reporting date to determine whether there is any objective evidence

that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or

more events have had a negative effect on the estimated future cash flows of that asset.

Non-financial assets

The carrying amounts of non-financial assets other than inventories and deferred tax asset, are assessed at

each reporting date to ascertain whether there is any indication of impairment. If any such indication exists

then the asset‟s recoverable amount is estimated. An impairment loss is recognized, as an expense in the

profit and loss account, for the amount by which the asset‟s carrying amount exceeds its recoverable

amount. The recoverable amount is the higher of an asset‟s fair value less cost to sell and value in use.

Value in use is ascertained through discounting of the estimated future cash flows using a discount rate

that reflects current market assessments of the time value of money and the risk specific to the assets. For

the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately

identifiable cash flows (cash-generating units).

An impairment loss is reversed if there has been a change in the estimates used to determine the

recoverable amount. An impairment loss is reversed only to the extent that the asset‟s carrying amount

does not exceed the carrying amount that would have been determined, net of depreciation or amortization,

if no impairment loss had been recognized.

Financial assets

3.6 Taxation

Current

Deferred

3.7 Foreign currency translations

3.8 Staff retirement benefits

3.9 Trade and other payables

3.10 Provisions

Charge for current taxation is based on taxable income at the current rates of taxation after taking into

account tax credits and tax rebates available, if any, or provisions of minimum tax. However, for income

covered under final tax regime, taxation is based on applicable tax rates under such regime.

Deferred tax is recognized using the balance sheet liability method in respect of all temporary differences

between the carrying amounts of assets and liabilities for financial reporting purposes and the tax base (the

amounts used for taxation purposes). In this regard, the effects on deferred taxation of the portion of

income subject to final tax regime is also considered in accordance with the requirement of Technical

Release – 27 of Institute of Chartered Accountants of Pakistan.

Deferred tax assets are recognized 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 liabilities are generally recognized for all taxable temporary differences. Deferred tax assets

and liabilities are based on the expected tax rates applicable at the time of reversal.

Transactions in foreign currencies are initially recorded at the rates of exchange ruling on the dates of

transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated into Pak

Rupees at the exchange rates prevailing on the balance sheet date. All exchange differences are charged to

profit and loss account.

The Company operates an un-funded gratuity scheme covering all eligible employees completing the

minimum qualifying period of service as specified by the scheme. Annual provision is made on the basis

of actuarial valuation to cover obligations under the scheme for all employees eligible to gratuity benefits

respective of the qualifying period. The projected unit credit method used for the valuation of the scheme

is based on assumptions stated in note 20.1.

Liabilities for trade and other amounts payable are measured at cost which is the fair value of the

consideration to be paid in the future for the goods and services received whether billed to the Company or

not.

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 obligation and a reliable estimate of the amount can be made. However, provisions are reviewed

at each balance sheet date and adjusted to reflect current best estimate.

3.11

3.12 Borrowing costs

3.13 Investments

Available-for-sale

Financial assets and liabilities are recognized when the Company becomes a party to the contractual

provisions of the instrument and de-recognized when the Company loses control of the contractual rights

that comprise the financial asset and in case of financial liability when the obligation specified in the

contract is discharged, cancelled or expired. Any gain or loss on derecognition of financial assets and

liabilities are included in profit and loss for the year.

Derivatives are initially recorded at cost which is the fair value of consideration given or received

respectively on the date a derivative contract is entered into and are remeasured to fair value, amortized

cost or cost as the case may be 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 derivates that are designated and qualify as cash flow

hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized

immediately in the profit and loss account.

Amounts accumulated in equity are recognized in profit and loss account in the periods when the hedged

item will effect profit or loss. However, when the forecast hedged transaction results in the recognition of

a non-financial assets or a liability, the gains and losses previously deferred in equity are transferred from

equity and included in the initial measurement of the cost of the asset or liability.

Financial instruments

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,

which are assets that necessarily take a substantial period of time to get ready for their intended use or

sale, are added to the cost of those assets, until such time as the assets are substantially ready for their

intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure

on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are charged to income in the period of incurrence.

Available for sale investments are initially recognised at cost, being the fair value of the consideration

given. Subsequent to initial recognition these are recognised at fair value unless fair value cannot be

reliably measured. The investments for which quoted market price is not available are measured at cost.

Changes in carrying value are recognised in equity until investment is sold or determined to be impaired at

which time the cumulative gain or loss previously recognised in equity is included in profit or loss

account.

At fair value through profit or loss

Investment in subsidiary

3.14 Stores, spares and loose tools

3.15 Stock-in-trade

Cost has been determined as follows:

Weighted average cost

Cost of direct materials, labour and appropriate

manufacturing overheads.

3.16 Revenue recognition

The fair value of investments classified as available for sale is their quoted bid price at the balance sheet

date.

Investments in subsidiaries are stated at cost and the carrying amount is adjusted for impairment, if any.

These are valued at moving average cost less allowance for obsolete and slow moving items. Items in

transit are valued at invoice values plus other charges incurred thereon.

These are stated at the lower of cost and net realizable value except for waste stock which is valued at net

realizable value.

Raw materials

All “regular way” purchase and sale of listed shares are recognised on the trade date i.e. the date that the

Company commits to purchase/sell the asset.

Investments at fair value through profit and loss are those which are acquired for generating a profit from

short-term fluctuation in prices. All investments are initially recognized at cost, being the fair value of the

consideration given. Subsequent to initial recognition, these investments are re-measured at fair value

(quoted market price). Any gain or loss from a change in the fair value is recognized in income.

Subsidiary is an enterprise in which the Company directly controls, beneficially owns or holds more than

50% of the voting securities or otherwise has power to elect and / or appoint more than 50% of its

directors. The existence and effect of potential voting right that are currently exercisable or convertible

when assessing whether the group controls another entity.

Work in process and finished goods

Materials in transit comprises of invoice value plus other charges paid thereon.

Net realizable value signifies the estimated selling price in the ordinary course of business less costs

necessarily to be incurred in order to make a sale.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company

and the revenue can be measured reliably. Revenue is measured at the fair value of consideration received

or receivable on the following basis:

-

-

-

-

-

3.17 Trade debts and other receivables

3.18 Cash and cash equivalents

3.19 Off setting of financial instruments

3.20 Government grants

3.21 Segment reporting

3.22 Earnings per share

3.23 Dividend distribution

An operating segment is a component of the Company that engages in business activities from which it

may earn revenues and incur expenses. All operating segments' operating results are regularly reviewed by

the Company's Chief Executive to make decisions about resources to be allocated to the segment and

assess its performance, and for which discrete financial information is available.

The Company presents basic and diluted earnings per shares (EPS) data. Basic EPS is calculated by

dividing the profit or loss attributable to share holders of the Company by the weighted average number of

ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss

attributable to share holders and the weighted average number of ordinary shares outstanding, adjusted for

the effects of all dilutive potential ordinary shares.

Dividend distribution to the Company's shareholders is recognized as a liability in the period in which the

dividends are approved.

Gain on sale and lease-back transactions is deferred and is credited to profit and loss account over

the lease term.

Interest/mark-up income is recognized as the interest / mark-up become due.

Trade debts and other receivables are carried at original invoice amount less an estimate made for doubtful

receivables based on review of outstanding amounts at the year end. Bad debts are written off when

identified.

Cash in hand and at banks and short term deposits, which are held to maturity, are carried at cost. For the

purposes of cash flow statement, cash equivalents are short term highly liquid instruments, which are

readily convertible to known amounts of cash and which are subject to insignificant risk of changes in

values.

Financial assets and liabilities are off-set and the net amount reported in the balance sheet when there is a

legally enforceable right to set-off the recognized amounts and there is an intention to settle on a net basis,

or realize the asset and settle the liability simultaneously.

Government grants that compensates the company for expenses incurred is recognized in the profit and

loss account on a systematic basis in the same period in which the expenses are recognized. Government

grants are deducted in reporting the related expense.

Sales are recorded when significant risks and rewards of ownership of the goods are transferred to

the customers.

Return on investments and deposits is accounted for on time proportionate basis.

Dividend income is accounted for when the right to receive is established.

Note 2013 2012

Rupees Rupees

4 Property, plant and equipment

Operating assets 4.1 12,102,832,043 11,092,153,643

Capital work-in-progress 4.2 168,545,198 162,919,560

12,271,377,241 11,255,073,203

4.1 Operating assets

Net book value

Owned

Freehold land 1,113,721,870 76,420,262 (14,400,000) - 1,175,742,132 - - - - - 1,175,742,132

Factory building 1,864,046,880 197,174,204 - - 2,061,221,084 5% 308,738,208 78,977,506 - 387,715,714 1,673,505,370

Non-factory building 696,478,581 40,406,804 - - 736,885,385 5% 120,143,131 29,119,969 - 149,263,100 587,622,285

Plant and machinery 9,769,600,759 1,151,352,818 (20,480,251) - 10,900,473,326 5% 2,400,943,557 386,454,799 (17,545,711) 2,769,852,645 8,130,620,681

Electric fittings & installations 408,551,188 47,374,079 - - 455,925,267 5% 79,329,938 17,111,681 - 96,441,619 359,483,648

Sui gas installations 14,620,961 474,195 - - 15,095,156 5% 5,272,165 479,531 - 5,751,696 9,343,460

Tools, laboratory equipments

and arms 57,088,673 6,219,238 - - 63,307,911 5% 24,269,761 1,718,917 - 25,988,678 37,319,233

Office equipment 28,301,915 4,105,150 (640,238) - 31,766,827 10% 10,766,311 1,902,291 (254,530) 12,414,072 19,352,755

27,753,389 86,500 - - 27,839,889 5% 8,706,523 953,123 - 9,659,646 18,180,243

Furniture and fixtures 12,601,636 3,554,691 - - 16,156,327 10% 5,008,206 858,587 - 5,866,793 10,289,534

Vehicles 103,656,599 37,601,337 (5,048,172) - 136,209,764 20% 41,091,008 16,976,560 (3,230,506) 54,837,062 81,372,702

2013 14,096,422,451 1,564,769,278 (40,568,661) - 15,620,623,068 3,004,268,808 534,552,964 (21,030,747) 3,517,791,025 12,102,832,043

Net book value

Owned

575,838,188 - - 537,883,682 1,113,721,870 - - - - - 1,113,721,870

Factory Building 1,142,197,431 170,370,619 - 551,478,830 1,864,046,880 5% 256,214,037 52,524,171 - 308,738,208 1,555,308,672

Non-Factory Building 473,358,558 104,530,714 - 118,589,309 696,478,581 5% 99,377,956 20,765,175 - 120,143,131 576,335,450

Plant and machinery 6,868,102,015 2,098,401,336 (17,216,837) 820,314,245 9,769,600,759 5% 2,101,374,145 310,774,530 (11,205,118) 2,400,943,557 7,368,657,202

Electric fittings and installations 266,002,946 142,548,242 - - 408,551,188 5% 67,787,543 11,542,395 - 79,329,938 329,221,250

Sui gas installations 13,484,492 1,136,469 - - 14,620,961 5% 4,834,953 437,212 - 5,272,165 9,348,796

Tools, laboratory equipment

and arms 51,715,671 5,373,002 - 57,088,673 5% 22,789,127 1,480,634 - 24,269,761 32,818,912

Office equipment 22,251,255 6,050,660 - - 28,301,915 10% 9,163,150 1,603,161 - 10,766,311 17,535,604

27,007,639 745,750 -

- 27,753,389 5%

7,734,507 972,016 - 8,706,523 19,046,866

Furniture and fixtures 9,720,748 2,880,888 - - 12,601,636 10% 4,356,272 651,934 - 5,008,206 7,593,430

Vehicles 67,957,519 41,262,525 (5,563,445) - 103,656,599 20% 35,226,097 10,464,584 (4,599,673) 41,091,008 62,565,591

2012 9,517,636,462 2,573,300,205 (22,780,282) 2,028,266,066 14,096,422,451 2,608,857,787 411,215,812 (15,804,791) 3,004,268,808 11,092,153,643

Reassessed value/original cost

Rate

%

Depreciation

As at

01 July 2012 Additions Deletions

Surplus on

revaluation

As at

30 June 2013

As at

30 June 2013

Fire extinguishing equipment

& weighing scales

Reassessed value/original cost

Rate

%

Depreciation

As at

01 July 2011

As at

01 July 2012

For the

year Disposals

As at

30 June 2013

Fire extinguishing equipment

& weighing scales

----------------------------------------------------------(Rupees)---------------------------------------------------------- ----------------------------------------------------------(Rupees)----------------------------------------------------------

----------------------------------------------------------(Rupees)---------------------------------------------------------- ----------------------------------------------------------(Rupees)----------------------------------------------------------

For the

year Disposals

As at

30 June 2012

As at

30 June 2012

Freehold Land

Additions Deletions Surplus on

revaluation

As at

30 June 2012

As at

01 July 2011

2013 2012

Note

4.2 Capital work-in-progress

Opening balance 162,919,560 156,084,017

Additions during the year 1,114,106,111 2,185,758,045

Transfers during the year (1,108,480,473) (2,178,922,502)

Closing balance 168,545,198 162,919,560

Breakup of closing balance of capital work-in-progress:

Factory buildings

Material and expenses 52,991,390 27,833,068

Advance payments 44,750,183 20,279,515

97,741,573 48,112,583

Non-factory buildings

Material and expenses 39,690,801 1,936,637

Plant and machinery

Cost and expenses 1,907,064 183,160

Advance payments 27,213,847 -

Letters of credit - 112,687,180

29,120,911 112,870,340

Furniture and fixtures

Advance payments 14,600 -

Office equipment

Advance payments 147,298 -

Electric fittings & Installations

Advance payments 1,830,015 -

168,545,198 162,919,560

4.3 Depreciation is allocated as under:

Cost of sales 27 514,808,069 398,488,284

Administrative expenses 29 19,744,895 12,727,528

534,552,964 411,215,812

4.4

Had there been no revaluation, the net book value of operating fixed assets are as follows:

Cost Depreciation Net book value

30 June 2013

Freehold land 144,431,518 - 144,431,518

Building 1,482,476,363 324,317,679 1,158,158,684

Plant & machinery and others 8,866,388,298 2,386,394,233 6,479,994,065

10,493,296,179 2,710,711,912 7,782,584,267

30 June 2012 9,007,739,566 2,380,912,616 6,626,826,950

--------------(Rupees)--------------

--------------------------------(Rupees)--------------------------------

Property, plant and equipement of the Company were first revalued on 30 June 2007 by an independent valuer on

the basis of depreciated replacement values which resulted in the surplus of Rs. 2,915 million. The next

revaluation had been carried out on 31 March 2012 by another independent valuer on the basis of depreciated

replacement values which resulted in the additional surplus of Rs.2,028 million.

4.5

Reassessed

value / original

cost

Accumulated

depreciation

Net book

value

Sale

proceeds

Gain/(loss)

on disposalMode of disposal

Toyota Corolla 1299 CC 951,975 761,716 190,259 400,000 209,741 Negotiation Ehsan Elahi

Toyota Corolla Atlas 1,832,750 1,058,499 774,251 1,850,000 1,075,749 Insurance Claim Adamjee Insurance Limited

Honda Civic 1799 CC 1,454,174 935,798 518,376 1,415,000 896,624 Insurance Claim Adamjee Insurance Limited

Electronic Winder and Twisters 3,642,910 3,256,445 386,465 1,326,750 940,285 Negotiation AZ & Brothers

Coner Automatic Winder 16,837,341 14,289,266 2,548,075 3,173,250 625,175 Negotiation AZ & Brothers

Digital Copier 133,682 77,002 56,680 91,577 34,897 Insurance Claim Adamjee Insurance Limited

Hp Pro 45305 Laptop Intel Core 2630 85,000 11,687 73,313 66,000 (7,313) Insurance Claim Adamjee Insurance Limited

Mitsubishi cabinet air conditioner 114,900 45,686 69,214 123,500 54,286 Insurance Claim Adamjee Insurance Limited

19 Kanal and 4 Marlas 14,400,000 - 14,400,000 13,500,000 (900,000) Negotiation Fazal Weaving Mills Limited

Photocopier Richo 2045 80,000 15,600 64,400 65,000 600 Insurance Claim Adamjee Insurance Limited

Toyota Corolla Saloon 407,063 243,108 163,955 327,500 163,545 Insurance Claim Adamjee Insurance Limited

628,866 335,940 292,926 316,331 23,405 Company Policy /

Negotiation

2013 40,568,661 21,030,747 19,537,914 22,654,908 3,116,994

2012 22,780,282 15,804,791 6,975,491 16,784,898 9,809,407

The following assets were disposed of during the year

-------------------------------------------(Rupees)---------------------------------------------

Items of property, plant and equipment

with individual value not exceeding Rs.

50,000

2013 2012

-----------------(Rupees)-----------------

5 Intangible assets

Net book value at beginning of the year 3,398,483 4,538,527

Amortization for the year (1,140,044) (1,140,044)

Net book value at end of the year 2,258,439 3,398,483

Gross carrying value as at end of the year

Cost 10,514,570 10,514,570

Accumulated amortization (8,256,131) (7,116,087)

Net book value 2,258,439 3,398,483

6 Long term investments

2012 2013 2012

Restated

--------Number of shares-------- Note -----------------(Rupees)-----------------

Quoted - available for sale investments

60,414,970 Fatima Fertilizer Company Limited -

Equity interest held 2.88% (2012: 2.88 %) 6.1 1,564,141,790 1,490,437,310

Un-quoted - available for sale investments

25,790,610 Pak Arab Fertilizers Limited -

Equity interest held 5.73% (2012: 5.73 %) 6.1 & 6.3 252,966,706 252,966,706

Nil Fazal Weaving Mills Limited

Wholly owned subsidiary 6.2 250,000,000 -

2,067,108,496 1,743,404,016

6.1

2012 2011

-----------------(Rupees)-----------------

Unappropriated profits

Balance - as previously reported 4,150,734,634 3,100,929,710

Net cumulative effect due to rectification

of prior period error (550,695,388) (482,793,414)

Balance - as restated 3,600,039,246 2,618,136,296

Pak Arab Fertilizers Limited and Fatima Fertilizer Company Limited are associated companies of the Company as defined in

Companies Ordinance, 1984. However, according to International Accounting Standard 28 "Investments in Associates and

Joint Ventures", Pak Arab Fertilizers Limited and Fatima Fertilizer Company Limited are not considered as Associates as

criteria for significant influence is not met. Therefore, the investment in Pak Arab Fertilizers Limited is classified as available

for sale and is valued at cost, owing to non-availability of market value of its shares as the company is not listed on any of the

Stock Exchanges in Pakistan and investment in Fatima Fertilizer Company Limited has been classified as available for sale

with fair value changes recognized in equity, in accordance with the requirement of International Accounting Standard 39

"Financial Instruments: Recognition and Measurement".

Previously, this investment was treated as 'Investments in Associates" under equity method in accordance with the provisions

of International Accounting Standard 28 "Investments in Associates and Joint Ventures". This treatment of valuation of

investments under equity method is treated as prior period error in the current year financial statements. The effect of prior

period error due to wrong accounting treatment for valuation of these investments has been accounted for by restatement of

figures of earliest reporting periods. The effect of this restatement is summarized below:

2013

62,994,031

25,790,610

25,000,000

Un-quoted - investment in subsidiary at cost

2012 2011

-----------------(Rupees)-----------------

Fair value reserve - available for sale

financial assets

Balance - as previously reported - -

Net cumulative effect due to rectification

of prior period error 784,049,931 246,163,636

Balance - as restated 784,049,931 246,163,636

Long term investments

Balance - as previously reported 2,182,061,781 1,535,348,169

Effect due to rectification of prior period error

- derecognition of share of post

acquisition profits (1,626,110,793) (1,208,800,594)

- recognition of cash and specie dividends 1,214,594,228 844,117,856

- derecognition of share of other

comprehensive income (139,853,823) (118,110,676)

- derecognition of share of revaluation surplus (671,337,308) (141,896,820)

959,354,085 910,657,935

784,049,931 246,163,636

Balance - as restated 1,743,404,016 1,156,821,571

Surplus on revaluation of property,

plant and equipment

Balance - as previously reported 4,461,659,446 2,334,396,213

Effect due to rectification of prior period error (671,337,308) (141,896,820)

Balance - as restated 3,790,322,138 2,192,499,393

6.2

6.3

2013 2012

Note

7 Stores, spares and loose tools

Stores 7.1 146,582,114 126,088,345

Spares 159,811,788 205,967,900

Loose tools 549,005 624,335

306,942,907 332,680,580

Less: Provision for slow moving items (1,770,316) (1,770,316)

305,172,591 330,910,264

7.1 This includes stores in transit of Rs. 4.89 million (2012: Rs. 55.42 million).

--------------(Rupees)--------------

Management has accounted for the above adjustments with retrospective effect and comparative information has been restated

in accordance with treatments specified in IAS 8 "Accounting Policies, changes in accounting estimates and error".

The shareholders of the Company in their Extra Ordinary General Meeting held on 29 January 2013 have approved to make

M/s. Fazal Weaving Mills Limited, an associated public limited company, as a wholly owned subsidiary of M/s. Fazal Cloth

Mills Limited by investing and acquiring 24,982,500 ordinary shares of Rs. 10/- each and the remaining 17,500 shares are held

by nominee directors being qualification shares under Memorandum & Article of Association of the Subsidiary Company. The

funds for this investment were generated out of Company's own sources. The provisions of section 208 of the Companies

Ordinance, 1984 were complied with before making the investment.

Remeasurement to fair value

During the year, the Company has received 2,579,061 shares (2012: 15,474,366 shares) of Fatima Fertilizer Company Limited

as specie dividend from Pak Arab Fertilizer Limited which have been recognized at fair value of Rs. 61.79 million as an

increase in investment of Fatima Fertilizer Company Limited. Furthermore, the company has received cash dividends

amounting to Rs. 139 million on it's investment in Fatima Fertilizers Limited which is disclosed in other income.

2013 2012

Note

8 Stock-in-trade

Raw material 8.1 4,646,912,278 2,822,587,199

Work-in-process 205,937,615 172,590,755

4,852,849,893 2,995,177,954

Finished goods

Yarn 831,554,614 659,940,484

Fabric 244,214,094 118,892,687

1,075,768,708 778,833,171

5,928,618,601 3,774,011,125

8.1

2013 2012

Note

9 Trade debts

Considered good

Export - secured 9.1 608,024,072 858,285,522

Local - unsecured 1,387,603,732 1,153,902,730

1,995,627,804 2,012,188,252

9.1

2013 2012

Note

Fazal Rehman Fabrics Limited 138,795,584 37,596,629

Amir Fine Exports (Private) Limited 8,400 8,400

138,803,984 37,605,029

10 Loans and advances

Considered good

Due from associated undertaking / related party 10.1 9,681,589 21,484

Others

Advances to:

- Suppliers and contractors 117,989,180 74,832,921

Loan to:

- Executives - interest free 10.2 450,000 380,095

- Other employees 6,335,528 4,717,160

Letters of credit 6,321,583 56,555,138

140,777,880 136,506,798

10.1 Due from associated undertaking / related party

- On account of non-trading activities

Fatima Fertilizers Ltd. 9,681,589 -

Reliance Commodities (Private) Limited - 21,484

9,681,589 21,484

10.2

--------------(Rupees)--------------

--------------(Rupees)--------------

--------------(Rupees)--------------

Maximum aggregate amount due from executives at any month end during the year was Rs. 0.45 million

(2012: Rs. 0.38 million).

These are secured through banks by letters of credit. These include due from following associated

undertakings on account of trading activities.

This includes raw material in transit of Rs. 337.96 million (2012: Rs. 16.55 million).

2013 2012

Note

11 Trade deposits and short term prepayments

Deposits 4,587,000 5,535,500

Prepayments 2,068,581 1,218,711

6,655,581 6,754,211

12 Short term investments

Investments

- at fair value through profit and loss account

In quoted companies

Fatima Fertilizer Company Limited

6,520,000 (2012: 6,520,000) fully paid ordinary

shares of Rs. 10 each 161,891,600 160,848,400

Pakistan State Oil Company Limited

89,280 (2012: 62,000) fully paid ordinary

shares of Rs. 10 each 28,603,526 15,648,271

190,495,126 176,496,671

13 Tax refunds due from government

Sales tax 103,160,318 63,324,293

Income tax - net 13.1 209,999,806 65,636,718

Excise duty 74,950 -

313,235,074 128,961,011

13.1 Movement of income tax

Balance at the beginning of year 65,636,718 76,105,110

Add: Advance tax paid / deducted at source 206,376,968 183,996,287

Add: Payments/adjustments against

completed assessments - 8,370,659

272,013,686 268,472,056

Less: Provision for taxation 62,013,880 202,835,338

Balance at the end of year 209,999,806 65,636,718

14 Cash and bank balances

Cash in hand 3,743,255 1,117,140

Cash at banks

- Current accounts 131,722,688 69,186,760

- Dividend accounts 18,836,397 540,656

- Saving accounts 14.1 1,697,836 1,143,799

152,256,921 70,871,215

156,000,176 71,988,355

14.1 Rate of interest and mark up on saving accounts ranges from 6% to 7% (2012: 5% to 8.2%).

--------------(Rupees)--------------

2013 2012

15 Issued, subscribed and paid-up capital Note

Ordinary shares 15.1 250,000,000 226,000,000

Preference shares 15.2 - 175,000,000

250,000,000 401,000,000

15.1 Ordinary shares

2012 2013 2012

-----------------(Rupees)-----------------

1,000,000 Ordinary shares of Rs.10 each

fully paid in cash 10,000,000 10,000,000

9,187,200 Ordinary shares of Rs.10 each

fully paid as right shares 91,872,000 91,872,000

12,412,800 Ordinary shares of Rs.10 each

issued as bonus shares 15.1.1 148,128,000 124,128,000

22,600,000 250,000,000 226,000,000

15.1.1 Movement of bonus shares

Opening balance 124,128,000 85,679,940

Add: Bonus shares issued during the year 24,000,000 38,448,060

(2,400,000 shares (2012: 3,844,806) ordinary shares of Rs. 10 each)

148,128,000 124,128,000

15.1.2

2013 2012

----------(Number of shares)----------

Amir Fine Exports (Private) Limited 6,119,941 5,531,312

15.2 Preference shares

2012 2013 2012

------(Number of shares)------ -----------------(Rupees)-----------------

17,500,000 Preference shares of Rs.10 each

fully paid in cash 175,000,000 175,000,000

Less: transferred to

current liability 21 (175,000,000) -

- 175,000,000

2013 2012

------(Number of shares)------

Preference shares are issued to the following financial institutions:

MCB Bank Limited 10,000,000 10,000,000

The Bank of Punjab 2,500,000 2,500,000

Faysal Bank Limited 2,500,000 2,500,000

NIB Bank Limited 2,500,000 2,500,000

17,500,000 17,500,000

15.2.1

(a)

--------------(Rupees)--------------

The preference shareholders are not entitled to receive notice, attend general meetings of the Company and vote

at meetings of the shareholders of the Company, except as otherwise provided by the Companies Ordinance,

1984 (the Ordinance), whereby the holders of such shares would be entitled to vote separately as a class i.e.

with respect to voting entitlement of preference shareholders on matters/issues affecting substantive rights or

liabilities of preference shareholders.

2013

------(Number of shares)------

1,000,000

9,187,200

14,812,800

25,000,000

17,500,000

As at the balance sheet date, ordinary shares held by an associated company is as follows:

The Company, during the financial year ended 30 June 2006, had offered to the shareholders of the Company 30

million preference shares of Rs.10 each at par value. The salient terms of this issue were as follows:

2013

(b)

(c)

(d)

(e)

(f)

2013 2012

Note -----------------(Rupees)-----------------

16 Capital reserves

- Share premium

Issue of 3,168,000 (2012: 3,168,000) ordinary shares of

Rs. 10 each @ Rs. 20 per share issued during 2001 63,360,000 63,360,000

Issue of 2,851,200 (2012: 2,851,200) ordinary shares of

Rs. 10 each @ Rs. 5 per share issued during 2002 14,256,000 14,256,000

77,616,000 77,616,000

- Capital redemption reserve 16.1 175,000,000 175,000,000

252,616,000 252,616,000

16.1 This represents capital redemption reserve created for the purpose of redemption of preference shares.

2013 2012

Restated

Note -----------------(Rupees)-----------------

17 Surplus on revaluation of property, plant

and equipment

Balance at beginning of the year 4,488,235,841 2,551,578,393

Add:

Surplus arising due to revaluation of property,

plant and equipment - 2,028,266,066

Less:

Transferred to unappropriated profit on account of:

Incremental depreciation - net of deferred tax (133,391,944) (91,608,618)

Effect of disposal of property, plant and equipment (11,572,351) -

4,343,271,546 4,488,235,841

Less: Related deferred tax liability on

Opening balance of revaluation 697,913,703 359,079,000

Surplus arising due to revaluation of property,

plant and equipment 116,938,401 456,080,865

Incremental depreciation charged on related assets (167,470,520) (117,246,162)

647,381,584 697,913,703

3,695,889,962 3,790,322,138

Preference shareholders will have the option to serve the notice, after the end of 7th year from the issue date, to

convert the preference shares along with accumulated dividend into the ordinary shares of the company within

the conversion period by providing written notice to the Company. In this regard a 60 days prior written notice

will be given to the Company. The preference shares along with accumulated dividend will be convertible into

ordinary shares at a 25% discount to breakup value per share or at a 25% discount to the average market value

of the share in the preceding 3 months whichever is higher.

The Company may at its option redeem the preference shares whole or minimum of 20% of the outstanding

face value at any time after completion of third year from the issue date by giving at least 60 days prior written

notice to the preference shareholders.

Preference shareholders shall be paid preference dividend @ 6-months KIBOR + 9.75% per annum on

cumulative basis. If the Company does not pay dividend in any year, the unpaid dividend for the relevant year

will be paid in the immediately following year along with the dividend payment for such year.

The Company shall create a sinking fund reserve account from the profits of the company. Any payment on

account of the call option will only be made from the Sinking fund reserve account and profits from the current

year. The company will build up the reserve account to ensure that it is sufficient to service the exercise of the

call option.

Subsequent to the year end, the Company has served a notice relating to the redemption of preference shares in

cash on 01 August 2013.

2013 2012

Note

18 Long term financing

Banking Companies

Askari Bank Limited

- Term finance - V 18.1 - 46,362,000

- Term finance - VI under LTF-EOP scheme 18.2 6,732,000 10,098,000

- Term finance - under LTF-EOP scheme 18.3 44,316,501 59,088,667

- Term finance - VII 18.4 (a) 63,919,399 82,182,086

- Term finance - VII under LTFF scheme 18.4 (b) 8,997,029 11,567,608

- Term finance - VIII 18.5 (a) 62,970,147 71,845,457

- Term finance - VIII under LTFF scheme 18.5 (b) 38,608,496 47,259,286

225,543,572 328,403,104

Soneri Bank Limited

- Term finance 18.6 24,300,000 40,700,000

- Term finance 18.7 50,000,000 50,000,000

- Term finance 18.8 149,927,045 -

- Term finance 18.9 350,000,000 -

574,227,045 90,700,000

Faysal Bank Limited

- Term finance 18.10 100,000,000 150,000,000

- Term finance 18.11 200,000,000 200,000,000

- Term finance 18.12 (a) 237,586,502 237,586,502

- Term finance under LTFF scheme 18.12 (b) 112,413,498 112,413,498

- Term finance 18.13 200,000,000 -

850,000,000 700,000,000

Habib Bank Limited

- Demand finance 18.14 (a) 53,847,275 89,745,458

- Demand finance under LTF-EOP scheme 18.14 (b) 14,421,115 20,189,625

68,268,390 109,935,083

National Bank of Pakistan

- Demand finance - IV 18.15 120,000,000 160,000,000

- Demand finance - III 18.16 (a) 71,318,646 97,294,058

- Demand finance - III under LTFF scheme 18.16 (b) 32,122,277 41,300,071

- Demand finance - VI 18.17 (a) 207,167,200 125,665,600

- Demand finance - VI under LTFF scheme 18.17 (b) 62,832,800 -

493,440,923 424,259,729

United Bank Limited

- Demand finance-I B 18.18 26,288,424 78,865,264

- Demand finance-I C 18.19 10,000,000 20,000,000

- Demand finance-II 18.20 (a) 17,130,000 51,389,000

- Demand finance- under LTF-EOP scheme 18.20 (b) 7,551,000 12,585,000

- Demand finance-III under LTF-EOP scheme 18.21 2,311,576 6,934,736

- Demand finance-IV under LTF-EOP scheme 18.22 4,166,670 12,500,004

67,447,670 182,274,004

MCB Bank Limited

- Demand finance under LTF-EOP scheme 18.23 - 4,899,438

- Demand finance under LTFF scheme 18.24 320,761,619 349,921,766

320,761,619 354,821,204

-------------(Rupees)-------------

2013 2012

Note

Allied Bank Limited

- Demand finance 18.25 (a) 54,414,246 90,690,408

- Demand finance under LTF-EOP scheme 18.25 (b) 14,617,984 19,526,572

- Demand finance under LTFF scheme 18.25 (c) 680,074 1,133,454

- Term loan- 2 18.26 (a) 129,319,516 143,577,505

- Term loan-2 under LTFF scheme 18.26 (b) 96,830,415 101,805,806

- Term loan- 3 18.27 (a) 216,669,192 239,743,698

- Term loan-3 under LTFF scheme 18.27 (b) 8,998,645 8,998,645

- Term loan- 4 18.28 (a) 621,759,795 621,759,795

- Term loan-4 under LTFF scheme 18.28 (b) 4,240,205 4,240,205

- Term loan- 5 18.29 218,431,188 -

1,365,961,260 1,231,476,088

Pak Kuwait Investment Company

(Private) Limited

- Term finance 18.30 210,000,000 270,000,000

Saudi Pak Industrial and Agricultural

Investment Company Limited

- Term finance 18.31 (a) 99,794,666 108,867,000

- Term finance under LTFF scheme 18.31 (b) 129,372,001 141,133,000

229,166,667 250,000,000

Pak Brunei Investment Company Limited

- Term finance under LTFF scheme 18.32 199,995,050 199,995,050

- Term finance 18.33 200,000,000 -

399,995,050 199,995,050

Pak Oman Investment Company Limited

- Term finance under LTFF scheme 18.34 99,998,000 99,998,000

Bank Al Falah

- Term finance 18.35 325,000,000 -

5,229,810,196 4,241,862,262

Less:

Current portion grouped under current liabilities 837,688,363 600,073,758

4,392,121,833 3,641,788,504

18.1 Askari Bank Limited - TF-V

This finance has been obtained to finance permanent working capital requirement/refinancing of fixed assets.

This finance was fully repaid during the current year. Originally it was repayable in 5 semi annual

installments with break up of first 4 installments of Rs. 15 million each and 5th/last installments of Rs.240

million. 1st installment was due after 12 months of first draw dawn. However, as per revised terms during

the year 2008, balance amount of Rs.255 million was repayable in 11 equal semi annual installments of

principle amount. Before this revision in the terms, this finance carried markup at the rate of 6 months

average KIBOR ask rate + 2.50% per annum with a floor of 4.25% per annum however, after revision in

terms, it carried mark up at the rate of 6 months KIBOR + 1.25% per annum with a floor of 4.25% per

annum. During the year markup was charged at the rates ranging from 10.63 % per annum to 13.31 % per

annum (2012: from 13.27% per annum to 15.03% per annum). This finance was secured against 1st Joint

Pari Passu Charge/Mortgage of Rs.723.5 million on all present and future fixed assets of the Company and

personal guarantees of the sponsoring directors of the Company.

-------------(Rupees)-------------

18.2 Askari Bank Limited - TF-VI under LTF-EOP scheme

18.3 Askari Bank Limited - TF under LTF-EOP scheme

18.4 (a) Askari Bank Limited - TF-VII

18.4 (b) Askari Bank Limited - TF-VII under LTFF scheme

18.5 (a) Askari Bank Limited - TF-VIII

This finance has been obtained for the purpose of disbursement and retirement of letters of credit of Meezan

Bank Limited opened for import of Caterpillar Gas Generator set. During the year 2008 this finance was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme. This finance is repayable in

12 half yearly installments commencing from July 10, 2008 after a grace period of one year. However, during

the year 2009, SBP has allowed grace period of one year starting from January 01, 2009 to December 31,

2009 and accordingly last installment is due on January 26, 2015 . This finance carried mark up at the rate of

6 months KIBOR + 2.50% per annum before refinancing by SBP under LTF-EOP scheme, however, after

approval and refinancing by SBP under LTF-EOP. It carries mark up at the rate of SBP rate + 2.00% per

annum. During the year mark up was charged at the rate of 7.00% per annum (2012: 7.00% per annum). It is

secured against the security as stated in note 18.1.

This finance has been disbursed during the year 2008 for the purpose of retirement of letter of credit opened

for import of Caterpillar Gas Generator sets. This finance was approved and refinanced by the State Bank of

Pakistan under LTF-EOP scheme. This finance is repayable in 12 half yearly equal installments of principle

amount commencing after a grace period of one year. However, during the year 2009 SBP has allowed grace

period of one year starting from January 01, 2009 to December 31, 2009 and accordingly last installment is

due on 08 June 2016. It carries mark up at the rate of SBP rate + 2.00% per annum. During the year mark up

was charged at the rate of 7.00% per annum (2012: 7.00% per annum.). It is secured against the security as

stated in note 18.1.

This finance has been obtained for the purpose of retirement of letters of credit opened for import of textile

machinery. It is repayable within a period of eight years including two years grace period in 12 half yearly

equal installments of principal amount. This finance carries markup at the rate of 6 months KIBOR + 1.25%

per annum with floor of 4.25% per annum. During the year markup was charged at the rates ranging from

10.63 % per annum to 13.31 % per annum (2012: from 13.27% per annum to 15.05% per annum). It is

secured against the security as stated in note 18.1.

During the year 2010, an amount of Rs.15.4 million out of term finance VII of Askari Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 12 equal installments of principal amount.

Last installment is falling due on 30 September 2016. This finance carries mark up at the rate of SBP rate +

3.00 % per annum. During the year mark up was charged at the rate of 10.50% per annum (2012: 10.50% per

annum) . It is secured against the security as sated in note 18.1.

This finance has been obtained during the year 2010 for the purpose of retirement of letters of credit opened

for import of textile machinery. It is repayable within a period of eight years including two years grace period

in 12 half yearly equal installments of principal amount. Last installment is falling due on 23 December

2017. This finance carries markup at the rate of 6 months KIBOR + 2.00% per annum. During the year

markup was charged at the rates ranging from 11.38% per annum to 14.06 % per annum (2012: from 14.02%

per annum to 15.03% per annum) . It is secured against the security as stated in note 18.1.

18.5 (b) Askari Bank Limited - TF-VIII under LTFF scheme

18.6 Soneri Bank Limited - TF

18.7 Soneri Bank Limited - TF

18.8 Soneri Bank Limited- TF

18.9 Soneri Bank Limited- TF

18.10 Faysal Bank Limited - TF

This finance was obtained during the year 2009 to finance the import of textile machinery and existing fixed

assets. It is repayable within a period of 6 years including two years grace period in 8 equal semi annual

installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 2.50% per annum.

During the year mark up was charged at the rates ranging from 11.90% per annum to 14.53% per annum

(2012: from 14.48% per annum to 16.29% per annum). It is secured against 1st Joint Pari Passu

charge/mortgage of Rs.1,269 million over all present and future fixed assets of the Company and personal

guarantees of the sponsoring directors.

During the current year, a term finance of Rs.350 million has been obtained from Soneri Bank Limited for

BMR projects. Limit of this term finance was Rs.350 million. It is repayable within the period of seven years

inclusive of two years grace period in ten half yearly equal installments of principal amount. It carries mark

up at the rate of 6 months KIBOR + 1.75% per annum. During the year mark up was charged at the rates

ranging from 11.11% per annum to 12.28% per annum. It is secured against the security as stated in note

18.6.

During year 2011 an amount of Rs. 19.2 million and during the year 2010, an amount of Rs.32.7 million, out

of term finance VIII of Askari Bank Limited were approved and refinanced by the State Bank of Pakistan

under LTFF scheme against imported textile machinery eligible under the scheme. This finance is repayable

in 12 equal installments of principal amount. Last installment is falling due on 23 December 2017. This

finance carries mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was charged at

the rate of 10.50% per annum (2012: 10.50% per annum). It is secured against the security as stated in note

18.1.

During the year 2009, a term finance amounting to Rs.82 million was obtained for BMR projects and

retirement of letters of credit. It is repayable within a period of 6 years including one year grace period in 10

equal semi annual installments of principal amount. It carries mark up at the rate of 6 months KIBOR +

1.25% per annum. During the year mark up was charged at the rates ranging from 10.61 % per annum to

13.25 % per annum (2012: from 13.20% per annum to 15.05% per annum). It is secured against 1st Joint

Pari Passu charge/mortgage of Rs. 834 million over all present and future fixed assets of the Company and

personal guarantees of the sponsoring directors of the Company.

During the year 2012, a term finance amounting to Rs.50 million was obtained from Soneri Bank Limited for

ongoing BMR projects. It is repayable within the period of six years inclusive of one & half year grace period

in 9 semi annual equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR +

2.00% per annum. During the year mark up was charged at the rates ranging from 11.36% per annum to

14.00% per annum (2012: 13.95% per annum). It is secured against the security as stated in note 18.6.

During the current year, a term finance of Rs.149.9 million has been obtained from Soneri Bank Limited to

finance the retirement of letter of credit opened for import of textile machinery. Limit of this term finance

was Rs.150 million. It is repayable within the period of seven years inclusive of two years grace period in ten

half yearly equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 1.75%

per annum. During the year mark up was charged at the rates ranging from 11.10% per annum to 11.24% per

annum. It is secured against the security as stated in note 18.6.

18.11 Faysal Bank Limited - TF

18.12 (a) Faysal Bank Limited - TF

18.12 (b) Faysal Bank Limited - Term Finance under LTFF scheme

18.13 Faysal Bank Limited - TF

18.14 (a) Habib Bank Limited - DF

This finance was obtained during the year 2012 for the purpose of partially financing the additional cost of

ongoing expansions and BMR projects. It is repayable within the period of seven years inclusive of two years

grace period in 10 semi annual equal installments of principal amount. It carries mark up at the rate of 6

months KIBOR + 2.25% per annum. During the year mark up was charged at the rates ranging from 11.60%

per annum to 14.24% per annum (2012: from 14.42% per annum to 16.30% per annum). This finance is

secured against security as stated in note 18.10

During the year 2012, a term finance /ltff amounting to Rs.350 million was obtained from Faysal Bank

Limited for retirement of letters of credits opened for imported plant and machinery. Sanctioned limit of this

finance was Rs.350 million. It is repayable within the period of seven years inclusive of two years grace

period in 10 semi annual equal installments of principal amount. It carries mark up at the rate of 6 months

KIBOR + 2.25% per annum. During the year mark up was charged at the rates ranging from 12.01% per

annum to 14.50% per annum (2012: from 14.48% per annum to 15.46% per annum). This finance is secured

against the security as stated in note 18.10.

During the year 2012, an amount of Rs.112.4 million out of term finance of Rs.350 million of Faysal Bank

Limited were approved and refinanced by the State Bank of Pakistan under ltff scheme against imported

textile machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal

amount after grace period of two years. This finance carries mark up at the rate of SBP rate + 3.00 % per

annum. During the year mark up was charged at the rate of 12.70% per annum (2012: 12.70% per annum). It

is secured against the security as stated in note 18.10.

During the current year, a term finance of Rs.200 million has been obtained from Faysal Bank Limited to

finance the retirement of letter of credit opened for import of textile machinery. Limit of this term finance

was Rs.200 million. It is repayable within the period of seven years inclusive of two years grace period in ten

half yearly equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 2.00%

per annum. During the year mark up was charged at the rates ranging from 11.35% per annum to 11.50% per

annum. It is secured against the security as stated in note 18.10.

This finance has been disbursed for the purpose of retirement of letters of credit and swap of other expensive

term finances. This finance is repayable with in seven years inclusive of one year grace period in 12 half

yearly equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + spreads of

1.00% per annum for first year, 1.25% per annum for second year and 1.50% per annum from third year to

onward. During the year mark up was charged at the rates ranging from 10.99% per annum to 13.52% per

annum (2012: from 13.42% per annum to 15.08% per annum). It is secured against 1st Joint Pari Passu

charge/mortgage of Rs.694 million on all present and future fixed assets of the Company and personal

guarantees of the sponsoring directors of the company. During the year 2009 an amount of Rs.0.92 million

and year 2008 an amount of Rs.33.6 million out of this finance were refinanced by the State Bank of Pakistan

under LTF-EOP scheme and accordingly transferred to DF under LTF-EOP of Habib Bank Limited as stated

in note 18.14(b).

18.14 (b) Habib Bank Limited - DF under LTF- EOP scheme

18.15 National Bank of Pakistan - DF- IV

18.16 (a) National Bank of Pakistan - DF III

18.16 (b) National Bank of Pakistan - DF III under LTFF scheme

18.17 (a) National Bank of Pakistan - DF VI

18.17 (b) National Bank of Pakistan - DF VI under LTFF scheme

During current year, an amount of Rs.62.8 million out of demand finance VI of National Bank of Pakistan

were approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount.

This finance carries mark up at the rate of SBP rate + 3.00 % pa. During the year mark up was charged at the

rate of 11.20% per annum. It is secured against the security as stated in note 18.15.

During the year 2009 an amounts of Rs.0.92 million and year 2008 an amount of Rs. 33.68 million out of

demand finance of Habib Bank Limited were approved and refinanced by the State Bank of Pakistan under

LTF-EOP scheme against the imported textile machinery. This finance is repayable in 12 equal half yearly

installments of principle amount. However, during the year 2009, SBP has allowed grace period of one year

starting from 01 January 2009 to 31 December 2009 and accordingly last installment is due on 19 November

2015. This finance carries mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was

charged at the rate of 7% per annum (2012: 7.00% per annum). This finance is secured against the security as

stated in note 18.14(a).

This finance has been obtained during the year 2010 for the purpose of re-profiling of balance sheet to ease

out cash flow burdens owing to repayments of long term loans. It is repayable within a period of six years

including one year grace period in 10 half yearly equal installments of principal amount. Last installment is

falling due on 16 March 2016. This finance carries markup at the rate of 6 months KIBOR + 2.00% per

annum. During the year markup was charged at the rates ranging from 11.38% per annum to 14.06% per

annum (2012: from 13.97% per annum to 15.78% per annum). It is secured against 1st Joint Pari Passu

charge/mortgage of Rs.1,400 million on all present and future fixed assets of the Company and personal

guarantees of the sponsoring directors of the Company.

During the year 2012, a demand finance amounting to Rs.147.7 million was obtained from National Bank of

Pakistan for retirement of 720 days letters of credits opened for imported plant and machinery. Sanctioned

limit of this finance was Rs.147.7 million. It is repayable within the period of five years without grace in 10

semi annual equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR +

2.00% per annum. During the year mark up was charged at the rates ranging from 11.38% per annum to

14.06% per annum (2012: from 13.93% per annum to 14.02% per annum). This finance is secured against

the security as stated in note 18.15.

During year 2012, an amount of Rs.45.8 million out of demand finance III of National Bank of Pakistan were

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount.

This finance carries mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was

charged at the rate of 12.60% per annum (2012: 12.60% per annum). It is secured against the security as

stated in note 18.15.

This finance amounting to Rs.270 million has been obtained from National Bank of Pakistan for retirement

of letters of credits opened for imported plant and machinery. Sanctioned limit of this finance was Rs.270

million. It is repayable within the period of six years inclusive of one year grace period in 10 semi annual

equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 2.00% per

annum. During the year mark up was charged at the rates ranging from 11.88% per annum to 14.56% per

annum (2012: 14.50% per annum). This finance is secured against the security as stated in note 18.15.

18.18 United Bank Limited - DF-I B

18.19 United Bank Limited- DF-I C

18.20 (a) United Bank Limited - DF- II

18.20 (b) United Bank Limited - DF under LTF-EOP scheme

18.21 United Bank Limited - DF-III under LTF-EOP scheme

This finance has been obtained for retirement of import documents of plant and machinery . It is repayable in

10 bi-annual installments of principal amount commencing from 31 March 2009 after grace period of 2

years. Originally it carried markup at the rate of 6 months KIBOR Ask Rate + 2.00% per annum. During the

year 2008, pricing was reduced to 3 months KIBOR Ask rate + 1.00% per annum. However, during the year

2009, spread was revised to1.50 % per annum. During the year markup was charged at the rates ranging from

10.81% per annum to 13.49% per annum (2012: from 13.41% per annum to 15.04% per annum). It is

secured against 1st Joint Pari Passu charge/mortgage of Rs.911.5 million on all present and future fixed

assets of the Company and personal guarantees of the sponsoring directors of the Company.

This finance has been obtained for the purpose of incurring capital expenditures. It is repayable in 10 bi-

annual installments of principal amount commencing from 30 September 2009 after grace period of 2 years.

Originally it carried markup at the rate of 6 months KIBOR Ask Rate + 2.25% per annum. During the year

2008, pricing was reduced to 3 months KIBOR Ask rate + 1.50% per annum. During the year markup was

charged at the rates ranging from 10.81% per annum to 13.49% per annum (2012: from 13.41% per annum

to 15.04% per annum). It is secured against the security as stated in note 18.18.

This finance has been obtained for retirement of import documents of plant and machinery. It is repayable in

12 equal semi-annual installments of principal amount with no grace period. Originally it carried markup at

the rate of 6 months KIBOR Ask Rate + 2.00% per annum. During the year 2008, pricing was reduced to 3

months KIBOR Ask rate + 1.00% per annum. However, during the year 2009, spread was revised to 1.50%

per annum. During the year markup was charged at the rates ranging from 10.81% per annum to 13.49% per

annum (2012: from 13.41% per annum to 15.04% per annum). It is secured against the security as stated in

note 18.18. During the year 2008, an amount of Rs.30.2 million out of this finance was refinanced by the

State Bank of Pakistan under LTF-EOP scheme and accordingly transferred to Demand Finance under LTF-

EOP of United Bank Limited as stated in note 18.20(b).

During the year 2008, an amount of Rs.30.2 million out of demand finance II of United Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme against the imported textile

machinery eligible under the scheme. It is repayable in 12 equal semi annual installments of principal

amount. However, during the year 2009, SBP has allowed grace period of one year starting from 01 January

2009 to 31 December 2009 and accordingly last installment is due on 31 July 2014. This finance carries

mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate of

7.00% per annum (2012: 7.00% per annum). This finance is secured against the security as stated in note

18.18.

During the year 2007, an amount of Rs.23.1 million out of demand finance I B of United Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme against the imported textile

machinery eligible under the scheme. It is repayable in 10 equal semi annual installments of principal

amount. However, during the year 2009, SBP has allowed one year grace period starting from 01 January

2009 to 31 December 2009 and accordingly last installment is due on July 20, 2013. This finance carries

mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate of

7.00% per annum (2012: 7.00% per annum). This finance is secured against the security as stated in note

18.18.

18.22 United Bank Limited - DF-IV under LTF-EOP scheme

18.23 MCB Bank Limited - DF under LTF-EOP scheme

18.24 MCB Bank Limited - Demand Finance under LTFF scheme

18.25 (a) Allied Bank Limited - DF

This finance was obtained under LTF-EOP scheme of SBP for swap of an amount of Rs.50 million out of

outstanding Diminishing Muskarika Finance of Meezan Bank Limited. This finance was approved and

refinanced by the State Bank of Pakistan under LTF-EOP scheme against the eligible textile machinery

imported through Meezan Bank Limited. It is repayable in 24 equal quarterly installments of principal

amount . However, during the year 2009, SBP has allowed grace period of one year starting from January

01, 2009 to December 31, 2009 and accordingly last installment is due on October 10, 2013. This finance

carries mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate

of 7.00% per annum (2012: 7.00% per annum). It is secured against the security as stated in note 18.18.

During the year 2007, an amount of Rs.26.9 million out of demand finance of MCB Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme against the imported textile

machinery eligible under the scheme. It was repayable in 11 equal semi annual installments of principal

amount. However, during the year 2009, SBP has allowed grace period of one year starting from 01 January

2009 to 31 December 2009 and accordingly last installment is due on 19 February 2013. This finance was

fully repaid during the current year. This finance carried mark up at the rate of SBP rate + 2.00% per annum.

During the year mark up was charged at the rate of 7.00% per annum (2012: 7.00% per annum). This finance

is secured against 1st Joint Pari Passu charge/mortgage of Rs.949 million on all present and future fixed

assets of the Company and personal guarantees of the sponsoring directors of the Company.

During the current year a demand finance /LTFF amounting to Rs.349.9 million has been obtained from

MCB Bank Limited for retirement of letters of credits opened for imported plant and machinery. Sanctioned

limit of this finance was Rs.350 million. It is repayable within the period of seven years inclusive of one year

grace period in 12 semi annual equal installments of principal amount. Entire amount was refinanced by the

State Bank of Pakistan under LTFF scheme as entire imported machinery was qualified under LTFF scheme.

It carries mark up at the rate of SBP rate + 3% per annum. During the year mark up was charged at the rate of

12.70% per annum (2012: 12.70 per annum). This finance is secured against the security as stated in note

18.23.

This finance has been obtained for retirement of letters of credit opened for import of plant and machinery. It

is repayable with in a period of seven years including one year grace period in 12 equal bi-annual

installments of principal amount. Last installment is falling due on 04 July 2014. Originally it carried markup

at the rate of 6 months KIBOR + 2.50% per annum. During the year 2008, pricing was reduced to 6 months

KIBOR + 1.50% per annum. During the year markup was charged at the rates ranging from 10.88% per

annum to 13.56% per annum (2012: from 13.52% per annum to 15.28% per annum). It is secured against 1st

Joint Pari Passu charge/mortgage of Rs.2,640 million on all present and future fixed assets of the Company

and personal guarantees of the sponsoring directors of the Company. During the year 2009 an amount of Rs.

1.2 million and year 2008 an amount of Rs.28.1 million out of this finance were refinanced by the State Bank

of Pakistan under LTF-EOP scheme and accordingly transferred to demand finance under LTF-EOP of

Allied Bank Limited as stated in note 18.25(b).

18.25 (b) Allied Bank Limited - DF under LTF-EOP scheme

18.25 (c) Allied Bank Limited - DF under LTFF scheme

18.26 (a) Allied Bank Limited - TL-2

18.26 (b) Allied Bank Limited - TL-2 under LTFF scheme

18.27 (a) Allied Bank Limited - TL-3

During year 2012 an amount of Rs.79.4 million and during 2010 an amount of Rs.24.8 million out of Term

Loan-2 of Allied Bank Limited were approved and refinanced by the State Bank of Pakistan under LTFF

scheme against imported textile machinery eligible under the scheme. This finance is repayable in 10 equal

installments of principal amount. Last installment is falling due on 13 December 2017. This finance carries

mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was charged at the rates

ranging from 10.25% per annum to 11.20% per annum (2012: from 10.25% per annum to 11.20% per

annum). It is secured against the security as stated in note 18.25(a).

This finance amounting to Rs.248.7 million has been obtained during the year 2011 for the purpose of

retirement of letters of credit opened for import of textile machinery. It is repayable within a period of seven

years inclusive of grace period of two years in 10 half yearly equal installments of principal amount. Last

installment is falling due on 23 November 2017. This finance carries markup at the rate of 6 months KIBOR

+ 2.15% per annum. During the year markup was charged at the rates ranging from 11.53% per annum to

14.21% per annum (2012: from 14.17% per annum to 15.93% per annum). It is secured against the security

as stated in note 18.25(a).

This finance was obtained during the year 2012 and year 2010 for the purpose of retirement of letters of

credit opened for import of textile machinery. It is repayable within a period of seven years including two

years grace period in 10 half yearly equal installments of principal amount. Last installment is falling due on

13 December 2017. This finance carries markup at the rate of 6 months KIBOR + 2.15% per annum. During

the year markup was charged at the rates ranging from 11.53% per annum to 14.21% per annum (2012: from

14.17% per annum to 15.93% per annum). It is secured against the security as stated in note 18.25(a).

During the year 2009 an amount of Rs.1.2 million and year 2008 an amount of Rs.28.1 million out of

demand finance of Allied Bank Limited were approved and refinanced by the State Bank of Pakistan under

LTF-EOP scheme against the imported textile machinery eligible under the scheme. It is repayable in 12

equal semi annual installments of principle amount commencing from 13 November 2009 after a grace

period of one year. However, during the year 2009, SBP has allowed one year grace period starting from 01

January 2009 to 31 December 2009 and accordingly last installment is due on 16 May 2016. This finance

carries mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate

of 7.00% per annum (2012: 7.00% per annum). This finance is secured against the security as stated in note

18.25(a).

During the year 2010, an amount of Rs.2.2 million out of demand finance of Allied Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in remaining 10 equal installments of

principal amount. Last installment is falling due on 04 July 2014. This finance carries mark up at the rate of

SBP rate + 2.50 % per annum. During the year mark up was charged at the rate of 9.00% per annum (2012:

9.00% per annum). It is secured against the security as stated in note 18.25(a).

18.27 (b) Allied Bank Limited - TL-3 under LTFF scheme

18.28 (a) Allied Bank Limited - Term Loan 4

18.28 (b) Allied Bank Limited - Term Loan 4 under LTFF scheme

18.29 Allied Bank Limited - Term Loan 5

18.30 Pak Kuwait Investment Company (Private) Limited - TF

18.31 (a) Saudi Pak Industrial and Agricultural Investment Company Limited- TF

During the year 2011 an amount of Rs.8.99 million out of Term Loan-3 of Allied Bank Limited were

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount

after grace period of two years. Last installment is falling due on 23 November 2017. This finance carries

mark up at the rate of SBP rate + 3.00% per annum. During the year mark up was charged at the rate of

11.20% per annum (2012: 11.20% per annum). It is secured against the security as stated in note 18.25(a).

During the year 2012, a term finance amounting to Rs.626 million has been obtained from Allied Bank

Limited for retirement of letters of credits opened for imported plant and machinery. Sanctioned limit of this

finance was Rs.626 million. It is repayable within the period of seven years inclusive of two years grace

period in 10 semi annual equal installments of principal amount. It carries mark up at the rate of 6 months

KIBOR + 2.50% per annum .During the year mark up was charged at the rates ranging from 11.88% per

annum to 14.56% per annum (2012: from 14.52% per annum to 16.30% per annum). This finance is secured

against the security as stated in note 18.25(a).

During the year 2012, an amount of Rs.4.24 million out of term finance 4 of Allied Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount.

This finance carries mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was

charged at the rate of 12.70% per annum (2012: 12.70 % per annum). It is secured against the security as

stated in note 18.25(a).

During the current year, a term finance of Rs.218.4 million has been obtained from Allied Bank Limited to

finance the retirement of Letter of Credit opened for import of textile machinery. Limit of this term finance

was Rs.230 million. It is repayable within the period of eight years, from the date of disbursement of 50% of

this facility, inclusive of two years grace period in twelve half yearly equal installments of principal amount.

It carries mark up at the rate of 6 months KIBOR + 1.75% per annum. During the year mark up was charged

at the rate of 11.10% per annum. It is secured against the security as stated in note 18.25(a).

This finance amounting to Rs.300 million has been obtained during the year 2011 from Pak Kuwait

Investment Company (Private) Limited to finance the capital expenditures of the Company's capacity

expansion. It is repayable within a period of six years inclusive of grace period of one year in 10 half yearly

equal installments of principal amount. Last installment is falling due on 28 October 2016. This finance

carries markup at the rate of 6 months KIBOR + 2.45% per annum. During the last year mark up pricing was

reduced to 6 months KIBOR + 2.25% per annum. During the year markup was charged at the rates ranging

from 11.85% per annum to 14.27% per annum (2012: from 14.27% per annum to 16.14% per annum). It is

secured against the security of 1st Joint Pari Passu charge/mortgage of Rs.400 million on all present and

future fixed assets of the Company and personal guarantees of the sponsoring directors of the Company.

This finance has been obtained from Saudi Pak Industrial and Agricultural Investment Company Limited for

the purpose of retirement of letters of credit opened for import of plant and machinery. Sanctioned amount of

this facility is Rs.250 million. It is repayable within a period of eight years inclusive of grace period of two

years in 12 half yearly equal installments of principal amount. Last installment is falling due on November

03, 2018. This finance carries markup at the rate of 6 months KIBOR + 2.75% per annum. During the year

markup was charged at the rates ranging from 11.20% per annum to 14.76% per annum (2012: from 14.65%

per annum to 16.42% per annum). It is secured against the security of 1st Joint Pari Passu charge/mortgage

of Rs.575 million on all present and future fixed assets of the Company and personal guarantees of the

sponsoring directors of the Company.

18.31 (b) Saudi Pak Industrial and Agricultural Investment Company Limited-TF under LTFF scheme

18.32 Pak Brunei Investment Company Limited - Term Finance under LTFF scheme

18.33 Pak Brunei Investment Company Limited - Term Finance

18.34 Pak Oman Investment Company Limited - Term Finance under LTFF scheme

18.35 Bank Al Falah - Term Finance

During the current year, a term finance amounting to Rs. 325 Million has been obtained from Bank Alfalah

Limited to pay-off earlier obtained expensive debt / current portion of long term debt and to even out cash

flows during payment tenor of long term loans presently appearing. Limit of this term finance was Rs.325

million. It is repayable within the period of seven years inclusive of two years grace period in 10 half yearly

equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 1.75% per

annum. During the year mark up was charged at the rates ranging from 11.11% to 11.51% per annum. This

finance is secured against 1st Joint Pari Passu Charge/mortgage of Rs.434 million on all present and future

fixed assets of the Company and personal guarantees of the sponsoring directors.

During the year 2012, a term finance / LTFF amounting to Rs.100 million has been obtained from Pak Oman

Investment Company Limited for retirement of letters of credits opened for imported plant and machinery. It

is repayable within the period of seven years inclusive of two years grace period in 20 quarterly equal

installments of principal amount. Entire amount was refinanced by the State Bank of Pakistan under LTFF

scheme as entire imported machinery was qualified under LTFF scheme. It carries mark up at the rate of SBP

rate + 3% per annum. During the year mark up was charged at the rate of 12.70% per annum (2012: 12.70%

per annum). This finance is secured against 1st Joint Pari Passu Charge/mortgage of Rs.134 million on all

present and future fixed assets of the Company and personal guarantees of the sponsoring directors.

During the year 2012, an amount of Rs.133.1 million and year 2010 an amount of Rs. 8 million out of Term

Finance of Saudi Pak Industrial and Agricultural Investment Company Limited was approved and refinanced

by the State Bank of Pakistan under LTFF scheme against imported textile machinery eligible under the

scheme. This finance is repayable in 12 equal installments of principal amount after grace period of two

years. Last installment is falling due on November 03, 2018. This finance carries mark up at the rate of SBP

rate + 3.00 % per annum. During the year mark up was charged at the rates ranging from 11.20% per annum

to 12.70% per annum (2012: from 11.20 % per annum to 12.70% per annum). It is secured against the

security as sated in note 18.31(a).

During the year 2012, a term finance / LTFF amounting to Rs.199.9 million has been obtained from Pak

Brunei Investment Company Limited for retirement of letters of credits opened for imported plant and

machinery. Sanctioned limit of this finance is Rs.200 million. It is repayable within the period of eight years

inclusive of two years grace period in 12 semi annual equal installments of principal amount. Entire amount

was refinanced by the State Bank of Pakistan under LTFF scheme as entire imported machinery was

qualified under LTFF scheme. It carries mark up at the rate of SBP rate + 3% per annum. During the year

mark was charged at the rate of 12.70% per annum (2012: 12.70% per annum). This finance is secured

against 1st Joint Pari Passu Charge/mortgage of Rs 534 million on all present and future fixed assets of the

Company and personal guarantees of the sponsoring directors.

During the current year, a term finance amounting to Rs.200 million has been obtained from Pak Brunei

Investment Company Limited to enable the Company to re-profile its balance sheet. It is repayable within the

period of five years inclusive of one year grace period in eight half yearly equal installments of principal

amount. It carries mark up at the rate of 6 months KIBOR + 2.00% per annum. During the year mark up was

charged at the rates ranging from 11.55% to 12.43% per annum. It is secured against the security as as stated

in 18.32.

2013 2012

Note

19 Long term musharika

- Secured

Meezan Bank Limited

- Diminishing musharika -I 19.1 - 23,755,451

- Diminishing musharika -II 19.2 225,000,000 250,000,000

- Diminishing musharika -III 19.3 150,000,000 -

375,000,000 273,755,451

Less: Current portion grouped under current liabilities 50,000,000 48,755,451

325,000,000 225,000,000

19.1 Meezan Bank Limited-Diminishing Musharika- I

19.2 Meezan Bank Limited-Diminishing Musharika- II

19.3 Meezan Bank Limited-Diminishing Musharika- III

-------------(Rupees)-------------

Diminishing Musharika-I finance was obtained from Meezan Bank Limited for repayment of cost of

imported plant and machinery. This finance has been fully repaid during the current year. It carried mark up

for first 5 years (4 years plus 1 year grace period) at the rate of 6 months KIBOR + 1.25% per annum and for

the remaining period of three years at the rate of 6 months KIBOR + 1.50% per annum. During the year, the

bank has charged mark up at the rate of 13.50% per annum (2012: from 13.46% per annum to 15.25% per

annum). It was repayable in twenty eight equal quarterly installments from the date of disbursement after one

year grace period, however, during the year 2007, due to prepayment, a grace of seven quarterly installments

was allowed by the bank and accordingly remaining balance of Rs.201.9 million was repayable in 17 equal

quarterly installments over the original tenor. This finance was secured against exclusive charge of Rs.270

million over machinery imported through Meezan Bank Limited and personal guarantees of the sponsoring

directors of the Company.

Diminishing Musharika-II finance amounting to Rs.250 million has been obtained during the year 2011 from

Meezan Bank Limited for repayment of cost of imported plant and machinery. It carries mark up at the rate

of 6 months KIBOR + 2.00% per annum. During the year, bank has charged mark up at the rates ranging

from 11.51% per annum to 14.01% per annum (2012: from 13.93% per annum to 14.01% per annum). It is

repayable within seven years inclusive of two years grace period in ten equal half yearly installments of

principal amount . This finance is secured against exclusive charge of Rs.334 million over machinery

imported through Meezan Bank Limited and personal guarantees of the sponsoring directors of the

Company.

During the current year, a Diminishing Musharika finance of Rs.150 million has been obtained from Meezan

Bank Limited to finance the retirement of LCs opened for import of textile machinery. It is repayable within

the period of seven years inclusive of two years grace period in ten half yearly equal installments of principal

amount. It carries mark up at the rate of 6 months KIBOR + 1.75% per annum. During the year mark up was

charged at the rate of 11.08% per annum. This finance is secured against exclusive charge of Rs.200 million

over machinery imported through Meezan Bank Limited and personal guarantees of the sponsoring directors

of the Company.

2013 2012

Note

20 Deferred liabilities

Staff gratuity 20.1 99,907,603 85,596,865

Deferred taxation 20.2 1,687,387,849 1,488,732,651

1,787,295,452 1,574,329,516

20.1 Staff gratuity

2013 2012

The amounts recognized in the balance sheet are as follows: -------------(Rupees)-------------

Present value of defined benefit obligation 130,453,221 84,624,574

Unrecognized actuarial (loss)/gain (30,545,618) 972,291

Net liability at end of the year 99,907,603 85,596,865

Net liability at beginning of the year 85,596,865 71,445,903

Charge for the year 39,740,889 37,521,467

Benefits paid during the year (25,430,151) (23,370,505)

Net liability at end of the year 99,907,603 85,596,865

Movement in the present value of defined benefit obligation is as follows:

Present value of defined benefit obligation at beginning of the year 84,624,574 74,080,961

Current service cost 28,739,694 27,150,132

Interest cost 11,001,195 10,371,335

Benefits paid (25,430,151) (23,370,505)

Actuarial loss/(gain) 31,517,909 (3,607,349)

Present value of defined benefit obligation at end of the year 130,453,221 84,624,574

Actuarial assumptions:

The following are the principal actuarial assumptions at 30 June 2013:

2013 2012

Discount rate 10.5% 13.0%

Expected rate of growth per annum in future salaries 9.5% 12.0%

Average expected remaining working life time of employees 10 years 10 years

Expected mortality rate EFU (61-66) EFU (61-66)

Historical Information:

2013 2012 2011 2010 2009

Present value of defined benefit

obligation 130,453,221 84,624,574 74,080,961 60,093,491 48,846,341

Unrecognized actuarial gain/(loss) (30,545,618) 972,291 (2,635,058) (4,036,688) (364,743)

20.1.1

2013 2012

20.2 Deferred taxation -------------(Rupees)-------------

This comprises of the following:

Deferred tax liability on taxable temporary differences:

Surplus on revaluation of operating assets 647,381,578 697,913,703

Tax on specie dividend 62,994,031 57,835,909

Tax depreciation allowance 997,699,124 750,636,015

Deferred tax asset on deductible temporary differences:

Provision for gratuity (20,326,704) (17,295,275)

Provision for slow moving items (360,180) (357,701)

1,687,387,849 1,488,732,651

Comparison of present value of defined benefit obligation and unrecognized actuarial gain/(loss) for five years is as follows:

---------------------------------------------------(Rupees)---------------------------------------------------

The Company's policy with regard to actuarial gains/losses is to follow the “minimum 10% corridor” recommended approach under IAS 19

(Employee Benefits).

-------------(Rupees)-------------

The latest actuarial valuation of the Company's defined benefit plan, were conducted at 30 June 2013 using projected unit credit method. Detail

of obligation for defined benefit plan is as follows:

2013 2012

Restated

Note -----------------(Rupees)-----------------

21 Trade and other payables

Trade creditors 142,920,617 98,234,492

Accrued liabilities 847,766,677 388,615,978

Advance from customers 48,723,124 43,014,242

Un-claimed dividend 19,050,466 754,726

Preference dividend payable 25,410,385 28,490,000

Payable against redemption of preference shares 15.2.1 175,000,000 -

Due to associated undertakings 21.1 59,630,329 16,276,339

Bills payable 838,319 14,624,126

Tax deducted at source 35,712 -

Custom duties (infrastructure cess) 25.2 114,899,587 84,912,156

Workers' profit participation fund 21.2 82,023,554 68,811,735

Workers' welfare fund 84,589,457 54,650,330

Due to employees 1,075,735 808,189

Others 175,000 -

1,602,138,962 799,192,313

21.1 Due to associated undertaking

Hussain Ginneries Limited 7,235,335 6,701,412

Reliance Weaving Mills Limited 525,903 1,381,441

Fatima Sugar Mills Limited 4,835 4,008

Ahmed Fine Textile Mills Limited 51,823,755 8,148,977

Pak Arab Fertilizer Limited 40,501 40,501

59,630,329 16,276,339

21.2 Workers' profit participation fund

Opening balance 68,811,735 56,534,593

Add:

4,694,280 3,880,039

Contribution for the year 78,787,179 68,811,735

152,293,194 129,226,367

Less: Payment made during the year (70,269,640) (60,414,632)

82,023,554 68,811,735

22 Accrued profit / interest / mark-up

Profit/interest/mark-up accrued on:

Long term financing 179,400,797 168,548,673

Short term borrowings 70,115,929 84,422,578

249,516,726 252,971,251

Interest on amount utilized by the Company

2013 2012

Note -----------------(Rupees)-----------------

23 Short term borrowings

Banking Companies

Secured

Cash finance 1,630,804,137 464,636,223

Running finance 229,905,957 1,151,680,262

Finance against foreign bills / packing credit 84,116,787 32,023,908

Foreign currency export finance 609,085,065 1,176,501,590

Finance against imported merchandise 897,368,687 873,348,492

Money market loan 885,900,000 100,000,000

4,337,180,633 3,798,190,475

23.1

2013 2012

Note -----------------(Rupees)-----------------

24 Current portion of non-current liabilities

Long term financing 18 837,688,363 600,073,758

Long term musharika 19 50,000,000 48,755,451

887,688,363 648,829,209

25 Contingencies and commitments

25.1 The following proceedings have been initiated by the tax authorities:

25.1.1

25.1.2 Company's appeals against the amendment orders passed under section 122(5A) & 122(5) of the Income

tax Ordinance, 2001 in respect of tax years 2004 & 2006 respectively, have been disposed of by the

Commissioner Inland Revenue [CIR(A)] through its separate orders dated 30 July 2011 and a

substantial relief has been extended to the company. In respect of the issues which were not favourably

decided by the CIR(A), Company has preferred appeals before Appellate Tribunal Inland Revenue

(Tribunal), which have not yet been taken up for hearing.

These facilities are obtained from various commercial banks under mark-up arrangements are

aggregating to Rs. 10 billion (2012: Rs.7.9 billion) for working capital requirements. During the year,

mark-up was charged by banks at various rates ranging from 10.07% per annum to 13.51% per annum

on monthly / quarterly basis (2012: from 12.92% per annum to 15.29% per annum on monthly /

quarterly basis). The aggregate facilities are secured against pledge / hypothecation of stocks-in-trade,

stores and spares, charge on current assets and personal guarantees of the sponsoring directors except

nominee director. Facilities which remained unutilized at year end were Rs.8.18 billion (2012: Rs.6.23

billion).

Amendment proceedings initiated by the Additional Commissioner Inland Revenue, under section

122(5A) of the Income Tax Ordinance, 2001 for the tax year 2009 and an income tax demand of

Rs.140.6 million has been raised against the company through order dated 23 October 2012. The

Company has preferred appeal before the commissioner inland revenue (appeal) which has been heard

and decision is awaited.

25.1.3

25.1.4

25.1.5

25.1.6

25.2

25.3 Commitments

2013 2012

-----------------(Rupees)-----------------

25.3.1

315,040,715 260,345,000

25.3.2 Commitments against irrevocable letters of credit:

- capital expenditure 743,750,937 32,899,567

- raw material and stores and spares 266,457,826 239,843,281

1,325,249,478 533,087,848

Through show cause notice dated 14 November 2012, proceedings under section 182 of the Ordinance

were initiated against the company for imposition of penalty, of Rs 7 million approximately, for non-

payment of tax demand raised through amendment order dated 23 October 2012. Company's position in

the matter was duly communicated to the concerned officials on 22 November 2012. Since, the

department has not proceeded any further in the matter, thus related exposure, if any, cannot be assessed

at this stage.

Consequent to the amendment of deemed assessment for tax year 2007 through order passed under

section 122(5) of the Ordinance by the Assistant Commissioner Inland Revenue (Audit), the Company

contested such order in appeal before the Commissioner Inland Revenue (Appeals) [CIR (A)] which

remained successful on various accounts. The Company has preferred further appeal before the Tribunal

to assail the issues not decided favourably by CIR(A) and as such cross appeals in respect of tax year

2007 are pending hearing before Tribunal.

The issue of admissibility of 'return to preference shareholders' was disputed in the amendment

proceedings for tax years 2007 and 2009 on the grounds that such payments were not classified as 'profit

on debt' as claimed by the Company. In this respect, the Company's appeal are pending at judication,

considering the matter as un-precedeted in nature, ultimate outcome thereof cannot be predicted with

certainty at this stage.

Based on the discrepancies identified through computerized risk evaluation of Sales Tax (CREST),

proceeding regarding alleged non-compliance with provision of notification SROs 283(I)/2011 &

1125(I)/2011 respectively dated 01 April 2011 and 31 December 2011 were initiated against the

company through notice dated 11 July 2013. While detailed submission have been filed, departmental

action thereon has not been finalised.

Guarantees issued by various commercial banks,

in respect of financial and operational

obligations of the Company, to various

institutions and corporate bodies.

The infrastructure cess levied by the Excise and Taxation Department of Sindh under section 9 of Sindh

Finance Act 1994 on items imported by the company. The company has filed an appeal in the Sindh

High Court at Karachi against the said levy. The appeal is pending for decision till the balance sheet

date. However keeping in view any unfavorable outcome of the appeal, the Company has provided the

balance payable amount in these financial statements.

2013 2012

Note -----------------(Rupees)-----------------

26 Sales - net

Local:

Yarn 10,055,464,974 10,387,385,847

Comber noil 10,181,583 6,528,822

Fabric 1,953,749,307 837,723,542

Waste 98,465,429 103,534,693

12,117,861,293 11,335,172,904

Raw material 150,428,262 247,958,733

Conversion 21,077,770 -

12,289,367,325 11,583,131,637

Less:

Sales return 86,047,449 80,842,063

Sales tax 142,597,775 -

Commission 45,031,840 31,914,300

273,677,064 112,756,363

Net local sales 12,015,690,261 11,470,375,274

Export:

Yarn - Net 6,976,150,960 7,387,755,107

Fabric 1,347,825,769 678,572,155

Comber noil 336,303,086 370,030,336

Waste 11,482,235 3,398,000

8,671,762,050 8,439,755,598

Raw material - 4,392,203

8,671,762,050 8,444,147,801

Less:

Commission 118,815,503 164,078,568

Sales return 10,048,922 -

128,864,425 164,078,568

Net export sales 8,542,897,625 8,280,069,233

20,558,587,886 19,750,444,507

27 Cost of sales

Raw material consumed 27.1 12,775,004,147 12,434,336,584

Packing material consumed 226,664,478 237,273,205

Salaries, wages and benefits 27.2 1,222,434,206 806,614,571

Traveling and conveyance 5,706,777 3,553,460

Power and fuel 1,683,664,332 1,240,981,176

Stores and spares consumed 370,822,514 324,204,139

Processing charges 15,090,476 17,294,436

Repair and maintenance 30,454,607 33,336,244

Insurance 49,266,204 37,528,856

Depreciation 4.3 514,808,069 398,488,284

Rates and taxes 11,186,041 4,825,315

Others 1,041,510 715,606

C/F 16,906,143,361 15,539,151,876

2013 2012

Note -----------------(Rupees)-----------------

B/F 16,906,143,361 15,539,151,876

Adjustment of work-in-process

Opening stock 172,590,755 163,759,089

Closing stock (205,937,615) (172,590,755)

(33,346,860) (8,831,666)

Cost of goods manufactured 16,872,796,501 15,530,320,210

Adjustment of finished goods

Opening stock 778,833,171 789,116,676

Finished goods purchased 961,507,523 1,155,156,903

Closing stock (1,075,768,708) (778,833,171)

664,571,986 1,165,440,408

Cost of goods sold 17,537,368,487 16,695,760,618

Cost of raw material sold 130,982,654 223,493,415

17,668,351,141 16,919,254,033

27.1 Raw material consumed

Opening stock 2,822,587,199 2,457,338,332

Purchases and expenses 14,419,937,401 12,520,896,111

Transfer from ginning unit 27.1.1 187,633,528 287,797,088

14,607,570,929 12,808,693,199

17,430,158,128 15,266,031,531

Less:

Insurance claim 8,241,703 9,107,713

Closing stock 4,308,953,542 2,806,033,353

Stock in transit 337,958,736 16,553,881

4,655,153,981 2,831,694,947

12,775,004,147 12,434,336,584

27.1.1 Production cost of ginning unit - net

Raw material purchased and consumed 217,003,661 356,653,663

Lease charges 1,250,000 500,000

Salaries, wages and benefits 4,440,057 4,709,616

Traveling and conveyance 663,594 632,042

Repair and maintenance 943,029 717,429

Store consumption 379,439 203,074

Utilities 639,374 3,242,579

Entertainment 142,014 147,058

Legal and professional 40,750 -

Printing and stationery 22,565 31,718

Communication 37,225 48,480

Insurance 134,438 216,612

Others 691,953 233,875

226,388,099 367,336,146

Less: Sale of cotton seed (38,754,571) (79,539,058)

Transferred to raw material consumed 187,633,528 287,797,088

The Company has acquired a cotton ginning factory (Hussain Ginneries Limited) on operating lease

basis. Its total cost of production, after adjustment of sale of cotton seed to third parties, has been

transferred to the company as raw material cost.

27.2

2013 2012

Note -----------------(Rupees)-----------------

28 Distribution cost

Export sales

Export development surcharge 20,102,810 21,131,950

Freight, shipment and handling charges 210,722,370 194,778,812

Insurance 2,600,867 2,409,393

Local sales

Freight, shipment, handling and other charges 22,704,640 23,686,655

Insurance 639,093 617,822

256,769,780 242,624,632

2013 2012

Restated

-----------------(Rupees)-----------------

29 Administrative expenses

Salaries and benefits 29.1 121,539,263 87,847,778

Traveling and conveyance 29.2 7,008,376 11,361,781

Vehicle running and maintenance 18,951,203 14,533,831

Rent, rates, taxes and fees 7,356,033 5,974,303

Electricity, gas and water 1,788,829 1,752,959

Entertainment/ guest house expenses 6,364,867 4,978,672

Communication 9,431,581 10,530,670

Printing and stationery 4,253,539 3,981,490

Insurance 3,435,444 2,645,049

Repair and maintenance 4,881,874 5,961,795

Subscription/ advertisement 1,476,862 4,235,481

Auditors' remuneration 29.3 1,010,647 635,000

Legal and professional charges 4,308,821 6,165,470

Directors' meeting fee 105,000 75,000

Depreciation 4.3 19,744,895 12,727,528

Amortization 5 1,140,044 1,140,044

Others 1,042,342 769,089

213,839,620 175,315,940

29.1

29.2

2013 2012

Restated

-----------------(Rupees)-----------------

29.3 Auditors' remuneration

Fee for statutory audit 670,000 390,000

Fee for half yearly review and other certifications 230,000 135,000

Out of pocket expenses 75,647 75,000

975,647 600,000

Workers profit participation fund's audit fee 35,000 35,000

1,010,647 635,000

These include Rs. 33.6 million (2012: Rs. 31.04 million) in respect of staff retirement benefits.

These include Rs. 6.13 million (2012: Rs. 6.52 million) in respect of staff retirement benefits.

These include directors traveling expense of Rs. 3.2 million (2012: Rs. 8.6 million).

2013 2012

Note -----------------(Rupees)-----------------

30 Other operating expenses

Workers' profit participation fund 21.2 78,787,179 68,811,735

Workers' welfare fund 29,939,128 26,070,859

Donations 30.1 8,672,634 8,364,285

Promotion of education 520,762 1,132,083

Bad debts written off - 97,657

Loss on disposal of property, plant and equipment 900,000 -

118,819,703 104,476,619

30.1

2013 2012

Restated

Note

31 Other operating income

Income from non-financial assets

Gain on disposal of property, plant and equipment 4,016,994 9,809,407

Miscellaneous income 1,271,600 -

Income from financial assets

Dividend income 147,201,720 101,232,016

Gain on remeasurement of short term

investments to fair value 6,351,797 51,599,911

Profit on disposal of short term Investments - 14,180

Profit on disposal of long term Investment - 475,000

Specie dividend from Pak Arab Fertilizer Limited 61,794,302 279,853,916

220,636,413 442,984,430

32 Finance cost

Profit / interest / mark up on:

603,773,860 535,962,770

5,711,908 4,691,111

32.1 334,334,115 508,698,160

(154,428) (33,261)

334,179,687 508,664,899

Bank charges 85,350,938 52,820,792

Dividend on redeemable preference shares 25,410,385 28,490,000

Interest income from associated undertaking - (31,375,342)

Interest on workers' profit participation fund 21.2 4,694,280 3,880,039

1,059,121,058 1,103,134,269

- Long term financing

- Musharika

- Short term borrowings

less: Interest income on margin/ bank account

Donations include Rs. 3.19 million (2012: Rs. 2.68 million) paid to Fazal-ur-Rehman Foundation, 487-

A, Mumtazabad, Vehari Road, Multan. Sheikh Naseem Ahmad (Chairman / Chief Executive Officer) is

amongst the trustees of the Foundation.

--------------(Rupees)--------------

32.1

2013 2012

33 Taxation

Current 62,013,880 202,835,338

Deferred 249,187,323 260,887,948

311,201,203 463,723,286

33.1

2013 2012

Restated

34 Basic earnings per share

Profit after taxation 1,151,121,794 1,184,900,158

Profit attributable to ordinary shareholders 1,151,121,794 1,184,900,158

Weighted average number of ordinary shares 25,000,000 25,000,000

Basic earnings per share 46.04 47.40

35 Diluted earnings per share

Profit after taxation 1,151,121,794 1,184,900,158

Add: dividend on preference shares 25,410,385 28,490,000

Profit attributable to ordinary shareholders 1,176,532,179 1,213,390,158

Weighted average number of shares outstanding 25,000,000 25,000,000

Dilutive effect of preference shares

Weighted average number of shares 666,134 666,134

outstanding - diluted 25,666,134 25,666,134

Diluted earnings per share 45.84 47.28

--------------(Rupees)--------------

The numerical reconciliation between the average tax rate and the applicable tax rate has not been

presented in the financial statements as the tax provision of the Company is determined under section

113 and 169 of the Income Tax Ordinance, 2001.

It includes exchange loss on foreign currency finances amounting to Rs. 57.55 million (2012: Rs. 92.97

million). It also includes mark-up amounting to Rs. 5.8 million (2012: nil) against advance obtained

from Subsidiary Company, which is not less than the borrowing cost of the Subsidiary Company.

--------------(Rupees)--------------

36 Financial risk management

Credit risk

Liquidity risk

Market risk

Risk management framework

36.1 Credit risk and concentration of credit risk

2013 2012

Restated

Non current assets

Long term investments 2,067,108,496 1,743,404,016

Long term deposits 20,228,306 25,710,156

Long term loans to employees - secured - 64,000

Current assets

Trade debts 1,995,627,804 2,012,188,252

Loans and advances 140,777,880 136,506,798

Other financial assets 190,495,126 176,496,671

Trade deposits and short term prepayments 6,655,581 6,754,211

Other receivables 4,778,084 102,862,038

Cash and bank balances 156,000,176 71,988,355

4,581,671,453 4,275,974,497

The Company believes that it is not exposed to major concentration of credit risk.

Trade debts

The maximum exposure to credit risk for trade debt at the reporting date by geographical region was as follows:

2013 2012

Export - secured 608,024,072 858,285,522

Local - unsecured and considered good 1,387,603,732 1,153,902,730

1,995,627,804 2,012,188,252

The Company's Audit Committee oversees how management monitors compliance with the Company‟s risk management policies and procedures and

reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its

oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results

of which are reported to the Audit Committee.

The Company has exposures to the following risks from its use of financial instruments:

Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have similar economic

features that would cause their abilities to meet contractual obligation to be similarly effected by the changes in economic, political or other

conditions.

The carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximum exposure

to credit risk at the reporting date is:

-------------(Rupees)-------------

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual

obligations. Out of the total financial assets of Rs. 2,504.9 million (2012: Rs. 2,425.7 million), the financial assets which are subject to

credit risk amounted to Rs. 2,501.9 million (2012: Rs. 2,424.5 million).

To manage exposure to credit risk in respect of trade receivables, management performs credit reviews taking into account the customer's

financial position, past experience and other factors. Sales tenders and credit terms are approved by the tender approval committee. Where

considered necessary, advance payments are obtained from certain parties. Export sales made to major customers are secured through

letters of credit. The management has set a maximum credit period of 15 days in respect of yarn and fabric parties to reduce the credit risk.

All investing transactions are settled / paid for upon delivery as per the advice of investment committee. The Company's policy is to enter

into financial instrument contract by following internal guidelines such as approving counterparties and approving credits.

This note presents information about the Company‟s exposure to each of the above risks, the Company‟s objectives, policies and processes for

measuring and managing risk, and the Company‟s management of capital. Further quantitative disclosures are included throughout these financial

statements.

The Company‟s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and

controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market

conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to develop a disciplined

and constructive control environment in which all employees understand their roles and obligations. All derivative activities for risk management

purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company‟s policy that no trading in

derivatives for speculative purposes shall be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks.

The Board of Directors has overall responsibility for the establishment and oversight of the Company‟s risk management framework. The Board is

responsible for developing and monitoring the Company‟s risk management policies.

-------------(Rupees)-------------

Export debts of the Company are secured through letter of credit and majority of export debts are situated in Asia and America.

2013 2012

The ageing of trade debts at the balance sheet date is as follows:

Not past due 725,529,494 646,858,333

Past due 1 to 30 days 1,330,946,589 1,293,716,667

Past due 30 to 150 days 71,229,081 69,236,625

Past due 150 days 2,445,020 2,376,627

2,130,150,184 2,012,188,252

Related party

Not past due 913,665 426,125

Past due 1 to 30 days 79,698,206 37,170,504

Past due 30 to 150 days 58,183,713 -

Past due 150 days 8,400 8,400

138,803,984 37,605,029

Investments

Bank balances

The credit quality of Company's bank balances can be assessed with reference to external credit ratings as follows:

2013 2012

Short term Long term Rupees Rupees

Habib Bank Limited A-1+ AAA JCR-VIS 7,386,144 242,193

United Bank Limited A-1+ AA+ JCR-VIS 22,806,168 6,560,017

MCB Bank Limited A1+ AAA PACRA 21,966,133 (249,419)

Askari Bank Limited A1+ AA PACRA 9,119,120 1,337,345

Bank Al Habib Limited A1+ AA+ PACRA 1,490,315 3,870,399

National Bank of Pakistan A-1+ AAA JCR-VIS 2,816,727 3,357,033

Soneri Bank Limited A1+ AA - PACRA 107,891 375,410

Allied Bank Limited A1+ AA+ PACRA 19,303,180 6,780,389

Meezan Bank Limited A-1+ AA JCR-VIS 26,261,238 22,295,677

Faysal Bank Limited A1+ AA PACRA 258,102 329,971

Standard Chartered Bank Pakistan Limited A1+ AAA PACRA 8,850 40,890

Bank Al-Falah Limited A1+ AA PACRA 497,460 20,698,030

Dubai Islamic Bank Pakistan Limited A-1 A JCR-VIS 772,995 152,536

Barclays Bank PLC, Pakistan P-1 Aa3 Moody‟s 2,829,536 888,826

The Bank of Punjab A1+ AA- PACRA 10,239,619 22,992

The Bank of Khyber A-2 A JCR-VIS 167,613 -

Habib Metropolitan Bank Limited A1+ AA+ PACRA 24,138,796 2,765,090

Summit Bank Limited A-2 A- JCR-VIS 1,917,793 1,239,595

NIB Bank Limited A1+ AA- PACRA 8,026 3,026

Bank Islamic Pakistan Limited A1 A PACRA 79,920 79,920

Silk Bank Limited A-2 A- JCR-VIS 81,295 81,295

152,256,921 70,871,215

Based on past experience the management believes no impairment allowance is necessary in respect of loans, advances and other

receivables past due as some receivables have been recovered subsequent to the year end and for other balances, there are reasonable

grounds to believe that the amounts will be recovered in due course.

-------------(Rupees)-------------

Investments majorly comprise of ordinary shares of Fatima Fertilizer Company Limited, listed on Karachi Stock Exchange. The fair value

of the investment forming part of long term investment is Rs. 1,564 million and Rs. 161.9 million form part of short term investment. Long

term and short term credit rating of the investee company is "A+" and "A1" respectively, issued by PACRA.

Out of total trade debts, 35% comprise of foreign debtors that are secured against letters of credit. Local trade debts include companies with

very good credit history and are regular in their payments. The management continuously monitors the repayment capacity and intention of

their debtors and extends the credit periods to their customers according to their credit history.

Rating

agency

Rating

The Company is exposed to credit risk from its operating activities (primarily for trade debts and loans and advances) and from its

financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

The credit rating of the banks in which the company has maintained its deposits is as follows:

36.2 Liquidity risk

The following are the contractual maturities of the financial liabilities, including estimated interest payments:

Carrying valueContractual cash

flows

Less than one

month

One to three

months

Three months to

one year

One to

five years

Above

five yearsTotal

---------------------------------------------------(R u p e e s)----------------------------------------------------

Financial liabilities

Long term finance 7.00% to 14.56% 5,604,810,196 7,475,441,960 - 131,785,559 1,255,902,804 5,009,422,401 1,078,331,196 7,475,441,960

Short term borrowings 0.90% to 13.51% 4,337,180,633 4,337,180,633 82,754,072 494,666,341 3,759,760,220 - - 4,337,180,633

Trade and other payables 1,602,138,962 1,602,138,962 159,260,880 1,129,924,987 312,953,095 - - 1,602,138,962

11,544,129,791 13,414,761,555 242,014,952 1,756,376,887 5,328,616,119 5,009,422,401 1,078,331,196 13,414,761,555

Carrying valueContractual cash

flows

Less than one

month

One to three

months

Three months to

one year

One to

five years

Above

five yearsTotal

---------------------------------------------------(R u p e e s)----------------------------------------------------

Financial liabilities

Long term finance 7% to 16.30% 4,515,617,713 6,419,231,048 - 162,207,299 690,235,245 5,135,782,785 431,005,719 6,419,231,048

Short term borrowings 1.86% to 15.06% 3,798,190,475 3,798,190,475 72,470,057 433,193,160 3,292,527,258 - - 3,798,190,475

Trade and other payables - restated 799,192,313 799,192,313 124,879,724 503,554,458 170,758,131 - - 799,192,313

9,113,000,501 11,016,613,836 197,349,781 1,098,954,917 4,153,520,634 5,135,782,785 431,005,719 11,016,613,836

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure as far as possible to always have sufficient liquidity

to meet its liabilities when due. The Company is not materially exposed to liquidity risk as substantially all obligations / commitments of the Company are short term in nature and are restricted to the extent of available

liquidity. In addition, the Company has obtained running finance facilities from various commercial banks to meet any deficit, if required to meet the short term liquidity commitments.

2013

2012Weighted Average

effective rate of

interest

Weighted

average effective

rate of interest

36.3 Market risk

36.3.1 Currency risk

The Company's exposure to currency risk is as follows:

2013 2012

Export finances 886,875,278 1,557,097,526

Foreign currency bank account - -

Foreign debtors (742,546,452) (858,285,522)

Gross balance sheet exposure 144,328,826 698,812,004

Outstanding letters of credit 1,010,208,763 272,742,848

Forward foreign exchange contracts - -

Net exposure 1,154,537,589 971,554,852

The following significant exchange rate has been applied:

Average rate Reporting date rate

2013 2012 2013 2012

USD to Rupee 96.70 / 96.90 89.47 / 89.67 98.60 / 98.80 94.00 / 94.20

Sensitivity analysis

2013 2012

Effect on profit or loss

USD to Rupee (115,453,759) (97,155,485)

Effect on balance sheet

USD to Rupee (14,432,883) (69,881,200)

The weakening of the PKR against US Dollar would have had an equal but opposite impact on the post tax loss / profits.

36.3.2 Interest rate risk

At the reporting date the interest rate profile of the Company's significant interest bearing financial instruments was as follows:

2013 2012 2013 2012

Financial liabilities

Variable rate instruments:

Long term loan 7% to 14.56% 7% to 16.30% 7,475,441,960 6,419,231,048

Short term running finance 0.90% to 13.51% 1.86% to 15.06% 3,450,305,355 2,241,092,949

Export finances 0.90% to 13.51% 1.86% to 15.06% 886,875,278 1,557,097,526

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the

Company's income or the value of its holdings of financial instruments.

The Company is exposed to currency risk on import of raw materials and stores and spares and export of goods mainly denominated in

US dollars and on foreign currency bank accounts.

The sensitivity analysis prepared is not necessarily indicative of the effects on (loss) / profit for the year and assets / liabilities of the

Company.

------------(Rupees)------------

At reporting date, if the PKR had strengthened by 10% against the US Dollar with all other variables held constant, post-tax profit for

the year would have been higher by the amount shown below, mainly as a result of net foreign exchange gain on translation of export

finances and foreign debtors.

------------(Rupees)------------ ------------(Rupees)------------

------------(Rupees)------------

Effective rate Carrying amount

------------(Rupees)------------

Average rate Reporting date mid spot rate

Fair value sensitivity analysis for fixed rate instruments

Cash flow sensitivity analysis for variable rate instruments

Increase Decrease

As at 30 June 2013

Cash flow sensitivity-Variable rate financial liabilities 321,034,836 (321,034,836)

As at 30 June 2012

Cash flow sensitivity-Variable rate financial liabilities 252,203,883 (252,203,883)

36.3.3 Fair value hierarchy

Financial instruments carried at fair value are categorized as follows:

Level 1: Quoted market prices

Level 2: Valuation techniques (market observable)

Level 3: Valuation techniques (non market observable)

The Company held the following financial instruments measured at fair value.

Total Level 1 Level 2 Level 3

Financial assets 30 June 2013

At fair value through profit and loss - Quoted 190,495,126 190,495,126 - -

At available for sale - quoted 1,564,141,790 1,564,141,790 - -

1,754,636,916 1,754,636,916 - -

Financial assets 30 June 2012

At fair value through profit and loss - Quoted 176,496,671 176,496,671 - -

At available for sale - quoted 1,490,437,310 1,490,437,310 - -

1,666,933,981 1,666,933,981 - -

36.3.4 Other price risk

2013 2012

Effect on profit for the year 175,463,692 166,693,398

Effect on investments at year end 175,463,692 166,693,398

36.3.5 Fair value of financial instruments

A change of 100 basis points in interest rates at the reporting date would have decreased / (increased) loss for the year by the amounts

shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is

performed on the same basis for 2012.

------------(Rupees)------------

------------(Rupees)------------

Other price risk is 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). Other price risk arises from the Company's investment in units of

mutual funds and ordinary shares of listed companies.

Carrying values of the financial assets and financial liabilities approximate to their fair values. Fair value is the amount for which an

asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm‟s length transaction.

-------------------------------------------------(Rupees)-------------------------------------------------

The sensitivity analysis prepared is not necessarily indicative of the effects on profit/ (loss) for the year and assets / liabilities of the

Company.

A 10% increase/(decrease) in redemption value of investments in mutual funds and share prices of listed companies at the balance sheet

date would have increased/(decreased) the Company's profit in case of investments through profit and loss as follows:

The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and the balance of investments at the

year end of the Company.

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore a change

in interest rates at the reporting date would not affect profit and loss account.

37 Capital management disclosure

2013 2012

Total borrowings 9,941,990,829 8,313,808,188

Less: cash and bank balances (156,000,176) (71,988,355)

Adjusted debt 9,785,990,653 8,241,819,833

Total equity 9,821,391,430 8,828,027,315

Total capital employed 19,607,382,083 17,069,847,148

Adjusted gearing ratio 49.91% 48.28%

38

Chairman Executive Executives Total

Director

Managerial remuneration 4,080,634 12,436,971 14,804,997 31,322,602

Perquisites and benefits:

House rent and utilities 130,594 1,292,743 3,131,127 4,554,464

Medical - 152,311 2,716,092 2,868,403

Conveyance/petrol - - 163,200 163,200

Insurance 5,618 - - 5,618

4,216,846 13,882,025 20,815,416 38,914,287

Numbers 1 3 28 32

Chairman Executive Executives Total

Director

Managerial remuneration 4,417,176 13,251,528 12,357,838 30,026,542

Perquisites and benefits:

House rent and utilities 4,529 815,187 2,033,619 2,853,335

Medical - 161,497 1,235,784 1,397,281

Conveyance/petrol - - 1,378,409 1,378,409

Insurance 5,618 22,382 - 28,000

4,427,323 14,250,594 17,005,650 35,683,567

Numbers 1 3 23 27

38.1

38.2

2013 2012

39 Number of employees

Total number of employees at the year end 4,861 4,387

Average number of employees during the year 4,677 3,914

-------------(Number)-------------

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.

The Company manages its capital structure which comprises capital and reserves by monitoring return on net assets and makes

adjustments to it in the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may

adjust the amount of dividend paid to shareholders, appropriation of amounts to capital reserves and/or issue new shares.

-------------(Rupees)-------------

--------------------------------- (Rupees) ---------------------------------

Remuneration of Chairman, Chief Executive, Directors, Non-Executive Directors and Executives

In addition to above, non executive directors were only paid Rs. 105,000 (2012: 75,000) as meeting fee.

Chief executive officer, executive directors and some of the executives are also provided with free use of the Company maintained

cars and telephones at their residences.

The aggregate amounts charged in the financial statements for the year for remuneration, including certain benefits to the Chairman,

Directors and other Executives of the Company are as follows:

2013

--------------------------------- (Rupees) ---------------------------------

2012

40 Segment reporting

40.1 Reportable segments

- Spinning segment - production of different qualities of yarn using natural and artificial fibers

- Weaving segment - production of different qualities of Fabric using yarn

40.2 Information about reportable segments

2013 2012 2013 2012 2013 2012

External revenues 17,224,643,597 18,241,833,557 3,333,944,289 1,508,610,950 20,558,587,886 19,750,444,507

Intersegment revenues 2,872,992,513 2,519,680,204 11,604,391 - 2,884,596,904 2,519,680,204

Cost of sales (17,562,515,772) (15,835,288,944) (105,835,369) (1,083,965,089) (17,668,351,141) (16,919,254,033)

Intersegment cost of sales (11,604,391) - (2,872,992,513) (2,519,680,204) (2,884,596,904) (2,519,680,204)

Distribution and marketing expense (225,586,861) (228,668,943) (31,182,919) (13,955,689) (256,769,780) (242,624,632)

Administrative expenses (193,428,991) (165,152,989) (20,410,629) (10,162,951) (213,839,620) (175,315,940)

Other operating expense (109,821,822) (104,476,619) (8,997,881) - (118,819,703) (104,476,619)

Finance cost (874,397,888) (989,629,586) (184,723,170) (113,504,683) (1,059,121,058) (1,103,134,269)

Other operating income 220,636,413 442,984,430 - - 220,636,413 442,984,430

Profit before tax 1,340,916,798 3,881,281,110 121,406,199 (2,232,657,666) 1,462,322,997 1,648,623,444

40.2.1 The accounting policies of the reportable segments are the same as the Company's accounting policies described in note 3.22 to the financial statements. Expenditures are

allocated on the basis of actual amounts incurred for the segments. This is the measure reported to management for the purposes of resource allocation and assessment of

segment performance.

The management has determined the operating segments of the Company on the basis of products produced.

The Company's reportable segments are as follows:

Information regarding the Company‟s reportable segments is presented below. Performance is measured based on segment profit before tax, as management believes that such

information is the most relevant in evaluating the results of certain segments relative to other companies that operate within these industries.

Spinning Weaving Total

40.3 Reconciliation of reportable segment revenues and profits

2013 2012

Total revenue from reportable segments 23,443,184,790 22,270,124,711

Elimination of inter segment revenue (2,884,596,904) (2,519,680,204)

20,558,587,886 19,750,444,507

Profit or loss

Total profit or loss of reportable segments 1,462,322,997 1,648,623,444

Elimination of intersegment profits - -

Tax for the year (311,201,203) (463,723,286)

Consolidated profits 1,151,121,794 1,184,900,158

40.4 Segment assets and liabilities

40.4.1

Spinning Weaving Total

For the year ended 30 June 2013:

Segment assets for reportable segment 18,343,652,858 2,457,705,972 20,801,358,830

Unallocated corporate assets 2,600,974,569

Total assets as per balance sheet 23,402,333,399

Segment liabilities for reportable segment 9,394,172,333 1,971,407,929 11,365,580,262

Unallocated corporate liabilities 2,215,361,707

Total liabilities as per balance sheet 13,580,941,969

For the year ended 30 June 2012:

Segment assets for reportable segment 15,386,855,337 2,328,067,487 17,714,922,824

Unallocated corporate assets 2,053,405,759

Total assets as per balance sheet 19,768,328,583

Segment liabilities for reportable segment 7,227,393,998 1,768,109,283 8,995,503,281

Unallocated corporate liabilities 1,944,797,987

Total liabilities as per balance sheet 10,940,301,268

-------------(Rupees)-------------

Reportable segments' assets and liabilities are reconciled to total assets and liabilities as follows:

-------------------------(Rupees)-------------------------

40.4.2

-

-

40.5 Geographical information

40.5.1 The Company's gross revenue from external customers by geographical

location is detailed below:

2013 2012

Pakistan 12,289,367,323 11,583,131,637

Asia 6,449,472,942 6,314,353,208

Europe 750,214,588 723,975,496

America 1,434,188,684 1,374,495,915

Australia 5,202,326 -

Africa 32,683,512 31,323,182

20,961,129,375 20,027,279,438

40.5.2

40.6 Other segment information

Spinning Weaving Total

For the year ended 30 June 2013:

Capital expenditure 1,433,063,655 137,331,264 1,570,394,919

Depreciation/amortization

Cost of sales 431,391,050 83,417,019 514,808,069

Administrative expenses 17,354,985 3,529,954 20,884,939

448,746,035 86,946,973 535,693,008

For the year ended 30 June 2012:

Capital expenditure 2,954,966,332 1,646,599,939 4,601,566,271

Depreciation/ Amortization

Cost of sales 359,026,342 39,461,940 398,488,284

Administrative expenses 11,811,663 2,055,909 13,867,572

370,838,005 41,517,849 412,355,856

-------------------------(Rupees)-------------------------

For the purposes of monitoring segment performance and allocating resources between segments

all assets are allocated to reportable segments except long term investment and tax refund due from

government which are held under unallocated corporate assets; and

all liabilities are allocated to reportable segments except deferred tax liability and provision of tax

are held under unallocated corporate liabilities

All non-current assets of the Company as at 30 June 2013 are located and operating in Pakistan.

-------------(Rupees)-------------

41 Transactions with related parties

2013 2012

Fazal Rehman Fabrics Limited Associate

Sale of goods and services 938,028,005 671,384,061

Purchase of goods and services 47,428,400 14,503,696

Fatima Fertilizer Company Limited Associate

Dividend Income 139,028,062 100,402,456

Purchase of goods and services 26,867,646 6,805,238

Pak Arab Fertilizers Limited Associate

Specie Dividend 61,794,302 279,853,916

Interest - 31,375,342

Reliance Weaving Mills Limited Associate

Sale of goods and services 61,611,128 102,875,574

Purchase of goods and services - 13,188,856

Sale of land 3,721,135 -

Ahmed Fine Textile Mills Limited Associate

Sale of goods and services 170,927,976 1,067,681,954

Purchase of goods and services 239,431,634 470,278,817

Fazal-ur-Rehman Foundation, Multan Associate

Donations 3,193,162 2,684,000

Fazal Weaving Mills Limited Subsidiary

- Short term loan obtained 175,000,000 -

- Sale of land 13,500,000 -

- Investment in subsidiary 249,825,000 -

- Payment of short term loan 92,454,397 -

- Interest 5,864,572 -

Key Management Personnel

Payable to key management personnel 175,000 -

All transactions with related parties have been carried out on commercial terms and conditions.

42 Capacity and production 2013 2012

Spinning:

Number of spindles installed 190,392 176,472

Number of rotors installed 1,740 780

Number of shifts worked

Unit I, II & IV 999 1,097

Unit III 998 1,097

Number of spindles - shifts worked 183,948,666 184,046,100

Capacity at 20's count Kgs. 74,797,999 69,321,593

Actual production of all counts Kgs. 53,013,774 53,251,977

Actual production converted into 20's count Kgs. 62,069,410 62,389,434

The related parties comprise subsidiary, associated undertakings and key management personnel. The

Company in the normal course of business carries out transactions with various related parties. Amounts due

from and to related parties are shown under receivables and payables and remuneration of the key

management personnel is disclosed in note 38. Other significant transactions with related parties are as

follows:

Description of transaction Nature of relationship-------------(Rupees)-------------

Weaving : 2013 2012

Number of looms installed 117 117

Number of looms worked 117 117

Number of shifts worked 1,042 726

Standard cloth production Sq. Mtr. 27,898,301 13,867,920

Actual cloth production Sq. Mtr. 24,570,220 12,210,835

43 Non adjusting event after balance sheet date

44 Corresponding figures

45 Date of authorization of financial statements

46 General

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

It is difficult to describe precisely the production capacity in spinning mills since it fluctuates widely

depending on various factors such as count of yarn spun, spindles speed, twist and raw materials used, etc.

It also varies according to the pattern of production adopted in a particular year.

Figures in the financial statements have been rounded-off to the nearest rupee except stated otherwise.

The board of directors in their meeting held on 05 October 2013 has proposed a final cash dividend for the

year ended 30 June 2013 of Rs. 2.5 per share (i.e. 25%), amounting to Rs. 62.5 million (2012: 20% cash

dividend and Bonus shares in the proportion of 20 shares for every 100 shares (2012: 10.62 shares for every

100 shares) held for approval of the members of the Company at the annual general meeting to be held on 31

October 2013. These financial statements do not include the effect of this proposed final cash dividend and

will be accounted for subsequent to year end.

Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However,

there were no material re-arrangements.

These financial statements were authorized for issue on 05 October 2013 by the board of directors of the

Company.

Fazal Cloth Mills Limited (The Group)

Consolidated Financial Statements for the year ended

30 June 2013

DIRECTORS' REPORT

The Directors are pleased to present their report together with the consolidated financial statements of Fazal

Cloth Mills Limited and its Subsidiary Company for the year ended 30 June, 2013. The consolidated results

comprise of financial statements of Fazal Cloth Mills Limited (“the Holding Company”), Fazal Weaving

Mills Limited. The Holding Company has annexed its consolidated financial statements along with its

separate financial statements, in accordance with the requirements of International Accounting Standard 27

(Consolidated and Separate Financial Statements). The Directors’ Report, giving a commentary on the

performance of Fazal Cloth Mills Limited for the year ended 30 June, 2013 has been presented separately.

Dated: October 05, 2013

Sd/-

(SH.NASEEM AHMAD)

Chairman / Chief Executive Officer

Fazal Cloth Mills LimitedConsolidated Balance Sheet

As at 30 June 2013

2013 2012 2011 2013 2012 2011

Restated Restated Restated Restated

Note Note

ASSETS EQUITY AND LIABILITIES

Non-current assets Share capital and reserves

Property, plant and equipment 4 12,450,991,731 11,255,073,203 7,064,862,691 Authorized share capital 700,000,000 700,000,000 700,000,000

Intangible assets 5 3,628,464 3,398,483 4,538,527

Long term investments 6 1,817,108,496 1,743,404,016 1,156,821,571 Issued, subscribed and paid-up capital

Long term loans to employees - - Ordinary shares 15 250,000,000 226,000,000 187,551,940

secured - 64,000 399,270 - Preference shares 15 - 175,000,000 175,000,000

Long term deposits 28,149,696 25,710,156 25,638,156 250,000,000 401,000,000 362,551,940

14,299,878,387 13,027,649,858 8,252,260,215

Reserves 16 252,616,000 252,616,000 227,616,000

Fair value reserve - available for sale

financial assets 795,960,133 784,049,931 246,163,636

Unappropriated profits 4,831,573,116 3,600,039,246 2,618,136,296

6,130,149,249 5,037,705,177 3,454,467,872

Current assets

Surplus on revaluation of property,

Stores, spares and loose tools 7 305,172,591 330,910,264 306,844,778 plant and equipment 17 3,695,889,962 3,790,322,138 2,192,499,393

Stock-in-trade 8 5,928,618,601 3,774,011,125 3,410,214,097

Trade debts 9 1,995,627,804 2,012,188,252 1,767,710,377

Loans and advances 10 140,777,880 136,506,798 264,132,165

Trade deposits and short term Non-current liabilities

prepayments 11 6,655,581 6,754,211 7,678,585

Interest / markup accrued - - 16,265,203 Long term financing 18 4,392,121,833 3,641,788,504 1,956,200,180

Other receivables 4,778,084 102,862,038 3,796,190 Long term musharika 19 325,000,000 225,000,000 273,755,451

Short term investments 12 190,495,126 176,496,671 125,142,836 Bills payables - - 155,210,331

Tax refunds due from government 13 313,235,074 128,961,011 90,941,983 Deferred liabilities 20 1,787,295,452 1,574,329,516 960,455,903

Cash and bank balances 14 217,397,994 71,988,355 191,635,465 Director's loan 299,693 - -

9,102,758,735 6,740,678,725 6,184,361,679 6,504,716,978 5,441,118,020 3,345,621,865

Current liabilities

Trade and other payables 21 1,603,359,783 799,192,313 720,686,943

Accrued profit / interest / mark-up 22 243,652,154 252,971,251 176,362,211

Short term borrowings 23 4,337,180,633 3,798,190,475 4,016,584,511

Current portion of non-current liabilities 24 887,688,363 648,829,209 530,399,099

7,071,880,933 5,499,183,248 5,444,032,764

Contingencies and commitments 25

23,402,637,122 19,768,328,583 14,436,621,894 23,402,637,122 19,768,328,583 14,436,621,894

The annexed notes from 1 to 46 form an integral part of these consolidated financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

--------------------------------------(Rupees)-------------------------------------- --------------------------------------(Rupees)--------------------------------------

Fazal Cloth Mills LimitedConsolidated Profit and Loss Account For the year ended 30 June 2013

2013 2012

Restated

Note

Sales - net 26 20,558,587,886 19,750,444,507

Cost of sales 27 (17,668,351,141) (16,919,254,033)

Gross profit 2,890,236,745 2,831,190,474

Distribution cost 28 (256,769,780) (242,624,632)

Administrative expenses 29 (215,956,411) (175,315,940)

Other operating expenses 30 (117,919,703) (104,476,619)

(590,645,894) (522,417,191)

Other operating income 31 220,636,413 442,984,430

Profit from operations 2,520,227,264 2,751,757,713

Finance cost 32 (1,053,256,486) (1,103,134,269)

Profit before taxation 1,466,970,778 1,648,623,444

Taxation 33 (311,201,203) (463,723,286)

Profit after taxation 1,155,769,575 1,184,900,158

Attributable to:

Ordinary equity holders of the Holding Company 1,155,769,575 1,184,900,158

1,155,769,575 1,184,900,158

Basic earnings per share 34 46.23 47.40

Diluted earnings per share 35 46.02 47.28

The annexed notes from 1 to 46 form an integral part of these consolidated financial statements.

`

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

-------------(Rupees)-------------

Fazal Cloth Mills LimitedConsolidated Statement of Comprehensive IncomeFor the year ended 30 June 2013

2013 2012

Restated

Profit after taxation 1,155,769,575 1,184,900,158

Other comprehensive income - net of tax:

Items that are or may be reclassified subsequently

to profit or loss:

Net change in fair value of available for sale financial assets 11,910,202 537,886,295

Total comprehensive income for the year 1,167,679,777 1,722,786,453

Attributable to:

Ordinary equity holders of the Holding Company 1,167,679,777 1,722,786,453

1,167,679,777 1,722,786,453

The annexed notes from 1 to 46 form an integral part of these consolidated financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

-------------(Rupees)-------------

Fazal Cloth Mills LimitedConsolidated Cash Flow Statement For the year ended 30 June 2013

2013 2012

Restated

Cash flow from operating activities

Profit before taxation 1,466,970,778 1,648,623,444

Adjustments for:

Depreciation of property, plant and equipment 534,556,044 411,215,812

Amortization of intangible assets 1,185,531 1,140,044

Gain on re-measurement of other financial assets (13,998,455) (51,599,911)

Provision for gratuity 39,740,889 37,521,467

Provision for infrastructure cess 29,987,431 29,965,410

Gain on disposal of property, plant and equipment (4,016,994) (9,809,407)

Gain on disposal of other financial asset - (14,180)

Dividend income (200,822,364) (381,085,931)

Finance cost 1,053,256,486 1,103,134,269

Cash generated from operations before working capital changes 2,906,859,346 2,789,091,017

(Increase) / decrease in current assets

Stores, spares and loose tools 25,737,673 (24,065,486)

Stock in trade (2,154,607,476) (363,797,028)

Trade debts 16,560,448 (244,477,875)

Loans and advances (564,068) 121,234,500

Trade deposits and short term prepayments 98,630 924,374

Tax refunds due from the government (39,910,975) (50,962,817)

Interest / markup accrued - 16,265,203

Other receivables 98,083,954 (99,065,848)

Increase / (decrease) in trade and other payables 550,010,304 (38,951,647)

(1,504,591,510) (682,896,624)

Cash generated from operations 1,402,267,836 2,106,194,393

Gratuity paid (25,430,151) (23,370,505)

Customs duty paid - (67,718,724)

Income tax paid (206,376,968) (183,500,676)

Finance cost paid (1,062,575,565) (1,026,525,229)

Cash generated from operating activities 107,885,152 805,079,259

Long term loans to employees - net 64,000 335,270

Long term deposits (2,439,540) (72,000)

Net cash used in operating activities 105,509,612 805,342,529

Cash flow from investing activities

Expenditure for property, plant and equipment (1,547,112,486) (2,580,135,748)

Proceeds from disposal of property, plant and equipment 12,876,043 16,784,898

Dividend received 139,028,062 101,232,016

Purchase of intangible assets (909,751) -

Purchase of subsidiary (188,443,347) -

Other financial assets - 260,256

Net cash used in investing activities (1,584,561,479) (2,461,858,578)

Cash flow from financing activities

Long term financing obtained 1,587,692,633 2,299,487,339

Long term financing repaid (599,744,699) (496,713,448)

Long term musharika obtained 150,000,000 -

Director's loan repaid (3,721,135) -

Long term musharika repaid (48,755,451) (47,510,916)

Short term borrowings - net 538,990,158 (218,394,036)

Net cash generated from financing activities 1,624,461,506 1,536,868,939

Net increase in cash and cash equivalents 145,409,639 (119,647,110)

Cash and cash equivalents at the beginning of the period 71,988,355 191,635,465

Cash and cash equivalents at the end of the period 217,397,994 71,988,355

The annexed notes from 1 to 46 form an integral part of these consolidated financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

-----------(Rupees)-----------

Fazal Cloth Mills LimitedConsolidated Statement of Changes in EquityFor the year ended 30 June 2013

Balance as at 01 July 2011 187,551,940 175,000,000 77,616,000 150,000,000 - 3,100,929,710 3,691,097,650

Effect of rectification of prior period error - - - - 246,163,636 (482,793,414) (236,629,778)

Balance as at 01 July 2011 - restated 187,551,940 175,000,000 77,616,000 150,000,000 246,163,636 2,618,136,296 3,454,467,872

Total comprehensive income

Profit for the year - restated - - - - 1,184,900,158 1,184,900,158

Other comprehensive income - restated - - - 537,886,295 - 537,886,295

- - - - 537,886,295 1,184,900,158 1,722,786,453

Incremental depreciation arising due to surplus

on revaluation of property, plant and

equipment - net of deferred tax - - - - - 91,608,618 91,608,618

Specie dividend - - - - - (231,157,766) (231,157,766)

Bonus shares issued 38,448,060 - - - - (38,448,060) -

Transfer to capital redemption reserve fund from

unappropriated profit - - - 25,000,000 - (25,000,000) -

Balance as at 30 June 2012 - restated 226,000,000 175,000,000 77,616,000 175,000,000 784,049,931 3,600,039,246 5,037,705,177

Non-controlling interest at acquisition - - - - - - -

Total comprehensive income

Profit for the period - - - - - 1,155,769,575 1,155,769,575

Other comprehensive income - - - - 11,910,202 - 11,910,202

- - - - 11,910,202 1,155,769,575 1,167,679,777

Incremental depreciation arising due to surplus

on revaluation of property, plant and

equipment - net of deferred tax - - - - - 133,391,944 133,391,944

Preference shares transferred to current liability - (175,000,000) - - - - (175,000,000)

Surplus transferred on disposal of a revalued asset - - - - - 11,572,351 11,572,351

Bonus shares issued 24,000,000 - - - - (24,000,000) -

Cash dividend @ Rs.2 per share - - - - - (45,200,000) (45,200,000)

Balance as at 30 June 2013 250,000,000 - 77,616,000 175,000,000 795,960,133 4,831,573,116 6,130,149,249

The annexed notes from 1 to 46 form an integral part of these consolidated financial statements.

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

----------------------------------------------------------------------------------------(Rupees)----------------------------------------------------------------------------------------

Ordinary sharesPreference

shares

Share

premium

Capital

redemption

reserve

Fair value reserve-

available for sale

financial assets

Un-appropriated

profits Total

Fazal Cloth Mills LimitedNotes to the Consolidated Financial StatementsFor the year ended 30 June 2013

1 The Group and its operations

1.1 The Group consists of:

Holding Company

- Fazal Cloth Mills Limited

Subsidiary Company

- Fazal Weaving Mills Limited

Fazal Cloth Mills Limited

Fazal Weaving Mills Limited

1.2 Significant events

Consideration transferred Rupees

in cash 200,000,000

in kind 50,000,000

250,000,000

Identifiable assets acquired and liabilities assumed

Non-current assets

Property, plant and equipment 238,500,000

Current assets

Advances against letters of credit 3,707,014

Cash and bank 11,381,653

15,088,667

Fazal Cloth Mills Limited ("the Holding Company") was incorporated in Pakistan in 1966 as a public

limited company under the Companies Act, 1913 (now the Companies Ordinance, 1984) and its shares are

quoted on Karachi and Lahore Stock Exchanges. The registered office of the Holding Company is situated

at 69/7, Abid Majeed Road, Survey # 248/7, Lahore Cantt, Lahore. The Holding Company is engaged in

manufacture and sale of yarn and fabric. The manufacturing facilities are located at Fazal Nagar, Jhang

Road, Muzaffargarh and Qadirpur Rawan Bypass, Khanewal Road, Multan in the province of Punjab.

Fazal Weaving Mills Limited ("the Subsidiary Company") was incorporated in Pakistan in 1989 as a

public limited company under the Companies Ordinance, 1984. During the year the registered office of the

Subsidiary Company is changed from 1st floor, Trust Plaza, L.M.Q Road Multan to 69/7, Abid Majeed

Road, Survey # 248/7, Lahore Cantt, Lahore. The principal activity of the Subsidiary Company is to carry

business of textile spinning and weaving. During the year, the Subsidiary Company has started installation

of textile machinery and plans to commence its commercial operations by the month of February 2014.

During the year, the Holding Company obtained control of Fazal Weaving Mills Limited, an assosiated

public limited company, as a wholly owned subsidiary by investing and acquiring 24,982,500 ordinary

shares of Rs. 10/- each and the remaining 17,500 shares are held by nominee directors of the Holding

Company being qualification shares under Memorandum & Article of Association of the Subsidiary

Company. The funds for this investment were generated out of the Holding Company's own sources. The

following summarizes the major classes of consideration transferred, and the recognized amounts of the

assets acquired and liabilities assumed at the acquisition date:

Rupees

Current liabilities

Trade and other payables 73,600

Non-current liabilities

Director's loan 4,020,828

Net assets 249,494,239

Group's share of net assets acquired 249,494,239

Goodwill

Amount

Rs.

Total consideration transferred

Cash consideration 200,000,000

Consideration-in-kind 50,000,000

250,000,000

Fair value of identifiable net assets acquired 249,494,239

Goodwill 505,761

2 Basis of consolidation and preparation

2.1 Statement of compliance

Consequent to acquisition of the Subsidiary Company during the year, the Holding Company has prepared

consolidated financial statements of the Group for the first time with corresponding figures of Holding Company's

individual financial statements being presented for the year ended 30 June 2012 and 30 June 2011. These

consolidated financial statements have been prepared from the information available in the audited separate

financial statements of the Holding Company for the year ended 30 June 2013 and the audited financial statements

of the Subsidiary Company for the year ended 30 June 2013.

The accounting policies used by the Subsidiary Company in preparation of its financial statements are consistent

with that of the Holding Company.

These consolidated financial statements have been prepared in accordance with the 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 notified

under the provisions of the Companies Ordinance, 1984, the requirements of the Companies Ordinance,

1984 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP). Wherever

the requirements of the Companies Ordinance, 1984 or the directives issued by the SECP differ with the

requirements of the IFRS, the requirements of the Companies Ordinance, 1984, and the said directives

shall prevail.

If new information obtained within one year from the acquisition date about facts and circumstances that existed at

the acquisition date identifies adjustments to the above amounts or any additional provision that existed at the

acquisition date, then the acquisition accounting will be revised.

Group uses proportionate method for calculation of goodwill. Goodwill was recognized as a result of the

acquisition as follows:

2.2 Standards, interpretations and amendments to published approved accounting standards

2.2.1

-

-

2.3

2.3.1 Standards, amendments or interpretations which became effective during the year

2.3.2

-

Standards and interpretations to existing standards that are effective and applicable to the Group

During the current period, the Group has adopted the following amendments to IFRS which became

effective for the current period:

Presentations of items of Other Comprehensive Income (Amendments to IAS 1) - (effective for

annual periods beginning on or after 1 July 2012). The amendments require that an entity present

separately the items of other comprehensive income that would be reclassified to profit or loss in

the future if certain conditions are met from those that would never be reclassified to profit or loss.

The amendments do not address which items are presented in other comprehensive income or

which items need to be reclassified. The requirements of other IFRSs continue to apply in this

regard.

The adoption of the above amendments did not have any effect on these consolidated financial statements.

The following standards, amendments and interpretations of approved accounting standards will

be effective for accounting periods beginning on or after 01 July 2013

IAS 19 Employee Benefits (amended 2011) - (effective for annual periods beginning on or after 1

January 2013). The amended IAS 19 includes the amendments that require actuarial gains and

losses to be recognized immediately in other comprehensive income; this change will remove the

corridor method and eliminate the ability for entities to recognize all changes in the defined benefit

obligation and in plan assets in profit or loss, which currently is allowed under IAS 19; and that the

expected return on plan assets recognized in profit or loss is calculated based on the rate used to

discount the defined benefit obligation. The Group‟s policy was to account for actuarial gains and

losses using the corridor method and with the change unrecognized actuarial gains / losses

amounting to Rs. 30.5 million at 30 June 2013 would need to be recognized in other comprehensive

income.

Amendments to IAS 12 - deferred tax on investment property (effective for annual periods

beginning on or after 1 January 2012). The 2012 amendment provides an exception to the

measurement principle in respect of investment property measured using the fair value model in

accordance with IAS 40 Investment Property. The measurement of deferred tax assets and

liabilities, in this limited circumstance, is based on a rebuttable presumption that the carrying

amount of the investment property will be recovered through sale. The presumption can be rebutted

only if the investment property is depreciable and held within a business model whose objective is

to consume substantially all of the asset's economic benefits over the life of the asset.

Standards, interpretations and amendments to published approved accounting standards that are

not yet effective

During the year, certain amendments to Standards or new interpretations became effective, however, the

amendments or interpretation did not have any material effect on the consolidated financial statements of

the Group.

-

-

-

-

-

o

o

Annual Improvements 2009–2011 (effective for annual periods beginning on or after 1 January

2013). The new cycle of improvements contains amendments to the following four standards, with

consequential amendments to other standards and interpretations.

IAS 1 Presentation of Financial Statements is amended to clarify that only one comparative

period – which is the preceding period – is required for a complete set of financial

statements. If an entity presents additional comparative information, then that additional

information need not be in the form of a complete set of financial statements. However, such

information should be accompanied by related notes and should be in accordance with

IFRS. Furthermore, it clarifies that the „third statement of financial position‟, when required,

is only required if the effect of restatement is material to statement of financial position.

IAS 16 Property, Plant and Equipment is amended to clarify the accounting of spare parts,

stand-by equipment and servicing equipment. The definition of „property, plant and

equipment‟ in IAS 16 is now considered in determining whether these items should be

accounted for under that standard. If these items do not meet the definition, then they are

accounted for using IAS 2 Inventories.

IAS 27 Separate Financial Statements (2011) - (effective for annual periods beginning on or after 1

January 2013). IAS 27 (2011) supersedes IAS 27 (2008). Three new standards IFRS 10 -

Consolidated Financial Statements, IFRS 11- Joint Arrangements and IFRS 12- Disclosure of

Interest in Other Entities dealing with IAS 27 would be applicable effective 1 January 2013. IAS

27 (2011) carries forward the existing accounting and disclosure requirements for separate financial

statements, with some minor clarifications. The amendments have no impact on financial statements

of the Group.

IAS 28 Investments in Associates and Joint Ventures (2011) - (effective for annual periods

beginning on or after 1 January 2013). IAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011)

makes the amendments to apply IFRS 5 to an investment, or a portion of an investment, in an

associate or a joint venture that meets the criteria to be classified as held for sale; and on cessation

of significant influence or joint control, even if an investment in an associate becomes an

investment in a joint venture. The amendments have no impact on financial statements of the

Group.

Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) – (effective for

annual periods beginning on or after 1 January 2014). The amendments address inconsistencies in

current practice when applying the offsetting criteria in IAS 32 Financial Instruments: Presentation.

The amendments clarify the meaning of „currently has a legally enforceable right of set-off‟; and

that some gross settlement systems may be considered equivalent to net settlement.

Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) – (effective for

annual periods beginning on or after 1 January 2013). The amendments to IFRS 7 contain new

disclosure requirements for financial assets and liabilities that are offset in the statement of

financial position or subject to master netting agreement or similar arrangement.

o

o

-

-

-

-

2.4

- modification of foreign currency translation adjustments as stated in note 2.5,

IAS 32 Financial Instruments: Presentation - is amended to clarify that IAS 12 Income

Taxes applies to the accounting for income taxes relating to distributions to holders of an

equity instrument and transaction costs of an equity transaction. The amendment removes a

perceived inconsistency between IAS 32 and IAS 12.

IAS 34 Interim Financial Reporting is amended to align the disclosure requirements for

segment assets and segment liabilities in interim financial reports with those in IFRS 8

Operating Segments. IAS 34 now requires the disclosure of a measure of total assets and

liabilities for a particular reportable segment. In addition, such disclosure is only required

when the amount is regularly provided to the chief operating decision maker and there has

been a material change from the amount disclosed in the last annual financial statements for

that reportable segment.

The amendments have no impact on consolidated financial statements of the Group.

Basis of measurement

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

for:

IFRIC 20 - Stripping cost in the production phase of a surface mining (effective for annual periods

beginning on or after 1 January 2013). The interpretation requires production stripping cost in a

surface mine to be capitalized if certain criteria are met. The amendments have no impact on

financial statements of the Group.

IFRIC 21- Levies „an Interpretation on the accounting for levies imposed by governments‟

(effective for annual periods beginning on or after 1 January 2014). IFRIC 21 is an interpretation of

IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 sets out criteria for the

recognition of a liability, one of which is the requirement for the entity to have a present obligation

as a result of a past event (known as an obligating event). The interpretation clarifies that the

obligating event that gives rise to a liability to pay a levy is the activity described in the relevant

legislation that triggers the payment of the levy.

IAS 39 Financial Instruments: Recognition and Measurement- Novation of Derivatives and

Continuation of Hedge Accounting (Amendments to IAS 39) (effective for annual periods

beginning on or after 1 January 2014). The narrow-scope amendments will allow hedge accounting

to continue in a situation where a derivative, which has been designated as a hedging instrument, is

novated to effect clearing with a central counterparty as a result of laws or regulation, if specific

conditions are met (in this context, a novation indicates that parties to a contract agree to replace

their original counterparty with a new one).

Amendment to IAS 36 “Impairment of Assets” Recoverable Amount Disclosures for Non-Financial

Assets (effective for annual periods beginning on or after 1 January 2014). These narrow-scope

amendments to IAS 36 Impairment of Assets address the disclosure of information about the

recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

- recognition of employee retirement benefits at present value,

- long term investments classified as available for sale which are stated at fair value,

- revaluation of certain property, plant and equipment,

- certain financial instruments at fair value

2.5 Functional and presentation currency

2.6 Use of estimates and judgments

2.6.1 Fixed assets

Property, plant and equipments

The areas where assumptions and estimates are significant to the Group's financial statements or where

judgment was exercised in application of accounting policies are as follows:

The Group‟s management determines the estimated useful lives and related depreciation charge for its

plant and equipment. The Group also reviews the value of the assets for possible impairment on an annual

basis. Any change in the estimates in future years might affect the carrying amounts of the respective items

of property, plant and equipments with a corresponding affect on the depreciation charge and impairment.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the period in which the estimates are revised if the revision affects only that

period, or in the period of the revision and future periods if the revision affects both current and future

periods.

These consolidated financial statements are presented in Pak Rupees, which is the Group's functional and

presentation currency. All financial information has been rounded to the nearest rupee, except when

otherwise indicated.

The preparation of consolidated financial statements in conformity with approved accounting standards, as

applicable in Pakistan, requires management to make judgments, estimates and assumptions that affect the

application of policies and the reported amounts of assets, liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that

are believed to be reasonable under the circumstances, the results of which form the basis of making the

judgments about the carrying values of assets and liabilities that are not readily apparent from other

sources. Actual results may differ from these estimates.

Intangible assets

2.6.2 Inventory

2.6.3 Provision for doubtful debts, advances and other receivables

2.6.4 Employee benefits

2.6.5 Taxation

2.6.6 Contingencies

The Group reviews the rate of amortization and value of intangible assets for possible impairment on an

annual basis. Any change in the estimates in future years might affect the carrying amounts of intangible

assets with a corresponding effect on the amortization charge and impairment.

The Group reviews the net realizable value of stock-in-trade and stores, spares and loose tools to assess

any diminution in their respective carrying values. Any change in the estimates in future years might affect

the carrying amounts of stock-in-trade and stores, spares and loose tools with a corresponding effect in

profit and loss account of those future years. Net realizable value is determined with respect to estimated

selling price less estimated expenditure to make the sale.

The Group reviews the recoverability of its trade debts, advances and other receivables at each reporting

dates to assess whether provision should be recorded in the consolidated profit and loss account. In

particular, judgment by management is required in the estimates of the amount and timing of future cash

flows when determining the level of provision required. Such estimates are based on certain assumptions

whereas actual results may differ, resulting in future changes to the provisions.

The Group has disclosed significant contingent liabilities for the pending litigations and claims against the

Group based on its judgment and the advice of the legal advisors for the estimated financial outcome. The

actual outcome of these litigations and claims can have an effect on the carrying amounts of the liabilities

recognized at the balance sheet date. However, based on the best judgment of the Group and its legal

advisors, the likely outcome of these litigations and claims is remote and there is no need to recognize any

liability at the reporting date.

The Group operates an un-funded gratuity scheme covering all eligible employees completing the

minimum qualifying period of service as specified by the scheme. Annual provision is made on the basis

of actuarial valuation to cover obligations under the scheme for all employees eligible to gratuity benefits

respective of the qualifying period. The projected unit credit method used for the valuation of the scheme

is based on assumptions stated in note 20.1.

In making the estimates for income taxes currently payable by the Group, the management looks at the

current income tax laws and the decisions of appellate authorities on certain issues in the past. In making

the provision for deferred taxes, estimates of the Group‟s future taxable profits are taken into account.

3 Summary of significant accounting policies

3.1 Property, plant and equipment

Owned

Capital work-in-progress

Leased

Surplus arising on revaluation of operating assets is credited to surplus on revaluation of property, plant

and equipment account. The surplus on revaluation of operating assets to the extent of incremental

depreciation charged on the related assets is transferred by the Group to its un-appropriated profit.

The assets‟ residual values and useful lives are continually reviewed by the Group and adjusted if impact

on depreciation is significant. The Group‟s estimate of residual values of property, plant and equipment as

at 30 June 2013 has not required any adjustment as its impact is considered insignificant.

Capital work-in-progress are stated at cost less identified 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.

The Group accounts for property, plant and equipment obtained under finance leases by recording the

asset and the related liability. These amounts are determined on the basis of discounted value of minimum

lease payments at inception of lease or fair value whichever is lower. Financial charges are allocated to the

accounting period in a manner so as to provide a constant periodic rate of charge on the outstanding

liability. Depreciation on lease assets is charged, on a systematic basis over the useful life of the assets, on

reducing balance method, which reflects the patterns in which the asset‟s economic benefits are consumed

by the Group.

Furniture and fixtures, office equipment and vehicles are stated at cost less accumulated depreciation and

accumulated impairment losses, if any. Operating assets except mentioned above are stated at revalued

amount being the fair value at the date of revaluation, less any subsequent accumulated depreciation and

impairment losses while freehold land is stated at revalued amount being the fair value at the date of

revaluation, less any subsequent impairment losses, if any. Any revaluation increase arising on the

revaluation of such assets is credited in 'Surplus on Revaluation of Property, Plant and Equipment'. A

decrease in the carrying amount arising on revaluation is charged to profit or loss to the extent that it

exceeds the balance, if any, held in the surplus on revaluation account relating to a previous revaluation of

that asset. Cost includes borrowing cost in respect of qualifying assets as stated in note 3.12.

Depreciation is charged on a systematic basis over the useful life of the assets, on reducing balance

method, which reflects the patterns in which the economic benefits are consumed by the Group, at the

rates specified in note 4.1. Depreciation on additions is charged on a pro-rata basis from the date the asset

is available for use up to the date the asset is disposed of.

The gain or loss on disposal or retirement of an asset represented by the difference between the sale

proceeds and the carrying amount of the asset is recognized as an income or expense.

Major renewals and improvements to an item of property, plant and equipment are recognized in the

carrying amount of the item if it is probable that the embodied future economic benefits will flow to the

Group and the cost of renewal or improvement can be measured reliably. The cost of the day-to-day

servicing of property, plant and equipment are recognized in profit or loss as incurred.

3.2 Intangible assets

3.3 Impairment

3.4 Borrowings

3.5 Functional and presentation currency

Amortization is charged from the month of acquisition and up to the month preceding the disposal

respectively. Gain/ loss on disposal of intangible assets are taken to consolidated profit and loss account.

Major improvements and modifications are capitalized. Minor maintenance are taken to consolidated profit

and loss account.

Intangible assets are stated at cost less accumulated amortization and identified impairment losses, if any.

Amortization is charged to income on straight line basis during the estimated useful life. The useful life is

reviewed periodically to ensure that it is consistent with the expected pattern of economic benefits.

Interest bearing borrowings are recognized initially at fair value less attributable transaction cost.

Subsequent to initial recognition, these are stated at amortized cost with any difference between cost and

redemption value being recognized in the consolidated profit and loss over the period of the borrowings

on an effective interest basis.

Items included in the consolidated financial statement of the Group are measured using the currency of the

primary economic environment in which the Group operates (the functional currency). The consolidated

financial statements are presented in Pak Rupees which is the Group's functional and presentation

currency.

A financial asset is assessed at each reporting date to determine whether there is any objective evidence

that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or

more events have had a negative effect on the estimated future cash flows of that asset.

Non-financial assets

The carrying amounts of non-financial assets other than inventories and deferred tax asset, are assessed at

each reporting date to ascertain whether there is any indication of impairment. If any such indication exists

then the asset‟s recoverable amount is estimated. An impairment loss is recognized, as an expense in the

consolidated profit and loss account, for the amount by which the asset‟s carrying amount exceeds its

recoverable amount. The recoverable amount is the higher of an asset‟s fair value less cost to sell and

value in use. Value in use is ascertained through discounting of the estimated future cash flows using a

discount rate that reflects current market assessments of the time value of money and the risk specific to

the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there

are separately identifiable cash flows (cash-generating units).

An impairment loss is reversed if there has been a change in the estimates used to determine the

recoverable amount. An impairment loss is reversed only to the extent that the asset‟s carrying amount

does not exceed the carrying amount that would have been determined, net of depreciation or amortization,

if no impairment loss had been recognized.

Financial assets

3.6 Taxation

Current

Deferred

3.7 Foreign currency translations

3.8 Staff retirement benefits

3.9 Trade and other payables

3.10 Provisions

Charge for current taxation is based on taxable income at the current rates of taxation after taking into

account tax credits and tax rebates available, if any, or provisions of minimum tax. However, for income

covered under final tax regime, taxation is based on applicable tax rates under such regime.

Deferred tax is recognized using the balance sheet liability method in respect of all temporary differences

between the carrying amounts of assets and liabilities for financial reporting purposes and the tax base (the

amounts used for taxation purposes). In this regard, the effects on deferred taxation of the portion of

income subject to final tax regime is also considered in accordance with the requirement of Technical

Release – 27 of Institute of Chartered Accountants of Pakistan.

Deferred tax assets are recognized 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 liabilities are generally recognized for all taxable temporary differences. Deferred tax assets

and liabilities are based on the expected tax rates applicable at the time of reversal.

Transactions in foreign currencies are initially recorded at the rates of exchange ruling on the dates of

transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated into Pak

Rupees at the exchange rates prevailing on the balance sheet date. All exchange differences are charged to

consolidated profit and loss account.

The Group operates an un-funded gratuity scheme covering all eligible employees completing the

minimum qualifying period of service as specified by the scheme. Annual provision is made on the basis

of actuarial valuation to cover obligations under the scheme for all employees eligible to gratuity benefits

respective of the qualifying period. The projected unit credit method used for the valuation of the scheme

is based on assumptions stated in note 20.1.

Liabilities for trade and other amounts payable are measured at cost which is the fair value of the

consideration to be paid in the future for the goods and services received whether billed to the Group or

not.

Provisions are recognized when the Group 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

obligation and a reliable estimate of the amount can be made. However, provisions are reviewed at each

balance sheet date and adjusted to reflect current best estimate.

3.11

3.12 Borrowing costs

3.13 Investments

Available-for-sale

Financial assets and liabilities are recognized when the Group becomes a party to the contractual

provisions of the instrument and de-recognized when the Group loses control of the contractual rights that

comprise the financial asset and in case of financial liability when the obligation specified in the contract

is discharged, cancelled or expired. Any gain or loss on derecognition of financial assets and liabilities are

included in consolidated profit and loss for the year.

Derivatives are initially recorded at cost which is the fair value of consideration given or received

respectively on the date a derivative contract is entered into and are remeasured to fair value, amortized

cost or cost as the case may be 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 derivates that are designated and qualify as cash flow

hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized

immediately in the consolidated profit and loss account.

Amounts accumulated in equity are recognized in consolidated profit and loss account in the periods when

the hedged item will effect consolidated profit or loss. However, when the forecast hedged transaction

results in the recognition of a non-financial assets or a liability, the gains and losses previously deferred in

equity are transferred from equity and included in the initial measurement of the cost of the asset or

liability.

Financial instruments

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,

which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,

are added to the cost of those assets, until such time as the assets are substantially ready for their intended

use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure

on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are charged to income in the period of incurrence.

Available for sale investments are initially recognized at cost, being the fair value of the consideration

given. Subsequent to initial recognition these are recognized at fair value unless fair value cannot be

reliably measured. The investments for which quoted market price is not available are measured at cost.

Changes in carrying value are recognized in equity until investment is sold or determined to be impaired at

which time the cumulative gain or loss previously recognized in equity is included in consolidated profit or

loss account.

At fair value through profit or loss

Investment in subsidiary

3.14 Stores, spares and loose tools

3.15 Stock-in-trade

Cost has been determined as follows:

Weighted average cost

Cost of direct materials, labour and appropriate

manufacturing overheads.

3.16 Revenue recognition

-

-

The fair value of investments classified as available for sale is their quoted bid price at the reporting date.

Investments in subsidiaries are stated at cost and the carrying amount is adjusted for impairment, if any.

These are valued at moving average cost less allowance for obsolete and slow moving items. Items in

transit are valued at invoice values plus other charges incurred thereon.

These are stated at the lower of cost and net realizable value except for waste stock which is valued at net

realizable value.

Raw materials

All “regular way” purchase and sale of listed shares are recognized on the trade date i.e. the date that the

Group commits to purchase/sell the asset.

Investments at fair value through profit and loss are those which are acquired for generating a profit from

short-term fluctuation in prices. All investments are initially recognized at cost, being the fair value of the

consideration given. Subsequent to initial recognition, these investments are re-measured at fair value

(quoted market price). Any gain or loss from a change in the fair value is recognized in income.

Subsidiary is an enterprise in which the Group directly controls, beneficially owns or holds more than 50%

of the voting securities or otherwise has power to elect and / or appoint more than 50% of its directors.

The existence and effect of potential voting right that are currently exercisable or convertible when

assessing whether the Group controls another entity.

Sales are recorded when significant risks and rewards of ownership of the goods are transferred to

the customers.

Return on investments and deposits is accounted for on time proportionate basis.

Work in process and finished goods

Materials in transit comprises of invoice value plus other charges paid thereon.

Net realizable value signifies the estimated selling price in the ordinary course of business less costs

necessarily to be incurred in order to make a sale.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group

and the revenue can be measured reliably. Revenue is measured at the fair value of consideration received

or receivable on the following basis:

-

-

-

3.17 Trade debts and other receivables

3.18 Cash and cash equivalents

3.19 Off setting of financial instruments

3.20 Government grants

3.21 Segment reporting

3.22 Earnings per share

3.23 Dividend distribution

An operating segment is a component of the Group that engages in business activities from which it may

earn revenues and incur expenses. All operating segments' operating results are regularly reviewed by the

Group's Chief Executive to make decisions about resources to be allocated to the segment and assess its

performance, and for which discrete financial information is available.

The Group presents basic and diluted earnings per shares (EPS) data. Basic EPS is calculated by dividing

the profit or loss attributable to share holders of the Group by the weighted average number of ordinary

shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable

to share holders and the weighted average number of ordinary shares outstanding, adjusted for the effects

of all dilutive potential ordinary shares.

Dividend distribution to the Group's shareholders is recognized as a liability in the period in which the

dividends are approved.

Gain on sale and lease-back transactions is deferred and is credited to profit and loss account over

the lease term.

Interest/mark-up income is recognized as the interest / mark-up become due.

Trade debts and other receivables are carried at original invoice amount less an estimate made for doubtful

receivables based on review of outstanding amounts at the year end. Bad debts are written off when

identified.

Cash in hand and at banks and short term deposits, which are held to maturity, are carried at cost. For the

purposes of cash flow statement, cash equivalents are short term highly liquid instruments, which are

readily convertible to known amounts of cash and which are subject to insignificant risk of changes in

values.

Financial assets and liabilities are off-set and the net amount reported in the balance sheet when there is a

legally enforceable right to set-off the recognized amounts and there is an intention to settle on a net basis,

or realize the asset and settle the liability simultaneously.

Government grants that compensates the Group for expenses incurred is recognized in the profit and loss

account on a systematic basis in the same period in which the expenses are recognized. Government grants

are deducted in reporting the related expense.

Dividend income is accounted for when the right to receive is established.

2013 2012

Note Rupees Rupees

4 Property, plant and equipment

Operating assets 4.1 12,117,467,963 11,092,153,643

Capital work-in-progress 4.2 333,523,768 162,919,560

12,450,991,731 11,255,073,203

4.1 Operating assets

Net book value

Owned

Freehold land 1,117,443,005 76,485,262 (3,721,135) - 1,190,207,132 - - - - - 1,190,207,132

Factory building 1,864,046,880 197,174,204 - - 2,061,221,084 5% 308,738,208 78,977,506 - 387,715,714 1,673,505,370

Non-factory building 696,478,581 40,406,804 - - 736,885,385 5% 120,143,131 29,119,969 - 149,263,100 587,622,285

Plant and machinery 9,769,600,759 1,151,352,818 (20,480,251) - 10,900,473,326 5% 2,400,943,557 386,454,799 (17,545,711) 2,769,852,645 8,130,620,681

Electric fittings & installations 408,551,188 47,374,079 - - 455,925,267 5% 79,329,938 17,111,681 - 96,441,619 359,483,648

Sui gas installations 14,620,961 474,195 - - 15,095,156 5% 5,272,165 479,531 - 5,751,696 9,343,460

Tools, laboratory equipments

and arms 57,088,673 6,219,238 - - 63,307,911 5% 24,269,761 1,718,917 - 25,988,678 37,319,233

Office equipment 28,301,915 4,279,150 (640,238) - 31,940,827 10% 10,766,311 1,905,371 (254,530) 12,417,152 19,523,675

27,753,389 86,500 - - 27,839,889 5% 8,706,523 953,123 - 9,659,646 18,180,243

Furniture and fixtures 12,601,636 3,554,691 - - 16,156,327 10% 5,008,206 858,587 - 5,866,793 10,289,534

Vehicles 103,656,599 37,601,337 (5,048,172) - 136,209,764 20% 41,091,008 16,976,560 (3,230,506) 54,837,062 81,372,702

2013 14,100,143,586 1,565,008,278 (29,889,796) - 15,635,262,068 3,004,268,808 534,556,044 (21,030,747) 3,517,794,105 12,117,467,963

Net book value

Owned

575,838,188 - - 537,883,682 1,113,721,870 - - - - - 1,113,721,870

Factory Building 1,142,197,431 170,370,619 - 551,478,830 1,864,046,880 5% 256,214,037 52,524,171 - 308,738,208 1,555,308,672

Non-Factory Building 473,358,558 104,530,714 - 118,589,309 696,478,581 5% 99,377,956 20,765,175 - 120,143,131 576,335,450

Plant and machinery 6,868,102,015 2,098,401,336 (17,216,837) 820,314,245 9,769,600,759 5% 2,101,374,145 310,774,530 (11,205,118) 2,400,943,557 7,368,657,202

Electric fittings and installations 266,002,946 142,548,242 - - 408,551,188 5% 67,787,543 11,542,395 - 79,329,938 329,221,250

Sui gas installations 13,484,492 1,136,469 - - 14,620,961 5% 4,834,953 437,212 - 5,272,165 9,348,796

Tools, laboratory equipment

and arms 51,715,671 5,373,002 - 57,088,673 5% 22,789,127 1,480,634 - 24,269,761 32,818,912

Office equipment 22,251,255 6,050,660 - - 28,301,915 10% 9,163,150 1,603,161 - 10,766,311 17,535,604

27,007,639 745,750 -

- 27,753,389 5%

7,734,507 972,016 - 8,706,523 19,046,866

Furniture and fixtures 9,720,748 2,880,888 - - 12,601,636 10% 4,356,272 651,934 - 5,008,206 7,593,430

Vehicles 67,957,519 41,262,525 (5,563,445) - 103,656,599 20% 35,226,097 10,464,584 (4,599,673) 41,091,008 62,565,591

2012 9,517,636,462 2,573,300,205 (22,780,282) 2,028,266,066 14,096,422,451 2,608,857,787 411,215,812 (15,804,791) 3,004,268,808 11,092,153,643

Reassessed value/original cost

Rate

%

Depreciation

As at

01 July 2012 Additions Deletions

Surplus on

revaluation

As at

30 June 2013

As at

30 June 2013

Fire extinguishing equipment

& weighing scales

Reassessed value/original cost

Rate

%

Depreciation

As at

01 July 2011

As at

01 July 2012

For the

year Disposals

As at

30 June 2013

Fire extinguishing equipment

& weighing scales

----------------------------------------------------------(Rupees)---------------------------------------------------------- ----------------------------------------------------------(Rupees)----------------------------------------------------------

----------------------------------------------------------(Rupees)---------------------------------------------------------- ----------------------------------------------------------(Rupees)----------------------------------------------------------

For the

year Disposals

As at

30 June 2012

As at

30 June 2012

Freehold Land

Additions Deletions Surplus on

revaluation

As at

30 June 2012

As at

01 July 2011

2013 2012

Note

4.2 Capital work-in-progress

Opening balance 162,919,560 156,084,017

Additions during the year 1,146,539,078 2,185,758,045

Transfers during the year (975,934,870) (2,178,922,502)

Closing balance 333,523,768 162,919,560

Breakup of closing balance of capital work-in-progress:

Factory buildings

Material and expenses 159,817,243 27,833,068

Advance payments 68,790,312 20,279,515

228,607,555 48,112,583

Non-factory buildings

Material and expenses 68,076,880 1,936,637

Plant and machinery

Cost and expenses 1,907,064 183,160

Advance payments 27,213,847 -

Letters of credit 5,726,509 112,687,180

34,847,420 112,870,340

Furniture and fixtures

Advance payments 14,600 -

Office equipment

Advance payments 147,298 -

Electric fittings & Installations

Advance payments 1,830,015 -

333,523,768 162,919,560

4.3 Depreciation is allocated as under:

Cost of sales 27 514,808,069 398,488,284

Administrative expenses 29 19,747,975 12,727,528

534,556,044 411,215,812

4.4

Had there been no revaluation, the net book value of operating fixed assets are as follows:

Cost Depreciation Net book value

30 June 2013

Freehold land 144,431,518 - 144,431,518

Building 1,482,476,363 324,317,679 1,158,158,684

Plant & machinery and others 8,866,388,298 2,386,394,233 6,479,994,065

10,493,296,179 2,710,711,912 7,782,584,267

30 June 2012 9,007,739,566 2,380,912,616 6,626,826,950

--------------(Rupees)--------------

--------------------------------(Rupees)--------------------------------

Property, plant and equipment of the Group were first revalued on 30 June 2007 by an independent valuer on the

basis of depreciated replacement values which resulted in the surplus of Rs. 2,915 million. The next revaluation

had been carried out on 31 March 2012 by another independent valuer on the basis of depreciated replacement

values which resulted in the additional surplus of Rs.2,028 million.

4.5

Reassessed

value /

original cost

Accumulated

depreciation

Net book

valueSale proceeds

Gain/(loss)

on disposalMode of disposal

Toyota Corolla 1299 CC 951,975 761,716 190,259 400,000 209,741 Negotiation Ehsan Elahi

Toyota Corolla Atlas 1,832,750 1,058,499 774,251 1,850,000 1,075,749 Insurance Claim Adamjee Insurance Limited

Honda Civic 1799 CC 1,454,174 935,798 518,376 1,415,000 896,624 Insurance Claim Adamjee Insurance Limited

Electronic Winder and Twisters 3,642,910 3,256,445 386,465 1,326,750 940,285 Negotiation AZ & Brothers

Coner Automatic Winder 16,837,341 14,289,266 2,548,075 3,173,250 625,175 Negotiation AZ & Brothers

Digital Copier 133,682 77,002 56,680 91,577 34,897 Insurance Claim Adamjee Insurance Limited

Hp Pro 45305 Laptop Intel Core 2630 85,000 11,687 73,313 66,000 (7,313) Insurance Claim Adamjee Insurance Limited

Mitsubishi cabinet air conditioner 114,900 45,686 69,214 123,500 54,286 Insurance Claim Adamjee Insurance Limited

Photocopier Richo 2045 80,000 15,600 64,400 65,000 600 Insurance Claim Adamjee Insurance Limited

Sale of land 3,721,135 - 3,721,135 3,721,135 - Negotiation Reliance Weaving Mills Limited

Toyota Corolla Saloon 407,063 243,108 163,955 327,500 163,545 Insurance Claim Adamjee Insurance Limited

628,866 335,940 292,926 316,331 23,405 Group Policy /

Negotiation

2013 29,889,796 21,030,747 8,859,049 12,876,043 4,016,994

2012 22,780,282 15,804,791 6,975,491 16,784,898 9,809,407

The following assets were disposed of during the year

-------------------------------------------(Rupees)---------------------------------------------

Items of property, plant and equipment

with individual value not exceeding Rs.

50,000

2013 2012

Note -----------------(Rupees)-----------------

5 Intangible assets

Computer Software 5.1 3,122,703 3,398,483

Goodwill 5.2 505,761 -

3,628,464 3,398,483

5.1 Computer Software

Net book value at beginning of the year 3,398,483 4,538,527

Additions during the year 909,751

Amortization for the year (1,185,531) (1,140,044)

Net book value at end of the year 3,122,703 3,398,483

Gross carrying value as at end of the year

Cost 11,424,321 10,514,570

Accumulated amortization (8,301,618) (7,116,087)

Net book value 3,122,703 3,398,483

5.2 Goodwill

Opening balance - -

Add: Acquisition through business combination 5.2.1 505,761 -

Balance 505,761 -

5.2.1

6 Long term investments

2012 2013 2012

Restated

--------Number of shares-------- Note -----------------(Rupees)-----------------

Quoted - available for sale

investments

60,414,970 Fatima Fertilizer Company Limited -

Equity interest held 2.88%

(2012: 2.88 %) 6.1 1,564,141,790 1,490,437,310

Un-quoted - available for

sale investments

25,790,610 Pak Arab Fertilizers Limited -

Equity interest held 5.73% 6.1 & 6.2 252,966,706 252,966,706

(2012: 5.73 %)

1,817,108,496 1,743,404,016

Annual test for impairment

During the year, the Group assessed the recoverable amount of goodwill associated with the acquisition of

the Subsidiary Company, by determining the value in use in accordance with the provisions of

International Financial Reporting Standards (IFRS). The recoverable amount exceeds the carrying value

and hence no impairment is deemed to exist. The management believes that any reasonably possible

change to the key assumptions on which the calculation of recoverable amount is based would not cause

the carrying amount to exceed the recoverable amount.

2013

62,994,031

25,790,610

6.1

2012 2011

-----------------(Rupees)-----------------

Unappropriated profits

Balance - as previously reported 4,150,734,634 3,100,929,710

Net cumulative effect due to rectification

of prior period error (550,695,388) (482,793,414)

Balance - as restated 3,600,039,246 2,618,136,296

Fair value reserve - available for sale

financial assets

Balance - as previously reported - -

Net cumulative effect due to rectification

of prior period error 784,049,931 246,163,636

Balance - as restated 784,049,931 246,163,636

Long term investments

Balance - as previously reported 2,182,061,781 1,535,348,169

Effect due to rectification of prior period error

- derecognition of share of post

acquisition profits (1,626,110,793) (1,208,800,594)

- recognition of cash and specie dividends 1,214,594,228 844,117,856

- derecognition of share of other

comprehensive income (139,853,823) (118,110,676)

- derecognition of share of revaluation surplus (671,337,308) (141,896,820)

959,354,085 910,657,935

784,049,931 246,163,636

Balance - as restated 1,743,404,016 1,156,821,571

Pak Arab Fertilizers Limited and Fatima Fertilizer Company Limited are associated companies of the

Group as defined in Companies Ordinance, 1984. However, according to International Accounting

Standard 28 "Investments in Associates and Joint Ventures", Pak Arab Fertilizers Limited and Fatima

Fertilizer Company Limited are not considered as Associates as criteria for significant influence is not met.

Therefore, the investment in Pak Arab Fertilizers Limited is classified as available for sale and is valued at

cost, owing to non-availability of market value of its shares as the company is not listed on any of the

Stock Exchanges in Pakistan and investment in Fatima Fertilizer Company Limited has been classified as

available for sale with fair value changes recognized in equity, in accordance with the requirement of

International Accounting Standard 39 "Financial Instruments: Recognition and Measurement".

Previously, this investment was treated as 'Investments in Associates" under equity method in accordance

with the provisions of International Accounting Standard 28 "Investments in Associates and Joint

Ventures". This treatment of valuation of investments under equity method is treated as prior period error

in the current year financial statements. The effect of prior period error due to wrong accounting treatment

for valuation of these investments has been accounted for by restatement of figures of earliest reporting

periods. The effect of this restatement is summarized below:

Remeasurement to fair value

2012 2011

-----------------(Rupees)-----------------

Surplus on revaluation of property,

plant and equipment

Balance - as previously reported 4,461,659,446 2,334,396,213

Effect due to rectification of prior period error (671,337,308) (141,896,820)

Balance - as restated 3,790,322,138 2,192,499,393

6.2

2013 2012

Note

7 Stores, spares and loose tools

Stores 7.1 146,582,114 126,088,345

Spares 159,811,788 205,967,900

Loose tools 549,005 624,335

306,942,907 332,680,580

Less: Provision for slow moving items (1,770,316) (1,770,316)

305,172,591 330,910,264

7.1

2013 2012

Note

8 Stock-in-trade

Raw material 8.1 4,646,912,278 2,822,587,199

Work-in-process 205,937,615 172,590,755

4,852,849,893 2,995,177,954

Finished goods

Yarn 831,554,614 659,940,484

Fabric 244,214,094 118,892,687

1,075,768,708 778,833,171

5,928,618,601 3,774,011,125

8.1

--------------(Rupees)--------------

This includes raw material in transit of Rs. 337.96 million (2012: Rs. 16.55 million).

This includes stores in transit of Rs. 4.89 million (2012: Rs. 55.42 million).

--------------(Rupees)--------------

Management has accounted for the above adjustments with retrospective effect and comparative

information has been restated in accordance with the provisions of the International Accounting Standard 8

"Accounting Policies, changes in accounting estimates and error".

During the year, the Group has received 2,579,061 shares (2012: 15,474,366 shares) of Fatima Fertilizer

Company Limited as specie dividend from Pak Arab Fertilizer Limited which have been recognized at fair

value of Rs. 61.79 million as an increase in investment of Fatima Fertilizer Company Limited.

Furthermore, the Group has received cash dividends amounting to Rs. 139 million on it's investment in

Fatima Fertilizers Limited which is disclosed in other income.

2013 2012

Note

9 Trade debts

Considered good

Export - secured 9.1 608,024,072 858,285,522

Local - unsecured 1,387,603,732 1,153,902,730

1,995,627,804 2,012,188,252

9.1

2013 2012

Note

Fazal Rehman Fabrics Limited 138,795,584 37,596,629

Amir Fine Exports (Private) Limited 8,400 8,400

138,803,984 37,605,029

10 Loans and advances

Considered good

Due from associated undertaking / related party 10.1 9,681,589 21,484

Others

Advances to:

- Suppliers and contractors 117,989,180 74,832,921

Loan to:

- Executives - interest free 10.2 450,000 380,095

- Other employees 6,335,528 4,717,160

Letters of credit 6,321,583 56,555,138

140,777,880 136,506,798

10.1 Due from associated undertaking / related party

- On account of non-trading activities

Fatima Fertilizers Ltd. 9,681,589 -

Reliance Commodities (Private) Limited - 21,484

9,681,589 21,484

10.2

--------------(Rupees)--------------

--------------(Rupees)--------------

Maximum aggregate amount due from executives at any month end during the year was Rs. 0.45 million

(2012: Rs. 0.38 million).

These are secured through banks by letters of credit. These include due from following associated

undertakings on account of trading activities.

2013 2012

Note

11 Trade deposits and short term prepayments

Deposits 4,587,000 5,535,500

Prepayments 2,068,581 1,218,711

6,655,581 6,754,211

12 Short term investments

Investments

- at fair value through profit and loss account

In quoted companies

Fatima Fertilizer Company Limited

6,520,000 (2012: 6,520,000) fully paid ordinary

shares of Rs. 10 each 161,891,600 160,848,400

Pakistan State Oil Company Limited

89,280 (2012: 62,000) fully paid ordinary

shares of Rs. 10 each 28,603,526 15,648,271

190,495,126 176,496,671

13 Tax refunds due from government

Sales tax 103,160,318 63,324,293

Income tax - net 13.1 209,999,806 65,636,718

Excise duty 74,950 -

313,235,074 128,961,011

13.1 Movement of income tax

Balance at the beginning of year 65,636,718 76,105,110

Add: Advance tax paid / deducted at source 206,376,968 183,996,287

Add: Payments/adjustments against

completed assessments - 8,370,659

272,013,686 268,472,056

Less: Provision for taxation 62,013,880 202,835,338

Balance at the end of year 209,999,806 65,636,718

14 Cash and bank balances

Cash in hand 4,114,514 1,117,140

Cash at banks

- Current accounts 192,749,247 69,186,760

- Dividend accounts 18,836,397 540,656

- Saving accounts 14.1 1,697,836 1,143,799

213,283,480 70,871,215

217,397,994 71,988,355

14.1 Rate of interest and mark up on saving accounts ranges from 6% to 7% (2012: 5% to 8.2%).

--------------(Rupees)--------------

2013 2012

Note

15 Issued, subscribed and paid-up capital

Ordinary shares 15.1 250,000,000 226,000,000

Preference shares 15.2 - 175,000,000

250,000,000 401,000,000

15.1 Ordinary shares

2012 2013 2012

-----------------(Rupees)-----------------

1,000,000 Ordinary shares of Rs.10 each

fully paid in cash 10,000,000 10,000,000

9,187,200 Ordinary shares of Rs.10 each

fully paid as right shares 91,872,000 91,872,000

12,412,800 Ordinary shares of Rs.10 each

issued as bonus shares 15.1.1 148,128,000 124,128,000

22,600,000 250,000,000 226,000,000

15.1.1 Movement of bonus shares

Opening balance 124,128,000 85,679,940

Add: Bonus shares issued during the year 24,000,000 38,448,060

(2,400,000 shares (2012: 3,844,806) ordinary shares of Rs. 10 each)

148,128,000 124,128,000

15.1.2

2013 2012

----------(Number of shares)----------

Amir Fine Exports (Private) Limited 6,119,941 5,531,312

15.2 Preference shares

2012 2013 2012

------(Number of shares)------ -----------------(Rupees)-----------------

17,500,000 Preference shares of Rs.10 each

fully paid in cash 175,000,000 175,000,000

Less: transferred to

current liability 21 (175,000,000) -

- 175,000,000

2013 2012

------(Number of shares)------

Preference shares are issued to the following financial institutions:

MCB Bank Limited 10,000,000 10,000,000

The Bank of Punjab 2,500,000 2,500,000

Faysal Bank Limited 2,500,000 2,500,000

NIB Bank Limited 2,500,000 2,500,000

17,500,000 17,500,000

15.2.1

(a)

--------------(Rupees)--------------

The preference shareholders are not entitled to receive notice, attend general meetings of the Holding Company

and vote at meetings of the shareholders of the Holding Company, except as otherwise provided by the

Companies Ordinance, 1984 (the Ordinance), whereby the holders of such shares would be entitled to vote

separately as a class i.e. with respect to voting entitlement of preference shareholders on matters/issues affecting

substantive rights or liabilities of preference shareholders.

2013

------(Number of shares)------

1,000,000

9,187,200

14,812,800

25,000,000

17,500,000

As at the balance sheet date, ordinary shares held by an associated company is as follows:

The Holding Company, during the financial year ended 30 June 2006, had offered to the shareholders of the Group 30

million preference shares of Rs.10 each at par value. The salient terms of this issue were as follows:

2013

(b)

(c)

(d)

(e)

(f)

2013 2012

Note -----------------(Rupees)-----------------

16 Capital reserves

- Share premium

Issue of 3,168,000 (2012: 3,168,000) ordinary shares of

Rs. 10 each @ Rs. 20 per share issued during 2001 63,360,000 63,360,000

Issue of 2,851,200 (2012: 2,851,200) ordinary shares of

Rs. 10 each @ Rs. 5 per share issued during 2002 14,256,000 14,256,000

77,616,000 77,616,000

- Capital redemption reserve 16.1 175,000,000 175,000,000

252,616,000 252,616,000

16.1 This represents capital redemption reserve created for the purpose of redemption of preference shares.

2013 2012

Restated

-----------------(Rupees)-----------------

17 Surplus on revaluation of property, plant

and equipment

Balance at beginning of the year 4,488,235,841 2,551,578,393

Add:

Surplus arising due to revaluation of property,

plant and equipment - 2,028,266,066

Less:

Transferred to unappropriated profit on account of:

Incremental depreciation - net of deferred tax (133,391,944) (91,608,618)

Effect of disposal of property, plant and equipment (11,572,351) -

4,343,271,546 4,488,235,841

Less: Related deferred tax liability on

Opening balance of revaluation 697,913,703 359,079,000

Surplus arising due to revaluation of property,

plant and equipment 116938401 456,080,865

Incremental depreciation charged on related assets (167,470,520) (117,246,162)

647,381,584 697,913,703

3,695,889,962 3,790,322,138

Preference shareholders will have the option to serve the notice, after the end of seventh year from the issue

date, to convert the preference shares along with accumulated dividend into the ordinary shares of the Holding

Company within the conversion period by providing written notice to the Holding Company. In this regard a 60

days prior written notice will be given to the Holding Company. The preference shares along with accumulated

dividend will be convertible into ordinary shares at a 25% discount to breakup value per share or at a 25%

discount to the average market value of the share in the preceding 3 months whichever is higher.

The Holding Company may at its option redeem the preference shares whole or minimum of 20% of the

outstanding face value at any time after completion of third year from the issue date by giving at least 60 days

prior written notice to the preference shareholders.

Preference shareholders shall be paid preference dividend @ 6-months KIBOR + 9.75% per annum on

cumulative basis. If the Holding Company does not pay dividend in any year, the unpaid dividend for the

relevant year will be paid in the immediately following year along with the dividend payment for such year.

The Holding Company shall create a sinking fund reserve account from the profits of the Holding Company.

Any payment on account of the call option will only be made from the Sinking fund reserve account and profits

from the current year. The Holding Company will build up the reserve account to ensure that it is sufficient to

service the exercise of the call option.

Subsequent to the year end, the Holding Company has served a notice relating to the redemption of preference

shares in cash on 01 August 2013.

2013 2012

Note

18 Long term financing

Banking Companies

Fazal Cloth Mills Limited - Holding Company

Askari Bank Limited

- Term finance - V 18.1 - 46,362,000

- Term finance - VI under LTF-EOP scheme 18.2 6,732,000 10,098,000

- Term finance - under LTF-EOP scheme 18.3 44,316,501 59,088,667

- Term finance - VII 18.4 (a) 63,919,399 82,182,086

- Term finance - VII under LTFF scheme 18.4 (b) 8,997,029 11,567,608

- Term finance - VIII 18.5 (a) 62,970,147 71,845,457

- Term finance - VIII under LTFF scheme 18.5 (b) 38,608,496 47,259,286

225,543,572 328,403,104

Soneri Bank Limited

- Term finance 18.6 24,300,000 40,700,000

- Term finance 18.7 50,000,000 50,000,000

- Term finance 18.8 149,927,045 -

- Term finance 18.9 350,000,000 -

574,227,045 90,700,000

Faysal Bank Limited

- Term finance 18.10 100,000,000 150,000,000

- Term finance 18.11 200,000,000 200,000,000

- Term finance 18.12 (a) 237,586,502 237,586,502

- Term finance under LTFF scheme 18.12 (b) 112,413,498 112,413,498

- Term finance 18.13 200,000,000 -

850,000,000 700,000,000

Habib Bank Limited

- Demand finance 18.14 (a) 53,847,275 89,745,458

- Demand finance under LTF-EOP scheme 18.14 (b) 14,421,115 20,189,625

68,268,390 109,935,083

National Bank of Pakistan

- Demand finance - IV 18.15 120,000,000 160,000,000

- Demand finance - III 18.16 (a) 71,318,646 97,294,058

- Demand finance - III under LTFF scheme 18.16 (b) 32,122,277 41,300,071

- Demand finance - VI 18.17 (a) 207,167,200 125,665,600

- Demand finance - VI under LTFF scheme 18.17 (b) 62,832,800 -

493,440,923 424,259,729

United Bank Limited

- Demand finance-I B 18.18 26,288,424 78,865,264

- Demand finance-I C 18.19 10,000,000 20,000,000

- Demand finance-II 18.20 (a) 17,130,000 51,389,000

- Demand finance- under LTF-EOP scheme 18.20 (b) 7,551,000 12,585,000

- Demand finance-III under LTF-EOP scheme 18.21 2,311,576 6,934,736

- Demand finance-IV under LTF-EOP scheme 18.22 4,166,670 12,500,004

67,447,670 182,274,004

MCB Bank Limited

- Demand finance under LTF-EOP scheme 18.23 - 4,899,438

- Demand finance under LTFF scheme 18.24 320,761,619 349,921,766

320,761,619 354,821,204

-------------(Rupees)-------------

2013 2012

Note

Allied Bank Limited

- Demand finance 18.25 (a) 54,414,246 90,690,408

- Demand finance under LTF-EOP scheme 18.25 (b) 14,617,984 19,526,572

- Demand finance under LTFF scheme 18.25 (c) 680,074 1,133,454

- Term loan- 2 18.26 (a) 129,319,516 143,577,505

- Term loan-2 under LTFF scheme 18.26 (b) 96,830,415 101,805,806

- Term loan- 3 18.27 (a) 216,669,192 239,743,698

- Term loan-3 under LTFF scheme 18.27 (b) 8,998,645 8,998,645

- Term loan- 4 18.28 (a) 621,759,795 621,759,795

- Term loan-4 under LTFF scheme 18.28 (b) 4,240,205 4,240,205

- Term loan- 5 18.29 218,431,188 -

1,365,961,260 1,231,476,088

Pak Kuwait Investment Company

(Private) Limited

- Term finance 18.30 210,000,000 270,000,000

Saudi Pak Industrial and Agricultural

Investment Company Limited

- Term finance 18.31 (a) 99,794,666 108,867,000

- Term finance under LTFF scheme 18.31 (b) 129,372,001 141,133,000

229,166,667 250,000,000

Pak Brunei Investment Company Limited

- Term finance under LTFF scheme 18.32 199,995,050 199,995,050

- Term finance 18.33 200,000,000 -

399,995,050 199,995,050

Pak Oman Investment Company Limited

- Term finance under LTFF scheme 18.34 99,998,000 99,998,000

Bank Al Falah

- Term finance 18.35 325,000,000 -

5,229,810,196 4,241,862,262

Fazal Weaving Mills Limited -

Subsidiary Company 18.36

United Bank Limited

- Demand finance 18.37 - -

Allied Bank Limited

- Term finance 18.38 - -

MCB Bank Limited

- Term finance 18.39 - -

- -

Less:

Current portion grouped under current liabilities 837,688,363 600,073,758

4,392,121,833 3,641,788,504

-------------(Rupees)-------------

18.1 Askari Bank Limited - TF-V

18.2 Askari Bank Limited - TF-VI under LTF-EOP scheme

18.3 Askari Bank Limited - TF under LTF-EOP scheme

18.4 (a) Askari Bank Limited - TF-VII

This finance has been obtained to finance permanent working capital requirement/refinancing of fixed assets.

This finance was fully repaid during the current year. Originally it was repayable in 5 semi annual

installments with break up of first 4 installments of Rs. 15 million each and 5th/last installments of Rs.240

million. 1st installment was due after 12 months of first draw dawn. However, as per revised terms during

the year 2008, balance amount of Rs.255 million was repayable in 11 equal semi annual installments of

principle amount. Before this revision in the terms, this finance carried markup at the rate of 6 months

average KIBOR ask rate + 2.50% per annum with a floor of 4.25% per annum however, after revision in

terms, it carried mark up at the rate of 6 months KIBOR + 1.25% per annum with a floor of 4.25% per

annum. During the year markup was charged at the rates ranging from 10.63 % per annum to 13.31 % per

annum (2012: from 13.27% per annum to 15.03% per annum). This finance was secured against 1st Joint

Pari Passu Charge/Mortgage of Rs.723.5 million on all present and future fixed assets of the Group and

personal guarantees of the sponsoring Directors of the Group.

This finance has been obtained for the purpose of disbursement and retirement of letters of credit of Meezan

Bank Limited opened for import of Caterpillar Gas Generator set. During the year 2008 this finance was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme. This finance is repayable in

12 half yearly installments commencing from July 10, 2008 after a grace period of one year. However, during

the year 2009, SBP has allowed grace period of one year starting from January 01, 2009 to December 31,

2009 and accordingly last installment is due on January 26, 2015 . This finance carried mark up at the rate of

6 months KIBOR + 2.50% per annum before refinancing by SBP under LTF-EOP scheme, however, after

approval and refinancing by SBP under LTF-EOP. It carries mark up at the rate of SBP rate + 2.00% per

annum. During the year mark up was charged at the rate of 7.00% per annum (2012: 7.00% per annum). It is

secured against the security as stated in note 18.1.

This finance has been disbursed during the year 2008 for the purpose of retirement of letter of credit opened

for import of Caterpillar Gas Generator sets. This finance was approved and refinanced by the State Bank of

Pakistan under LTF-EOP scheme. This finance is repayable in 12 half yearly equal installments of principle

amount commencing after a grace period of one year. However, during the year 2009 SBP has allowed grace

period of one year starting from January 01, 2009 to December 31, 2009 and accordingly last installment is

due on 08 June 2016. It carries mark up at the rate of SBP rate + 2.00% per annum. During the year mark up

was charged at the rate of 7.00% per annum (2012: 7.00% per annum.). It is secured against the security as

stated in note 18.1.

This finance has been obtained for the purpose of retirement of letters of credit opened for import of textile

machinery. It is repayable within a period of eight years including two years grace period in 12 half yearly

equal installments of principal amount. This finance carries markup at the rate of 6 months KIBOR + 1.25%

per annum with floor of 4.25% per annum. During the year markup was charged at the rates ranging from

10.63 % per annum to 13.31 % per annum (2012: from 13.27% per annum to 15.05% per annum). It is

secured against the security as stated in note 18.1.

18.4 (b) Askari Bank Limited - TF-VII under LTFF scheme

18.5 (a) Askari Bank Limited - TF-VIII

18.5 (b) Askari Bank Limited - TF-VIII under LTFF scheme

18.6 Soneri Bank Limited - TF

18.7 Soneri Bank Limited - TF

18.8 Soneri Bank Limited- TF

During the year 2010, an amount of Rs.15.4 million out of term finance VII of Askari Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 12 equal installments of principal amount.

Last installment is falling due on 30 September 2016. This finance carries mark up at the rate of SBP rate +

3.00 % per annum. During the year mark up was charged at the rate of 10.50% per annum (2012: 10.50% per

annum) . It is secured against the security as sated in note 18.1.

This finance has been obtained during the year 2010 for the purpose of retirement of letters of credit opened

for import of textile machinery. It is repayable within a period of eight years including two years grace period

in 12 half yearly equal installments of principal amount. Last installment is falling due on 23 December

2017. This finance carries markup at the rate of 6 months KIBOR + 2.00% per annum. During the year

markup was charged at the rates ranging from 11.38% per annum to 14.06 % per annum (2012: from 14.02%

per annum to 15.03% per annum) . It is secured against the security as stated in note 18.1.

During year 2011 an amount of Rs. 19.2 million and during the year 2010, an amount of Rs.32.7 million, out

of term finance VIII of Askari Bank Limited were approved and refinanced by the State Bank of Pakistan

under LTFF scheme against imported textile machinery eligible under the scheme. This finance is repayable

in 12 equal installments of principal amount. Last installment is falling due on 23 December 2017. This

finance carries mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was charged at

the rate of 10.50% per annum (2012: 10.50% per annum). It is secured against the security as stated in note

18.1.

During the year 2009, a term finance amounting to Rs.82 million was obtained for BMR projects and

retirement of letters of credit. It is repayable within a period of 6 years including one year grace period in 10

equal semi annual installments of principal amount. It carries mark up at the rate of 6 months KIBOR +

1.25% per annum. During the year mark up was charged at the rates ranging from 10.61 % per annum to

13.25 % per annum (2012: from 13.20% per annum to 15.05% per annum). It is secured against 1st Joint

Pari Passu charge/mortgage of Rs. 834 million over all present and future fixed assets of the Group and

personal guarantees of the sponsoring Directors of the Group.

During the year 2012, a term finance amounting to Rs.50 million was obtained from Soneri Bank Limited for

ongoing BMR projects. It is repayable within the period of six years inclusive of one & half year grace period

in 9 semi annual equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR +

2.00% per annum. During the year mark up was charged at the rates ranging from 11.36% per annum to

14.00% per annum (2012: 13.95% per annum). It is secured against the security as stated in note 18.6.

During the current year, a term finance of Rs.149.9 million has been obtained from Soneri Bank Limited to

finance the retirement of letter of credit opened for import of textile machinery. Limit of this term finance

was Rs.150 million. It is repayable within the period of seven years inclusive of two years grace period in ten

half yearly equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 1.75%

per annum. During the year mark up was charged at the rates ranging from 11.10% per annum to 11.24% per

annum. It is secured against the security as stated in note 18.6.

18.9 Soneri Bank Limited- TF

18.10 Faysal Bank Limited - TF

18.11 Faysal Bank Limited - TF

18.12 (a) Faysal Bank Limited - TF

18.12 (b) Faysal Bank Limited - Term Finance under LTFF scheme

18.13 Faysal Bank Limited - TF

This finance was obtained during the year 2009 to finance the import of textile machinery and existing fixed

assets. It is repayable within a period of 6 years including two years grace period in 8 equal semi annual

installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 2.50% per annum.

During the year mark up was charged at the rates ranging from 11.90% per annum to 14.53% per annum

(2012: from 14.48% per annum to 16.29% per annum). It is secured against 1st Joint Pari Passu

charge/mortgage of Rs.1,269 million over all present and future fixed assets of the Group and personal

guarantees of the sponsoring Directors.

This finance was obtained during the year 2012 for the purpose of partially financing the additional cost of

ongoing expansions and BMR projects. It is repayable within the period of seven years inclusive of two years

grace period in 10 semi annual equal installments of principal amount. It carries mark up at the rate of 6

months KIBOR + 2.25% per annum. During the year mark up was charged at the rates ranging from 11.60%

per annum to 14.24% per annum (2012: from 14.42% per annum to 16.30% per annum). This finance is

secured against security as stated in note 18.10

During the year 2012, a term finance /ltff amounting to Rs.350 million was obtained from Faysal Bank

Limited for retirement of letters of credits opened for imported plant and machinery. Sanctioned limit of this

finance was Rs.350 million. It is repayable within the period of seven years inclusive of two years grace

period in 10 semi annual equal installments of principal amount. It carries mark up at the rate of 6 months

KIBOR + 2.25% per annum. During the year mark up was charged at the rates ranging from 12.01% per

annum to 14.50% per annum (2012: from 14.48% per annum to 15.46% per annum). This finance is secured

against the security as stated in note 18.10.

During the year 2012, an amount of Rs.112.4 million out of term finance of Rs.350 million of Faysal Bank

Limited were approved and refinanced by the State Bank of Pakistan under ltff scheme against imported

textile machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal

amount after grace period of two years. This finance carries mark up at the rate of SBP rate + 3.00 % per

annum. During the year mark up was charged at the rate of 12.70% per annum (2012: 12.70% per annum). It

is secured against the security as stated in note 18.10.

During the current year, a term finance of Rs.200 million has been obtained from Faysal Bank Limited to

finance the retirement of letter of credit opened for import of textile machinery. Limit of this term finance

was Rs.200 million. It is repayable within the period of seven years inclusive of two years grace period in ten

half yearly equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 2.00%

per annum. During the year mark up was charged at the rates ranging from 11.35% per annum to 11.50% per

annum. It is secured against the security as stated in note 18.10.

During the current year, a term finance of Rs.350 million has been obtained from Soneri Bank Limited for

BMR projects. Limit of this term finance was Rs.350 million. It is repayable within the period of seven years

inclusive of two years grace period in ten half yearly equal installments of principal amount. It carries mark

up at the rate of 6 months KIBOR + 1.75% per annum. During the year mark up was charged at the rates

ranging from 11.11% per annum to 12.28% per annum. It is secured against the security as stated in note

18.6.

18.14 (a) Habib Bank Limited - DF

18.14 (b) Habib Bank Limited - DF under LTF- EOP scheme

18.15 National Bank of Pakistan - DF- IV

18.16 (a) National Bank of Pakistan - DF III

18.16 (b) National Bank of Pakistan - DF III under LTFF scheme

This finance has been disbursed for the purpose of retirement of letters of credit and swap of other expensive

term finances. This finance is repayable with in seven years inclusive of one year grace period in 12 half

yearly equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + spreads of

1.00% per annum for first year, 1.25% per annum for second year and 1.50% per annum from third year to

onward. During the year mark up was charged at the rates ranging from 10.99% per annum to 13.52% per

annum (2012: from 13.42% per annum to 15.08% per annum). It is secured against 1st Joint Pari Passu

charge/mortgage of Rs.694 million on all present and future fixed assets of the Group and personal

guarantees of the sponsoring Directors of the Group. During the year 2009 an amount of Rs.0.92 million and

year 2008 an amount of Rs.33.6 million out of this finance were refinanced by the State Bank of Pakistan

under LTF-EOP scheme and accordingly transferred to DF under LTF-EOP of Habib Bank Limited as stated

in note 18.14(b).

During the year 2009 an amounts of Rs.0.92 million and year 2008 an amount of Rs. 33.68 million out of

demand finance of Habib Bank Limited were approved and refinanced by the State Bank of Pakistan under

LTF-EOP scheme against the imported textile machinery. This finance is repayable in 12 equal half yearly

installments of principle amount. However, during the year 2009, SBP has allowed grace period of one year

starting from 01 January 2009 to 31 December 2009 and accordingly last installment is due on 19 November

2015. This finance carries mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was

charged at the rate of 7% per annum (2012: 7.00% per annum). This finance is secured against the security as

stated in note 18.14(a).

This finance has been obtained during the year 2010 for the purpose of re-profiling of balance sheet to ease

out cash flow burdens owing to repayments of long term loans. It is repayable within a period of six years

including one year grace period in 10 half yearly equal installments of principal amount. Last installment is

falling due on 16 March 2016. This finance carries markup at the rate of 6 months KIBOR + 2.00% per

annum. During the year markup was charged at the rates ranging from 11.38% per annum to 14.06% per

annum (2012: from 13.97% per annum to 15.78% per annum). It is secured against 1st Joint Pari Passu

charge/mortgage of Rs.1,400 million on all present and future fixed assets of the Group and personal

guarantees of the sponsoring Directors of the Group.

During the year 2012, a demand finance amounting to Rs.147.7 million was obtained from National Bank of

Pakistan for retirement of 720 days letters of credits opened for imported plant and machinery. Sanctioned

limit of this finance was Rs.147.7 million. It is repayable within the period of five years without grace in 10

semi annual equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR +

2.00% per annum. During the year mark up was charged at the rates ranging from 11.38% per annum to

14.06% per annum (2012: from 13.93% per annum to 14.02% per annum). This finance is secured against

the security as stated in note 18.15.

During year 2012, an amount of Rs.45.8 million out of demand finance III of National Bank of Pakistan were

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount.

This finance carries mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was

charged at the rate of 12.60% per annum (2012: 12.60% per annum). It is secured against the security as

stated in note 18.15.

18.17 (a) National Bank of Pakistan - DF VI

18.17 (b) National Bank of Pakistan - DF VI under LTFF scheme

18.18 United Bank Limited - DF-I B

18.19 United Bank Limited- DF-I C

18.20 (a) United Bank Limited - DF- II

This finance has been obtained for retirement of import documents of plant and machinery . It is repayable in

10 bi-annual installments of principal amount commencing from 31 March 2009 after grace period of 2

years. Originally it carried markup at the rate of 6 months KIBOR Ask Rate + 2.00% per annum. During the

year 2008, pricing was reduced to 3 months KIBOR Ask rate + 1.00% per annum. However, during the year

2009, spread was revised to1.50 % per annum. During the year markup was charged at the rates ranging from

10.81% per annum to 13.49% per annum (2012: from 13.41% per annum to 15.04% per annum). It is

secured against 1st Joint Pari Passu charge/mortgage of Rs.911.5 million on all present and future fixed

assets of the Group and personal guarantees of the sponsoring Directors of the Group.

This finance has been obtained for the purpose of incurring capital expenditures. It is repayable in 10 bi-

annual installments of principal amount commencing from 30 September 2009 after grace period of 2 years.

Originally it carried markup at the rate of 6 months KIBOR Ask Rate + 2.25% per annum. During the year

2008, pricing was reduced to 3 months KIBOR Ask rate + 1.50% per annum. During the year markup was

charged at the rates ranging from 10.81% per annum to 13.49% per annum (2012: from 13.41% per annum

to 15.04% per annum). It is secured against the security as stated in note 18.18.

This finance has been obtained for retirement of import documents of plant and machinery. It is repayable in

12 equal semi-annual installments of principal amount with no grace period. Originally it carried markup at

the rate of 6 months KIBOR Ask Rate + 2.00% per annum. During the year 2008, pricing was reduced to 3

months KIBOR Ask rate + 1.00% per annum. However, during the year 2009, spread was revised to 1.50%

per annum. During the year markup was charged at the rates ranging from 10.81% per annum to 13.49% per

annum (2012: from 13.41% per annum to 15.04% per annum). It is secured against the security as stated in

note 18.18. During the year 2008, an amount of Rs.30.2 million out of this finance was refinanced by the

State Bank of Pakistan under LTF-EOP scheme and accordingly transferred to Demand Finance under LTF-

EOP of United Bank Limited as stated in note 18.20(b).

During current year, an amount of Rs.62.8 million out of demand finance VI of National Bank of Pakistan

were approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount.

This finance carries mark up at the rate of SBP rate + 3.00 % pa. During the year mark up was charged at the

rate of 11.20% per annum. It is secured against the security as stated in note 18.15.

This finance amounting to Rs.270 million has been obtained from National Bank of Pakistan for retirement

of letters of credits opened for imported plant and machinery. Sanctioned limit of this finance was Rs.270

million. It is repayable within the period of six years inclusive of one year grace period in 10 semi annual

equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 2.00% per

annum. During the year mark up was charged at the rates ranging from 11.88% per annum to 14.56% per

annum (2012: 14.50% per annum). This finance is secured against the security as stated in note 18.15.

18.20 (b) United Bank Limited - DF under LTF-EOP scheme

18.21 United Bank Limited - DF-III under LTF-EOP scheme

18.22 United Bank Limited - DF-IV under LTF-EOP scheme

18.23 MCB Bank Limited - DF under LTF-EOP scheme

18.24 MCB Bank Limited - Demand Finance under LTFF scheme

During the year 2008, an amount of Rs.30.2 million out of demand finance II of United Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme against the imported textile

machinery eligible under the scheme. It is repayable in 12 equal semi annual installments of principal

amount. However, during the year 2009, SBP has allowed grace period of one year starting from 01 January

2009 to 31 December 2009 and accordingly last installment is due on 31 July 2014. This finance carries

mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate of

7.00% per annum (2012: 7.00% per annum). This finance is secured against the security as stated in note

18.18.

During the year 2007, an amount of Rs.23.1 million out of demand finance I B of United Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme against the imported textile

machinery eligible under the scheme. It is repayable in 10 equal semi annual installments of principal

amount. However, during the year 2009, SBP has allowed one year grace period starting from 01 January

2009 to 31 December 2009 and accordingly last installment is due on 20 July 2013. This finance carries

mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate of

7.00% per annum (2012: 7.00% per annum). This finance is secured against the security as stated in note

18.18.

This finance was obtained under LTF-EOP scheme of SBP for swap of an amount of Rs.50 million out of

outstanding Diminishing Muskarika Finance of Meezan Bank Limited. This finance was approved and

refinanced by the State Bank of Pakistan under LTF-EOP scheme against the eligible textile machinery

imported through Meezan Bank Limited. It is repayable in 24 equal quarterly installments of principal

amount . However, during the year 2009, SBP has allowed grace period of one year starting from 01 January

2009 to 31 December 2009 and accordingly last installment is due on 10 October 2013. This finance carries

mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate of

7.00% per annum (2012: 7.00% per annum). It is secured against the security as stated in note 18.18.

During the year 2007, an amount of Rs.26.9 million out of demand finance of MCB Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTF-EOP scheme against the imported textile

machinery eligible under the scheme. It was repayable in 11 equal semi annual installments of principal

amount. However, during the year 2009, SBP has allowed grace period of one year starting from 01 January

2009 to 31 December 2009 and accordingly last installment is due on 19 February 2013. This finance was

fully repaid during the current year. This finance carried mark up at the rate of SBP rate + 2.00% per annum.

During the year mark up was charged at the rate of 7.00% per annum (2012: 7.00% per annum). This finance

is secured against 1st Joint Pari Passu charge/mortgage of Rs.949 million on all present and future fixed

assets of the Group and personal guarantees of the sponsoring Directors of the Group.

During the current year a demand finance /LTFF amounting to Rs.349.9 million has been obtained from

MCB Bank Limited for retirement of letters of credits opened for imported plant and machinery. Sanctioned

limit of this finance was Rs.350 million. It is repayable within the period of seven years inclusive of one year

grace period in 12 semi annual equal installments of principal amount. Entire amount was refinanced by the

State Bank of Pakistan under LTFF scheme as entire imported machinery was qualified under LTFF scheme.

It carries mark up at the rate of SBP rate + 3% per annum. During the year mark up was charged at the rate of

12.70% per annum (2012: 12.70 per annum). This finance is secured against the security as stated in note

18.23.

18.25 (a) Allied Bank Limited - DF

18.25 (b) Allied Bank Limited - DF under LTF-EOP scheme

18.25 (c) Allied Bank Limited - DF under LTFF scheme

18.26 (a) Allied Bank Limited - TL-2

18.26 (b) Allied Bank Limited - TL-2 under LTFF scheme

During year 2012 an amount of Rs.79.4 million and during 2010 an amount of Rs.24.8 million out of Term

Loan-2 of Allied Bank Limited were approved and refinanced by the State Bank of Pakistan under LTFF

scheme against imported textile machinery eligible under the scheme. This finance is repayable in 10 equal

installments of principal amount. Last installment is falling due on 13 December 2017. This finance carries

mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was charged at the rates

ranging from 10.25% per annum to 11.20% per annum (2012: from 10.25% per annum to 11.20% per

annum). It is secured against the security as stated in note 18.25(a).

This finance was obtained during the year 2012 and year 2010 for the purpose of retirement of letters of

credit opened for import of textile machinery. It is repayable within a period of seven years including two

years grace period in 10 half yearly equal installments of principal amount. Last installment is falling due on

13 December 2017. This finance carries markup at the rate of 6 months KIBOR + 2.15% per annum. During

the year markup was charged at the rates ranging from 11.53% per annum to 14.21% per annum (2012: from

14.17% per annum to 15.93% per annum). It is secured against the security as stated in note 18.25(a).

This finance has been obtained for retirement of letters of credit opened for import of plant and machinery. It

is repayable with in a period of seven years including one year grace period in 12 equal bi-annual

installments of principal amount. Last installment is falling due on 04 July 2014. Originally it carried markup

at the rate of 6 months KIBOR + 2.50% per annum. During the year 2008, pricing was reduced to 6 months

KIBOR + 1.50% per annum. During the year markup was charged at the rates ranging from 10.88% per

annum to 13.56% per annum (2012: from 13.52% per annum to 15.28% per annum). It is secured against 1st

Joint Pari Passu charge/mortgage of Rs.2,640 million on all present and future fixed assets of the Group and

personal guarantees of the sponsoring Directors of the Group. During the year 2009 an amount of Rs. 1.2

million and year 2008 an amount of Rs.28.1 million out of this finance were refinanced by the State Bank of

Pakistan under LTF-EOP scheme and accordingly transferred to demand finance under LTF-EOP of Allied

Bank Limited as stated in note 18.25(b).

During the year 2009 an amount of Rs.1.2 million and year 2008 an amount of Rs.28.1 million out of

demand finance of Allied Bank Limited were approved and refinanced by the State Bank of Pakistan under

LTF-EOP scheme against the imported textile machinery eligible under the scheme. It is repayable in 12

equal semi annual installments of principle amount commencing from 13 November 2009 after a grace

period of one year. However, during the year 2009, SBP has allowed one year grace period starting from 01

January 2009 to 31 December 2009 and accordingly last installment is due on 16 May 2016. This finance

carries mark up at the rate of SBP rate + 2.00% per annum. During the year mark up was charged at the rate

of 7.00% per annum (2012: 7.00% per annum). This finance is secured against the security as stated in note

18.25(a).

During the year 2010, an amount of Rs.2.2 million out of demand finance of Allied Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in remaining 10 equal installments of

principal amount. Last installment is falling due on 04 July 2014. This finance carries mark up at the rate of

SBP rate + 2.50 % per annum. During the year mark up was charged at the rate of 9.00% per annum (2012:

9.00% per annum). It is secured against the security as stated in note 18.25(a).

18.27 (a) Allied Bank Limited - TL-3

18.27 (b) Allied Bank Limited - TL-3 under LTFF scheme

18.28 (a) Allied Bank Limited - Term Loan 4

18.28 (b) Allied Bank Limited - Term Loan 4 under LTFF scheme

18.29 Allied Bank Limited - Term Loan 5

18.30 Pak Kuwait Investment Group (Private) Limited - TF

This finance amounting to Rs.248.7 million has been obtained during the year 2011 for the purpose of

retirement of letters of credit opened for import of textile machinery. It is repayable within a period of seven

years inclusive of grace period of two years in 10 half yearly equal installments of principal amount. Last

installment is falling due on 23 November 2017. This finance carries markup at the rate of 6 months KIBOR

+ 2.15% per annum. During the year markup was charged at the rates ranging from 11.53% per annum to

14.21% per annum (2012: from 14.17% per annum to 15.93% per annum). It is secured against the security

as stated in note 18.25(a).

During the year 2011 an amount of Rs.8.99 million out of Term Loan-3 of Allied Bank Limited were

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount

after grace period of two years. Last installment is falling due on 23 November 2017. This finance carries

mark up at the rate of SBP rate + 3.00% per annum. During the year mark up was charged at the rate of

11.20% per annum (2012: 11.20% per annum). It is secured against the security as stated in note 18.25(a).

During the year 2012, a term finance amounting to Rs.626 million has been obtained from Allied Bank

Limited for retirement of letters of credits opened for imported plant and machinery. Sanctioned limit of this

finance was Rs.626 million. It is repayable within the period of seven years inclusive of two years grace

period in 10 semi annual equal installments of principal amount. It carries mark up at the rate of 6 months

KIBOR + 2.50% per annum .During the year mark up was charged at the rates ranging from 11.88% per

annum to 14.56% per annum (2012: from 14.52% per annum to 16.30% per annum). This finance is secured

against the security as stated in note 18.25(a).

During the year 2012, an amount of Rs.4.24 million out of term finance 4 of Allied Bank Limited was

approved and refinanced by the State Bank of Pakistan under LTFF scheme against imported textile

machinery eligible under the scheme. This finance is repayable in 10 equal installments of principal amount.

This finance carries mark up at the rate of SBP rate + 3.00 % per annum. During the year mark up was

charged at the rate of 12.70% per annum (2012: 12.70 % per annum). It is secured against the security as

stated in note 18.25(a).

During the current year, a term finance of Rs.218.4 million has been obtained from Allied Bank Limited to

finance the retirement of Letter of Credit opened for import of textile machinery. Limit of this term finance

was Rs.230 million. It is repayable within the period of eight years, from the date of disbursement of 50% of

this facility, inclusive of two years grace period in twelve half yearly equal installments of principal amount.

It carries mark up at the rate of 6 months KIBOR + 1.75% per annum. During the year mark up was charged

at the rate of 11.10% per annum. It is secured against the security as stated in note 18.25(a).

This finance amounting to Rs.300 million has been obtained during the year 2011 from Pak Kuwait

Investment Group (Private) Limited to finance the capital expenditures of the Group's capacity expansion. It

is repayable within a period of six years inclusive of grace period of one year in 10 half yearly equal

installments of principal amount. Last installment is falling due on 28 October 2016. This finance carries

markup at the rate of 6 months KIBOR + 2.45% per annum. During the last year mark up pricing was

reduced to 6 months KIBOR + 2.25% per annum. During the year markup was charged at the rates ranging

from 11.85% per annum to 14.27% per annum (2012: from 14.27% per annum to 16.14% per annum). It is

secured against the security of 1st Joint Pari Passu charge/mortgage of Rs.400 million on all present and

future fixed assets of the Group and personal guarantees of the sponsoring Directors of the Group.

18.31 (a) Saudi Pak Industrial and Agricultural Investment Group Limited- TF

18.31 (b) Saudi Pak Industrial and Agricultural Investment Group Limited-TF under LTFF scheme

18.32 Pak Brunei Investment Group Limited - Term Finance under LTFF scheme

18.33 Pak Brunei Investment Group Limited - Term Finance

18.34 Pak Oman Investment Group Limited - Term Finance under LTFF scheme

During the year 2012, a term finance / LTFF amounting to Rs.100 million has been obtained from Pak Oman

Investment Group Limited for retirement of letters of credits opened for imported plant and machinery. It is

repayable within the period of seven years inclusive of two years grace period in 20 quarterly equal

installments of principal amount. Entire amount was refinanced by the State Bank of Pakistan under LTFF

scheme as entire imported machinery was qualified under LTFF scheme. It carries mark up at the rate of SBP

rate + 3% per annum. During the year mark up was charged at the rate of 12.70% per annum (2012: 12.70%

per annum). This finance is secured against 1st Joint Pari Passu Charge/mortgage of Rs.134 million on all

present and future fixed assets of the Group and personal guarantees of the sponsoring Directors.

This finance has been obtained from Saudi Pak Industrial and Agricultural Investment Group Limited for the

purpose of retirement of letters of credit opened for import of plant and machinery. Sanctioned amount of

this facility is Rs.250 million. It is repayable within a period of eight years inclusive of grace period of two

years in 12 half yearly equal installments of principal amount. Last installment is falling due on November

03, 2018. This finance carries markup at the rate of 6 months KIBOR + 2.75% per annum. During the year

markup was charged at the rates ranging from 11.20% per annum to 14.76% per annum (2012: from 14.65%

per annum to 16.42% per annum). It is secured against the security of 1st Joint Pari Passu charge/mortgage

of Rs.575 million on all present and future fixed assets of the Group and personal guarantees of the

sponsoring Directors of the Group.

During the year 2012, an amount of Rs.133.1 million and year 2010 an amount of Rs. 8 million out of Term

Finance of Saudi Pak Industrial and Agricultural Investment Group Limited was approved and refinanced by

the State Bank of Pakistan under LTFF scheme against imported textile machinery eligible under the scheme.

This finance is repayable in 12 equal installments of principal amount after grace period of two years. Last

installment is falling due on November 03, 2018. This finance carries mark up at the rate of SBP rate + 3.00

% per annum. During the year mark up was charged at the rates ranging from 11.20% per annum to 12.70%

per annum (2012: from 11.20 % per annum to 12.70% per annum). It is secured against the security as sated

in note 18.31(a).

During the year 2012, a term finance / LTFF amounting to Rs.199.9 million has been obtained from Pak

Brunei Investment Group Limited for retirement of letters of credits opened for imported plant and

machinery. Sanctioned limit of this finance is Rs.200 million. It is repayable within the period of eight years

inclusive of two years grace period in 12 semi annual equal installments of principal amount. Entire amount

was refinanced by the State Bank of Pakistan under LTFF scheme as entire imported machinery was

qualified under LTFF scheme. It carries mark up at the rate of SBP rate + 3% per annum. During the year

mark was charged at the rate of 12.70% per annum (2012: 12.70% per annum). This finance is secured

against 1st Joint Pari Passu Charge/mortgage of Rs 534 million on all present and future fixed assets of the

Group and personal guarantees of the sponsoring Directors.

During the current year, a term finance amounting to Rs.200 million has been obtained from Pak Brunei

Investment Group Limited to enable the Group to re-profile its balance sheet. It is repayable within the

period of five years inclusive of one year grace period in eight half yearly equal installments of principal

amount. It carries mark up at the rate of 6 months KIBOR + 2.00% per annum. During the year mark up was

charged at the rates ranging from 11.55% to 12.43% per annum. It is secured against the security as as stated

in 18.32.

18.35 Bank Al Falah - Term Finance

18.36

18.37 United Bank Limited - Non Interest Demand Finance

18.38 Allied Bank Limited - Term Finance

18.39 MCB Bank Limited - Term Finance

2013 2012

Note

19 Long term musharika

- Secured

Fazal Cloth Mills Limited - Holding Company

Meezan Bank Limited

- Diminishing musharika -I 19.1 - 23,755,451

- Diminishing musharika -II 19.2 225,000,000 250,000,000

- Diminishing musharika -III 19.3 150,000,000 -

375,000,000 273,755,451

Fazal Weaving Mills Limited -

Subsidiary Company 19.4 - -

Less: Current portion grouped under current liabilities 50,000,000 48,755,451

325,000,000 225,000,000

During the current year, a term finance amounting to Rs. 325 Million has been obtained from Bank Alfalah

Limited to pay-off earlier obtained expensive debt / current portion of long term debt and to even out cash

flows during payment tenor of long term loans presently appearing. Limit of this term finance was Rs.325

million. It is repayable within the period of seven years inclusive of two years grace period in 10 half yearly

equal installments of principal amount. It carries mark up at the rate of 6 months KIBOR + 1.75% per

annum. During the year mark up was charged at the rates ranging from 11.11% to 11.51% per annum. This

finance is secured against 1st Joint Pari Passu Charge/mortgage of Rs.434 million on all present and future

fixed assets of the Group and personal guarantees of the sponsoring Directors.

-------------(Rupees)-------------

None of the loans were disbursed as at 30 June 2013. The detail of outstanding facilities is given in note

18.37, 18.38 & 18.39.

The amount of Rs. 400 million has been approved to finance the textile machinery/parts/generators and for

retirement of letter of credits opened with the bank for expansion/BMR at mill. The term of finance is 7 years

including one year of grace period and is repayable in 12 equal half yearly installments. First installment will

be due after grace period of 6 months i.e. 1 year from the date of first drawdown. It carries mark up at the

rate of 6 months KIBOR+1% p.a. It will be secured against 1st Joint Pari Passu Charge of Rs.534 million

over the fixed assets of the Group, personal guarantees of sponsoring Directors and corporate guarantee of

Fazal Cloth Mills Limited.

This amount of Rs. 700 million has been approved for establishing spinning unit of the Group and retiring

letter of credits opened with the bank for import of plant and machinery. The term of finance is 8 years

including two years grace period and is repayable in 12 equal half yearly installments. It carries mark up at

the rate of 6 month KIBOR + 1.05% p.a. It will be secured against 1st Joint Parri Passu charge over fixed

assets of the Group for Rs.934 million, personal guarantees of sponsoring Directors and corporate guarantee

of Fazal Cloth Mills Limited.

The amount of Rs. 550 million has been approved to partially participate in setting up of new spinning unit

along with back process and allied machinery imported through the bank. The term of the finance is 8 years

including two years grace period and is repayable in 12 equal half yearly installments. It will carry mark up at

the rate of 6 months KIBOR+1.25% p.a. It will be secured against 1st Joint Pari Passu Charge of Rs. 734

million created by way of hypothecation charge over all present and future fixed assets, personal guarantees

of sponsoring Directors, corporate guarantee of Fazal Cloth Mills Limited.

19.1 Meezan Bank Limited-Diminishing Musharika- I

19.2 Meezan Bank Limited-Diminishing Musharika- II

19.3 Meezan Bank Limited-Diminishing Musharika- III

19.4 Meezan Bank Limited-Diminishing Musharika

The loan was not disbursed as at 30 June 2013. The detail of outstanding facility is as follows:

Diminishing Musharika amounting to Rs. 300 million has been approved to purchase imported textile

spinning machinery. The term of finance is 8 years including two year grace period and is repayable in equal

12 half yearly installments. It will carry markup at the rate of 6 months KIBOR+ 1.25% p.a. with floor and

cap of 10% and 20% respectively. It will be secured against 1st Joint Parri Passu charge of Rs. 400 million

over fixed assets of the Group, personal guarantees of sponsoring Directors and corporate guarantee of Fazal

Cloth Mills Limited.

Diminishing Musharika-I finance was obtained from Meezan Bank Limited for repayment of cost of

imported plant and machinery. This finance has been fully repaid during the current year. It carried mark up

for first 5 years (4 years plus 1 year grace period) at the rate of 6 months KIBOR + 1.25% per annum and for

the remaining period of three years at the rate of 6 months KIBOR + 1.50% per annum. During the year, the

bank has charged mark up at the rate of 13.50% per annum (2012: from 13.46% per annum to 15.25% per

annum). It was repayable in twenty eight equal quarterly installments from the date of disbursement after one

year grace period, however, during the year 2007, due to prepayment, a grace of seven quarterly installments

was allowed by the bank and accordingly remaining balance of Rs.201.9 million was repayable in 17 equal

quarterly installments over the original tenor. This finance was secured against exclusive charge of Rs.270

million over machinery imported through Meezan Bank Limited and personal guarantees of the sponsoring

Directors of the Group.

Diminishing Musharika-II finance amounting to Rs.250 million has been obtained during the year 2011 from

Meezan Bank Limited for repayment of cost of imported plant and machinery. It carries mark up at the rate

of 6 months KIBOR + 2.00% per annum. During the year, bank has charged mark up at the rates ranging

from 11.51% per annum to 14.01% per annum (2012: from 13.93% per annum to 14.01% per annum). It is

repayable within seven years inclusive of two years grace period in ten equal half yearly installments of

principal amount . This finance is secured against exclusive charge of Rs.334 million over machinery

imported through Meezan Bank Limited and personal guarantees of the sponsoring Directors of the Group.

During the current year, a Diminishing Musharika finance of Rs.150 million has been obtained from Meezan

Bank Limited to finance the retirement of LCs opened for import of textile machinery. It is repayable within

the period of seven years inclusive of two years grace period in ten half yearly equal installments of principal

amount. It carries mark up at the rate of 6 months KIBOR + 1.75% per annum. During the year mark up was

charged at the rate of 11.08% per annum. This finance is secured against exclusive charge of Rs.200 million

over machinery imported through Meezan Bank Limited and personal guarantees of the sponsoring Directors

of the Group.

2013 2012

Note

20 Deferred liabilities

Staff gratuity 20.1 99,907,603 85,596,865

Deferred taxation 20.2 1,687,387,849 1,488,732,651

1,787,295,452 1,574,329,516

20.1 Staff gratuity

2013 2012

The amounts recognized in the balance sheet are as follows: -------------(Rupees)-------------

Present value of defined benefit obligation 130,453,221 84,624,574

Unrecognized actuarial (loss)/gain (30,545,618) 972,291

Net liability at end of the year 99,907,603 85,596,865

Net liability at beginning of the year 85,596,865 71,445,903

Charge for the year 39,740,889 37,521,467

Benefits paid during the year (25,430,151) (23,370,505)

Net liability at end of the year 99,907,603 85,596,865

Movement in the present value of defined benefit obligation is as follows:

Present value of defined benefit obligation at beginning of the year 84,624,574 74,080,961

Current service cost 28,739,694 27,150,132

Interest cost 11,001,195 10,371,335

Benefits paid (25,430,151) (23,370,505)

Actuarial loss/(gain) 31,517,909 (3,607,349)

Present value of defined benefit obligation at end of the year 130,453,221 84,624,574

Actuarial assumptions:

The following are the principal actuarial assumptions at 30 June 2013:

2013 2012

Discount rate 10.5% 13.0%

Expected rate of growth per annum in future salaries 9.5% 12.0%

Average expected remaining working life time of employees 10 years 10 years

Expected mortality rate EFU (61-66) EFU (61-66)

Historical Information:

2013 2012 2011 2010 2009

Present value of defined benefit

obligation 130,453,221 84,624,574 74,080,961 60,093,491 48,846,341

Unrecognized actuarial gain/(loss) (30,545,618) 972,291 (2,635,058) (4,036,688) (364,743)

20.1.1

2013 2012

20.2 Deferred taxation -------------(Rupees)-------------

This comprises of the following:

Deferred tax liability on taxable temporary differences:

Surplus on revaluation of operating assets 647,381,578 697,913,703

Tax on specie dividend 62,994,031 57,835,909

Tax depreciation allowance 997,699,124 750,636,015

Deferred tax asset on deductible temporary differences:

Provision for gratuity (20,326,704) (17,295,275)

Provision for slow moving items (360,180) (357,701)

1,687,387,849 1,488,732,651

Comparison of present value of defined benefit obligation and unrecognized actuarial gain/(loss) for five years is as follows:

---------------------------------------------------(Rupees)---------------------------------------------------

The Group's policy with regard to actuarial gains/losses is to follow the “minimum 10% corridor” recommended approach under IAS 19

(Employee Benefits).

-------------(Rupees)-------------

The latest actuarial valuation of the Group's defined benefit plan, were conducted at 30 June 2013 using projected unit credit method. Detail of

obligation for defined benefit plan is as follows:

2013 2012

Restated

Note -----------------(Rupees)-----------------

21 Trade and other payables

Trade creditors 143,724,946 98,234,492

Accrued liabilities 848,149,154 388,615,978

Advance from customers 48,723,124 43,014,242

Un-claimed dividend 19,050,466 754,726

Preference dividend payable 25,410,385 28,490,000

Payable against redemption of preference shares 15.2.1 175,000,000 -

Due to associated undertakings 21.1 59,630,329 16,276,339

Bills payable 838,319 14,624,126

Tax deducted at source 69,727 -

Custom duties (infrastructure cess) 25.2 114,899,587 84,912,156

Workers' profit participation fund 21.2 82,023,554 68,811,735

Workers' welfare fund 84,589,457 54,650,330

Due to employees 1,075,735 808,189

Others 175,000 -

1,603,359,783 799,192,313

21.1 Due to associated undertaking

Hussain Ginneries Limited 7,235,335 6,701,412

Reliance Weaving Mills Limited 525,903 1,381,441

Fatima Sugar Mills Limited 4,835 4,008

Ahmed Fine Textile Mills Limited 51,823,755 8,148,977

Pak Arab Fertilizer Limited 40,501 40,501

59,630,329 16,276,339

21.2 Workers' profit participation fund

Opening balance 68,811,735 56,534,593

Add:

Interest on amount utilized by the Holding Company 4,694,280 3,880,039

Contribution for the year 78,787,179 68,811,735

152,293,194 129,226,367

Less: Payment made during the year (70,269,640) (60,414,632)

82,023,554 68,811,735

22 Accrued profit / interest / mark-up

Profit/interest/mark-up accrued on:

Long term financing 179,400,797 168,548,673

Short term borrowings 64,251,357 84,422,578

243,652,154 252,971,251

2013 2012

Note -----------------(Rupees)-----------------

23 Short term borrowings

Banking Companies

Secured

Cash finance 1,630,804,137 464,636,223

Running finance 229,905,957 1,151,680,262

Finance against foreign bills / packing credit 84,116,787 32,023,908

Foreign currency export finance 609,085,065 1,176,501,590

Finance against imported merchandise 897,368,687 873,348,492

Money market loan 885,900,000 100,000,000

4,337,180,633 3,798,190,475

23.1

2013 2012

Note -----------------(Rupees)-----------------

24 Current portion of non-current liabilities

Long term financing 18 837,688,363 600,073,758

Long term musharika 19 50,000,000 48,755,451

887,688,363 648,829,209

25 Contingencies and commitments

25.1 The following proceedings have been initiated by the tax authorities:

25.1.1

25.1.2

These facilities are obtained from various commercial banks under mark-up arrangements are

aggregating to Rs. 10.5 billion (2012: Rs.7.9 billion) for working capital requirements. During the year,

mark-up was charged by banks at various rates ranging from 10.07% per annum to 13.51% per annum

on monthly / quarterly basis (2012: from 12.92% per annum to 15.29% per annum on monthly /

quarterly basis). The aggregate facilities are secured against pledge / hypothecation of stocks-in-trade,

stores and spares, charge on current assets and personal guarantees of the sponsoring directors except

nominee director. Facilities which remained unutilized at year end were Rs.8.68 billion (2012: Rs.6.23

billion).

Amendment proceedings initiated by the Additional Commissioner Inland Revenue, under section

122(5A) of the Income Tax Ordinance, 2001 for the tax year 2009 and an income tax demand of

Rs.140.6 million has been raised against the Holding Company through order dated 23 October 2012.

The Holding Company has preferred appeal before the commissioner inland revenue (appeal) which has

been heard and decision is awaited.

Holding Company's appeals against the amendment orders passed under section 122(5A) & 122(5) of

the Income tax Ordinance, 2001 in respect of tax years 2004 & 2006 respectively, have been disposed of

by the Commissioner Inland Revenue [CIR(A)] through its separate orders dated 30 July 2011 and a

substantial relief has been extended to the Holding Company. In respect of the issues which were not

favourably decided by the CIR(A), Holding Company has preferred appeals before Appellate Tribunal

Inland Revenue (Tribunal), which have not yet been taken up for hearing.

25.1.3

25.1.4

25.1.5

25.1.6

25.2

25.3 Commitments

2013 2012

-----------------(Rupees)-----------------

25.3.1

329,040,715 260,345,000

25.3.2 Commitments against irrevocable letters of credit:

- capital expenditure 2,033,152,850 32,899,567

- raw material and stores and spares 266,457,826 239,843,281

2,628,651,391 533,087,848

Guarantees issued by various commercial banks,

in respect of financial and operational

obligations of the Group, to various institutions

and corporate bodies.

The infrastructure cess levied by the Excise and Taxation Department of Sindh under section 9 of Sindh

Finance Act 1994 on items imported by the Holding Company. The Holding Company has filed an

appeal in the Sindh High Court at Karachi against the said levy. The appeal is pending for decision till

the balance sheet date. However keeping in view any unfavorable outcome of the appeal, the Holding

Company has provided the balance payable amount in these financial statements.

Through show cause notice dated 14 November 2012, proceedings under section 182 of the Ordinance

were initiated against the Holding Company for imposition of penalty, of Rs 7 million approximately,

for non-payment of tax demand raised through amendment order dated 23 October 2012. Holding

Company's position in the matter was duly communicated to the concerned officials on 22 November

2012. Since, the department has not proceeded any further in the matter, thus related exposure, if any,

cannot be assessed at this stage.

Consequent to the amendment of deemed assessment for tax year 2007 through order passed under

section 122(5) of the Ordinance by the Assistant Commissioner Inland Revenue (Audit), the Holding

Company contested such order in appeal before the Commissioner Inland Revenue (Appeals) [CIR (A)]

which remained successful on various accounts. The Holding Company has preferred further appeal

before the Tribunal to assail the issues not decided favourably by CIR(A) and as such cross appeals in

respect of tax year 2007 are pending hearing before Tribunal.

The issue of admissibility of 'return to preference shareholders' was disputed in the amendment

proceedings for tax years 2007 and 2009 on the grounds that such payments were not classified as 'profit

on debt' as claimed by the Holding Company. In this respect, the Holding Company's appeal are pending

at judication, considering the matter as un-precedeted in nature, ultimate outcome thereof cannot be

predicted with certainty at this stage.

Based on the discrepancies identified through computerized risk evaluation of Sales Tax (CREST),

proceeding regarding alleged non-compliance with provision of notification SROs 283(I)/2011 &

1125(I)/2011 respectively dated 01 April 2011 and 31 December 2011 were initiated against the

Holding Company through notice dated 11 July 2013. While detailed submission have been filed,

departmental action thereon has not been finalized.

2013 2012

Note -----------------(Rupees)-----------------

26 Sales - net

Local:

Yarn 10,055,464,974 10,387,385,847

Comber noil 10,181,583 6,528,822

Fabric 1,953,749,307 837,723,542

Waste 98,465,429 103,534,693

12,117,861,293 11,335,172,904

Raw material 150,428,262 247,958,733

Conversion 21,077,770 -

12,289,367,325 11,583,131,637

Less:

Sales return 86,047,449 80,842,063

Sales tax 142,597,775 -

Commission 45,031,840 31,914,300

273,677,064 112,756,363

Net local sales 12,015,690,261 11,470,375,274

Export:

Yarn - Net 6,976,150,960 7,387,755,107

Fabric 1,347,825,769 678,572,155

Comber noil 336,303,086 370,030,336

Waste 11,482,235 3,398,000

8,671,762,050 8,439,755,598

Raw material - 4,392,203

8,671,762,050 8,444,147,801

Less:

Commission 118,815,503 164,078,568

Sales return 10,048,922 -

128,864,425 164,078,568

Net export sales 8,542,897,625 8,280,069,233

20,558,587,886 19,750,444,507

27 Cost of sales

Raw material consumed 27.1 12,775,004,147 12,434,336,584

Packing material consumed 226,664,478 237,273,205

Salaries, wages and benefits 27.2 1,222,434,206 806,614,571

Traveling and conveyance 5,706,777 3,553,460

Power and fuel 1,683,664,332 1,240,981,176

Stores and spares consumed 370,822,514 324,204,139

Processing charges 15,090,476 17,294,436

Repair and maintenance 30,454,607 33,336,244

Insurance 49,266,204 37,528,856

Depreciation 4.3 514,808,069 398,488,284

Rates and taxes 11,186,041 4,825,315

Others 1,041,510 715,606

C/F 16,906,143,361 15,539,151,876

2013 2012

Note -----------------(Rupees)-----------------

B/F 16,906,143,361 15,539,151,876

Adjustment of work-in-process

Opening stock 172,590,755 163,759,089

Closing stock (205,937,615) (172,590,755)

(33,346,860) (8,831,666)

Cost of goods manufactured 16,872,796,501 15,530,320,210

Adjustment of finished goods

Opening stock 778,833,171 789,116,676

Finished goods purchased 961,507,523 1,155,156,903

Closing stock (1,075,768,708) (778,833,171)

664,571,986 1,165,440,408

Cost of goods sold 17,537,368,487 16,695,760,618

Cost of raw material sold 130,982,654 223,493,415

17,668,351,141 16,919,254,033

27.1 Raw material consumed

Opening stock 2,822,587,199 2,457,338,332

Purchases and expenses 14,419,937,401 12,520,896,111

Transfer from ginning unit 27.1.1 187,633,528 287,797,088

14,607,570,929 12,808,693,199

17,430,158,128 15,266,031,531

Less:

Insurance claim 8,241,703 9,107,713

Closing stock 4,308,953,542 2,806,033,353

Stock in transit 337,958,736 16,553,881

4,655,153,981 2,831,694,947

12,775,004,147 12,434,336,584

27.1.1 Production cost of ginning unit - net

Raw material purchased and consumed 217,003,661 356,653,663

Lease charges 1,250,000 500,000

Salaries, wages and benefits 4,440,057 4,709,616

Traveling and conveyance 663,594 632,042

Repair and maintenance 943,029 717,429

Store consumption 379,439 203,074

Utilities 639,374 3,242,579

Entertainment 142,014 147,058

Legal and professional 40,750 -

Printing and stationery 22,565 31,718

Communication 37,225 48,480

Insurance 134,438 216,612

Others 691,953 233,875

226,388,099 367,336,146

Less: Sale of cotton seed (38,754,571) (79,539,058)

Transferred to raw material consumed 187,633,528 287,797,088

The Group has acquired a cotton ginning factory (Hussain Ginneries Limited) on operating lease basis.

Its total cost of production, after adjustment of sale of cotton seed to third parties, has been transferred

to the Group as raw material cost.

27.2

2013 2012

Note -----------------(Rupees)-----------------

28 Distribution cost

Export sales

Export development surcharge 20,102,810 21,131,950

Freight, shipment and handling charges 210,722,370 194,778,812

Insurance 2,600,867 2,409,393

Local sales

Freight, shipment, handling and other charges 22,704,640 23,686,655

Insurance 639,093 617,822

256,769,780 242,624,632

2013 2012

Restated

-----------------(Rupees)-----------------

29 Administrative expenses

Salaries and benefits 29.1 122,506,015 87,847,778

Traveling and conveyance 29.2 7,097,468 11,361,781

Vehicle running and maintenance 19,114,439 14,533,831

Rent, rates, taxes and fees 7,356,033 5,974,303

Electricity, gas and water 1,792,235 1,752,959

Entertainment/ guest house expenses 6,369,392 4,978,672

Communication 9,432,121 10,530,670

Printing and stationery 4,266,937 3,981,490

Insurance 3,435,444 2,645,049

Repair and maintenance 4,881,874 5,961,795

Subscription / advertisement 1,476,862 4,235,481

Auditors' remuneration 29.3 1,160,647 635,000

Legal and professional charges 4,398,431 6,165,470

Directors' meeting fee 105,000 75,000

Depreciation 4.3 19,747,975 12,727,528

Amortization 5 1,185,531 1,140,044

Others 1,630,007 769,089

215,956,411 175,315,940

29.1

29.2

2013 2012

Restated

-----------------(Rupees)-----------------

29.3 Auditors' remuneration

Fee for statutory audit 820,000 390,000

Fee for half yearly review and other certifications 230,000 135,000

Out of pocket expenses 75,647 75,000

1,125,647 600,000

Workers Profit Participation Fund's audit fee 35,000 35,000

1,160,647 635,000

These include Rs. 6.13 million (2012: Rs. 6.52 million) in respect of staff retirement benefits.

These include directors traveling expense of Rs. 3.2 million (2012: Rs. 8.6 million).

These include Rs. 33.6 million (2012: Rs. 31.04 million) in respect of staff retirement benefits.

2013 2012

Note -----------------(Rupees)-----------------

30 Other operating expenses

Workers' profit participation fund 21.2 78,787,179 68,811,735

Workers' welfare fund 29,939,128 26,070,859

Donations 30.1 8,672,634 8,364,285

Promotion of education 520,762 1,132,083

Bad debts written off - 97,657

117,919,703 104,476,619

30.1

2013 2012

Restated

Note

31 Other operating income

Income from non-financial assets

Gain on disposal of property, plant and equipment 4,016,994 9,809,407

Miscellaneous income 1,271,600 -

Income from financial assets

Dividend income 147,201,720 101,232,016

Gain on remeasurement of short term

investments to fair value 6,351,797 51,599,911

Profit on disposal of short term investments - 14,180

Profit on disposal of long term investment - 475,000

Specie dividend from Pak Arab Fertilizer Limited 61,794,302 279,853,916

220,636,413 442,984,430

32 Finance cost

Profit / interest / mark up on:

603,773,860 535,962,770

5,711,908 4,691,111

32.1 328,469,543 508,698,160

(154,428) (33,261)

328,315,115 508,664,899

Bank charges 85,350,938 52,820,792

Dividend on redeemable preference shares 25,410,385 28,490,000

Interest income from associated undertaking - (31,375,342)

Interest on Workers' Profit Participation Fund 21.2 4,694,280 3,880,039

1,053,256,486 1,103,134,269

- Long term financing

- Musharika

- Short term borrowings

less: Interest income on margin/ bank account

--------------(Rupees)--------------

Donations include Rs. 3.19 million (2012: Rs. 2.68 million) paid to Fazal-ur-Rehman Foundation, 487-

A, Mumtazabad, Vehari Road, Multan. Sheikh Naseem Ahmad (Chairman / Chief Executive Officer) is

amongst the trustees of the Foundation.

32.1

2013 2012

33 Taxation

Current 62,013,880 202,835,338

Deferred 249,187,323 260,887,948

311,201,203 463,723,286

33.1

2013 2012

Restated

34 Basic earnings per share

Profit after taxation 1,155,769,575 1,184,900,158

Profit attributable to ordinary shareholders 1,155,769,575 1,184,900,158

Weighted average number of ordinary shares 25,000,000 25,000,000

Basic earnings per share 46.23 47.40

35 Diluted earnings per share

Profit attributable to ordinary shareholders 1,155,769,575 1,184,900,158

Add: dividend on preference shares 25,410,385 28,490,000

1,181,179,960 1,213,390,158

Weighted average number of shares outstanding 25,000,000 25,000,000

Dilutive effect of preference shares 666,134 666,134

Weighted average number of outstanding shares 25,666,134 25,666,134

Diluted earnings per share 46.02 47.28

--------------(Rupees)--------------

The numerical reconciliation between the average tax rate and the applicable tax rate has not been

presented in the financial statements as the tax provision of the Group is determined under section 113

and 169 of the Income Tax Ordinance, 2001.

It includes exchange loss on foreign currency finances amounting to Rs. 57.55 million (2012: Rs. 92.97

million).

--------------(Rupees)--------------

36 Financial risk management

Credit risk

Liquidity risk

Market risk

Risk management framework

36.1 Credit risk and concentration of credit risk

2013 2012

Restated

Non current assets

Long term investments 1,817,108,496 1,743,404,016

Long term deposits 28,149,696 25,710,156

Long term loans to employees - secured - 64,000

Current assets

Trade debts 1,995,627,804 2,012,188,252

Loans and advances 140,777,880 136,506,798

Short term investments 190,495,126 176,496,671

Trade deposits and short term prepayments 6,655,581 6,754,211

Other receivables 4,778,084 102,862,038

Cash and bank balances 217,397,994 71,988,355

4,400,990,661 4,275,974,497

The Group believes that it is not exposed to major concentration of credit risk.

Trade debts

The maximum exposure to credit risk for trade debt at the reporting date by geographical region was as follows:

2013 2012

Export - secured 608,024,072 858,285,522

Local - unsecured and considered good 1,387,603,732 1,153,902,730

1,995,627,804 2,012,188,252

The Group's Audit Committee oversees how management monitors compliance with the Group‟s risk management policies and procedures and

reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight

role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which

are reported to the Audit Committee.

The Group has exposures to the following risks from its use of financial instruments:

Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have similar economic

features that would cause their abilities to meet contractual obligation to be similarly effected by the changes in economic, political or other

conditions.

The carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximum exposure

to credit risk at the reporting date is:

-------------(Rupees)-------------

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual

obligations. Out of the total financial assets of Rs. 2,574.2 million (2012: Rs. 2,425.7 million), the financial assets which are subject to

credit risk amounted to Rs. 2,571.2 million (2012: Rs. 2,424.5 million).

To manage exposure to credit risk in respect of trade receivables, management performs credit reviews taking into account the customer's

financial position, past experience and other factors. Sales tenders and credit terms are approved by the tender approval committee. Where

considered necessary, advance payments are obtained from certain parties. Export sales made to major customers are secured through

letters of credit. The management has set a maximum credit period of 15 days in respect of yarn and fabric parties to reduce the credit risk.

All investing transactions are settled / paid for upon delivery as per the advice of investment committee. The Group's policy is to enter into

financial instrument contract by following internal guidelines such as approving counterparties and approving credits.

This note presents information about the Group‟s exposure to each of the above risks, the Group‟s objectives, policies and processes for measuring

and managing risk, and the Group‟s management of capital. Further quantitative disclosures are included throughout these financial statements.

The Group‟s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls,

and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions

and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive

control environment in which all employees understand their roles and obligations. All derivative activities for risk management purposes are carried

out by specialist teams that have the appropriate skills, experience and supervision. It is the Group‟s policy that no trading in derivatives for

speculative purposes shall be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks.

The Board of Directors has overall responsibility for the establishment and oversight of the Group‟s risk management framework. The Board is

responsible for developing and monitoring the Group‟s risk management policies.

-------------(Rupees)-------------

Export debts of the Group are secured through letter of credit and majority of export debts are situated in Asia and America.

2013 2012

The ageing of trade debts at the balance sheet date is as follows:

Not past due 725,529,494 646,858,333

Past due 1 to 30 days 1,330,946,589 1,293,716,667

Past due 30 to 150 days 71,229,081 69,236,625

Past due 150 days 2,445,020 2,376,627

2,130,150,184 2,012,188,252

Related party

Not past due 913,665 426,125

Past due 1 to 30 days 79,698,206 37,170,504

Past due 30 to 150 days 58,183,713 -

Past due 150 days 8,400 8,400

138,803,984 37,605,029

Investments

Bank balances

The credit quality of Group's bank balances can be assessed with reference to external credit ratings as follows:

2013 2012

Short term Long term Rupees Rupees

Habib Bank Limited A-1+ AAA JCR-VIS 7,390,394 242,193

United Bank Limited A-1+ AA+ JCR-VIS 22,810,094 6,560,017

MCB Bank Limited A1+ AAA PACRA 14,857,090 (249,419)

Askari Bank Limited A1+ AA PACRA 9,121,520 1,337,345

Bank Al Habib Limited A1+ AA+ PACRA 1,490,315 3,870,399

National Bank of Pakistan A-1+ AAA JCR-VIS 2,821,727 3,357,033

Soneri Bank Limited A1+ AA - PACRA 107,891 375,410

Allied Bank Limited A1+ AA+ PACRA 19,334,248 6,780,389

Meezan Bank Limited A-1+ AA JCR-VIS 26,293,788 22,295,677

Faysal Bank Limited A1+ AA PACRA 68,285,610 329,971

Standard Chartered Bank Pakistan Limited A1+ AAA PACRA 13,250 40,890

Bank Al-Falah Limited A1+ AA PACRA 502,460 20,698,030

Dubai Islamic Bank Pakistan Limited A-1 A JCR-VIS 772,995 152,536

Barclays Bank PLC, Pakistan P-1 Aa3 Moody‟s 2,829,536 888,826

The Bank of Punjab A1+ AA- PACRA 10,249,119 22,992

The Bank of Khyber A-2 A JCR-VIS 172,613 -

Habib Metropolitan Bank Limited A1+ AA+ PACRA 24,143,796 2,765,090

Summit Bank Limited A-2 A- JCR-VIS 1,917,793 1,239,595

NIB Bank Limited A1+ AA- PACRA 8,026 3,026

Bank Islamic Pakistan Limited A1 A PACRA 79,920 79,920

Silk Bank Limited A-2 A- JCR-VIS 81,295 81,295

213,283,480 70,871,215

Based on past experience the management believes no impairment allowance is necessary in respect of loans, advances and other

receivables past due as some receivables have been recovered subsequent to the year end and for other balances, there are reasonable

grounds to believe that the amounts will be recovered in due course.

-------------(Rupees)-------------

Investments majorly comprise of ordinary shares of Fatima Fertilizer Company Limited, listed on Karachi Stock Exchange. The fair value

of the investment forming part of long term investment is Rs. 1,564 million and Rs. 161.9 million form part of short term investment. Long

term and short term credit rating of the investee company is "A+" and "A1" respectively, issued by PACRA.

Out of total trade debts, 35% comprise of foreign debtors that are secured against letters of credit. Local trade debts include companies with

very good credit history and are regular in their payments. The management continuously monitors the repayment capacity and intention of

their debtors and extends the credit periods to their customers according to their credit history.

Rating

agency

Rating

The Group is exposed to credit risk from its operating activities (primarily for trade debts and loans and advances) and from its financing

activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

The credit rating of the banks in which the Group has maintained its deposits is as follows:

36.2 Liquidity risk

The following are the contractual maturities of the financial liabilities, including estimated interest payments:

Carrying valueContractual cash

flows

Less than one

month

One to three

months

Three months to

one year

One to

five years

Above

five yearsTotal

Financial liabilities

Long term finance 7.00% to 14.56% 5,604,810,196 7,475,441,960 - 131,785,559 1,255,902,804 5,009,422,401 1,078,331,196 7,475,441,960

Short term borrowings 0.90% to 13.51% 4,337,180,633 4,337,180,633 82,754,072 494,666,341 3,759,760,220 - - 4,337,180,633

Trade and other payables 1,603,359,783 1,603,359,783 159,260,880 1,131,145,808 312,953,095 - - 1,603,359,783

11,545,350,612 13,415,982,376 242,014,952 1,757,597,708 5,328,616,119 5,009,422,401 1,078,331,196 13,415,982,376

Carrying valueContractual cash

flows

Less than one

month

One to three

months

Three months to

one year

One to

five years

Above

five yearsTotal

Financial liabilities

Long term finance 7% to 16.30% 4,515,617,713 6,419,231,048 - 162,207,299 690,235,245 5,135,782,785 431,005,719 6,419,231,048

Short term borrowings 1.86% to 15.06% 3,798,190,475 3,798,190,475 72,470,057 433,193,160 3,292,527,258 - - 3,798,190,475

Trade and other payables -

restated 799,192,313 799,192,313 124,879,724 503,554,458 170,758,131 - - 799,192,313

9,113,000,501 11,016,613,836 197,349,781 1,098,954,917 4,153,520,634 5,135,782,785 431,005,719 11,016,613,836

---------------------------------------------------------------------------------------------------------- (R u p e e s) ----------------------------------------------------------------------------------------------------------

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure as far as possible to always have sufficient liquidity

to meet its liabilities when due. The Group is not materially exposed to liquidity risk as substantially all obligations / commitments of the Group are short term in nature and are restricted to the extent of available

liquidity. In addition, the Group has obtained running finance facilities from various commercial banks to meet any deficit, if required to meet the short term liquidity commitments.

2013

2012Weighted Average

effective rate of

interest

Weighted

average effective

rate of interest

---------------------------------------------------------------------------------------------------------- (R u p e e s) ----------------------------------------------------------------------------------------------------------

36.3 Market risk

36.3.1 Currency risk

The Group's exposure to currency risk is as follows:

2013 2012

Export finances 886,875,278 1,557,097,526

Foreign currency bank account - -

Foreign debtors (742,546,452) (858,285,522)

Gross balance sheet exposure 144,328,826 698,812,004

Outstanding letters of credit 1,010,208,763 272,742,848

Forward foreign exchange contracts - -

Net exposure 1,154,537,589 971,554,852

The following significant exchange rate has been applied:

Average rate Reporting date rate

2013 2012 2013 2012

USD to Rupee 96.70 / 96.90 89.47 / 89.67 98.60 / 98.80 94.00 / 94.20

Sensitivity analysis

2013 2012

Effect on profit or loss

USD to Rupee (115,453,759) (97,155,485)

Effect on balance sheet

USD to Rupee (14,432,883) (69,881,200)

The weakening of the PKR against US Dollar would have had an equal but opposite impact on the post tax loss / profits.

36.3.2 Interest rate risk

At the reporting date the interest rate profile of the Group's significant interest bearing financial instruments was as follows:

2013 2012 2013 2012

Financial liabilities

Variable rate instruments:

Long term loan 7% to 14.56% 7% to 16.30% 7,475,441,960 6,419,231,048

Short term running finance 0.90% to 13.51% 1.86% to 15.06% 3,450,305,355 2,241,092,949

Export finances 0.90% to 13.51% 1.86% to 15.06% 886,875,278 1,557,097,526

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the

Group's income or the value of its holdings of financial instruments.

The Group is exposed to currency risk on import of raw materials and stores and spares and export of goods mainly denominated in US

dollars and on foreign currency bank accounts.

The sensitivity analysis prepared is not necessarily indicative of the effects on (loss) / profit for the year and assets / liabilities of the

Group.

------------(Rupees)------------

At reporting date, if the PKR had strengthened by 10% against the US Dollar with all other variables held constant, post-tax profit for

the year would have been higher by the amount shown below, mainly as a result of net foreign exchange gain on translation of export

finances and foreign debtors.

------------(Rupees)------------ ------------(Rupees)------------

------------(Rupees)------------

Effective rate Carrying amount

------------(Rupees)------------

Average rate Reporting date mid spot rate

Fair value sensitivity analysis for fixed rate instruments

Cash flow sensitivity analysis for variable rate instruments

Increase Decrease

As at 30 June 2013

Cash flow sensitivity-Variable rate financial liabilities 321,034,836 (321,034,836)

As at 30 June 2012

Cash flow sensitivity-Variable rate financial liabilities 252,203,883 (252,203,883)

36.3.3 Fair value hierarchy

Financial instruments carried at fair value are categorized as follows:

Level 1: Quoted market prices

Level 2: Valuation techniques (market observable)

Level 3: Valuation techniques (non market observable)

The Group held the following financial instruments measured at fair value.

Total Level 1 Level 2 Level 3

Financial assets 30 June 2013

At fair value through profit and loss - Quoted 190,495,126 190,495,126 - -

At available for sale - quoted 1,564,141,790 1,564,141,790 - -

1,754,636,916 1,754,636,916 - -

Financial assets 30 June 2012

At fair value through profit and loss - Quoted 176,496,671 176,496,671 - -

At available for sale - quoted 1,490,437,310 1,490,437,310 - -

1,666,933,981 1,666,933,981 - -

36.3.4 Other price risk

2013 2012

Effect on profit for the year 175,463,692 166,693,398

Effect on investments at year end 175,463,692 166,693,398

36.3.5 Fair value of financial instruments

A change of 100 basis points in interest rates at the reporting date would have decreased / (increased) loss for the year by the amounts

shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is

performed on the same basis for 2012.

------------(Rupees)------------

------------(Rupees)------------

Other price risk is 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). Other price risk arises from the Group's investment in units of

mutual funds and ordinary shares of listed companies.

Carrying values of the financial assets and financial liabilities approximate to their fair values. Fair value is the amount for which an

asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm‟s length transaction.

-------------------------------------------------(Rupees)-------------------------------------------------

The sensitivity analysis prepared is not necessarily indicative of the effects on profit/ (loss) for the year and assets / liabilities of the

Group.

A 10% increase/(decrease) in redemption value of investments in mutual funds and share prices of listed companies at the balance sheet

date would have increased/(decreased) the Group's profit in case of investments through profit and loss as follows:

The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and the balance of investments at the

year end of the Group.

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore a change in

interest rates at the reporting date would not affect profit and loss account.

37 Capital management disclosure

2013 2012

Total borrowings 9,941,990,829 8,313,808,188

Less: cash and bank balances (217,397,994) (71,988,355)

Adjusted debt 9,724,592,835 8,241,819,833

Total equity 9,826,039,211 8,828,027,315

Total capital employed 19,550,632,046 17,069,847,148

Adjusted gearing ratio 49.74% 48.28%

38

Chairman Executive Executives Total

Director

Managerial remuneration 4,080,634 12,436,971 14,804,997 31,322,602

Perquisites and benefits:

House rent and utilities 130,594 1,292,743 3,131,127 4,554,464

Medical - 152,311 2,716,092 2,868,403

Conveyance/petrol - - 163,200 163,200

Insurance 5,618 - - 5,618

4,216,846 13,882,025 20,815,416 38,914,287

Numbers 1 3 28 32

Chairman Executive Executives Total

Director

Managerial remuneration 4,417,176 13,251,528 12,357,838 30,026,542

Perquisites and benefits:

House rent and utilities 4,529 815,187 2,033,619 2,853,335

Medical - 161,497 1,235,784 1,397,281

Conveyance/petrol - - 1,378,409 1,378,409

Insurance 5,618 22,382 - 28,000

4,427,323 14,250,594 17,005,650 35,683,567

Numbers 1 3 23 27

38.1

38.2

38.3 No remuneration is paid to any director or executive during the year by the Subsidiary Company.

2013 2012

39 Number of employees

Total number of employees at the year end 4,870 4,387

Average number of employees during the year 4,686 3,914

Fazal Weaving Mills Limited - Subsidiary Company

-------------(Number)-------------

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.

The Group manages its capital structure which comprises capital and reserves by monitoring return on net assets and makes adjustments to it in

the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividend

paid to shareholders, appropriation of amounts to capital reserves and/or issue new shares.

-------------(Rupees)-------------

--------------------------------- (Rupees) ---------------------------------

Remuneration of Chairman, Chief Executive, Directors, Non-Executive Directors and Executives

In addition to above, non executive directors were only paid Rs. 105,000 (2012: 75,000) as meeting fee.

Chief executive officer, executive directors and some of the executives are also provided with free use of the Holding Company

maintained cars and telephones at their residences.

The aggregate amounts charged in the financial statements for the year for remuneration, including certain benefits to the Chairman, Directors

and other Executives of the Group are as follows:

2013

--------------------------------- (Rupees) ---------------------------------

2012

Fazal Cloth Mills Limited - Holding Company

40 Segment reporting

40.1 Reportable segments

- Spinning segment - production of different qualities of yarn using natural and artificial fibers

- Weaving segment - production of different qualities of Fabric using yarn

40.2 Information about reportable segments

2013 2012 2013 2012 2013 2012

External revenues 17,224,643,597 18,241,833,557 3,333,944,289 1,508,610,950 20,558,587,886 19,750,444,507

Intersegment revenues 2,872,992,513 2,519,680,204 11,604,391 - 2,884,596,904 2,519,680,204

Cost of sales (17,562,515,772) (15,835,288,944) (105,835,369) (1,083,965,089) (17,668,351,141) (16,919,254,033)

Intersegment cost of sales (11,604,391) - (2,872,992,513) (2,519,680,204) (2,884,596,904) (2,519,680,204)

Distribution and marketing expense (225,586,861) (228,668,943) (31,182,919) (13,955,689) (256,769,780) (242,624,632)

Administrative expenses (193,428,991) (165,152,989) (22,527,420) (10,162,951) (215,956,411) (175,315,940)

Other operating expense (108,921,822) (104,476,619) (8,997,881) - (117,919,703) (104,476,619)

Finance cost (868,533,316) (989,629,586) (184,723,170) (113,504,683) (1,053,256,486) (1,103,134,269)

Other operating income 220,636,413 442,984,430 - - 220,636,413 442,984,430

Profit before tax 1,347,681,370 3,881,281,110 119,289,408 (2,232,657,666) 1,466,970,778 1,648,623,444

40.2.1 The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 3.21 to the financial statements. Expenditures are

allocated on the basis of actual amounts incurred for the segments. This is the measure reported to management for the purposes of resource allocation and assessment of

segment performance.

The management has determined the operating segments of the Group on the basis of products produced.

The Group's reportable segments are as follows:

Information regarding the Group‟s reportable segments is presented below. Performance is measured based on segment profit before tax, as management believes that such

information is the most relevant in evaluating the results of certain segments relative to other companies that operate within these industries.

Spinning Weaving Total

--------------------- (Rupees) ------------------------------------------ (Rupees) ------------------------------------------ (Rupees) ---------------------

40.3 Reconciliation of reportable segment revenues and profits

2013 2012

Total revenue from reportable segments 23,443,184,790 22,270,124,711

Elimination of inter segment revenue (2,884,596,904) (2,519,680,204)

20,558,587,886 19,750,444,507

Profit or loss

Total profit or loss of reportable segments 1,466,970,778 1,648,623,444

Elimination of intersegment profits - -

Tax for the year (311,201,203) (463,723,286)

Consolidated profits 1,155,769,575 1,184,900,158

40.4 Segment assets and liabilities

40.4.1

Spinning Weaving Total

For the year ended 30 June 2013:

Segment assets for reportable segment 18,344,131,227 2,457,705,972 20,801,837,199

Unallocated corporate assets 2,600,799,923

Total assets as per balance sheet 23,402,637,122

Segment liabilities for reportable segment 9,389,828,275 1,971,407,929 11,361,236,204

Unallocated corporate liabilities 2,215,361,707

Total liabilities as per balance sheet 13,576,597,911

For the year ended 30 June 2012:

Segment assets for reportable segment 15,386,855,337 2,328,067,487 17,714,922,824

Unallocated corporate assets 2,053,405,759

Total assets as per balance sheet 19,768,328,583

Segment liabilities for reportable segment 7,227,393,998 1,768,109,283 8,995,503,281

Unallocated corporate liabilities 1,944,797,987

Total liabilities as per balance sheet 10,940,301,268

-------------(Rupees)-------------

Reportable segments' assets and liabilities are reconciled to total assets and liabilities as follows:

-------------------------(Rupees)-------------------------

40.4.2

-

-

40.5 Geographical information

40.5.1 The Group's gross revenue from external customers by geographical

location is detailed below:

2013 2012

Pakistan 12,289,367,323 11,583,131,637

Asia 6,449,472,942 6,314,353,208

Europe 750,214,588 723,975,496

America 1,434,188,684 1,374,495,915

Australia 5,202,326 -

Africa 32,683,512 31,323,182

20,961,129,375 20,027,279,438

40.5.2

40.6 Other segment information

Spinning Weaving Total

For the year ended 30 June 2013:

Capital expenditure 1,433,063,655 131,944,623 1,565,008,278

Depreciation/amortization

Cost of sales 431,391,050 83,417,019 514,808,069

Administrative expenses 17,354,985 3,578,521 20,933,506

448,746,035 86,995,540 535,741,575

For the year ended 30 June 2012:

Capital expenditure 2,954,966,332 1,646,599,939 4,601,566,271

Depreciation/ Amortization

Cost of sales 359,026,342 39,461,940 398,488,284

Administrative expenses 11,811,663 2,055,909 13,867,572

370,838,005 41,517,849 412,355,856

-------------------------(Rupees)-------------------------

For the purposes of monitoring segment performance and allocating resources between segments

all assets are allocated to reportable segments except long term investment and tax refund due from

government which are held under unallocated corporate assets; and

all liabilities are allocated to reportable segments except deferred tax liability and provision of tax

are held under unallocated corporate liabilities

All non-current assets of the Group as at 30 June 2013 are located and operating in Pakistan.

-------------(Rupees)-------------

41 Transactions with related parties

2013 2012

Fazal Rehman Fabrics Limited Associate

Sale of goods and services 938,028,005 671,384,061

Purchase of goods and services 47,428,400 14,503,696

Fatima Fertilizer Company Limited Associate

Dividend Income 139,028,062 100,402,456

Purchase of goods and services 26,867,646 6,805,238

Pak Arab Fertilizers Limited Associate

Specie Dividend 61,794,302 279,853,916

Interest - 31,375,342

Reliance Weaving Mills Limited Associate

Sale of goods and services 61,611,128 102,875,574

Purchase of goods and services - 13,188,856

Sale of land 3,721,135 -

Ahmed Fine Textile Mills Limited Associate

Sale of goods and services 170,927,976 1,067,681,954

Purchase of goods and services 239,431,634 470,278,817

Fazal-ur-Rehman Foundation, Multan Associate

Donations 3,193,162 2,684,000

Key Management Personnel

Repayment of Director's Loan 3,721,135 -

Payable to key management personnel 175,000 -

All transactions with related parties have been carried out on commercial terms and conditions.

2013 2012

42 Capacity and production

Spinning:

Number of spindles installed 190,392 176,472

Number of rotors installed 1,740 780

Number of shifts worked

Unit I, II & IV 999 1,097

Unit III 998 1,097

Number of spindles - shifts worked 183,948,666 184,046,100

Capacity at 20's count Kgs. 74,797,999 69,321,593

Actual production of all counts Kgs. 53,013,774 53,251,977

Actual production converted into 20's count Kgs. 62,069,410 62,389,434

The related parties comprise associated undertakings and key management personnel. The Group in the

normal course of business carries out transactions with various related parties. Amounts due from and to

related parties are shown under receivables and payables and remuneration of the key management personnel

is disclosed in note 38. Other significant transactions with related parties are as follows:

Description of transaction Nature of relationship-------------(Rupees)-------------

Weaving : 2013 2012

Number of looms installed 117 117

Number of looms worked 117 117

Number of shifts worked 1,042 726

Standard cloth production Sq. Mtr. 27,898,301 13,867,920

Actual cloth production Sq. Mtr. 24,570,220 12,210,835

43 Non adjusting event after balance sheet date

44 Corresponding figures

45 Date of authorization of financial statements

46 General

Sd/- Sd/- Sd/-

(SH. NASEEM AHMAD) (REHMAN NASEEM) (FAIZAN-UL-HAQ)

Chief Executive Officer Director Chief Financial Officer

It is difficult to describe precisely the production capacity in spinning mills since it fluctuates widely

depending on various factors such as count of yarn spun, spindles speed, twist and raw materials used, etc.

It also varies according to the pattern of production adopted in a particular year.

Figures in the consolidated financial statements have been rounded-off to the nearest rupee except stated

otherwise.

The board of directors in their meeting held on 05 October 2013 has proposed a final cash dividend for the

year ended 30 June 2013 of Rs. 2.5 per share (i.e. 25%), amounting to Rs. 62.5 million (2012: 20% cash

dividend and Bonus shares in the proportion of 20 shares for every 100 shares (2012: 10.62 shares for every

100 shares) held for approval of the members of the Holding Company at the annual general meeting to be

held on 31 October 2013. These consolidated financial statements do not include the effect of this proposed

final cash dividend and will be accounted for subsequent to year end.

Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However,

there were no material re-arrangements.

These consolidated financial statements were authorized for issue on 05 October 2013 by the Board of

Directors of the Group.

FORM 34

TOTAL NO. OF PERCENTAGE

NO. OF SHAREHOLDRS SHARES HELD ( % )

FROM TO

802 1 100 16,885 0.07

306 101 500 77,526 0.31

113 501 1,000 77,769 0.31

104 1,001 5,000 215,519 0.86

20 5,001 10,000 143,646 0.57

5 10,001 15,000 59,475 0.24

1 15,001 20,000 15,763 0.06

1 20,001 25,000 21,030 0.08

2 30,001 35,000 63,051 0.25

4 35,001 40,000 147,263 0.59

1 40,001 45,000 44,757 0.18

1 45,001 50,000 49,837 0.20

1 55,001 60,000 58,195 0.23

1 105,001 110,000 109,326 0.44

1 130,001 135,000 134,734 0.54

1 220,001 225,000 225,000 0.90

1 260,001 265,000 260,249 1.04

1 470,001 475,000 473,881 1.90

1 475,001 480,000 479,115 1.92

1 870,001 875,000 871,952 3.49

2 945,001 950,000 1,895,518 7.58

2 955,001 960,000 1,916,456 7.67

1 1,085,001 1,090,000 1,085,736 4.34

1 1,470,001 1,475,000 1,473,740 5.89

2 1,660,001 1,665,000 3,328,175 13.31

1 2,010,001 2,015,000 2,012,852 8.05

1 4,705,001 4,710,000 4,709,579 18.84

1 5,030,001 5,035,000 5,032,971 20.13

1379 25,000,000 100.00

CATEGORIES OF NO. OF NO. OF PERCENTAGE

SHAREHOLDERS SHARE HOLDERS SHARES %

Directors , Spouses & Minor

Children 14 8,472,556 33.8902

Investment Banks/Co. , NIT &

ICP , Financial Institutions 6 41,307 0.1652

Joint Stock Companies 15 7,006,360 28.0254

Mudarba & Funds 5 1,624,041 6.4962

Trust 1 316 0.0013

Others ( Holding Of Ex - East

Pakistanies 1 44,757 0.1790

Individuals 1,337 7,810,663 31.2427

TOTAL :- 1,379 25,000,000 100.0000

PATTERN OF SHAREHOLDING OF SHAREHOLDERS

AS AT JUNE 30, 2013

CATEGORIES OF

SHARE HOLDING

PATTERN OF SHARE HOLDING AS PER REQUIREMENTS OF CODE OF CORPORATE GOVERNANCE

CATEGORIES OF SHARES HELD PERCENTAGE

SHAREHOLDERS ( % )

DIRECTORS, CEO & THEIR SPOUSE

AND MINOR CHILDREN

Sh. Naseem Ahmad (CEO / Chairman) 7,350 0.029

Rehman Naseem ( Director ) 260,249 1.041

Fazal Ahmad Sheikh ( Director ) 1,701,343 6.805

Faisal Ahmad ( Director ) 1,699,888 6.800

Fahd Mukhtar ( Director ) 36,256 0.145

Mrs. Mahnaz Amir Sh. ( Director ) 2,500 0.010

Abdullah Amir Fazal 947,759 3.791

Muhammad Yousaf Amir 947,759 3.791

Ayesha Amir Fazal 473,881 1.896

Amin Rehman Fazal 958,228 3.833

Sadek Rehman 958,228 3.833

Maha Rehman Fazal 479,115 1.916

ASSOCIATED COMPANIES, UNDERTAKINGS

AND RELATED PARTIES

Amir Fine Exports (Pvt.) Ltd 6,119,941 24.480

Reliance Commodities (Pvt.) Ltd 871,952 3.488

Amir Naseem Sheikh 10,829 0.043

Mst. Farrukh Mukhtar 4,709,579 18.838

Fawad Ahmad Mukhtar 2,012,852 8.051

Mrs. Ambreen Fawad 58,195 0.233

SHARE HOLDERS FIVE PERCENT ( 5% OR MORE )

Mst. Farrukh Mukhtar - -

Fawad Ahmad Mukhtar - -

Fazal Ahmad Sheikh - -

Faisal Ahmad - -

Amir Fine Exports (Pvt.) Ltd - -

NBP (Trustee Department) - -

BANKS, DEVELOPMENT FINANCIAL INSTITUTIONS,

NON BANKING FINANCIAL INSTITUTIONS, NIT & ICP

Industrial Development Bank of Pakistan 511 0.002

United Bank Ltd 657 0.003

Escorts Investment Bank Ltd. 164 0.001

National Bank Of Pakistan 828 0.003

IDBL ( ICP UNIT ) 1,196 0.005

National Investment Trust Ltd. 37,951 0.152

TRUST

The Trustee, Ghulaman-e-Abbas Educational & Medical Trust 316 0.001

MUDARABAS & FUNDS

NBP (Trustee Department) NIT FUND 1,473,740 5.895

Trustee NBP-Employees Pension fund 134,734 0.539

Trustee NBP-Emp. Benevolent fund Trust 4,728 0.019

Golden Arrow Selected Stocks Fund Ltd. 10,339 0.041

CDC-Trustee AKD Opportunity Fund 500 0.002

JOINT STOCK COMPANIESFazal Vegetable Ghee Mills Ltd 6,408 0.026

Fateh Textile Mills Ltd 215 0.001

Freedom Enterprises (Pvt) Ltd. 5,258 0.021

Molasses Trading & Exports Co. Ltd 113 0.000

Naeems' Securities Ltd 636 0.003

First Capital Equity Ltd. 16 0.000

Sarfraz Mahmood (Pvt.) Ltd 60 0.000

H.M. Investment Ltd. 338 0.001

Akram Cotton Mills Ltd. 5 0.000

FairTrade Capital Securities 28 0.000

Fikrees (SMC-Pvt) Ltd. 1,390 0.006

OTHERS

Govt. of Pakistan Abandoned Properties 44,757 0.179

(Holding of Ex-East Pakistanis)

INDIVIDUALS (other than above) 1,019,208 4.077

TOTAL 25,000,000 100.000

FORM OF PROXY

I/We

of

being a member of FAZAL CLOTH MILLS LIMITED, hereby appoint

(NAME)

of another member of the company or failing

him (NAME)

of

(being a member of the Company) as my/our Proxy to attend, act and vote for me/us and on my/our behalf, at the

48th Annual General Meeting of the Company to be held on Thursday, the 31st October, 2013 at 129/1 Old

Bahawalpur Road, Multan at 11:00 am or at any adjournment thereof.

As witness my hand this day of October, 2013. Affix

Revenue

Stamp

Rs. 5.00

( Witness Signature) (Member's Signature)

Name Folio No.

Address CDC A/c No.

NIC No. NIC No.

NOTES:

1. This form of proxy duly completed must be deposited at the Company's Shares Department at 129/1 Old

Bahawalpur Road, Multan or Company's Share Registrar VISION CONSULTING LIMITED, 3-C, LDA Flats,

Lawrance Road, LAHORE not later than 48 hours before the time of meeting.

2. Any individual beneficial owner of CDC, entitled to attend and vote at this meeting, must bring his/her NIC or

Passport, 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.