Mission Statement - yousufdewan.comyousufdewan.com/DKTML/Financial Highlights/dktml... · Muslim Comme rcial Bank Limited Habib Bank Limited Askari Commerc ial Bank Limited Silk Bank

Mission Statement

The Mission of Dewan Khalid Textile Mills Limited is to be the finestOrganisation, and to conduct business responsibly

and in a straight forward way.

Our basic aim is to benefit the customers, employeesand shareholders and to fulfill our commitments to the society.Our hallmark is honesty, innovation, teamwork of our peopleand our ability to respond effectively to change in all aspects

of life including technology, culture and environment.

We will create a work environment, which motivates, recognizesand rewards achievements at all levels of the Organisation

because

In Allah We Believe & In People We Trust

We will always conduct ourselves with integrityand strive to be the best.

CONTENTS

Company Information

Notice of Annual General Meeting

Directors Report

Financial Highlights

Statement of Compliance with the Best Practices of Code of Corporate Governance

Review Report to the Members on Statement of Compliance with Best Practices of the

Code of Corporate Governance

Auditors Report

Balance Sheet

Profit and Loss Account

Statement of Comprehensive Income

Cash Flow Statement

Statement of Changes in Equity

Notes to the Accounts

Pattern of Share Holding

Form of Proxy

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4

8

9

11

12

14

15

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18

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40

COMPANY INFORMATION ANNUAL REPORT 2011

1

Board of Directors

Audit Committee

Auditors

Company Secretary

Chief Financial Officer

Tax Advisors

Legal Advisor

Bankers

Registered Office

Factory Office

Shares Registrar &Transfer Agent

:

:

:

:

:

:

:

:

:

:

:

Dewan Mohammad Yousuf FarooquiChairman, Board of Directors

Dewan Abdul Baqi FarooquiChief Executive Officer

Dewan Abdul Rehman Farooqui

Mr. Haroon Iqbal

Mr. Aziz-ul-Haque

Dewan Abdul Rehman FarooquiMr. Haroon Iqbal - MemberMr. Aziz-ul-Haque - Member

Feroze Sharif Tariq & Co.Chartered Accountants4/N/H Block-6, P.E.C.H.S.,Karachi.

Syed Muhammad Salahuddin

Mehmood ul Hassan Asghar

Sharif & CompanyAdvocates

Muslim Commercial Bank LimitedHabib Bank Limited

Askari Commercial Bank LimitedSilk Bank LimitedBank Islami Limited

G/11, S.I.T.E., Kotri SindhKarachi.

Dewan Asim Mushfiq Farooqui

Dewan Abdullah Ahmed Farooqui

- Chairman

A. K. Brohi & Co. Advocates

Bank Al Falah Limited

Finance & Trade CentreBlock-A, 8th Floor,Shahrah-e-Faisal,Karachi.

BMF Consultants Pakistan (Private) Ltd.Anum Estate Building, Room No. 310 & 311,3rd Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal, AdjacentBaloch Colony Bridge, Karachi-75350, Pakistan

DEWAN KHALID TEXTILE MILLS LIMITED

NOTICE OF 34THANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Thirty Fourth Annual General Meeting of Dewan Khalid Textile Mills Limited (“DKTML” or “the Company”) will be held on Wednesday, October 26, 2011, at 10:30 a.m. at Dewan Cement Limited Factory Site, at Deh Dhando, Dhabeji, District Malir, Karachi, Pakistan; to transact the following businesses upon recitation from Holy Qur'aan and other religious recitals:

1. To confirm the minutes of the preceding General Meeting of the Company held on Friday, October 29, 2010;

2. To receive, consider, approve and adopt the annual audited financial statements of the Company for the year ended June 30, 2011, togetherwith the Directors' and Auditors' Reports thereon;

3. To appoint the Statutory Auditors' of the Company for the ensuing year, and to fix their remuneration;

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

NOTES:1. The Share Transfer Books of the Company will remain closed for the period from October 20, 2011 to October 26,

2011 (both days inclusive).

2. Members are requested to immediately notify change in their addresses, if any, at our Shares Registrar Transfer rdAgent BMF Consultants Pakistan (Private) Limited, located at Anum Estate Building, Room No. 310 & 311, 3

Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal, adjacent to Baloch Colony Bridge, Karachi, thPakistan.3104 Floor, A-14, Trade Centre, Block 7/8, K.C.H.S., Main Shahrah-e-Faisal, Karachi 75350, Pakistan.

3. A member of the Company entitled to attend and vote at this meeting, may appoint another member as his/her proxy to attend and vote instead of him/her. Proxies, in order to be effective, must be received by the Company at the abovesaid address, not less than 48 hours before the meeting.

4. CDC Account holders will further have to observe the following guidelines, as laid down in Circular 01 dated January 20, 2000, issued by the Securities and Exchange Commission of Pakistan:

a) For Attending Meeting:i) In case of individual, the account holder or sub-account holder, and/or the person whose securities are in group

account and their registration details are uploaded as per the regulations, shall authenticate his/her identity by showing his/her original National Identity Card (CNIC), or original passport at the time of attending the meeting.

ii) In case of corporate entity, the Board of Directors' resolution/power of attorney, alongwith the specimen signature of the nominee, shall be produced (unless it has been provided earlier) at the time of meeting.

2

Date : September 30, 2011Place : Karachi

By Order of the Board

Syed Muhammad SalahuddinCompany Secretary

ANNUAL REPORT 2011


b) For Appointing Proxies:i) In case of individual, the account holder or sub-account holder, and/or the person whose securities are in group

account and their registration details are uploaded as per the regulations, shall submit the proxy form as per the above requirements.

ii) Two persons, whose names, addresses, and CNIC numbers shall be mentioned on the form, shall witness the proxy.

iii) Attested copies of CNIC or passport of the beneficial owners and proxy shall be furnished alongwith the proxy form.

iv) The proxy shall produce his/her original CNIC or original passport at the time of the meeting.

v) In case of corporate entity, the Board of Directors' resolution/power of attorney, alongwith the specimen signature of the nominee, shall be produced (unless it has been provided earlier) along with the proxy form to the Company.

3

ANNUAL REPORT 2011


DIRECTORS’ REPORT

4

ANNUAL REPORT 2011

Dear Shareholder(s),Assalam-o-Alykum!

The Board of Directors, other members of the management of your Company are pleased to present the Annual Audited Financial Statements of the Company for the year ended June 30, 2011 together with the Auditors' Report thereon.

Operating results and performance:The operating results for the year under review are as follows:

IN THE NAME OF ALLAH;THE MOST GRACIOUS AND MERCIFUL

IF YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN)

SALES (NET)

COST OF SALES

GROSS PROFIT

OPERATING EXPENSES

OPERATING LOSS

FINANCE COST

LOSS BEFORE TAXATION

TAXATION

PROFIT AFTER TAXATION

1,368,138,305

(1,342,223,213)

25,915,092

(29,925,519)

(4,010,427)

(1,192,932)

(5,203,359)

20,509,695

15,306,336

"Rupees”

The turnover of the Company has increased by Rs 869.984 million as compared to the last year. Company has earned gross profit of Rs 25.92 million and suffered pretax loss of Rs 5.20 million during the year as compared to gross profit of Rs 12.88 million and pretax loss of Rs 21.15 million of previous year.

The year under review has been the most unusual in the recent history of textile industry. The volatility in the market witnessed during the current year has never been witnessed before. Among the various inputs, the textile industry uses, cotton prices fluctuated the most. At the start of the financial year, cotton price prevailing in the market was around Rs 4,500/maund, afterwards owing to its unprecedented increasing trends it peaked in March at Rs 14,000/maund. But later on during the last quarter of the year cotton prices dropped back to Rs. 5,000/maund causing considerable losses to the textile industry. Your company had to put extraordinary endeavors to come out of above adverse scenario and record a gross profit for the year under review, while working capital limits from lenders were not available to enable it to buy its raw material at the commencement of cotton season when the prices of cotton were at the lowest. Additionally, during the year, profitability of the company suffered due to increase in cost of production, increase in prices of gas, electricity, salary and wages, freight and transportation. Increased cost of stores spares and packing material has also affected the company results.


DIRECTORS’ REPORT

5

ANNUAL REPORT 2011

As far as loans of banks/financial institutions are concerned, a number of recovery suits were instituted in the past by Banks/Financial Institutions alleging default of the company which are being successfully defended by our Counsels, who are all of well repute. The respective counsels have already filed their respective submissions in respect of litigations / suits being handled by them and all of them are of the opinion that these suits can be successfully defended on legal grounds. It may also be pointed out that there is vested interest working to destabilize our company and is instrumental in bringing about cartelization in Banks/Financial Institutions to achieve their vested interest by trying to engineer alleged default of the Company. We have also instituted suits and complaints against them in courts/forums of appropriate jurisdictions.

The Auditors have qualified the report due to significance of the matter as referred in Para (a) of the Auditors Report. The management has explained the status of matter in respective notes to the financial statements. The management is fully confident that the company will have favorable decisions from concerned courts.

Future OutlookOnce again flood in the country has caused devastating effects on the economy of the country. This flood has also destroyed vast area of agriculture land, especially the cotton growing area. Almost 35% of the total output of cotton has been destroyed, which will further push up the prices of the cotton. Due to these facts, it seems that coming financial year will be a difficult one for the textile industry in Pakistan.

Human ResourceManagement of the Company has a clear vision that human resources and strong leadership practices are important enablers of high productivity and sustainable competitive advantage of our Company. Therefore, management of the Company gives much importance to the optimal use of human resources by way of proper guidance, motivation and incentive schemes for the employees.

Post Balance Sheet EventsSubsequent to the balance sheet date proposed financial restructuring of banking facilities have entered the final stage of negotiations and will be closed in near future.

There has been no other event subsequent to the balance sheet date that would require an appropriate disclosure or adjustment to the financial statements referred herein.

Statement of Compliance under Code of Corporate Governance Security and Exchange Commission of Pakistan framed a code of corporate governance, which was incorporated through the listing regulations of all stock exchanges of the country. The directors of your Company have ensured implementation of all provisions of code of corporate governance applicable for the period ended June 30, 2011.

Review report on statement of Compliance with code of corporate governance of Auditors is annexed with this report.

Directors of the Company are pleased to confirm that there is no material departure from the best practices as detailed in the listing regulations.

1. The financial Statements presented by the management of the Company give a fair account of the state of affairs, the results of its operations, cash flow and changes in equity.

2. Proper books of accounts have been maintained as required under the Companies Ordinance, 1984.

3. Accounting policies have been consistently applied in the preparation of financial statements and accounting estimates are based on reasonable and prudent judgment.

4. International Financial Reporting Standards as applicable in Pakistan have been followed in preparation of financial statements and any departure there from, if any, has been adequately disclosed.


Names

Dewan Muhammad Yousuf Farooqui

Dewan Abdul Baqi Farooqui

Dewan Asim Mushfiq Farooqui

Dewan Abdullah Ahmed Farooqui

Dewan Abdul Rehman Farooqui

Mr. Haroon Iqbal

Mr. M. A. Lodhi

No. ofMeetingsattended

3

4

2

2

4

4

3

DIRECTORS’ REPORT

6

ANNUAL REPORT 2011

5. The system of internal controls, which is in place, is sound in design and has been effectively implemented and monitored.

6. The fair value of investment of Provident Fund Trust as on June 30, 2011 is Rs.2,277,440/-

7. The management has explained their views in detail regarding the going concern ability of the Company in note 1.1 to the annexed financial statements.

8. There has been no material departure from the best practices of the corporate governance.

9. The Company has constituted an Audit Committee from amongst the non-executive members of its Board.

10. The Board has prepared and circulated a Statement of Ethics and Business Practices amongst its members and the company's employees.

11. As required under the Code of Corporate Governance, the following information has been presented in this report:

i) Pattern of Shareholding;ii) Shares held by associated undertaking and related persons;

BoardThe Board of Directors comprises of individuals with diversified knowledge who endeavor to contribute towards the aim of the Company with the best of their abilities. During the year four meetings of the Board were held. The attendance of directors was as follows:

Leave of absence was granted to directors who could not attend these meetings.

Earnings per ShareEarnings / (Loss) per share during the year under report worked out to Rs. 2.69 [(2010: Rs.(4.06)]

Appointment of AuditorsThe present auditors, M/s. Feroze Sharif Tariq & Co., Chartered Accountants, Karachi, retire and being eligible for reappointment under the Companies Ordinance, 1984, and the Code of Corporate Governance issued by the Securities and Exchange Commission of Pakistan, have offered themselves for the same. The Board of Directors of your company, based on the recommendations of the Audit Committee of the board, propose M/s. Feroze Sharif Tariq & Co., Chartered Accountants, for reappointment as auditors of the company for the ensuing year.


DIRECTORS’ REPORT

7

Date: September 30, 2011Place: Karachi.

LO-MY LORD IS INDEED HEARER OF PRAYER (HOLY QURAN)

By and under Authority of the Board of Directors

ANNUAL REPORT 2011

Pattern of ShareholdingThe prescribed shareholding information, both under the Companies Ordinance, 1984, and the Listing Regulations, vis-à-vis, Code of Corporate Governance, is attached at the end of this report.

Key operating and financial dataKey operating and financial data for preceding six years is annexed.

Vote of Thanks & ConclusionOn the behalf of the Board, I appreciate the valuable, loyal, and commendable services rendered to the Company by its executives, members of the staff and workers.

In conclusion, we bow, beg and pray to Almighty Allah, Rahman-o-Ar-Rahim, in the name of our beloved Prophet Muhammad (peace be upon him) for the continued showering of his blessings, guidance, strength, health, and prosperity to us, our company, country and nation; and also pray to Almighty Allah to bestow peace, harmony, brotherhood, and unity in true Islamic spirit to whole of the Muslim Ummah; Ameen; Summa Ameen.

Dewan Muhammad Yousuf FarooquiChairman / Director


FINANCIAL HIGHLIGHTS

8

(Rupees in Million)

2006 2007 2008 2009 2010PROFIT & LOSS ACCOUNT

Sale (Net) 810 565 1,203 652.20 498.15

Gross Profit / (Loss) 105 99 34.00 (8.50) 12.88

Operating Expenses (40.38) (39.59) (50.02) (45.26) (19.58)

Operating Profit / (Loss) 64.26 59.85 (16.34) (53.77) (6.70)

Finance Cost (48.65) (53.92) (56.22) (45.67) (7.12)

Profit / (Loss) before Tax 14 6 (72) (108.06) (21.15)

Taxation (2.78) (4.49) (27.08) 14.13 (1.90)

Profit / (Loss) after Tax 11 1 (99.65) (93.93) (23.04)

BALANCE SHEET

Assets Employed 1420 1446 1,039 917 884

Return on Equity 3.19% 0.2% (34.41%) (101.86%) (29.62%)

Current Assets 759 808 589 586 575

Shareholder's Equity 530 270 289 92 78

Deferred Liabilities 27 29 48 45 40

Current Liabilities 768 827 697 780 766

Gross Profit/(Loss) Ratio (%) 12.92% 17.6% 2.80% -1.30% 2.59%

Net profit Ratio (%) 1.40% 0.2% -8.28% -14.40 -4.63

Earning / (Loss) Per Share (Rs.) 1.991 0.20 -17.54 -16.53 -4.06

Dividend (%) - - - - -

Cash 10% - - - -

Production

Actual Production

at Actual Average Count (kg) 5,474,442 5,025,727 5,786,027 4,778,404 1,871,793

Actual Production

Converted to 20 Count (kg) 9,327,603 12,299,624 9,240,360 6,825,663 2,935,318

ANNUAL REPORT 2011

2011

1368.13

25.92

(29.93)

(4.01)

(1.19)

(5.20)

(20.51)

(15.31)

935

11.93%

577

128

5

802

1.89%

1.12

2.69

-

-

5,411,273

9,896,915


STATEMENT OF COMPLIANCE WITH THE CODE OFCORPORATE GOVERNANCE FOR THE PERIOD ENDED JUNE 30, 2011

This statement is being presented to comply with the code of Corporate Governance contained in listing regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing the framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.

The company has applied the principles contained in the Code in the following manner:

1. The company encourages representation of Independent non-executive directors. At present, the Board includes four non-executive directors.

2. The directors have confirmed that none of them is serving as a director in more than ten listed companies, including Dewan Khalid Textile Mills Limited.

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 stock exchange, has been declared as a defaulter by that Stock Exchange.

4. Casual vacancies occuring in the Board during the Financial year were duly filled up by the Board.

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

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

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

8. The meetings of the board were presided over by the Chairman, if he is available, and the Board met 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 arranged an orientation course for its directors during the year to appraise them of their duties and responsibilities.

10. The directors, report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed.

11. The directors, CEO and executives do not hold any interest in the shares of the Company other than that has already been disclosed in the pattern of shareholder.

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

13. The Board has formed an audit committee. It comprises three members, including the chairman.

9

ANNUAL REPORT 2011


10

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

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

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

17. 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.

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

Date : September 30, 2011Place : Karachi

ANNUAL REPORT 2011

Dewan Muhammad Yousuf FarooquiChairman / Director


AUDITORS’ REVIEW REPORT TO THE MEMBERS ON THE STATEMENT OFCOMPLIANCE WITH BEST PRACTICES OF THE CODE OF CORPORATE GOVERNANCE

11

Engaging Partner: Mohammad TariqDated: September 30, 2011 Feroze Sharif Tariq & CompanyPlace: Karachi Chartered Accountants


We have reviewed the 'Statement of Compliance with the Best Practices' contained in the 'Code of Corporate

Governance' prepared by the Board of Directors of Dewan Khalid Textile Mills Limited to comply with the respective

Listing Regulation No(s). 37 of the Karachi and Lahore Stock Exchange (Guarantee) limited, 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

the various documents prepared by the company to comply with the code.

As part of our audit of the 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 have not carried out any special

review of the internal control system to enable us to express an opinion as to whether the board's statement on internal

control covers all controls, and the effectiveness of such controls.

Further, Sub-Regulation (xiii) of Listing Regulation on 35 (previously Regulation no 37) notified by The Karachi Stock

Exchange (Guarantee) Limited vide circular KSE/N-269 dated 19 January 2009 requires the Company to place before

the Board of Directors for their consideration and approval, related party transactions distinguishing between

transactions carried out on term 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 June 30, 2011.

AUDITORS' REPORT TO THE MEMBERS

12DEWAN KHALID TEXTILE MILLS LIMITED

We have audited the annexed Balance Sheet of Dewan Khalid Textile Mills Limited, as at June 30, 2011, and 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 purpose 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) The company has not made provision of markup in its financial statements for the year amounting to Rs.

54.98 million (Note 26.1). Had the provision of markup been made in the financial statements, the profit for

the current year of Rs. 15.31 million would have been converted to loss of Rs. 39.67 million and accumulated

loss and markup payable would have been higher by Rs. 110.67 million and shareholders' equity would have

been lower by the same amount.

b) in our opinion, proper books of account have been kept by the company as required by the Companies

Ordinance, 1984;

c) 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 the 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;

Engaging Partner: Mohammad TariqDated: September 30, 2011 Feroze Sharif Tariq & CompanyPlace: Karachi Chartered Accountants

13DEWAN KHALID TEXTILE MILLS LIMITED

d) in our opinion, except for the matter discussed in paragraph (a) and its effect, the financial statements give a

true and fair view of the financial position of the company at June 30, 2011 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, g ive 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 June 30, 2011 and of the Profit, its

Comprehensive income, Cash flow and Changes in Equity for the year then ended; and

e) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.

f) Without further qualifying our opinion we draw attention to note 1.1 to the financial statements, which

indicates that the company made net Profit for the year of Rs. 15.306 million with out providing the markup as

disclosed in para 'a' above during the year ended June 30, 2011; and its Current liabilities exceeded its current

assets by Rs. 224.715 million, Lenders (Banks and Financial institutions) of the company have filed suits to

recover amount of Rs. 418.870 million through sale of hypothecated assets of the company as fully disclosed

in note 13.4 to the financial Statements. Furthermore, one of the banks has filed winding up petition against

the company for recovery as disclosed in note 13.4 to the financial statements. These conditions, along with

other matters as set forth in note 1.1, indicate the existence of a material uncertainty which may cast

significant doubt about the company's ability to continue as going concern.

BALANCE SHEET BALANCE SHEET AS AT JUNE 30, 2011

Director Dewan Abdul Rehman FarooquiDewan Muhammad Yousuf Farooqui

Chairman / Director

Statement under section 241(2) of The Companies Ordinance, 1984The Chief Executive Officer of the Company is presently out of the country. Therefore, these financial statementshave been signed by the two directors of the Company duly authorised by the Board of Directors.

June 30, June 30,2011 2010EQUITY AND LIABILITIES

CAPITAL & RESERVES

Authorized

15,000,000 (2010: 15,000,000) Ordinary Shares of Rs. 10/- each 150,000,000 150,000,000

Issued, Subscribed and Paid-up Capital 6 56,824,590 56,824,590General Reserves 135,000,000 135,000,000Reserve & Surplus (63,546,978) (114,038,350)

Shareholders Equity 128,277,612 77,786,240

Deferred Liabilities

Provision for Staff Gratuity 8 4,652,318 5,432,541Deferred taxation 9 -- 34,752,261

4,652,318 40,184,802

CURRENT LIABILITIES

Trade and Other Payables 10 399,382,613 374,063,536Mark-up accrued on loans 26,359,182 26,359,182Short Term Borrowings - Secured 11 343,590,154 347,368,490Current portion of Long Term Loan- over due 7 8,000,000 8,000,000

Provision for Income Tax 12 24,821,283 10,578,717

802,153,232 766,369,925Contingencies and Commitments 13

935,083,162 884,340,967ASSETS

NON-CURRENT ASSETS

Tangible Fixed Assets 14 273,321,891 259,866,664Long Term Investment 15 84,250,406 49,065,370Long Term Deposits 72,900 72,900

CURRENT ASSETS

Stores, Spares and Loose Tools 16 11,439,217 10,151,138

Stock-in-Trade 17 200,219,526 248,540,360

Trade Debts - Considered Good 18 303,986,572 257,374,339

Loans and Advances - Unsecured, Considered good 19 2,621,137 6,093,178

Trade Deposits, Prepayments and Statutory Balances - Considered good 20 26,877,290 29,439,019

Other Receivables - Unsecured, Considered good 6,011,991 6,045,004

Income Tax Refunds and Advances 24,128,635 15,661,428

Cash and Bank Balances 21 2,153,597 2,031,567

577,437,965 575,336,033

935,083,162 884,340,967

The annexed notes form an integral part of these financial statements

(Rupees)Notes

14

ANNUAL REPORT 2011


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2011

15

ANNUAL REPORT 2011


Chairman / Director



June 30, June 30,

2011 2010

Sales - net 22 1,368,138,305 498,154,992

Cost of Sales 23 (1,342,223,213) (485,274,995)

Gross Profit 25,915,092 12,879,997

Operating Expenses

Distribution Cost and Selling Expenses 24 (4,073,614) (2,100,362)

Administrative and General Expenses 25 (25,851,905) (17,483,349)

(29,925,519) (19,583,711)

Operating Loss (4,010,427) (6,703,714)

Finance Cost 26 (1,192,932) (7,120,282)

Loss Before Taxation (5,203,359) (21,145,714)

Taxation

- Current 12 (14,242,566) (2,507,594)

- Deferred 9 34,752,261 610,457

20,509,695 (1,897,137)

Profit / (Loss) After Taxation 15,306,336 (23,042,851)

Earning / (Loss) Per Share - Basic 27 2.69 (4.06)


(Rupees)Notes

Impairment in investment - (7,321,718)

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED JUNE 30, 2011

16

ANNUAL REPORT 2011


Chairman / Director



June 30, June 30,

2011 2010

Profit / (Loss) for the year 15,306,336 (23,042,851)

Other Comprehensive Income

Available for sale financial assets:

Changes in fair value 35,185,036 1,291,193

impairment carried directly in equity -- --

impairment charged to profit & loss -- 7,321,718

Total comprehensive income for the year 50,491,372 (14,429,940)


(Rupees)

35,185,036 8,612,911

June 30, June 30,2011 2010

CASH FLOW FROM OPERATING ACTIVITIES

Profit /(Loss) before Taxation (5,203,359) (21,145,714)

Adjustment for Non-Cash and Other Items:

Depreciation 24,029,709 24,019,422Impairment Profit /(Loss) -- 7,321,718Provision for Gratuity 1,021,761 2,712,032Finance Cost 1,192,932 7,120,282

26,244,402 41,173,454

21,041,043 20,027,740

Working Capital Changes

(Increase) / Decrease in Current Assets

Stores, Spares and Loose Tools (1,288,079) (1,350,131)

Stock-in-Trade 48,320,834 68,217,338

Trade Debts (46,612,231) (59,733,981)

Loans and Advances 3,472,041 2,530,177

Trade deposits, Prepayments & Statutory balances 2,561,729 (3,234,343)

Other Receivables 33,013 8,177,040

Increase / (Decrease) in Current Liabilities

Trade and Other Payables 25,319,077 18,490,375

31,806,384 33,096,475

Taxes Paid (8,467,207) (4,380,853)

Gratuity Paid (1,801,984) (6,767,733)

(10,269,191) (11,148,586)

Net Cash Inflow/ (Outflow) from Operating Activities 42,578,236 41,975,629

CASH FLOW FROM INVESTING ACTIVITIESFixed Capital Expenditure (37,484,938) (277,200)

Net Cash Inflow/ (Outflow) from Investing Activities (37,484,938) (277,200)

CASH FLOW FROM FINANCING ACTIVITIESFinance Cost Paid (1,192,932) (11,865,448)

Net Cash Inflow/ (Outflow) from Financing Activities (1,192,932) (11,865,448)

Net Increase / (Decrease) in Cash and Cash Equivalents 3,900,366 29,832,981

Cash and Cash Equivalents at the Beginning (345,336,923) (375,169,904)

Cash and Cash Equivalents at the End (note 31) (341,436,557) (345,336,923)


(Rupees)

CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2011

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ANNUAL REPORT 2011


Chairman / Director



STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2011

18

ANNUAL REPORT 2011

Share

Capital

General

Reserve

Impairment

Loss/gain on

available for

sale

investment

Unappropriate

d Profit / (Loss)

Total

Balance as on July 01, 2009 56,824,590 135,000,000 (8,612,911) (90,995,499) 92,216,180

Total Comprehensive income for the year -- -- 8,612,911 (23,042,851) (14,429,940)

Balance as on June 30, 2010 56,824,590 135,000,000 -- (114,038,350) 77,786,240

Balance as on July 01, 2010 56,824,590 135,000,000 -- (114,038,350) 77,786,240

Total Comprehensive income for the year -- -- 35,185,036 15,306,336 50,491,372

Balance as on June 30, 2011 56,824,590 135,000,000 35,185,036 (98,732,014) 128,277,612


(Rupees)


Chairman / Director



NOTES TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 2011

1. Corporate Information

Dewan Khalid Textile Mills Limited (the Company) was incorporated in Pakistan, as a public limited company

on April 03, 1978, under the Companies Act, 1913 (Now the Companies Ordinance, 1984) and its shares are

listed on the Karachi and Lahore Stock Exchanges in Pakistan. The registered office of the company is located at

Finance & Trade Center, Block A, 8th Floor, Shahrah-e-Faisal, Karachi, Pakistan; while its manufacturing

facilities are located at G-11, S.I.T.E., Kotri, Sind, Pakistan. The Principal activity of the Company is trading,

manufacturing and sale of yarn.

1.1 Going Concern Assumption

The financial statements for the year ended June 30, 2011 reflect profit after taxation of Rs. 15.306 million

without providing financial charges for the year amounting to Rs. 54.975 million as disclosed in note 26.1

to these financial statements. As of June 30, 2011 company’s current liabilities exceeded its current asset

by Rs. 224.715 million. Furthermore, the Company is facing litigations with the lenders (Banks) as

disclosed in note 13.4 to the financial statements, therefore, the banks have not renewed financing

facilities/credit limits for the Company.

2. Statement of Compliance

These financial statements have been prepared in accordance with approved accounting standards, as applicable

in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards

(IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance,

1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements

differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

Standards, interpretations and amendments to approved accounting standards are effective during

the year

The accounting policies adopted in the preparation of these financial statements are consistent with those of the

previous financial year, except as follows:

The Company has adopted the following new amended IFRS and IFRIC interpretations which became effective

during the year:

IFRS 2 - Group Cash -settled Share-based Based Payment Arrangemnets

IAS 32 - Financial Instruments: Presentation- Classification of Rights issues (Amendments)

IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments

The management is confident that the out come of the litigations

filed by the banks / financial institutions will be in favor of the company. These financial statements have

been prepared under going concern assumption as the aforesaid situation is temporary not permanent and

would reverse in future.

Company approached its lenders for the restructuring of its entire debt in the past. The management

believes that the restructuring proposal presented is workable and will be accepted by the lenders. At

present the proposed financial restructuring of banking facilities have entered into the final stage of

negotiations and will be closed in near future.

19

ANNUAL REPORT 2011


20

ANNUAL REPORT 2011

Improvements to various standards issued by IASB:

Issued in 2009IFRS 5 - Non current assets Held for Sale and Discontinued operationsIFRS 8 - Operating SegmentsIAS 1 - Presentation of Financial Statements IAS 7 - Statement of Cash flows Presentation of Financial Statements IAS 17 - LeasesIAS 36 - Impairmant of AssetsIAS 39 - Financial Instruments: Recognition and Measurement

Issued in May 2010IFRS 3 - Business CombinationsIAS 27 - Consolidated and separate Financial Statements

The adoption of the above standards, amendments and interpretations did not have any effect on the financial statements.

The company has not early adpoted any standard, interpretations or amendment that has been issued but is not yet effective.

Standards, interpretations and amendments to approved accounting standards that are not yet effective:The following revised standards, interpretations and amendments with respect to the approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard, interpretation or amendment:

Standards, interpretations and amendments Effective date(accounting periodsbeginning on or after)

IAS - 1Presentation of Financial statements - amendments to revise theway other comprehensive income Presentated January 01, 2011

IFRS 7 Financial Instruments: Disclosures - Amendments enhancingdisclosures about transfers of financial assets January 01, 2010

IAS - 12 Income tax (Amendment)- Deferred taxes:Recovery of underlying assets. January 01, 2011

IAS - 19 Employees Benefits- Amended Standard resultingfrom the post- employment benefits and termination benefits projects. January 01, 2011

IAS - 24 Related Party Disclosures (Revised) January 01, 2011

IFRIC 14 Prepayments of a Minimum Funding Requirements (Amendment) January 01, 2011

The Company expects that the adoption of the above revisions, interpretations and amendments of the standards will not affect the Company's financial statements in the period of initial application.

In addition to the above, amendments to various accounting standards have also been issued by the IASB . Such improvements are generally effective for accounting periods beginning on or after January 01, 2011. The Company expects that such improvements to the standards will not have any material impact on the Company's financial statements in the period of initial application.


21

ANNUAL REPORT 2011

Further, the following new standards have been issued by IASB which are yet to be notified by the SECP for the Purpose of applicability in Pakistan.

Standards IASB Effective date (Annual periodsbeginning on or after)

IFRS 9 - Financial Instruments January 01, 2015IFRS 10 - Consolidated finacial Statements January 01, 2013IFRS 11 - Djoint Arrangements January 01, 2013IFRS 12 - Disclosure of interest in Other Entities January 01, 2013IFRS 13 - Fair Value Measurement January 01, 2013

3. Significant Accounting Judgements, Estimates and Assumption The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Estimates and judgments are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

In the process of applying the Company’s accounting policies, management has made the following estimates and judgments which are significant to the financial statements:

3.1 Property, plant and equipment Estimates with respect to residual values and depreciable lives and pattern of flow of economic benefits are based on the recommendation of technical team of the company. Further, the Company 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 a amounts of the respective items of tangible fixed assets with a corresponding affect on the depreciation charge and impairment.

3.2 TaxationIn making the estimates for income taxes payable by the Company, the management considers applicable tax laws and the decisions of appellate authorities on certain cases issued in past. Deferred tax assets are recognized for all unused tax losses and credits to the extent that it is probable that taxable profit will be available against which such losses and credits can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

3.3 Stock-in-tradeThe Company reviews the Net Realizable Value (NRV) of stock-in-trade to assess any diminution in the respective carrying values.

3.4 Provision for doubtful receivables A provision for impairment of trade and other receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of receivables. These estimates and underlying assumptions are reviewed on an ongoing basis.

3.5 Staff retirement benefits Certain actuarial assumptions have been adopted as disclosed in note 8 to the financial statements for valuation of present value of defined benefit obligations and fair value of plan assets. Any changes in these assumptions in future years might affect unrecognized gains and losses in those years. The actuarial valuation involves making assumptions about discount rate, future salary increases and mortality rates.


22

ANNUAL REPORT 2011

4. Approval of Financial StatementsThese financial statements were approved by the Board of Directors and authorized for issue on September 30, 2011.

5. Summary of Significant Accounting Policies

5.1 Basis of Measurement and PresentationThe financial statements have primarily been prepared under the historical cost convention without any adjustments for the effect of inflation or current values, except for the financial assets and liabilities which are carried at their fair values and certain employee benefits are based on actuarial valuation and stock in trade which are valued at net realizable value, if it is less than the cost. Further, accrual basis of accounting is followed except for cash flow information.

5.2 Post Employment Benefits

Defined Benefit PlanThe Company operates an unfunded gratuity scheme for its non-mangement staff. Provisions are made, based on actuarial recommendations. Actuarial valuation is carried out using the 'Projected Unit Credit' method, as required by International Accounting Standard 19 "Employee Benefits". In line with the recognition of the resulting actuarial gain or loss over a period of three years, the frequency of carrying out an actuarial valuation is three years.

Defined Contribution PlanThe company upto June 30, 2010 was operating an un-funded gratuity scheme for its management employees as well. Provision was made accordingly in the financial statements to cover obligations under the scheme. The Company has fully provided for the liability under the gratuity scheme as of June 30, 2010. Effective from July 01, 2010, the company has, in place of gratuity scheme, established a recognised provident fund for its permanent management staff. Equal contributions are being made in respect thereof by company and employees in accordance with the terms of of the fund.

5.3 Trade and Other Payables Trade and other payables are stated at their cost.

5.4 TaxationCurrent Year Provision in respect of current year's taxation is based on the method of taxation prescribed under the Income Tax Ordinance, 2001, whereby taxable income is determined and tax charged at the current rates of taxation after taking into account tax credits and rebates available, if any, or the minimum tax liability determined under Section 113 of the Income Tax Ordinance, 2001, whichever is higher.

Deferred Deferred tax is provided using the liability method on all temporary differences at the balance sheet date, between the tax bases of assets and liabilities and their carrying amount for financial statements reporting purposes. Deferred tax liabilities are generally recognized for all temporary taxable differences.

Deferred tax assets are recognized for all deductible temporary differences 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 assets and liabilities are measured at the tax rates that are expected to apply when the asset is realized or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date


23

ANNUAL REPORT 2011

5.5 Property, Plant and Equipment- Owned

Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment losses, if any; except for lease hold land and capital works in progress which are stated at cost accumulated up to the balance sheet date.

- LeasedThe company accounts for fixed assets acquired under finance leases by recording the assets and the related liability. These amounts are determined as the fair values or discounted value of minimum lease payments; whichever is the lower, as at inception, less accumulated depreciation and impairment losses. 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.

- DepreciationDepreciation is charged from the month of acquisition or transfer of assets from capital work in progress on proportionate basis and until disposal or retirement, using the reducing balance method whereby the cost of an asset is written off over its estimated useful life and the rates applied are in no case less than the rates prescribed by the Central Board of Revenue. The depreciation method and useful lives of the items of property, plant and equipment are reviewed periodically and altered if circumstances or expectations have changed significantly. Any change is accounted for as a change in accounting estimate by changing the depreciation charge for the current and future periods.

The assets' residual values and useful lives are reviewed at each financial year end, and adjusted , if appropriate, at each balance sheet date.

- Repairs, renewals and maintenanceMajor repairs and renewals are capitalized . Normal repairs and maintenance are charged as expense when incurred. Gains or losses on disposal or retirement of assets are determined as the difference between the sale proceeds and the carrying amounts of these assets, and are included in the income currently.

5.6 LeasesFinance leases, which transfer to the company, substantially all the risks and benefits incidental to ownership, are capitalized at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

5.7 Investment in Related Companies (Available for sale) Available for sale investments are initially recognized at cost being the fair value of the consideration given including acquisition charges associated with.

After initial recognition, investment which are classified as available for sale are remeasured at fair value. Unrealized gains and losses on available for sale investments are recognized in equity till the investment is sold or otherwise disposed off, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in income.

5.8 Stores, Spares and Loose Tools These are stated at the lower of cost and net realizable value. The cost of inventory is based on the weighted average cost. Items in transit are stated at cost accumulated up to the date of the balance sheet.

Provision is made for any slow moving and obsolete items.

5.9 Stock-in-TradeThese are valued as follows : Raw Material : At lower of weighted average cost or net realizable value.

Cost of raw material and components represents invoice value plus other charges paid thereon.


24

ANNUAL REPORT 2011

Finished Goods : At lower of weighted average cost or net realizable value.Cost of finished goods comprises of prime cost and an appropriate portion of production overheads.

Waste : At net realizable value.

Work-in-Process : At weighted average cost.This comprises the direct cost of raw materials, wages, and appropriate manufacturing overheads.

Stock in Transit : At cost accumulated upto the balance sheet date.

Stock at fair price shop : At cost calculated on the First-in-first -out method of valuation.

Packing Material : At lower of weighted average cost or net realizable value.

Net Realizable Value signifies the estimated selling price in the ordinary course of business less cost necessary to be incurred in order to make the sale.

Provision for obsolete and slow moving stock is determined based on the management assesments regarding their future useability.

5.10 Trade Debts & Other Receivables Trade debts originated by the company are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts. An estimate for a doubtful receivable is made when collection of the whole or part of the amount is no longer probable. Bad debts are written off as incurred.

5.11 Foreign Currency Translation Transactions in foreign currencies are initially recorded using the rates of exchange ruling at the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Rupees at the exchange rates prevailing on the balance sheet date. In order to hedge its exposure to foreign exchange risks, the company enters into forward exchange contracts. Such transactions are translated at contracted rates. All exchange differences are included in the Profit and Loss Account.

5.12 Revenue Recognition- Revenue from sales is recognized on dispatch of goods to customers.

- Dividend income is recognized on the basis of declaration by the Investee company.

5.13 Borrowing CostBorrowing Costs are recognized initially in fair value net of transaction costs incurred.

Borrowing cost 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, are added to the cost of those assets until such time the assets are substantially ready for their intended use. All other borrowing costs are charged to income in the period in which they are incurred.

5.14 Provisions A provision is recognized in the balance sheet when the company has a legal or constructive obligation, and, as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and that a reliable estimate can be made for the amount of this obligation.


25

ANNUAL REPORT 2011

5.15 Financial Instruments

Recognition

All financial assets and liabilities are recognized at the time when the company becomes a party to the

contractual provisions of the instrument. Any gain or loss on derecognition of the financial assets and

financial liabilities are taken to profit and loss account to which it arises.

Off Setting

Financial asset and financial liability is set off and the net amount is reported in the balance sheet if the

company has a legal right to set off the transaction and also intends either to settle on a net basis or to realize

the asset and settle the liability simultaneously. Corresponding income on assets and charge on liability is

also offset.

Derivatives

Derivatives that do not qualify for hedge accounting are recognized in the balance sheet at estimated fair

value with corresponding effect to profit and loss. Derivative financial instruments are carried as assets

when fair value is positives and liabilities when fair value is negative.

5.16 Cash and Cash Equivalents

Cash and Cash Equivalents for cash flow purposes include cash in hand, current and deposit accounts held

with banks. Running finances facilities availed by the company which are payable on demand and form an

integral part of the Company's cash management are included as part of cash and cash equivalents for the

purpose of statement of cash flows.

5.17 Impairment of Assets

The carrying amounts of the assets are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized

whenever the carrying amount of an asset exceeds its recoverable amount, whereby the asset is written

down and that impairment losses are recognized in the profit and loss account.

5.18 Related Party Transactions

All transactions with related parties are carried out by the company at arm's length prices.

5.19 Loans, Advances and Other Receivables

Loans, advances and other receivables are recognized initially at cost, and subsequently at their amortized/

residual cost.

5.20 Short Term and Long Term Loans

Loans, advances and other receivables are recognized initially at cost, and subsequently at their mortized/

residual cost.

5.21 Dividend and appreciation to reservesDividends and appreciations to reserves, subsequent to the balance sheet date are considered as non-adjusting events and are recognised in the financial statements in the period in which such dividends and appropriations are approved.


26

ANNUAL REPORT 2011

6.1 The shareholders are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at the meetings of the company. All shares rank equally in respect to the company's residual assets.

6.2 The pattern of shareholding, as required under the Code of Corporate Governance issued by the Securities and Exchange Commission of Pakistan, is attached at the end of this report.

7 Long Term Loan - SecuredBalance at beginning -- 8,000,000Less: Installments due within the following twelve months -- (8,000,000)

-- --

The Company obtained Long Term Loan amounting to Rs. 64 Million for the purchase of plant & Machinery. The facility carries a floating markup rate linked to the three months KIBOR Bills of the State Bank of Pakistan, as base rate plus 2.5% per annum. The tenure of financing is five years including a grace period of one year. The finance facility is payable in sixteen equal quarterly installments commencing from December 31,2005. The Purchase price of the facility is Rs. 76.141 million. The facility is secured by way of first pari passu hypothecation charge over the company present and future fixed assets, upto an aggregate amount of Rs.100 million.

This includes overdue installments amounting to Rs. 8 million. The bank has filed suit in the High Court of Sindh U/s 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 for recovery of the full amount as fully disclosed in note 13.4 to the financial statements.

Since the company is litigation with banks no confirmations has been received from the Bank for above Amount.

8 Provision for Staff GratuityBalance at beginning 5,432,541 9,488,242Payments during the year (1,801,984) (6,767,733)

3,630,557 2,720,509Provision for the year 8.2 1,021,761 2,712,032

4,652,318 5,432,541

1,963,278 2,185,9268.1 Balance Sheet Reconciliation

Present value of defined benefit obligations Add: Benefits payable ceased (net of unrecognised acturial loss)

2,689,040 3,246,6154,652,318 5,432,541

June 30, June 30,2011 2010

6 Issued, Subscribed and Paid-up CapitalNo. of Ordinary Shares of Rs.10/- each

Fully Paid in cash 18,000,000 18,000,000

Issued as fully paid bonus shares 38,824,590 38,824,59056,824,590 56,824,590

(Rupees)

2010

1,800,000

3,882,459

5,682,459

2011

1,800,000

3,882,459

5,682,459


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ANNUAL REPORT 2011

1,020,000 2,413,385-- 298,647

1,020,000 2,712,032

9 Deferred TaxationThe liability for deferred taxation comprises of timing differences relating to:

Deferred tax liability arising due to accelerated tax depreciation 50,635,489 36,653,650

Deferred tax assets arising out of staff gratuity, tax loss and others (50,635,489) (1,901,389) -- 34,752,261

34,752,261 35,362,718

13,981,839 (2,029,953)(48,734,100) 1,419,496

9.1 The movement for the year, in the company's net deferred tax position was as follows:

Balance at beginning

Increase / (decrease) in deferred tax liabilitiesDecrease / (increase) in deferred tax assetsDeferred tax for the year (34,752,261) (610,457)

-- 34,752,261

10 Trade and Other PayablesCreditors 10.1 352,792,421 326,748,786Accrued Expenses 46,255,451 46,980,009Unclaimed Dividend 334,741 334,741

399,382,613 374,063,536

June 30, June 30,2011Note 2010

(Rupees)

758,001 1,676,787263,760 1,035,245

1,021,761 2,712,032

11 % per annum 11 % per annum12 % per annum 12 % per annum

8.4 The charge for the year has been allocated as follows

Cost of SalesAdministrative expenses

8.2 Charge for the YearService cost Interest cost

8.3 Principal Actuarial AssumptionExpected rate of increase in salariesDiscount factor usedRetirement age 8 years 10 years


28

ANNUAL REPORT 2011

11.1 The company has facilities for short term running finances under mark-up arrangements amounting to Rs.

400 million (2010: Rs. 400 million) from banks. The facility carries mark-up at the rate of 14.33% ~

16.53% per annum (2010: Re. 14.34% ~ 15.80%) per annum. These facilities are secured against

hypothecation charge on stocks-in-trade and trade debts. These facilities are generally for twelve months

renewable at the end of the period. The mark-up on running finance facilities is payable on a quarterly

basis.

The facility for opening of letters of credit as at June 30, 2011, amounted to Rs. 425 million (2010: Rs. 425

million).

The banks has filed recovery suit in Hon'able High court of sindh at Karachi as more fully describe in note

13.4 of the financial statements. Further, the company has not charged markup on the loan during the year

as disclosed in note 26.1 to the financial Statement.

Since the company is in litigation with banks, confirmations have not been received from Banks/ Financial

institutions amounting to Rs. 174.1 million.

11.2 This represents unpresented cheques

12 Provision for TaxationBalance at the beginning 10,578,717 8,071,123Add: Provision for the year 14,242,566 2,507,594

24,821,283 10,578,717

10.1 This includes Rs. 122.70 (2010: Rs. 122.70) million payable to associated undertaking.

11 Short Term Borrowings - SecuredShort term Running Finance 11.1 232,154,914 231,995,918 Short term Loan 98,131,536 98,131,536 Book Overdraft 11.2 13,303,704 17,241,036

343,590,154 347,368,490


(Rupees)


The income tax returns of the company has been filed upto tax year 2010 to income tax department and theassessments of the company have been finalized upto and including the tax year 2010. However, thecommissioner of income tax may at any time during a period of five years from the date of fling of returnmay select the deemed assessment for audit.

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ANNUAL REPORT 2011


(Rupees)

13.4 In respect of loans disclosed in the financial statements, certain Banks / Financial Institutions filed suits in Honorable High Court of Sindh at Karachi for recovery of suits amount to the extent of Rs. 418.87 million as their claim of loans, through attachment and sale of Company’s hypothecated / mortgaged properties. A bank also filed winding up petition u/s 305 of the Companies Ordinance, 1984.

The management has disputed the claims and is strongly contesting the cases. The management has filed counter claims alleging that the banks’ claims are highly exaggerated as they have charged markup on markup and other levies higher than the rate of markup agreed and other charges in violation of State Bank of Pakistan’s rules and other applicable laws of Pakistan. The management is hopeful that the decision will be in favor of the company and the base less suits shall be rejected by the concerned courts.

14 Tangible Fixed AssetsProperty, Plant and Equipment 14.1 273,321,891 210,535,609Capital Works-in-Progress 14.2 -- 49,331,055

273,321,891 259,866,664

13 Contingencies and Commitments13.1 Guarantees issued by banks Nil Nil 13.2 Local Bills discounted Nil Nil 13.3 Letters of Credit for other than capital expenditures Nil 31.569 million

12.1 Relationship between income tax expense and accounting profit

Accounting Loss as per accounts (5,203,359) (21,145,713)

Applicable tax rate 35% 35%

Tax payable on accounting Loss (1,821,176) (7,401,000)Tax effect of timing difference on depreciation 30,957,578 2,028,881

2,423,853 3,317,918

(31,560,255)Tax payable under normal rules -

(2,054,201)

12.2 Minimum tax payable under income tax ordinance 2001 14,242,566 (2,507,594)

Effect of Loss carried / (brought) forward

Tax effect of expenses / provision that are not deductible indetermining taxable loss charged to profit and loss account


-

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ANNUAL REPORT 2011

14.1 Property, Plant and Equipment - At cost less accumulated depreciation


For the

year

--

22,142,445

4,906,346

8,333,963

244,287,437

50,167,255

5,655,709

16,750,620

2,737,582

23,532,328

4,433,103

382,946,788

358,927,364

--

20,381,506

4,156,792

8,332,475

229,035,577

47,054,009

5,637,160

15,538,646

2,512,798

22,050,961

4,227,439

358,927,364

332,148,486

(Deletions) /

(Transfer)

--

--

--

--

--

--

--

--

--

--

--

RUPEES

1,651,808

75,585,756

11,652,333

8,338,425

430,170,363

78,186,466

5,760,815

27,658,382

5,552,161

29,457,798

6,284,081

680,298,388

593,482,395

1,651,808

37,990,890

11,652,333

8,338,425

381,734,174

78,186,466

5,760,815

27,658,382

4,767,223

29,457,798

6,284,081

593,482,395

593,205,195

Allocation of Depreciation 2011 2010

Depreciation for the year has been allocated as follows: (Rupees)

Cost of Sales 22,659,517 22,332,391

Administrative and General Expenses 1,370,192 1,687,032

24,029,709 24,019,423

--

37,594,866

--

--

48,436,189

--

--

--

784,938

--

--

86,815,993

277,200

1,651,808

37,990,890

11,652,333

8,338,425

381,734,174

78,186,466

5,760,815

27,658,382

4,767,223

29,457,798

6,284,081

593,482,395

593,205,195

As at

July01, 2010

1,651,808

37,990,890

11,652,333

8,338,425

381,464,174

78,186,466

5,760,815

27,658,382

4,760,023

29,457,798

6,284,081

593,205,195

584,895,823

As at

July

01, 2009

--

--

--

--

270,000

--

--

--

7,200

--

--

277,200

8,309,372

Additions /

Transfer

Additions / As at

Transfer June30, 2011

Non Factory Building

Generators

--

--

Factory and Office Equipments

Cost

Labour Quarters

Plant and Machinery

Particulars

Electric Installation

Power House

OWNED

Lease Hold Land

Factory Building

June 30, 2010

Sub Total

June 30, 2011

Equipments

Vehicles

Furniture and Fixture

Rate Written Down

As at Adjustments / For the As at Value as at

% July Transfer year June June01, 2010 30, 2011 30, 2011

-- -- -- -- 1,651,808

10 -- 1,898,135 24,040,580 51,545,176

10 -- 674,599 5,580,945 6,071,388

25 -- 1,116 8,335,079 3,347

10 -- 15,937,475 260,224,912 169,945,451

10 -- 2,801,921 52,969,176 25,217,290

15 -- 15,766 5,671,475 89,340

10 -- 1,090,776 17,841,396 9,816,986

10 -- 239,729 2,977,311 2,574,850

20 -- 1,185,094 24,717,422 4,740,376

10 -- 185,098 4,618,201 1,665,880

-- 24,029,709 406,976,497 273,321,891

-- 24,019,422 382,946,786 210,535,609

RUPEES

Depreciation

(Deletions) / As at

(Transfer) June

30, 2010

--

--

Non Factory Building --

--

--

Generators --

--

--

--

--

--

--

--

June 30, 2010

June 30, 2009

Equipments

Vehicles

Furniture and Fixture

Sub Total

Plant and Machinery

Electric Installation

Power House

Factory and Office Equipments

OWNED

Lease Hold Land

Factory Building

Labour Quarters

RUPEES

Cost

Particulars

Rate Written Down

As at Adjustments / As at Value as at

% July Transfer June June

01, 2009 30, 2010 30, 2010

-- -- -- -- 1,651,808

10 -- 1,760,938 22,142,445 15,848,445

10 -- 749,554 4,906,346 6,745,987

25 -- 1,488 8,333,963 4,462

10 -- 15,251,860 244,287,437 137,446,737

10 -- 3,113,246 50,167,255 28,019,211

15 -- 18,548 5,655,709 105,106

10 -- 1,211,974 16,750,620 10,907,763

10 -- 224,783 2,737,582 2,029,642

20 -- 1,481,367 23,532,328 5,925,471

10 -- 205,664 4,433,103 1,850,979

-- 24,019,422 382,946,786 210,535,609

-- 26,778,878 358,927,364 234,277,831

Depreciation

RUPEES

31

ANNUAL REPORT 2011

11,736,189 11,736,18937,594,866 37,594,86649,331,055 49,331,055

-- --49,331,055 49,331,055

14.2 Capital Works-in-ProgressPlant and Machinery Buildings and Civil Works

Addition during the year

Transfer to Fixed Assets 49,331,055 ---- 49,331,055

15 Long Term InvestmentShares in Dewan Salman Fibre Limited(A Listed Associated Company)32,279,849 (2010: 32,279,849) fully paid up ordinary shares of Rs.10/- each.(including 25,779,849 bonus shares) 65,000,000 65,000,000

Surplus due to change in fair value of investments 19,250,406 (15,934,630)

Aggregate Market value as at June 30 2011 Rs. 2.61 (2010: Rs.1.52) per share 84,250,406 49,065,370

Percentage of Holding 8.81% 8.81%

15.1

16 Stores, Spares & Loose ToolsStores and Spares 8,762,452 8,048,088Packing Material 2,676,765 2,103,050

11,439,217 10,151,138

17 Stock-in-TradeRaw Materials 22,182,569 18,669,179Work-in-Process 15,421,780 14,664,851Finished Goods 157,425,340 206,575,685Waste 5,189,837 8,630,645

200,219,526 248,540,360

18 Trade Debts - Considered GoodLocal Receivables - Unsecured 303,986,572 257,374,339

303,986,572 257,374,339

17.1 Stock-in-trade and trade debtors are under hypothecation as security for the company's short term finances(See Note 11.1


(Rupees)

The market price of associated company's share wherein company has investment showsdecreasing trend from the date of balance sheet to the date the financial statements are authorizedfor issue. The market price as of September 30, 2011 (i.e. the date on which the financial statements were au thor ized for i s sue) i s Rs .1 .94 per share , thereby decreas ing the marke tvalue of the investment by Rs.21.627 millions.


32

ANNUAL REPORT 2011

176,312,213 151,850,860 112,475,031 90,081,019 15,199,328 15,442,460 303,986,572 257,374,339

19 Loans and Advances - Unsecured, Considered GoodAdvance against Supplies 1,550,545 5,260,961Loans and Advances to employees 1,070,592 832,217

2,621,137 6,093,178

20 Trade Deposits, Prepayments and Statutory Balances - Considered goodDeposits 18,650,409 18,810,409Sales Tax Receivable 8,226,881 10,628,610

26,877,290 29,439,019

21 Cash and Bank BalancesCash in Hand 148,409 227,738Cash at Banks - Current Accounts 2,005,188 1,803,829

2,153,597 2,031,567

22 SALES - Net Yarn

- Local 1,353,565,018 497,204,162Waste 15,221,325 4,314,650Gross Sales 1,368,786,343 501,518,812

Commission - On Local Sales (648,038) (3,363,820)

1,368,138,305 498,154,992

18.1 The aging of Debtors at the repoting date was:Up to one month1 to 6 months More than 6 months

Since the company is in litigation with banks, certain confirmations have not been received.


(Rupees)

Based on past experience the management believes that no impairment allowance is necessary in respect of trade debts due to major amount of trade debts have been recovered subsequent to the balance sheet date and for the rest of the trade debts management believes that the same will be recovered in short course of time. The credit quality of the company's receivable can be measured with their past performance of no default.


33

ANNUAL REPORT 2011

June 30, June 30,2011 2010

23 Cost of SalesRaw Material Consumed 23.1 1,026,000,915 284,806,128Packing Material 15,854,885 4,710,696Stores and Spares Consumed 17,728,892 7,149,555Fuel and Power 91,894,553 38,339,594Salaries, Wages and Other Benefits 23.2 96,778,046 47,048,243Insurance 1,857,885 2,155,050Vehicle Expenses 570,567 282,835Repairs and Maintenance 1,407,509 214,499Rent, Rates and Taxes 415,755 210,138Depreciation 14.1 22,659,517 22,332,391

1,275,168,524 407,249,130Work-in-Process - Opening 14,664,851 5,337,310Work-in-Process - Closing (15,421,780) (14,664,851)Cost of Goods Manufactured 1,274,411,595 397,921,588Finished Goods - Opening 215,206,330 292,865,081Purchase of yarn 15,220,465 9,694,656Finished Goods - Closing (162,615,177) (215,206,330)

1,342,223,213 485,274,995

18,669,179 18,555,3081,029,514,305 284,919,9991,048,183,484 303,475,307

(22,182,569) (18,669,179)

23.1 Raw Material ConsumedOpening StockPurchases - Net

Closing StockRaw Material Consumed 1,026,000,915 284,806,128

24 Distribution Costs and Selling ExpensesSalaries, Allowances and Other Benefits 735,000 --Advertisement & Publicity 54,137 40,839Cartage Freight and Octroi 1,558,830 244,001Distribution Expenses 1,725,647 1,815,522

4,073,614 2,100,362

(Rupees)

23.2 'Salaries, wages and other benefits include Rs. 2.960 million (2010: Rs. 2.413 million) relating to staffretirement benefits


34

ANNUAL REPORT 2011

25 Administrative and General ExpensesSalaries, Allowances and Other Benefits 25.1 7,269,402 5,822,038Travelling, Conveyance and Entertainment 477,679 387,883Printing and Stationery 583,667 322,052Communication 755,755 158,818Vehicles Expenses 1,645,422 702,472Legal and Professional Charges 3,231,016 1,216,050Fees and Subscription 292,774 259,060Other Expenses 5,734,448 6,002,944Depreciation 14.1 1,370,192 1,687,032Auditors Remuneration 25.2 390,000 300,000Donation 25.3 4,101,550 625,000

25,851,905 17,483,349

June 30, June 30,2011 2010

(Rupees)

25.1 Salaries, allowances and other benefits include Rs. 0.46 million (2010: Rs. 0.299 million) relating to staff retirement benefits.

25.2 Represents Audit fee (Annual, half year review and review of Code and corporate Governance) for the year.

25.3 Interest of the directors or their spouses in the donations made during the year is as follows:

Dewan Farooque Trust - related party 3,000,000 600,000

Dewan M.Yousuf Farooqui- Chairman board of Trustees

26 Finance CostMark-up on Short Term Borrowings -- 290,847Bank Charges and Commission 1,192,932 6,829,435 1,192,932 7,120,282

27 Earning / (Loss) Per Share - BasicPofit / (Loss) after Taxation 15,306,336 (23,042,851)

Weighted Average Number of Ordinary Shares 5,682,459 5,682,459

Earning / (Loss) Per Share - Basic Rupees 2.69 (4.06)

26.1 The company has not provided the markup on long term and short term borrowings from banks for the year amounting to Rs. 54.975 million on the contention of the Company as disclosed in note 13.4 to the Financial Statements. However had the company provided this amount in the financial statements during the year the profit of the Company would have been converted to loss of Rs. 39.37 million and accrued markup would have been increased by Rs. 54.975 million.


Mr. Haroon Iqbal - TrusteeMr. Aziz-ul-Haque - TrusteeMrs. Hina Yousuf (Directors’ Spouse) - Trustee

Dewan Abdul Baqi Farooqui - Trustee

No figure for diluted earning per share has been presented as the company has not yet issued any instrumentswhich would have an impact on basic earning per Share when exercised.

27.1

--

--

--

--

-

--

Particulars

Chief Directors Executives Total Chief Directors Executives Total

Executive Executive

Managerial Remuneration -- 600,030 1,160,058 1,760,088 600,030 1,476,741 2,076,771

Meeting fees -- -- -- -- -- -- --

House rent allowance -- 266,940 516,084 783,024 266,940 656,969 923,909

Utilities allowance -- 33,030 63,858 96,888 33,030 81,290 114,320

Total - 900,000 1,740,000 2,640,000 900,000 2,215,000 3,115,000

Number of persons -- 1 2 3 1 2 3

2011 2010

Rupees Rupees

35

ANNUAL REPORT 2011

28 Remuneration of Chief Executive, Director and Executives

The aggregate amount charged in the accounts for remuneration, including all benefits, to the Chief Executive,Directors and Executives of the Company was as follows:

28.1 The Chief Executive Officer, Director and Executives of the company are provided with free use of company maintained cars and utilities at their residences.

June 30, June 30,2011 2010

29 Related Party TransactionsSales 109.556 million 111.772 million

Purchases 37.619 million 9.695 million

Maximum amount due at any time during a month 14.989 million 76.541 million

Donation to Dewan Farooque Trust 3.000 million 0.600 million

(Rupees)

All transactions were carried out on commercial terms and conditions and were valued at arm's length price.Reimbursement of expenses were on actual basis. Remuneration and benefits to key management personnelunder the terms of their employment are given in note 28 above to the financial statements


Provident Fund 2.539 million Nil

36

ANNUAL REPORT 2011

30 Plant Capacity and Production

Particulars Kgs

Actual production at actual average count

Actual production converted to 20 count

Attainable capacity converted to 20 count

Number of spindles installed

Number of spindles worked

Number of shifts worked

Kgs

5,411,273

9,896,915

10,875,731

25,536

23,630

1,077

1,871,793

2,935,318

4,250,926

25,536

17,633

489

Note June 30, June 30,2011 2010

31 Cash and Cash EquivalentsCash and Bank Balances 21 2,153,597 2,031,567Short term Borrowings 11 (343,590,154) (347,368,490)

(341,436,557) (345,336,923)

(Rupees)

32 Financial Instruments

The Company has exposures to the following risks from its use of financial instruments:

Credit risk

Liquidity risk

Market risk

The Board of Directors has overall responsibility for the establishment and oversight of Company’s risk

management framework. The Board is also responsible for developing and monitoring the Company’s risk

management policies.

32.1 Credit risk

Credit risk is the risk that one party to the financial instruments will fail to discharge an obligation and

cause the other party to incur a financial loss. The Company believes that it is not exposed to major

concentration of credit risk. However, to reduce exposure to credit risk, if any, the management monitors

the credit exposure towards the customers and makes provisions against those balances considered

doubtful of recovery.

The maximum exposure to credit risk at the reporting date is:


June 30, June 30,2011 2010

Long term Investments 84,250,406 49,065,370 Trade Debts - Considered Good 303,986,572 257,374,339 Loans and Advances - Unsecured, Considered good 1,070,592 832,217 Trade Deposits, Prepayments and Statutory Balances - Considered good 18,650,409 18,810,409 Other Receivables - Unsecured, Considered good 6,011,991 6,045,004 Cash and Bank Balances 2,005,188 1,803,829

415,975,158 333,931,168

(Rupees)

37

ANNUAL REPORT 2011

32.2 Liquidity riskLiquidity 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 liability when due.

The company is exposed to liquidity risk in respect of non current interest bearing liabilities, short term borrowings, trade and other payable and mark up accrued.

The following are the contractual maturities of the financial liabilities, including estimated interest payments:

Carrying

amount

Contractual

Cash flows Six months or

less

Six to twelve

months

One Year

onward

Financial Liabilities

Long term Finances 8,000,000 10,424,000 10,424,000 -

Trade & other payables 399,382,613 399,382,613 159,753,045 239,629,568 -

Short term Borrowings 343,590,154 395,128,677 395,128,677 -

750,972,767 804,935,290 565,305,722 239,629,568 -

Carrying amount

Contractual

Cash flows

Six Months or

less Six to twelve

One Year

onward

Financial Liabilities

Long term Finances 8,000,000 10,424,000 10,424,000 - -

Trade & other payables 370,063,536 370,063,536 92,515,884 277,547,652 -

Short term Borrowings 330,127,454 419,043,895 419,043,895 - -

708,190,990 799,531,431 521,983,779 277,547,652 -

Rupees

2010

2011

Rupees


38

ANNUAL REPORT 2011

The contractual cash flows relating to the above financial liabilities have been determined on the basis of markup rates effective as at June 30, 2011. The rates of markup have been disclosed in relevent notes to the financial statements.

32.3 Market riskMarket risk is the risk that the value of a financial instrument will fluctuate resulting in as a result of changes in market prices or the market prices due to change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities, supply and demand of securities and liquidity in the market.

32.4 Currency riskForeign currency risk arises mainly due to conversion of foreign currency assets and liabilities into local currency. The Company is not materially exposed to foreign currency risk on foreign currency assets and liabilities.

32.5 Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate because of changes in market interest rates, majority of the interest rate exposeure arises from short and long term borrowings from bank and term deosits and deposits in profit and loss sharing accounts with banks. At the balance sheet date the interest rate profile of the company's iterest-bearing financial instruments are:

2011 2010Rupees

Fixed rate instruments - - Variable rate instruments Financial assets - - Financial liabilities 338,286,451 (338,127,454)

338,286,451 (338,127,454)

Carrying amounts

32.6 Risk management policiesRisk management is carried out by the management under policies approved by board of directors. The board provides principles for overall risk management, as well as policies covering specific areas like foreign exchange risk, interest rate risk and investing excessive liquidity.

32.7 Capital risk managementThe Company’s objective when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure the Company may adjust the amount of dividends paid to shareholders, issue new shares and take other measures commensuration to the circumstances.

Consistent with others in the industry, the company manages its capital risk by monitoring its debt levels and liquid assets and keeping in view future investment requirements and expectation of the shareholder. Debt is calculated as total borrowings ('long term loan' and short term borrowings' as shown in the balance sheet). total capital comprises shareholders' equity as shown in the balance sheet under 'share capital and reserves'.


39

ANNUAL REPORT 2011

2011 2010Rupees

Total Borrowings 351,590,154 355,368,490Less Cash and Bank Balances (2,153,597) (2,031,567)Net debt 349,436,557 353,336,923Total equity 93,092,576 77,786,240Total Capital 442,529,133 431,123,163

Gearing ratio 78.96% 81.96%

32.8 Fair value of financial instrumentsFair value is an amount for which an assets could be exchanged, or a liability settled, between knowledgeable willing parties in arm's length transaction. Consequently, differences may arise betwen the carrying value and the fair value estimates.

As at the reporting date the fair value of all financial assets and liabilities are estimated to approximate their carrying values.

33 Generali) Figures have been rounded off to nearest rupee.

ii) Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates. The financial Statements are presented in Pakistani rupees, which is the Company's functional and presentational currency.

iii) Comparitive figures has been rearranged and re-classified wherever necessary for the purpose of better presentation and comparison. However, there was no material reclassification to report.


Chairman / Director



PATTERN OF SHAREHOLDING UNDER REGULATION 37(XX) (I)OF THE CODE OF CORPORATE GOVERNANCE AS ON 30TH JUNE 2011

40

ANNUAL REPORT 2011

Srl # Categories of ShareholdersNumber of

Shareholders

Number of Shares

held

% of

Shareholding

1. Associated Companies 1 451,185 7.94%2. NIT and ICP 5 523,669 9.22%3. Directors, CEO, their Spouses & Minor Children 8 2,577,371 45.36%4. Executives 2 1,000 0.02%5. Public Sector Companies & Corporations 5 15,282 0.27%

6. Banks, Development Finance lnstitutions, Non-Banking Finance

Companies, Insurance Companies, Modarbas & Mutual Funds

2 91,370 1.61%

7. Individuals 696 2,022,583 35.59%

TOTAL 719 5,682,460 100.00%

Srl # NamesNumber of

Shareholders

Number of Shares

held

% of

Shareholding

1. Associated Companies

1.1 Dewan Motors (Pvt.) Limited 1 451,185 7.94%

2. NIT and ICP2.1 NATIONAL BANK OF PAKISTAN-TRUSTEE DEPT. NI(U)T FUND 1 279,486 4.92%

2.2 National Bank of Pakistan 3 169,830 2.99%

2.3 National Investment Trust Limited 1 74,353 1.31%

5 523,669 9.22%

3. Directors, CEO, their Spouses & Minor Children

Directors and CEO

3.1 Dewan Muhammad Yousuf Farooqui 1 1,174,319 20.67%3.2 Dewan Abdullah Ahmed Farooqui 1 321,618 5.66%3.3 Dewan Asim Mushfiq Farooqui 1 321,631 5.66%3.4 Dewan Abdul Rehman Farooqui 1 339,015 5.97%3.5 Dewan Abdul Baqi Farooqui 1 321,618 5.66%3.6 Mr. Haroon Iqbal 1 500 0.01%3.7 Mr. Aziz ul Haque 1 500 0.01%

7 2,479,201 43.63%

Spouses of Directors and CEO

3.8 Mrs. Heena Yousuf 1 65,766 1.16%

1 65,766 1.16%

Minor Children of Directors and CEO

3.9 Miss Yumna Yousuf 1 9,730 0.17%

3.10 Mr. Khizer Salman 1 23,674 0.42%

2 33,404 0.59%

Total Directors, CEO, Their Spouses & Children 10 2,578,371 45.37%

Srl # NamesNumber of

Shareholders

Number of Shares

held

% of

Shareholding

1 Dewan Muhammad Yousuf Farooqui 1 1,174,319 20.67%

DETAILS OF CATAGORIES OF SHAREHOLDERS

SHAREHOLDERS HOLDING 10% OR MORE OF THE VOTING SHARES/ INTERESTS IN THE COMPANY

DETAILS OF TRADING IN THE SHARES OF THE COMPANY BY DIRECTORS, CEO, CFO, COMPANY

SECRETARY, THEIR SPOUSES AND MINOR CHILDREN

During the year under review, none of the CEO, CFO, Directors, Company Secretary, their spouses and minor children have

traded in the shares of the Company.


PATTERN OF SHAREHOLDING AS ON 30TH JUNE 2011

4141

ANNUAL REPORT 2011

FORM 34

1. Incorporation Number

2. Name of the Company

3. Pattern of holding of the shares held by the

Shareholders as at

4. Number of

ShareholdersTotal Shares held

342 1 - 100 Shares 7,688194 101 - 500 Shares 53,04849 501 - 1,000 Shares 37,88781 1,001 - 5,000 Shares 191,05113 5,001 - 10,000 Shares 91,4335 10,001 - 15,000 Shares 63,8053 15,001 - 20,000 Shares 50,7225 20,001 - 25,000 Shares 117,8722 25,001 - 30,000 Shares 52,0964 30,001 - 35,000 Shares 127,8961 35,001 - 45,000 Shares 42,4991 45,001 - 50,000 Shares 48,7501 50,001 - 55,000 Shares 50,4201 55,001 - 60,000 Shares 59,8042 60,001 - 70,000 Shares 131,5321 70,001 - 75,000 Shares 74,3531 75,001 - 85,000 Shares 81,5871 85,001 - 110,000 Shares 108,0421 110,001 - 145,000 Shares 142,4251 145,001 - 170,000 Shares 166,1821 170,001 - 200,000 Shares 199,7161 200,001 - 275,000 Shares 272,8681 275,001 - 280,000 Shares 279,4861 280,001 - 305,000 Shares 301,9123 305,001 - 325,000 Shares 964,8671 325,001 - 340,000 Shares 339,0151 340,001 - 455,000 Shares 451,1851 455,001 - 1,175,000 Shares 1,174,319

719 5,682,460

5. Percentage

5.1

45.37%

5.2 7.94%

5.3 NIT and ICP 9.22%

5.41.05%

5.5 Insurance Companies 0.56%5.6 Modarabas and Mutual Funds 0.00%5.7 Shareholders holding 10% 20.67%5.8 General Public 0.00%

a. Local 35.59%b. Foreign 0.00%

5.9

0.27%

Others (Joint Stock Companies, Brokrage Houses,

Employees Funds & Trustees) 15,282

-

523,669

Banks, Development Financial Institutions, Non-

Banking Finance Companies59,804

31,566

-

1,174,319

2,022,583

Directors, Chief Executive Officer, their spouses

and minor children 2,578,371

Associated Companies, undertakings and related parties 451,185


Shareholdings

TOTAL

Categories of Shareholders Shares held

THE COMPANIES ORDINANCE, 1984

(Section 236(1) and 464)

PATTERN OF SHAREHOLDING

006194

3 0 0 6 2 0 1 1


I/we

of being a member (s) of

DEWAN KHALID TEXTILE MILLS LIMITED and holder of

Ordinary Shares as per Registered Folio No./CDC Participant's ID and Account No.

hereby appoint

of

or failing him

of

who is also member of DEWAN KHALID TEXTILE MILLS LIMITED vide Registered Folio

No./CDC Participant's ID and Account No. as my/our proxy to vote for me/us and

on my/our behalf at the 34th Annual General Meeting of the Company to be held on Wednesday, October

26th, 2011 at 10:30 a.m.and any adjournment thereof.

Signed this day of 2011.

Signature

Witness: Witness:SIGNATURE SIGNATURE

Name : Name :

Address : Address :


34TH ANNUAL GENERAL MEETING

FORM OF PROXY

AffixRevenueStampRs. 5/-

This form of Proxy duly completed must be deposited at our Shares RegistrarTransfer Agent BMF Consultants Pakistan (Private) Ltd.

Not later than 48 hours before the time of holding the meeting A Proxy should also be a member of the Company.

Anum Estate Building, Room No. 310 & 311, 3rd Floor, 49, Darul Aman Society, Main Shahrah-e-Faisal,Adjacent Baloch Colony Bridge, Karachi-75350, Pakistan.

Documents

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