QUETTA TEXTILE MILLS LIMITED

CORPORATE VISION / MISSION

STATEMENT

VISION
Quetta Textile Mills Limited is one of the leading manufacturers & exporters of yarns &
fabrics in Pakistan. The Company aims to become a market leader by producing high
quality products with the help of latest technologies. The Company strives to explore new
markets worldwide and at the same time tries to integrate its supply chain and diversify
its customer portfolio. The Company aims to be fittest in a changing market scenario
through effective Balancing, Modernization & Replacement of existing machinery.

MISSION
Our aim is to make Quetta Textile Mills Limited a secure & rewarding investment for its
shareholders & investors, a reliable source of high quality yarns & fabrics at affordable
prices to its customers all over the world, a secure place of work to its employees & an
ethical partner to its business associates.
QUETTA TEXTILE MILLS IMITED
Annual Report 2011
For the Year Ended June 30, 2011

CONTENTS

Corporate Information 3

Notice of Meeting 4

Chief Executives Review 5

Directors Report 6

Statement of Compliance of Code of 8

Corporate Governance

Auditors Review on compliance of 10

Code of Corporate Governance

Summary of Financial Data 11

Pattern of Share Holdings 12

Auditors Report of Members 14

Balance Sheet 15

Profit & Loss A/c 16

Statement of Comprehensive Income 17

Statement of Cash Flow 18

Statement of Change in Equity 19

Notes of the Financial Statements 20

 QUETTA TEXTILE MILLS LIMITED
CORPORATE INFORMATION

BOARD OF DIRECTORS Mr. Tariq Iqbal (Chief Executive)

Mr. Mr. Tauqir Tariq
Mr. Asim Khalid
Mr. Omer Khalid
Mrs. Saima Asim
Mrs. Tabbasum Tariq
Mrs. Sadaf Khalid

AUDIT COMMITTEE Mr. Asim Khalid (Chairman)

Mrs. Saima Asim (Member)
Mrs. Tabbasum Tariq (Member)

CHIEF FINANCIAL OFFICER Mr. Omer Khalid

COMPANY SECRETARY Mr. Muhammed Sohrab Ghani

AUDITORS Mushtaq and Company

Chartered Accountants
407 / 4th Floor, Commerce Centre
Hasrat Mohani Road, Karachi

BANKERS Allied Bank Limited

AlBaraka Bank (Pakistan) Limited
Al- Noor Modarba
Askari Bank Limited
Bank Alfalah Limited
Burj Bank Limited
Dubai Islamic Bank Pakistan Limited
Faysal Bank Limited
Habib Bank Limited
Habib Metropolitan Bank Limited
KASB Bank Limited
MCB Bank Limited
Meezan Bank Limited
National Bank of Pakistan
Soneri Bank Limited
Silk Bank Limited
Standard Chartered Bank (Pakistan) Limited
Summit Bank Limited
United Bank Limited

REGISTERED OFFICE Nadir House (Ground Floor)

I. I. Chundrigar Road, Karachi
MILLS P/3 & B/4, S.I.T.E., Kotri
49 K.M. Lahore Multan Road, Bhai Pheru

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 QUETTA TEXTILE MILLS LIMITED

NOTICE OF MEETING

NOTICE IS HEREBY GIVEN of the 47th Annual General Meeting of the Shareholders to be held on Monday , October 31, 2011 at 09.00
a.m. at the Registered office of the company at Nadir House, Ground floor, I.I Chundrigar Road, Karachi to transact the following
business.

1. To confirm the minutes of the 46th General Meeting held on January 29, 2011.
2. To receive, consider and approve the Audited Accounts and Directors Report thereon for the year ended June 30,
2011.
3. To appoint Auditors for the year 2011-2012 and fix their remuneration.
4. To transact any other business with the permission of the Chairman.

5. To approve 15% cash dividend for the year ended June 30, 2011 as recommended by the Board of Directors

By order of the Board

Karachi: October 08, 2011 MOHAMMAD SOHRAB GHANI
Company Secretary

1. A member entitled to attend the Annual General Meeting is entitled to appoint a proxy to attend and vote instead of him/her. Proxies
in order to be valid must be received at the registered office of the company 48 Hours before meeting commences.

2. For the purpose of entitlement of dividend, the Register of the members of the company will remain closed at registered office from
October 25, 2011 to October 31, 2011 (both days inclusive) and dividend approved will be paid to such members whose name
appear in the Company's register of member at the close of business on October 24, 2011.

3. Guidelines for CDC Account Holders for personal attendance:

i)In case of individuals, 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 Regulations, shall authenticate his / her identity by showing his/her original NIC at
the time of attending the meeting
ii) In case of corporate entity, the Board of Directors' resolution / power of attorney with specimen signature of the nominee shall
be produced (unless it has been provided earlier) at the time of meeting.
4. Shareholders are required to promptly notify at registered office of the company of any change in their address.

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 QUETTA TEXTILE MILLS LIMITED
CHIEF EXECUTIVE'S REVIEW

Dear Shareholders:

Presentation of these financial results for the year ended June 30, 2011 come at an extremely sad
time for your company, it's officers, workers, staff, financial institutions, and everyone else
associated with this organization. On August 30, 2011, we lost our dear and beloved CEO Mr.
Khalid Iqbal, while on company duty. He spent nearly half of his life of 68 years working
relentlessly to build this company from a sick spinning mill to what it is today. He will always be
remembered as a good muslim, a simple, direct, yet an assertive leader, a man of commitment with
a special dedication to work and business ethics. He will be in our hearts forever.

Your company earned a profit before tax of Rs.773.47 (M) as compared to Rs.375.60 (M) last year.
Turnover for the year ended was Rs.14.34 (B), as compared to corresponding year 2010 amounting
to Rs.9.33 (B), showing an increase of 53.67%. Good demand for textile products in the west, and
timely purchase of raw cotton at good prices at the start of the cotton season have resulted in
improved profit after tax from Rs.255.03 (M) to Rs.583.80 (M). Prices of yarn and fabric increased
exorbitantly during the first 9 months of this fiscal year, caused by sharp and continuous rise in
raw cotton prices. After April, prices abruptly dropped and kept declining further till June 2011.
This caused severe pressure on profitability due to remaining cotton stocks, which luckily were
held by your company only till June. So impact of this phenomenon negatively affected
profitability for the last two months of this year only. As a result your company managed to keep
bulk of the profits for the year.

We expect cotton prices to stabilize this year due to good cotton crop in Pakistan as well as the
world. However, productions may be curtailed due to severe electricity/ gas load-shedding.

Cotton prices for the coming year are expected to remain stable and attractive for the spinning
industry. Yet the highly uncertain global financial conditions, especially those prevailing in
Europe and the US continue to threaten world economy in general and textile markets
particularly.

Textile industry in Pakistan continues to suffer from very high interest rates, acute gas and
electricity shortage and severe lawlessness. Gas load-shedding has further increased from 2 days
weekly to 3 days. Next year is expected to be even worse with respect to gas shutdowns.

The company continues its focus on BMR in our spinning and weaving mills that is critical for the
company to keep its edge over competition and cater to the ever-changing demands of customers.

In the end I would like to thank all the financial institutions for their continued support and
confidence they have showed towards the company. To the workers, staff and officers, I extend
my gratitude for their dedication and honesty.

TARIQ IQBAL
Chief Executive
Karachi: October 08, 2011

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 QUETTA TEXTILE MILLS LIMITED
DIRECTORS' REPORT TO THE SHARE HOLDERS:
nd
The Directors have pleasure in presenting the 42 Annual Report of the company and the Auditor's Report thereon for the year ended
June 30, 2011.

FINANCIAL RESULTS Rupees

Net Profit before taxation 773,468,337
Less: Taxation 189,672,887
Net Profit after taxation 583,795,450
Un-appropriated profit brought forward 706,287,162
Transferred from surplus on revaluation of fixed assets on account of
incremental depreciation charged in current year 31,612,807
Dividend paid @ 20% for the year ended June 30, 2010 (26,000,000)
Available for appropriation 1,295,695,419
Un-appropriated profit 1,295,695,419

Profit after Taxation 583,795,450

Ordinary Shares 13,000,000
Earnings per share 44.91

CHAIRMAN'S REVIEW
The Directors of the Company endorse the contents of the Chairman's review, which is deemed to be a part of the
Director's report.

Operational Performance
Year ended June 30 Increase /
2011 2010 (Decrease)
(Amount in Rupees ) %age

Total Sales 14,343,553,424 9,334,111,703 53.67%

Local Sales 7,660,755,907 4,622,449,385 65.73%
Export Sales 6,682,797,517 4,711,662,318 41.84%
Gross Profit 2,293,589,872 1,707,970,650 34.29%

Salient Feature of the Accounting Results

The achievement of the year under review my be compared against preceding year in are as under
Year ended June 30
2011 2010
(Amount in Rupees )
Sales 14,343,553,424 9,334,111,703
Cost of Sales (12,049,963,552) (7,626,141,053)

Gross profit 2,293,589,872 1,707,970,650

Distribution cost (389,769,766) (286,765,433)
Administrative Expenses (35,755,750) (32,762,174)
Other operating expenses (122,050,909) (73,147,100)
Finance cost (978,217,081) (962,309,108)
(1,525,793,506) (1,354,983,815)
Other Operating Income 5,671,971 22,604,700
Profit before Tax 773,468,337 375,591,535

Financial Management
Cash flow Management

The Company has an effective Cash Flow Management system in Place whereby cash inflows and out flows are projected on regular basis.
Working Capital requirements are planned to be financed through internal cash generation and short term borrowings from external
resources where necessary.
Risk Mitigation
The Inherent risks and uncertainties in running a business directly affect the success of business. The management of Quetta Textile Mills
Limited has identified its exposure to the potential risks. As a part of our policy to produced forward looking statement we are outlining
the risks which may effect our business. This exercise also helps the management focus on a strategy to mitigate risk factors.
Credit Risk

All financial assets of the company except cash in hand are subject to credit risk. The company believes that it is not exposed to major
concentration of credit risk. Exposure is Managed through application of credit limits to its customers secured by and on the base of past
experience, sales volume, consideration of financial position, past track records and recoveries, economic conditions of particularly the
textile sector and generally the industry. The company believes that it is prudent to provide Provision of doubt full debts.
Liquidity Risk
Prudent liquidity risk management ensures availability of the sufficient funds for meeting contractual commitments. The Company's
fund management strategy aims at managing liquidity risk through internal cash generation and committed credit lines with financial
institutions.
Interest Rate Risk
Majority of the interest rate exposure arises from short and long term borrowing from banks. Therefore, a change in interest rates at the
reporting date would not effect the profit and loss accounts.

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 QUETTA TEXTILE MILLS LIMITED
Foreign Exchange Risk.
Foreign currency risk arises mainly where receivables and payables exist due to transaction in foreign currencies. The company is mainly
exposed to short term USD/ PKR parity on its imports of raw material and Plant and Machinery.

Production facilities.
Performance of our production facilities was excellent with unprecedented levels of output. Our team continued to improve efficiencies
through harmonized efforts, eliminating wastage and avoidance of shutdowns on numerous occasions. The Company is determined to
continue its focus on maximum capacity utilization for sustained profitability and to maintain its position as the leading Textile
Manufacturer of the Country.
DIVIDEND
The Board of Directors have Proposed a final cash dividend @15 % i.e Rs.1.5/= per share for the year ended June 30, 2011.
AUDITORS
The Present Auditors M/s. Mushtaq and Company Chartered Accountants retired and being eligible offer themselves
for re-appointment
PATTERN OF SHARE HOLDING
The pattern of shareholding as on June 30, 2011 is annexed to this report.
SUMMARY OF FINANCIAL DATA
Financial data for last six years in summarized form is annexed.
ATTENDANCE AT THE BOARD MEETING DURING THE YEAR 2010-2011
All the directors keenly take interest in the company's affairs. During the year Sixteen Board Meetings were held,
Attendance by each director was as under:-
Name of Directors No of Meetings attended

Mr. Khalid Iqbal 15

Mr. Tariq Iqbal 13
Mr. Daanish Javed 3
Mr. Asim Khalid 11
Mr. Omer khalid 16
Mrs. Najma Javed 6
Mrs. Saima Asim 5
Mr.s Tauqir Tariq 6
Mrs. Tabbasum Tariq 09

Leave of absence was granted to the directors who could not attend some of the meetings. During the period under review there was no
trading of the Company's share by the Chief Executive, Chief Financial Officer, and Company Secretary, there spouses and minor
children.
AUDIT COMMITTEE
The Board of Directors in compliance with the Code of Corporate Governance has established an Audit Committee. The name of its
members are given in the company profile.
The term of reference of the Audit Committee based on the scope as defined by the Securities and Exchange Commission of Pakistan
(SECP) and the guidelines given by the board of directors from time to time to improve the system and prsedures.Within the frame work
of term of reference determined by board of directors, the Audit Committee, among other things, will recommend appointment of
external auditors and review of periodical statements.
CORPORATE GOVERNANCE
The Board of Directors hereby declares that for the year ended June 30, 2011.

a) The Financial statements, together with the notes thereon have been drawn up in conformity with the Companies Ordinance 1984.
These Statements present fairly the Company's state of affairs, result of its operations, cash flow and change in equity
b) Proper books of accounts of the Company have been maintained.
c) Appropriate accounting policies have been consistently applied in preparation of financial statements and
accounting estimates are based on reasonable and prudent judgment.
d) The International Accounting Standards, as applicable in Pakistan, have been followed in preparation of
financial statements.
e) The system of Internal control is sound in design and has been effectively implemented and monitored.
f) There is no significant doubt upon the Company's ability to continuous a going concern.

g) There has been no material departure from the best practices of corporate governance, as detailed in the
listing regulations.
h) Key operating and financial data for the last six years in summarized from is annexed.
CONCLUSION
The Directors place on record their appreciation to the officers, members of the staff and workers for their efforts
and hard work
For and on behalf of the Board of Directors

TARIQ IQBAL
Chief Executive
Karachi: October 08, 2011
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 QUETTA TEXTILE MILLS LIMITED
STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF THE CODE OF
CORPORATE GOVERNANCE
This statement is being presented to comply with the Code of Corporate Governance contained in the
Listing Regulations of the Karachi Stock Exchange (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 Code 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 two non-
executive Directors and none representing minority share holders.

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

3. The Directors have voluntarily declared that 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. None of the Directors is a member of a stock exchange.

4. During the year, no casual vacancies occurred in the Board of Directors.

5. The Board have developed and adopted a “Statement of Ethics and Business Practices” which is
regularly circulated within the Company and it is in the knowledge of Company's Directors and
employees.

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

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

8. The meetings of the Board, which were held during the year were presided by the Chairman and in
his absence, by a director elected by the Board for this purpose and 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 in time.

9. The Directors have been provided with copies of the Listing Regulations of the Karachi Stock
Exchange, Company's Memorandum and Articles of Association and the Code of Corporate
Governance and they are well conversant with their duties and responsibilities. The Board
arranged orientation courses for its directors during the year to appraise them of their duties and
responsibilities.

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

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

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 QUETTA TEXTILE MILLS LIMITED

12. The financial statements of the Company were duly endorsed by the 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 Code

15. The Board has formed an Audit Committee. It comprises three members, of whom two are non
executive Directors

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

17. The Board has set up an effective Internal Audit Function.

18. The statutory auditors of the Company have confirmed that they have been given a satisfactory
rating under the quality control review program 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 the Institute of
Chartered Accountants of Pakistan.

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

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

On Behalf of the Board of Directors

TARIQ IQBAL
CHIEF EXECUTIVE

Quetta Textile Mills Limited

KARACHI: October- 08, 2011.

9
MUSHTAQ & CO. Member of

CHARTERED ACCOUNTANTS
T H E
407, Commerce Centre, Hasrat Mohani Road, Karachi. Tel: 32638521-4 Fax: 362639843 Leading Edge
A L L I A N C E
Branch Office: 20-B, Block-G, Gulberg-III, Lahore. Tel: 35884926 Fax: 35843360
Email Address: [email protected] Illinois, USA

REVIEW REPORT TO THE MEMBERS

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

We have reviewed the statement of compliance with the best practices contained in the
Code of Corporate Governance prepared by the Board of Directors of Quetta Textile Mills
Limited to comply with the Listing Regulation No. 35 (previously Regulation No. 37) of the
Karachi 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 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 system 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 internal controls.

Further, Sub- Regulation (xiii a) of Listing Regulation No. 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 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 under taken at arm's length price.

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 respect, with the best practices contained in the Code of Corporate Governance as
applicable to the company for the year ended June 30, 2011.

MUSHTAQ & COMPANY

KARACHI: Chartered Accountants
Date: October 08, 2011 Engagement Partner:
Shahabuddin A. Siddiqui
F.C.A

10
 QUETTA TEXTILE MILLS LIMITED
SUMMARY OF FINANCIAL DATA 2006-2011

June June Jun-08 Jun-09 Jun-10 Jun-10

2006 2007 2008 2009 2010 2011

Profit and Loss

Net sales (Rs.000) 4,562,635 4,912,815 5,769,155 7,514,898 9,334,111 14,343,553

Gross Profit (Rs.000) 396,000 500,414 593,843 1,337,706 1,707,970 2,293,589

Profit before tax (Rs.000) 91,291 144,334 46,556 98,968 375,591 773,468

Profit after tax (Rs.000) 52,633 83,197 27,187 30,721 255,034 583,795

Cash Outflows

Taxes paid (Rs.000) 6,855 51,087 56,467 31,468 51,583 124,745

Financial charges paid (Rs.000) 289,559 265,246 501,913 859,771 958,328 927,091

Fixed capital expenditures (Rs.000) 844,277 516,070 863,987 458,072 156,914 455,966

Balance sheet

Current assets (Rs.000) 2,104,795 2,225,983 3,254,813 3,857,386 3,552,358 4,483,902

Current liabilities (Rs.000) 2,419,535 2,246,671 3,568,583 4,408,998 4,069,031 4,551,383

Operating fixed assets (Rs.000) 2,803,300 3,340,924 3,972,109 4,871,288 4,775,130 5,090,266

Total assets (Rs.000) 5,177,570 5,661,208 7,513,237 8,912,046 8,508,167 9,646,739

Long term loans and finances (Rs.000) 1,554,972 2,090,583 2,164,689 2,123,703 1,743,354 1,619,468

Share holders' equity (Rs.000) 534,308 612,897 413,903 1,263,353 1,536,790 2,192,119

Ratios

Current ratio (As per SBP regulations) 0.87 0.99 0.91 0.87 0.87 0.99

Equity: Debt ratio (As per SBP regulations) 0.39 0.35 0.35 0.39 0.47 0.58

Leverage 3.37 3.27 3.69 3.35 2.56 2.07

Gross profit to sales 8.7% 10.2% 10.3% 17.8% 18.3% 15.99%

Net Profit before tax to sales 2.00% 2.94% 0.81% 1.32% 4.02% 5.39%

Earning per share 16.84 26.62 8.70 9.83 28.60 44.91

Proposed Dividend 15% 15% NIL% NIL% 20% 15%

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 PATTERN OF SHAREHOLDING ( FORM - A )
Pattern of holding of the shares held by the shareholders as at 30-06-2011 is given below

No of Total
Shareholders ShareholdIng Share held

85 From 1 To 100 Shares 2,378

66 From 101 To 500 Shares 15,918
21 From 501 To 1,000 Shares 17,353
24 From 1,001 To 5,000 Shares 45,733
7 From 5,001 To 10,000 Shares 52,086
4 From 10,001 To 15,000 Shares 49,464
2 From 15,001 To 20,000 Shares 38,000
1 From 20,001 To 25,000 Shares 24,272
1 From 25,001 To 30,000 Shares 25,884
2 From 30,001 To 35,000 Shares 67,826
1 From 40,001 To 45,000 Shares 42,460
1 From 50,001 To 55,000 Shares 52,082
1 From 120,001 To 125,000 Shares 124,402
1 From 155,001 To 160,000 Shares 156,358
1 From 160,001 To 165,000 Shares 161,114
1 From 170,001 To 175,000 Shares 173,158
1 From 190,001 To 195,000 Shares 193,358
1 From 210,001 To 215,000 Shares 214,663
1 From 215,001 To 220,000 Shares 218,610
1 From 235,001 To 240,000 Shares 238,438
3 From 245,001 To 250,000 Shares 743,183
1 From 265,001 To 270,000 Shares 267,368
1 From 280,001 To 285,000 Shares 281,686
1 From 310,001 To 315,000 Shares 313,167
2 From 325,001 To 330,000 Shares 656,906
1 From 375,001 To 380,000 Shares 377,137
1 From 390,001 To 395,000 Shares 393,760
1 From 415,001 To 420,000 Shares 419,375
1 From 435,001 To 440,000 Shares 437,393
1 From 445,001 To 450,000 Shares 449,205
1 From 470,001 To 475,000 Shares 471,318
1 From 495,001 To 500,000 Shares 496,921
1 From 530,001 To 535,000 Shares 530,384
2 From 565,001 To 570,000 Shares 1,132,094
1 From 58,001 To 63,000 Shares 582,002
1 From 595,001 To 600,000 Shares 595,177
1 From 605,001 To 610,000 Shares 607,303
1 From 630,001 To 635,000 Shares 631,983
1 From 690,001 To 695,000 Shares 694,353
1 From 1,005,001 To 1,010,000 Shares 1,005,728
247 Total 13,000,000

Categories of Shareholders No of Share Percentage

Shareholders held

Financial Institutions 4 12,348 0.09

Individuals 234 12,918,197 99.37
Investment Companies 1 250 0.00
Insurance Companies 1 52,082 0.40
Joint Stock Companies 6 17,122 0.13
Securities & Exchange Commission of Pakistan 1 1 0.00
247 13,000,000 100.00

12
 DETAIL OF PATTERN OF SHAREHOLDING AS PER
REQUIREMENT OF CODE OF CORPORATE GOVERNANCE
AS AT 30TH JUNE 2011

No of
Name of Shareholders Shareholders Share held Percentage

1 Associates Companies NIL

2 NIT & ICP 1

Investment Corporation of Pakistan 250 0.00

3 Directors, CEO their SPOUSE and Minor Children 9

Mr. Khalid Iqbal ( Director & CEO) 1,005,728 7.74

Mr. Asim Khalid ( Director ) 582,002 4.48
Mr. Omer Khalid ( Director ) 607,303 4.67
Mrs. Rukhsana Khalid 246,577 1.90
Mrs. Saima Asim ( Director ) 8,700 0.07
Mr. Tariq Iqbal ( Director ) 566,059 4.35
Mrs. TabbasumTariq ( Director ) 694,353 5.34
Mr. Tauqeer Tariq ( Director ) 631,983 4.86
Mrs. Tahmina Tauqir 449,205 3.46

4 Executive NIL

5 Public Sector Companies & Corporations NIL

6 Bank Development Finance Institution,

Non Banking Finance Institution, Insurance
Companies, Modarabas & Mutual Fund 4

State Life Insurance Corporation of Pakistan 52,082 0.40

National Bank Of Pakistan, 11,496 0.09
National Investment Trust Ltd 488 0.00
National Industrial Co-operate Finance Corporation Ltd 364 0.00

7 Shareholders Holding 10% or More NIL

8 Individuals 225 8,126,287 62.51

9 Others 8 17,123 0.13

TOTAL 247 13,000,000 100

13
MUSHTAQ & CO. Member of

CHARTERED ACCOUNTANTS
T H E
407, Commerce Centre, Hasrat Mohani Road, Karachi. Tel: 32638521-4 Fax: 362639843 Leading Edge
A L L I A N C E
Branch Office: 20-B, Block-G, Gulberg-III, Lahore. Tel: 35884926 Fax: 35843360
Email Address: [email protected] Illinois, USA

AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed Balance Sheet of Quetta Textile Mills Limited as at June 30, 2011 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 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 the 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 verifications, we report that;

(a) in our opinion, proper books of accounts 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 accounts 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 June 30, 2011 and of the profit,
comprehensive income, its cash flows and changes in equity for the year then ended; and

(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of
1980) was deducted by the company and deposited in Central Zakat Fund established under
section 7 of that Ordinance.

MUSHTAQ & COMPANY

KARACHI: Chartered Accountants
Date: October 08, 2011 Engagement Partner:
Shahabuddin A. Siddiqui
F.C.A

14
 QUETTA TEXTILE MILLS LIMITED
BALANCE SHEET
AS AT JUNE 30, 2011
2011 2010
Note Rupees Rupees

NON CURRENT ASSETS

Property, plant and equipment 4 5,090,266,750 4,775,130,044

Capital work in progress 5 43,041,260 136,121,413
Long term investments 6 2,786,576 26,988,433
Long term deposits 7 26,742,702 17,503,512

5,162,837,288 4,955,743,402

CURRENT ASSETS

Stores, spare and loose tools 8 449,805,371 436,830,375

Stock in trade 9 2,947,780,363 2,269,203,857
Trade debts 10 658,397,688 524,062,248
Other financial assets 11 15,898,000 11,449,354
Loans and advances 12 192,394,294 184,707,178
Short term prepayments 13 6,450,130 -
Income tax and sales tax 14 188,514,029 122,886,770
Cash and bank balances 15 24,661,647 3,218,580
4,483,901,522 3,552,358,362

TOTAL ASSETS 9,646,738,810 8,508,101,764

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized capital
20,000,000 (2010: 20,000,000) ordinary shares of Rs. 10 each 200,000,000 200,000,000
15,000,000 (2010: 15,000,000) preference shares of Rs. 10 each 150,000,000 150,000,000

350,000,000 350,000,000

Issued, subscribed and paid-up capital 16 130,000,000 130,000,000

Reserves 114,674,209 48,687,626
Share premium reserve 651,750,000 651,750,000
Unappropriated profit 1,295,695,419 706,287,162

2,192,119,628 1,536,724,788

Surplus on revaluation of property, plant and equipment 17 743,015,956 763,564,281

Loan from directors 18 78,776,000 23,900,000

NON CURRENT LIABILITIES

Long term finances 19 255,208,177 253,916,615

Redeemable capital - Sukuk 20 1,177,250,000 1,292,666,667
Liabilities against assets subject to finance lease 21 187,010,286 196,772,226
Deferred liabilities 22 461,976,060 371,526,146

CURRENT LIABILITIES

Trade and other payables 23 360,935,227 256,851,870

Accrued interest / mark-up 24 168,349,923 117,223,936
Short term borrowings 25 3,652,262,111 3,193,828,559
Current portion of long term finance
Long term finances 19 157,892,190 347,517,765
Redeemable capital - Sukuk 20 115,416,667 69,250,000
Liabilities against assets subject to finance lease 21 96,526,585 84,358,911

4,551,382,703 4,069,031,041

Contingencies and Commitments 26

9,646,738,810 8,508,101,764
The annexed notes form an integral part of these financial statements.

TARIQ IQBAL OMER KHALID

Karachi: October 08, 2011 Chief Executive Director

15
 QUETTA TEXTILE MILLS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2011

2011 2010
Note Rupees Rupees

Sales 27 14,343,553,424 9,334,111,703

Cost of sales 28 (12,049,963,552) (7,626,141,053)

Gross profit 2,293,589,872 1,707,970,650

Selling and distribution expenses 29 (389,769,766) (286,765,433)

Administrative expenses 30 (35,755,750) (32,762,174)
Other operating expenses 31 (122,050,909) (73,147,100)
Finance cost 32 (978,217,081) (962,309,108)
(1,525,793,506) (1,354,983,815)

Profit from operations 767,796,366 352,986,835

Other operating income 33 5,671,971 22,604,700

Profit before taxation 773,468,337 375,591,535

Taxation 34 (189,672,887) (120,557,496)

Profit after taxation 583,795,450 255,034,039

Earnings per share - basic and diluted 35 44.91 28.26

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

TARIQ IQBAL OMER KHALID

Karachi: October 08, 2011 Chief Executive Director

16
 QUETTA TEXTILE MILLS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED JUNE 30, 2011

2011 2010
Rupees Rupees

Profit for the year after taxation 583,795,450 255,034,039

Other comprehensive income:

Unrealized gain / (loss) on remeasurement of 65,986,583 6,576,014

available for sale investments

Transfer from surplus on revaluation of 31,612,807 34,421,854

property, plant & equipment - incremental depreciation -
net of deferred tax

Other comprehensive income for the year 97,599,390 40,997,868

Total comprehensive income for the year 681,394,840 296,031,907

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

TARIQ IQBAL OMER KHALID

Karachi: October 08, 2011
Chief Executive Director

17
 QUETTA TEXTILE MILLS LIMITED
CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2011

2011 2010
Note Rupees Rupees

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 36 1,254,960,131 1,869,261,754

Long term loans and deposits (9,239,190) -

Interest paid (927,091,094) (958,328,746)
Gratuity paid (15,701,602) (20,161,717)
Workers' profit participation fund paid (21,029,058) (5,284,843)
Taxes paid (124,745,067) (51,583,006)

(1,097,806,011) (1,035,358,312)

Cash flows from operating activities 157,154,120 833,903,442

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (455,966,320) (156,914,713)
Long term investments 90,188,441 28,073,849
other financial assets (3,475,335) 91,326,537
Proceeds from disposal of property, plant and equipment 90,000 30,000
Dividend received 1,086,169 3,161,389

Cash (used in) investing activities (368,077,045) (34,322,938)

CASH FLOWS FROM FINANCING ACTIVITIES

Long term finances - net (188,334,013) (205,699,391)

Redeemable capital - Sukuk - net (69,250,000) (23,083,333)
Liabilities against assets subject to finance lease - net 2,405,734 (52,120,825)
Short term borrowings - net 458,433,552 (519,681,257)
Loans from directors - net 54,876,000 (749,261,770)
Dividend paid (25,765,280) (128,434)
Right shares issued - 98,750,000
Share premium reserve - 651,750,000

232,365,993 (799,475,010)

Net increase in cash and cash equivalents 21,443,067 105,494

Cash and cash equivalent at the beginning of the year 3,218,580 3,113,086

Cash and cash equivalent at the end of the year 15 24,661,647 3,218,580

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

TARIQ IQBAL OMER KHALID

Karachi: October 08, 2011 Chief Executive Director

18
 QUETTA TEXTILE MILLS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2011

Reserves

Reserve for Unappropriated

Share Capital Gain/(loss) on Total equity
Share Capital power profit
General reserve available for sale Sub total
premium reserve generation
investment
plant

Rupees

Balance as at June 30, 2009 31,250,000 - 1,200 - 115,000,000 (72,889,588) 42,111,612 416,831,269 490,192,881

Right shares issued during the year 98,750,000 - - - - - - - 98,750,000

Share premium reserve - 651,750,000 - - - - 651,750,000 - 651,750,000

Total comprehensive income for the year ended June

30, 2010

Profit for the year - 2010 - - - - - - - 255,034,039 255,034,039

Unrealized gain on remeasurement of - - - - - 6,576,014 6,576,014 - 6,576,014

available for sale investments

Transfer from surplus on revaluation of - - - - - - - 34,421,854 34,421,854

property, plant & equipment - incremental
depreciation - net of deferred tax

Balance as at June 30, 2010 130,000,000 651,750,000 1,200 - 115,000,000 (66,313,574) 700,437,626 706,287,162 1,536,724,788

Balance as at July 01, 2010 130,000,000 651,750,000 1,200 - 115,000,000 (66,313,574) 700,437,626 706,287,162 1,536,724,788

Final dividend for the year June 30, 2010 - - - - - - - (26,000,000) (26,000,000)

Total comprehensive income for the year ended June

30, 2011

Profit for the year - 2011 - - - - - - - 583,795,450 583,795,450

Unrealized gain on remeasurement of - - - - - 65,986,583 65,986,583 - 65,986,583

available for sale investments

Transfer from surplus on revaluation of - - - - - - - 31,612,807 31,612,807

property, plant & equipment - incremental
depreciation - net of deferred tax

Balance as at June 30, 2011 130,000,000 651,750,000 1,200 - 115,000,000 (326,991) 766,424,209 1,295,695,419 2,192,119,628

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

TARIQ IQBAL OMER KHALID

Karachi: October 08, 2011
Chief Executive Director

19
QUETTA TEXTILE MILLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2011

1 LEGAL STATUS AND NATURE OF BUSINESS

1.1 Quetta Textile Mills Limited (the Company) was incorporated in Pakistan on January 29, 1970 as a public limited
company under the Companies Act, 1913 (Now the Companies Ordinance, 1984). The shares of the Company
are listed on Karachi Stock Exchange. The main business of the company is manufacturing and sale of yarn and
fabric. The registered office of the company is situated at ground floor Nadir House I.I Chundrigar road Karachi.
2 BASIS OF PREPARATION

2.1 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 of and directives of the Companies Ordinance, 1984 shall prevail.

2.2 Basis of measurement

These financial statements have been prepared on the historical cost convention except for certain financial
instruments at fair value and employees retirement benefits at present value. In these financial statements,
except for cash flow statements , all transactions have been accounted for on accrual basis.

2.3 Functional and presentation currency

These financial statements are presented in Pakistan Rupees which is also the company's functional currency. All
financial information presented in Pakistan Rupees has been rounded to the nearest rupee.

2.4 Use of Estimates and Judgments

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.

Judgments made by the management in the application of approved accounting standards, as applicable in
Pakistan, that have significant effect on the financial statements and estimates with a significant risk of material
adjustment in the next year are discussed in note 42 to these financial statements.

2.5 Standards, interpretations and amendments to published approved accounting standards

2.5.1 Standards, interpretations and amendments to published approved accounting standards that are effective in the
current year

The following are new and revised approved accounting standards, interpretations and amendments thereto
that are effective in the current year. However, these do not effect financial statements of the Company for the
current year.

Standards, interpretations and amendments Description

IFRS 1 - First-time Adoption of The amendments provide certain exemptions to first-time

International Financial Reporting adoptors of International Financial Reporting Standards.
Standards (Amendments)

IFRS 2 - Share-based Payments The standard was amended to provide additional guidance
(Amendments) on the accounting for share-based payment transactions
among group entities.

20
IFRS 3 - Business Combinations The amendments provide guidance on measurement of non-
(Amendments) controlling interests and on measurement of un-replaced
and voluntary replaced share-based payment awards and
transitional requirements for contingent consideration from a
business combination.

IFRS 5 - Non-current Assets Held for The amendments provide clarification regarding scope of
Sale and Discontinued Operations the standard.
(Amendments)

IFRS 8 - Operating Segments The amendments clarify requirements regarding disclosure of

(Amendments) segment assets.

IAS 1 - Presentation of Financial The amendments provide guidance on current/non-current

Statements (Amendments) classification of convertible instruments.

IAS 7 - Statement of Cash Flows The standard was amended to provide guidance on
(Amendments) recognition of certain expenditures as investing activities.

IAS 17 - Leases (Amendments) The amendments have removed guidance regarding

classification of leases of land so as to eliminate inconsistency
with the general guidance on lease classification.

IAS 32 - Financial Instruments: The amendments provide guidance on classification of right

Presentation (Amendments) issues.

IAS 36 - Impairment of Assets The amendments provide guidance on identification of unit

(Amendments) of accounting for goodwill impairment test.

IAS 38 - Intangible Assets The amendments clarify requirements regarding accounting

(Amendments) for intangible assets acquired in a business combination.

IAS 39 - Financial Instruments: The amendments provide clarification regarding treatment

Recognition and Measurement of loan prepayment penalties and recognition of gains or
losses on certain hedging instruments .

IFRIC 19 - Extinguishing Financial The interpretation provides guidance on accounting for debt
Liabilities with Equity Instruments for equity swaps.

Approved accounting standards, interpretations and amendments thereto issued but not effective as at the
reporting date

The following standards, interpretations and amendments issued but are not effective as at the reporting date.

Standards, interpretations and amendments Description

IFRS 7 - Financial Instruments: The amendments emphasize the interaction between

Disclosures (Amendments) quantitative and qualitative disclosures about the nature and
extent of risks associated with financial instruments. The
amendment is effective for annual periods beginning on or
after January 01, 2011.

IFRS 7 - Financial Instruments: The amendments provide enhanced disclosure requirements

Disclosures (Amendments) pertaining to derecognition of financial assets The
amendment is effective for annual periods beginning on or
after July 01, 2011.

21
Standards, interpretations and amendments Description
IFRS 9 - Financial Instruments: The standard introduces new requirements for the
Classification and Measurement classification and measurement of financial instruments and
replaces relevant requirements in IAS 39 - Financial
Instruments: Recognition and Measurement . The standard is
effective for annual periods beginning on or after January 01,
2013.

IFRS 10 - Consolidated Financial The standard replaces those parts of IAS 27 - Consolidated
Statements and Separate Financial Statements, that address when and
how an investor should prepare consolidated financial
statements and supersedes SIC 12 - Consolidation: Special
Purpose Entities. The standard is effective for annual periods
beginning on or after January 01, 2013.

IFRS 11 - Joint Arrangements The standard supersedes IAS 31 - Interest in Joint Ventures
and SIC 13 - Jointly Controlled Entities: Non-monetary
Contributions by Ventures. The standard is effective for
annual periods beginning on or after January 01, 2013.

IFRS 12 - Disclosure of Interests in Other The standard introduces disclosure requirements relating to
Entities interests in subsidiaries, joint arrangements, associates and
unconsolidated structured entities. The standard is effective
for annual periods beginning on or after January 01, 2013.

IFRS 13 - Fair Value Measurement The standard establishes a single framework for measuring
fair value where that is required by other standards. The
standard is effective for annual periods beginning on or after
January 01, 2013.

IAS 1 - Presentation of Financial The amendments clarify that an entity may present the
Statements (Amendments) analysis of other comprehensive income for each
component of equity, either in the statement of changes in
equity or in the notes to the financial statements. The
amendment is effective for annual periods beginning on or
after January 01, 2011.

IAS 12 - Income Taxes The amendments provide exception to the general principal
of IAS 12 for investment property measured using the fair
value model and introduces a rebuttable presumption that
the carrying amount of such an asset will recovered entirely
through sale. The amendment is effective for annual periods
beginning on or after January 01, 2012.

IAS 24 - Related Party Disclosures The revised standard amends the definition of related party
(Revised 2009) and modifies certain related party disclosure requirements for
government-related entities. The standard is effective for
annual periods beginning on or after January 01, 2011.

IAS 34 - Interim Financial Reporting The amendments provide clarification about significant
(Amendments) events and transactions to be disclosed in interim financial
reports. The amendment is effective for annual periods
beginning on or after January 01, 2011.

IFRIC 13 - Customer Loyalty The amendments clarify the meaning of 'fair value' in the
Programmes (Amendments) context of measuring award credits under customer loyalty
programmes. The amendment is effective for annual periods
beginning on or after January 01, 2011.

IFRIC 14 - IAS 19: The Limit on a Defined The amendments remove unintended consequences arising
from the treatment of prepayments where there is a
Benefit Asset, Minimum Funding
minimum funding requirement and result in prepayments of
Requirements and their Interaction contributions being recognized as an asset rather than an
expense. The amendment is effective for annual periods
beginning on or after January 01, 2011.

22
3 Summary of Significant Accounting Policies
3.1 Borrowings
Mark-up bearing borrowings are recognized initially at cost, less attributable transaction cost. Subsequent to initial
recognition, mark-up bearing borrowings are stated at amortized cost with any difference between cost and
redemption value being recognized in the income statement over the period of the borrowings on an effective
interest basis.

3.2 Employee benefits

3.2.1 Compensated absences
The Company provides for compensated absences of its employees on unavailed balance of leaves in the
period in which the leaves are earned.

Post retirement benefits

3.2.2 Defined benefit plans

The Company operates an unfunded gratuity scheme for its permanent employees as per the terms of
employment who have completed minimum qualifying period of service as defined under the scheme.
The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations
being carried out at each balance sheet date. Actuarial gains and losses which exceed 10 percent of the
greater of the present value of the Company’s obligations are amortized over the expected average remaining
working lives of the eligible employees. Past service cost is recognized immediately to the extent that the benefits
are already vested. For non-vested benefits past service cost is amortized on a straight line basis over the
average period until the amended benefits become vested.
Amounts recognized in the balance sheet represent the present value of the defined benefit obligation as
adjusted for unrecognized actuarial gains and losses and unrecognized past service cost.

3.3 Taxation
Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in profit or loss
except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current
Current tax is the amount of tax payable on taxable income for the year, using tax rates enacted or substantively
enacted by the reporting date, and any adjustment to the tax payable in respect of previous years. Provision for
current tax is based on higher of the taxable income at current rates of taxation in Pakistan after taking into
account tax credits, rebates and exemptions available, if any, or 1% of turnover. However, for income covered
under final tax regime, taxation is based on applicable tax rates under such regime. The amount of unpaid
income tax in respect of the current or prior periods is recognized as a liability. Any excess paid over what is due
in respect of the current or prior periods is recognized as an asset.

Deferred
Deferred tax is accounted for using the balance sheet liability method providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
tax purposes. In this regard, the effects on deferred taxation of the portion of income that is subject to final tax
regime is also considered in accordance with the requirement of "Technical Release - 27" of the Institute of
Chartered Accountants of Pakistan. Deferred tax is measured at rates that are expected to be applied to the
temporary differences when they reverse, based on laws that have been enacted or substantively enacted by
the reporting date. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset
is recognized for deductible temporary differences to the extent that future taxable profits will be available
against which temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred tax is not recognized for timing differences that are not expected to reverse and for the temporary
differences arising from the initial recognition of goodwill and initial recognition of assets and liabilities in a
transaction that is not a business combination and that at the time of transaction affects neither the accounting
nor the taxable profit.

3.4 Provisions
A provision is recognized in the balance sheet when the company has a legal or constructive obligation as a
result of past events, and it is probable that an outflow of economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
3.5 Trade and other payables
Liabilities for trade and other amounts payable are recognized and carried at cost, which is the fair value of the
consideration to be paid in the future for goods and services received, whether or not billed to the company.

23
3.6 Dividend
Dividend is recognized as a liability in the period in which it is approved by shareholders.

3.7 Property, plant and equipment and depreciation

Owned assets
Property, plant and equipment except land, building, certain items of plant and machinery and capital work in
process are stated at cost less accumulated depreciation and impairment, if any.

Land, building and plant and machinery are stated at revalued amount being the fair value at the date of
revaluation, less any subsequent accumulated depreciation and impairment losses. Revaluation are performed
with sufficient regularity so that the fair value and carrying value don't differ materially at the end of reporting
period.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to the company
and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment
are recognized in profit or loss as incurred.

Depreciation is charged to income on reducing balance method over its estimated useful life at the rates
specified in property, plant and equipment note. Depreciation on additions to property, plant and equipment is
charged from the month in which an item is acquired or capitalized while no depreciation is charged for the
month in which the item is disposed off.

The assets’ residual values and useful lives are reviewed at each financial year end and adjusted if impact on
depreciation is significant.

The gain or loss on disposal 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.

Where the carrying amount of asset exceeds its estimated recoverable amount it is written down immediately to
its recoverable amount.

Leases in terms of which the company assumes substantially all the risks and rewards of ownership are classified
as finance lease. Asset acquired by way of finance lease is stated at an amount equal to the lower of its fair
value and the present value of minimum lease payments at the inception of the lease less accumulated
depreciation and impairment losses, if any. Depreciation is charged on the same basis as used for owned assets.

Financial charges are allocated to accounting period in a manner so as to provide a constant rate of charge on
outstanding liability.

3.8 Capital work in process

Capital work in progress and stores held for capital expenditure are stated at cost and represents expenditure
incurred on property, plant and equipment during construction and installation. Cost includes borrowing cost as
referred in accounting policy of borrowing cost. Transfers are made to relevant property, plant and equipment
category as and when assets are available for intended use.

3.9 Investments
Investments in associate - Equity Method
Investment in associates is accounted for using the equity method. These are entities in which the company has
significant influence which is neither a subsidiary nor a joint venture of the company.

Derivative financial instruments

The Company uses derivative financial instruments such as forward exchange contracts and interest rate swaps
to hedge its risks associated with foreign currency borrowings and effects on cash flow of any fluctuations in
interest rates. Such derivative financial instruments are stated at fair value.

Financial assets at fair value through profit or loss

Financial assets classified as held for trading and those designed as such are included in the category ‘financial
assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for
the purpose of selling in the near item. Gains or losses on such investments are recognized in profit and loss

Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-
maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to
be held for an undefined period are not included in this classification.

24
 The fair value of investments that are actively traded in organized financial markets is determined by reference to
quoted market bid prices at the close of business on the balance sheet date. For investments where there is no
active market, fair value is determined using valuations techniques.

Available for sale

Other investments not covered in any of the above categories including investments in associates in which the
Company has no significant influence are classified as being available for sale are stated at fair value, with any
resultant gain or loss being recognized directly in equity. Gains or losses on available for sale investments are
recognised directly in equity until the investments are sold or disposed off, or until the investments are
determined to be impaired, at that time cumulative gain or loss previously reported in the equity is included in
current year's profit and loss account.

3.10 Derivative financial instruments

The Company uses derivative financial instruments such as interest rate swaps and cross currency swaps to
hedge its risk associated with interest rate fluctuations. Such derivative financial instruments are initially
recognized at fair value on the date on which a derivative contract is entered into and are subsequently
measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the
fair value is negative. Any gains or losses arising from change in fair value of derivatives that do not qualify for
hedge accounting are taken directly to profit and loss account.

3.11 Financial instruments

All the financial assets and financial 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 is taken to profit and loss account currently. Financial assets are stated at their nominal value as
reduced by the appropriate allowances for estimating irrecoverable amount. Mark up bearing financial liabilities
are recorded at the gross proceeds received. Other financial liabilities are stated at their nominal value.

3.12 Stores and spares

Stores and spares are valued at lower of cost and net realizable value. Cost is determined on a weighted
average basis. Items in transit are valued at cost comprising invoice value plus other charges incurred thereon.

3.13 Stock-in-trade
Stock-in-trade is stated at the lower of cost and net realizable value except waste which is valued at net
realizable value. Cost is determined as follows;

Raw material At weighted average cost or replacement cost which ever is lower

Work in progress At average manufacturing cost

Finished goods At average manufacturing cost or net realisable value which ever is lower

Waste Net realizable value

Raw material in transit is stated at invoice price plus other charges paid thereon upto the balance sheet date.

Average manufacturing cost in relation to work in process and finished goods, consist of direct material and
proportion of manufacturing overheads based on normal capacity.

Net realizable value is the estimated selling price in the ordinary course of business less costs of completion and
selling expenses.

3.14 Trade debts

Trade debts originated by the Company are recognized and carried at original invoice amount less an
allowance for any uncollectible amounts. An estimated provision for doubtful debt is made when collection of
the full amount is no longer probable. Bad debts are written off as incurred.

3.15 Cash and cash equivalents

Cash and cash equivalents comprise cash balances, cash in transit and balances with bank for the purpose of
cash flow statement.

3.16 Revenue recognition

Revenue from sales is recognized when significant risks and rewards of ownership are transferred to the buyer.

Interest income is recognized on the basis of constant periodic rate of return.

25
 Dividend income is recognised when the right to receive dividend is established i.e. the book closure date of the
investee company declaring the dividend.

3.17 Borrowing costs

Borrowing costs incurred on long term finances directly attributable for the construction / acquisition of qualifying
assets are capitalized up to the date, the respective assets are available for the intended use. All other mark-up,
interest and other related charges are taken to the profit and loss account currently.

3.18 Impairment
All company’s assets are reviewed at the end of each reporting period to determine whether there is objective
evidence of impairment. If any such indication exists, the assets' recoverable amount is estimated. Impairment
losses are recognized in the profit and loss account currently.

3.19 Foreign currency translation

Foreign currency transactions are translated into Pak Rupees at exchange rates prevailing on the date of
transaction. Monetary assets and liabilities in foreign currencies are retranslated into Pak Rupees at the rates of
exchange prevailing at the balance sheet date.

Exchange differences, if any, are taken to profit and loss account.

3.20 Offsetting of financial assets and financial liabilities

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

3.21 Transactions with related party

All transactions with related parties are carried out by the Company at arms' length price using the method
prescribed under the Companies Ordinance 1984.

Nature of the related party relationship as well as information about the transactions and outstanding balances
are disclosed in the relevant noted to the financial statements.

3.22 Segment reporting

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

3.23 Capital Management

The company's policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The board of directors monitors the return on
capital and level of dividends to ordinary shareholders. The company seeks to keep a balance between the
higher return that might be possible with higher level of borrowings and the advantages and security afforded by
a sound capital position. There were no changes in the company's approach to capital management during the
year. Further the company is not subject to externally imposed capital requirements.

26
4 PROPERTY, PLANT AND EQUIPMENT- 30-06-2011

COST DEPRECIATION W. D. V.
PARTICULARS AS AT ADDITION/ AS AT RATE % AS AT AS AT AS AT
For the Year
1-Jul-2010 ( DISPOSAL) 30-Jun-2011 1-Jul-2010 30-Jun-2011 30-Jun-2011

OWNED ASSETS
Land
Land - leased hold 93,037,897 - 93,037,897 - 4,465,505 906,147 5,371,652 87,666,245
Land - free hold 439,940,000 - 439,940,000 - - - - 439,940,000
Building
Building - lease hold 384,337,524 - 384,337,524 5 76,817,415 15,376,006 92,193,421 292,144,102
Building - free hold 475,880,566 - 475,880,566 5 137,991,463 16,894,455 154,885,918 320,994,648
Labour Colony
Labour colony - lease hold 49,743,057 31,371,948 81,115,005 5 9,692,310 2,135,760 11,828,070 69,286,935
Labor Colony - free hold 51,652,180 - 51,652,180 5 15,677,466 1,798,736 17,476,202 34,175,978
Plant and machinery 2,836,401,615 98,588,792 2,934,990,407 5 1,352,308,762 76,847,748 1,429,156,510 1,505,833,898
Electrical fitting 49,162,770 950,520 50,113,290 15 30,797,668 2,824,073 33,621,741 16,491,549
Factory equipment 20,925,620 1,500,000 22,425,620 15 14,679,019 973,976 15,652,995 6,772,625
Office premises 22,120,321 - 22,120,321 15 10,204,053 1,787,440 11,991,493 10,128,828
Office equipment 19,882,578 241,254 20,123,832 15 12,795,496 1,089,983 13,885,479 6,238,353
Furniture and fixture 12,547,688 283,792 12,831,480 15 9,181,274 526,160 9,707,434 3,124,046
Vehicles 47,153,003 3,124,960 49,578,798 15 30,281,984 2,594,455 32,252,346 17,326,452
(699,165) (624,093) -
TOTAL 4,502,784,818 135,362,101 4,638,146,919 1,704,268,322 123,754,939 1,828,023,261 2,810,123,658

POWER PLANT
Building
Building - lease hold 31,724,992 - 31,724,992 5 25,683,159 302,092 25,985,251 5,739,741
Building - free hold 89,391,861 - 89,391,861 5 21,007,638 3,419,211 24,426,849 64,965,012
Plant and machinery 830,504,028 150,322,004 980,826,032 5 311,028,359 28,110,018 339,138,377 641,687,655
Electrical fitting 43,213,067 1,570,050 44,783,117 15 20,122,485 3,577,039 23,699,524 21,083,593
Office equipment 36,300 30,500 66,800 15 17,848 5,413 23,261 43,539
Furniture and fixture 445,150 - 445,150 15 273,144 25,801 298,945 146,205
Factory equipment 7,044,074 65,000 7,109,074 15 3,268,588 566,351 3,834,939 3,274,135
Vehicles 940,725 - 940,725 15 831,305 16,413 847,718 93,007
TOTAL 1,003,300,197 151,987,554 1,155,287,751 382,232,526 36,022,337 418,254,863 737,032,887

WEAVING ASSETS
Building on free hold land 249,226,961 23,007,098 272,234,059 5 89,145,835 8,162,091 97,307,926 174,926,133
Labour colony free hold 24,609,823 24,609,823 5 6,372,284 911,877 7,284,161 17,325,662
Plant and machinery 1,145,266,784 143,225,552 1,288,492,336 5 399,317,464 39,208,073 438,525,537 849,966,799
Electrical fitting 28,549,109 659,106 29,208,215 15 18,044,078 1,589,298 19,633,376 9,574,839
Factory equipment 10,646,918 1,553,570 12,200,488 15 5,730,661 829,456 6,560,117 5,640,371
Office equipment 1,105,243 2,016,430 3,121,673 15 524,641 243,530 768,171 2,353,502
Furniture and fixture 1,662,674 68,500 1,731,174 15 1,027,170 101,354 1,128,524 602,650
Vehicles 2,465,667 3,618,000 6,083,667 15 1,171,693 449,806 1,621,499 4,462,168
TOTAL 1,463,533,179 174,148,256 1,637,681,435 521,333,826 51,495,485 572,829,311 1,064,852,124

TOTAL OWNED ASSETS 6,969,618,194 461,497,911 7,431,116,105 2,607,834,674 211,272,761 2,819,107,435 4,612,008,669

LEASED ASSETS
Plant and machinery 461,685,439 87,548,562 549,234,001 5 47,714,819 23,261,101 70,975,920 478,258,081

G. TOTAL - 30.06.2011 - Rupees 7,431,303,633 549,046,473 7,980,350,106 2,655,549,493 234,533,862 2,890,083,355 5,090,266,750

June 30 - 2011 June 30 - 2010

Note Rupees Rupees
4.1 Depreciation Charged as under:

Cost of sale-Spinning 28 140,614,591 139,134,556

Cost of sale-Weaving 28 51,104,206 51,645,332
Administrative expenses 30 6,792,728 7,203,608
Power plant expenses 33.1 36,022,337 35,836,815

234,533,862 233,820,311

4.2 Had there been no revaluation, the related figures of cost, accumulated depreciation and W.D.V of revalued assets, would have been as follows:

June 30 - 2011 June 30 - 2010

Rupees Rupees
Freehold Land 439,940,000 439,940,000
Lease hold land 5,915,859 6,822,006
Building on freehold land 269,840,017 264,371,358
Building on lease hold land 66,961,274 82,639,372
Plant and machinery 271,137,079 285,407,452
1,053,794,229 1,079,180,188
4.3 Disposal of property plant & equipments

Accumulated Net
Particulars Cost Sale Proceeds Particulars of Buyers
Depreciation Book

Vehicles 699,165 624,093 75,072 90,000 Mr. Farhan Saleem, Hyderabad

27
PROPERTY, PLANT AND EQUIPMENT- 30-06-2010
COST DEPRECIATION W. D. V.
PARTICULARS AS AT ADDITION/ AS AT RATE % AS AT For the AS AT AS AT
1-Jul-2009 ( DISPOSAL) 30-Jun-2009 1-Jul-2009 Year/(Adjustment) 30-Jun-2010 30-Jun-2010
OWNED ASSETS
Land - leased hold 92,502,187 535,710 93,037,897 - 3,559,358 906,147 4,465,505 88,572,392
Land - free hold 439,940,000 - 439,940,000 - - - - 439,940,000
Building
Building - lease hold 357,769,929 26,567,595 384,337,524 5 61,363,704 15,453,711 76,817,415 307,520,109
Building - free hold 428,412,502 47,468,064 475,880,566 5 121,460,408 16,531,055 137,991,463 337,889,103
Labour colony - lease hold 49,743,057 - 49,743,057 5 7,584,376 2,107,934 9,692,310 40,050,747
Labor Colony - free hold 51,652,180 - 51,652,180 5 13,784,060 1,893,406 15,677,466 35,974,714
Plant and machinery 2,809,475,635 26,925,980 2,836,401,615 5 1,274,784,115 77,524,647 1,352,308,762 1,484,092,854
Electrical fitting 46,307,972 2,854,798 49,162,770 15 27,761,653 3,036,015 30,797,668 18,365,102
Factory equipment 19,177,602 1,748,018 20,925,620 15 13,805,017 874,002 14,679,019 6,246,601
Office premises 22,020,321 100,000 22,120,321 15 8,115,331 2,088,722 10,204,053 11,916,268
Office equipment 18,706,640 1,175,938 19,882,578 15 11,648,096 1,147,400 12,795,496 7,087,082
Furniture and fixture 12,313,888 233,800 12,547,688 15 8,618,211 563,063 9,181,274 3,366,414
Vehicles 46,929,503 725,000 47,153,003 15 27,862,936 2,908,549 30,281,984 16,871,019
(501,500) (489,501)
TOTAL 4,394,951,416 108,334,902 4,502,784,818 1,580,347,265 125,034,651 1,704,892,415 2,797,892,404
POWER PLANT
Building - lease hold 31,724,992 - 31,724,992 5 25,365,168 317,991 25,683,159 6,041,833
Building - free hold 89,391,861 - 89,391,861 5 17,408,468 3,599,170 21,007,638 68,384,223

28
Plant and machinery 825,009,258 5,494,770 830,504,028 5 283,783,247 27,245,112 311,028,359 519,475,669
Electrical fitting 42,460,306 752,761 43,213,067 15 16,110,411 4,012,074 20,122,485 23,090,582
Office equipment 36,300 - 36,300 15 14,593 3,256 17,848 18,452
Furniture and fixture 445,150 - 445,150 15 242,790 30,354 273,144 172,006
Factory equipment 6,968,254 75,820 7,044,074 15 2,606,120 662,468 3,268,588 3,775,486
Vehicles 940,725 - 940,725 15 811,995 19,310 831,305 109,420
TOTAL 996,976,846 6,323,351 1,003,300,197 346,342,792 35,889,735 382,232,526 621,067,671
WEAVING ASSETS
Building on free hold land 247,210,625 2,016,336 249,226,961 5 80,770,093 8,375,742 89,145,835 160,081,126
Labour colony free hold 24,609,823 - 24,609,823 5 5,412,413 959,871 6,372,284 18,237,539
Plant and machinery 1,141,605,981 3,660,803 1,145,266,784 5 360,143,643 39,173,821 399,317,464 745,949,320
Electrical fitting 28,549,109 - 28,549,109 15 16,190,249 1,853,829 18,044,078 10,505,031
Factory equipment 10,646,918 - 10,646,918 15 4,863,086 867,575 5,730,661 4,916,253
Office equipment 1,105,243 - 1,105,243 15 422,182 102,459 524,641 580,602
Furniture and fixture 1,662,674 - 1,662,674 15 915,022 112,148 1,027,170 635,504
Vehicles 2,465,667 - 2,465,667 15 943,345 228,348 1,171,693 1,293,974
TOTAL 1,457,856,040 5,677,139 1,463,533,179 469,660,033 51,673,793 521,333,826 942,199,349
TOTAL OWNED ASSETS 6,849,784,302 120,335,392 6,969,618,194 2,396,350,090 212,598,178 2,608,458,766 4,361,159,424
LEASED ASSETS
Plant and machinery 444,346,375 17,339,064 461,685,439 5 26,492,686 21,222,133 47,714,819 413,970,620
G. TOTAL - 30.06.2010 - Rupees 7,294,130,677 137,674,456 7,431,303,633 2,422,842,776 233,820,311 2,656,173,585 4,775,130,044
 2011 2010
Note Rupees Rupees
5 Capital work in progress - at cost

Plant and machinery - 88,073,793

Building - civil works 43,041,260 48,047,620

43,041,260 136,121,413
The movement in Capital work in progress is as follows:

Balance at the beginning of the year 136,121,413 117,382,655

Addition during the year

Building - civil works - 88,073,793
Plant and machinery - -
- 88,073,793
Transfer to operating fixed assets
Building - civil works 88,073,793 17,270,762
Plant and machinery 5,006,360 52,064,273
93,080,153 69,335,035

Balance at the end of the year 43,041,260 136,121,413

6 Long term investments - at fair value

Quoted available for sale 6.1 473,800 24,719,258

Un-quoted available for sale 6.2 2,312,776 2,269,175

2,786,576 26,988,433

6.1 Quoted available for sale

Fair value
Name of securities No. of shares Cost Fair value
adjustments
Rupees Rupees Rupees

Fauji Cement Company Limited 115,000 1,819,300 (1,345,500) 473,800

30.06.2011 115,000 1,819,300 (1,345,500) 473,800

30.06.2010 5,432,804 92,007,741 (67,288,483) 24,719,258

6.2 Un-quoted available for sale 2011 2010

National Tanneries of Pakistan Limited Note Rupees Rupees
45,896 Ordinary shares of Rs.10 each
Break up value Rs. 50.39 per share as
on 30.06.2011(2010: 49.44 ). 1,294,267 1,294,267
Appreciation in the value of investments 1,018,509 974,908

2,312,776 2,269,175
7 Long term deposits

Security deposits
- WAPDA 2,113,190 1,882,550
- Leasing companies 21 23,495,868 14,487,318
- Others 1,133,644 1,133,644
26,742,702 17,503,512
8 Stores, spares and loose tools

Spinning
Stores 78,315,908 66,412,911
Spares and accessories 195,956,207 170,315,016
Loose tools 22,611,017 19,581,258
296,883,132 256,309,185

Weaving
Stores 66,221,349 57,691,542

Power plant
Oil and stores 86,700,890 122,829,648

449,805,371 436,830,375

29
 2011 2010
9 Stock - in - trade
Note Rupees Rupees
Spinning
Raw material 1,241,612,080 1,014,368,879
Work-in-process 94,863,445 79,216,170
Finished goods 432,199,103 240,674,327
Waste 123,856,579 30,502,512
1,892,531,207 1,364,761,888

Weaving
Raw material 136,860,035 173,656,148
Work-in-process 71,205,512 44,357,580
Finished goods 846,669,109 686,402,570
Waste 514,500 25,671
1,055,249,156 904,441,969

2,947,780,363 2,269,203,857

9.1 The caring value of Pledged stock is Rs. 1,428,364,387 (2010: Rs. 706,347,078).

10 Trade debts

Considered good

Export debts - secured 147,970,379 5,861,532

Local debts - unsecured 510,427,309 518,200,716

658,397,688 524,062,248
11 Other financial assets

Held for trading

In listed companies 11.1 20,831,937 17,356,602

Revaluation reserve for investment (4,933,937) (5,907,248)

15,898,000 11,449,354
11.1 Details are as under:

Fair value
Name of securities No. of shares Cost Fair value
adjustments

The Hub Power Company Limited 44,000 1,412,299 242,101 1,654,400

Askari Bank Limited 2,750 47,895 (17,975) 29,920
Dewan Salman Fibre Limited 10,000 35,260 (9,160) 26,100
Thal Limited 7,500 972,882 (215,082) 757,800
Standard Chartered Leasing Company Limited 120,000 1,867,802 (1,567,802) 300,000
Pakistan Petroleum Limited 25,000 5,281,413 (104,663) 5,176,750
Fauji Fertilizer Company Limited 5,000 697,353 54,397 751,750
Nishat Chunia Power Limited 249,000 4,223,468 (807,188) 3,416,280
Engro Corporation Limited 20,000 3,793,565 (528,565) 3,265,000
Wateen Telecom Limited 250,000 2,500,000 (1,980,000) 520,000

30.06.2011 20,831,937 (4,933,937) 15,898,000

30.06.2010 17,356,602 (5,907,248) 11,449,354

2011 2010
12 Loans and advances
Note Rupees Rupees
Considered good
Loan to employees 1,104,215 2,152,591

Advance against:
Letter of credit 15,956,829 5,381,643
Advance to cotton suppliers 132,378,799 126,086,691
Store suppliers and others 42,954,451 51,086,253
191,290,079 182,554,587

192,394,294 184,707,178

30
 2011 2010
Note Rupees Rupees
13 Short term prepayments

Prepayments 6,450,130 -

14 Income tax and sales tax

Income tax 25,922,302 8,988,644

Sales tax receivable 162,591,727 113,898,126

188,514,029 122,886,770

15 Cash and bank balances

With banks on:

- currents accounts 21,242,870 1,737,922
- saving accounts 15.1 300,000 -
21,542,870 1,737,922

Cash in hand 3,118,777 1,480,658

24,661,647 3,218,580

15.1 It carries mark up at the rate of 5% (June 30, 2010 : NIL) per annum.

16 Issued, subscribed and paid-up capital

2011 2010 2011 2010

Number of shares Rupees Rupees

1,200,000 1,200,000 Ordinary shares of Rs. 10 each alloted for 12,000,000 12,000,000
consideration paid in cash
9,875,000 9,875,000 Ordinary shares of Rs. 10 each alloted as right shares 98,750,000 98,750,000

1,925,000 1,925,000 Ordinary shares of Rs. 10 each issued as bonus shares 19,250,000 19,250,000

13,000,000 13,000,000 130,000,000 130,000,000

16.1 The Company has only one class of shares which carry no right to fixed income.

16.2 During the year 2010 company has issued 9,875,000 Ordinary Shares in the ratio of 316 shares for every 100 ordinary Shares at
exercise price of Rs. 76/= per share having premium of Rs. 66/= per share.
2011 2010
Rupees Rupees
17 Surplus on revaluation of property, plant and equipment

Opening balance 763,564,281 785,938,486

Less: Transferred from surplus on revaluation of Property Plant (20,548,325) (22,374,205)

Equipment on account of incremental depreciation charged in the
current period- net of deferred tax
Closing balance 743,015,956 763,564,281

17.1 On March 31, 2009, further revaluation was made of the Land, Building and Labour Colony, by Asif Associates (Pvt.) Ltd,
registered surveyors and valuation consultants, on the basis of market value which resulted in net revaluation surplus of Rs.
622,057,842.

17.2 On November 13, 2006 and December 28, 2006, further revaluation was made of the Land, Building and Plant and Machinery,
by Asif Associates (Pvt.) Ltd, registered surveyors and valuation consultants, on the basis of market value and realizable values
which resulted in net revaluation surplus of Rs. 154,291,391.

17.3 On May 27, 2005 and Jun 24, 2005 , Land was revalued by MYK Associate (Pvt) Ltd, registered surveyors and valuation
consultants, on the basis of market value and realizable values which resulted in net revaluation surplus amounting to Rs.
119,794,763.

31
17.4 On July 16, 2003, revaluation was made of the land, building and machinery , by MYK Associates (Pvt.) Ltd, registered surveyors

and valuation consultants, on the basis of market value which resulted in net revaluation surplus of Rs. 20,750,716.

2011 2010
18 Loan from directors Note Rupees Rupees
Unsecured
Due to directors 26,394,000 -
Due to others 18.1 52,382,000 23,900,000

78,776,000 23,900,000

18.1 These are non mark-up bearing loan and are unsecured. It is repayable after more than one year. The loan upto Rs. 23,900,000
(2010: Rs. 23,900,000) is subordinated to bank loans.

19 Long term finances 2011 2010

Note Rupees Rupees
Loans from banking companies - secured
Al Baraka Islamic Bank Limited 19.1 4,375,000 13,125,000
Allied Bank Limited - LTF 19.2 36,451,422 109,354,267
Askari Bank Limited 19.3 - 7,987,464
Askari Bank Limited - LTF 19.4 - 16,845,430
Bank of Punjab 19.5 - 4,596,682
Bank of Punjab - LTF 19.6 3,952,004 15,806,636
Citi Bank N.A 19.7 19,327,586 30,371,918
Faysal Bank Limited - LTF 19.8 23,598,213 31,265,446
First Credit & Investment Bank Limited 19.9 - 15,136,907
Habib Bank Limited - LTF 19.10 - 21,807,662
Habib Bank Limited - LTF 19.11 10,049,999 12,283,333
Habib Metropolitan Bank Limited 19.12 4,200,000 6,400,000
National Bank of Pakistan 19.13 - 25,089,114
National Bank of Pakistan - LTF 19.14 6,204,886 18,616,330
Pak Oman Investment Co. Limited 19.15 9,375,000 12,500,000
Pak Oman Investment Co. Limited - LTF 19.16 9,375,000 12,500,000
Pak Oman Investment Co. Limited - LTF 19.17 6,080,975 10,134,999
Silk Bank Limited 19.18 - 30,000,000
Silk Bank Limited - LTF 19.19 25,514,000 33,395,969
Silk Bank Limited - LTF 19.20 8,489,000 11,170,000
Silk Bank Limited - LTL 19.21 8,489,000 11,380,559
Saudi Pak Ind. & Agri. Investment Co. Limited - LTF 19.22 22,999,996 30,666,664
Soneri Bank Limited 19.23 22,750,000 26,000,000
Soneri Bank Limited - LTF 19.24 128,297,000 -
Standard Chartered Bank (Pakistan) Limited 19.25 10,000,000 35,000,000
United Bank Limited 19.26 25,714,286 30,000,000
United Bank Limited - LTF 19.27 27,857,000 30,000,000

413,100,367 601,434,380

Less: Current portion shown under current liabilities (157,892,190) (347,517,765)

255,208,177 253,916,615

19.1 Equitable mortgage over property and Token registered mortgage of Rs. 63.75 over commercial property. Total facility amount
is Rs. 35 million, markup payable quarterly @ 6MK +2.4 %. Loan is repayable in 08 semi annual installments commencing from 28-
06-2008.

19.2 First exclusive charge of Rs. 435 million on Specific Fixed assets of the Company . Total Facility amount is Rs. 326 million, markup
payable quarterly @ SBP rate + 2%. Loan is repayable in 08 semi annual installments commencing From 22-04-2007.

19.3 First pari passu Equitable mortgage charge of Rs. 180 million over land ,building and machinery of the company. Total Facility
amount is Rs. 55.913 million, markup payable semi annually @ 6mk + 1.5%. Loan is repayable in 07 semi annual installments
commencing from 27-04-2007.

19.4 Security charge same as notes no. 19.3. Total Facility amount is Rs. 58.959 million. markup payable semi annually @ SBP rate +
2%. Loan is repayable in 07 semi annual installments commencing from 27-04-2007.

19.5 First pari passu charge on all Fixed assets of the Company amounting to Rs. 24.66 million. Total Facility amount is Rs. 18.387
million, markup payable semi annually @ 6mk + 1.75%. Loan is repayable in 08 semi annual installments commencing From 30-05-
2007.

32
19.6 First pari passu charge on all Fixed assets of the Company amounting to Rs. 42.0 million. Total Facility amount is Rs.31.613 million,

markup payable quarterly @ SBP rate +1.75%. Loan is repayable in 08 semi annual installments commencing From 30-05-2007.

19.7 Registered hypothecation charge over plant and machinery of the company & 78 million charge ranking . Markup payable
monthly @ 1 MK + 1.5%. The facility amount is 58.470 million. This Loan is repayable in 45 monthly installments commencing from
25-07-2009.

19.8 First pari passu charge on all Fixed assets of the Company amounting to Rs. 61.33 million. Total Facility amount is Rs. 46 million,

markup payable quarterly @ SBP rate + 2%. Loan is repayable in 24 quarterly installments commencing From 14-09-2007.

19.9 First pari passu charge of Rs. 86.67 million over all Fixed assets of the Company including land and building with atlest 25%
margin. Total Facility amount is Rs. 65 million, markup payable semi annually @ 6MK + 1.75%. Loan is repayable in 08 semi annual
installments commencing from 31-05-2007.However the loan was settled during the year.

19.10 The loan was secured by First pari passu E/M and hypo (each) charge of Rs. 420 million on present and future fixed assets of the
company. The charge amount of Rs. 393 million first pari passu and charge amount of Rs. 27 million to remain ranking. Total
Facility amount is Rs. 130.846 million. markup payable quarterly @ SBP rate + 2% loan is repayable in 06 semi annual installment
commencing from 28-04-2007.However the loan was settled during the year.

19.11 Security charge same as notes no. 19.10 .Total facility amount is Rs. 13.4 million, markup payable quarterly @ SBP rate + 2% loan is
repayable in 12 semi annual installments commencing from 24-05-2009

19.12 Ranking charge of Rs. 12.5 (M) with 40% margin over Machinery including importered Plant and Machinery. Total facility amount
is Rs. 7.5 million, markup payable quarterly @ 3MK + 3%.Loan is repayable in 14 quarterly installments commencing from 21-10-
2009

19.13 First pari passu charge of Rs. 200 million on all present & future Fixed assets of the Company. and equitable mortgage over land

& building of the company. Total Facility amount is Rs. 100.356 million, markup payable semi annually @ 6mk +2%. Loan is
repayable in 08 semi annual installments commencing from 28-05-2007.However the loan was settled during the year.

19.14 Security charge same as notes no. 19.13. Total Facility amount is Rs. 49.644 million, markup payable quarterly @ SBP rate + 2%.
rate Loan is repayable in 08 semi annual installments commencing from 28-05-2007.

19.15 Ranking charge of Rs. 34 million over all the present and future fixed assets of the company with 25% margin . Total facility
amount is Rs. 12.5 million, markup payable quarterly @ 3MK + 3%. Loan is repayable in 16 quarterly installments commencing
from 18-08-2010.

19.16 Security charge same as notes no. 19.15. Total facility amount is Rs. 12.5 million, markup payable quarterly @ SBP rate +
2.5%.Loan is repayable in 16 quarterly installments commencing from 18-08-2010.

19.17 Ranking Charge of Rs. 28 million on present and future fixed assets (Land , building and machinery ) of the company with 25%
margin over the facility amount. Total facility amount is Rs. 20.27 million, markup payable quarterly @ SBP rate + 2.5%. Loan is
repayable in 20 quarterly installments commencing from 28-02-2007.

19.18 Equitable Mortgage over charge on specific Land and property of the company amounting to Rs. 200 million. Total facility
amount is Rs. 75 million, markup payable quarterly @ 6MK + 2.75%. Loan is repayable in 05 quarterly installments commencing
from 08-05-2009.However the loan was settled during the year.

19.19 First pari passu hypothecation charge of Rs. 61.33 (M) over Plant and Machinery of the company. Total Facility amount is Rs. 46

Million, markup payable quarterly @ SBP rate + 2%. Loan is repayable in 24 quarterly installments commencing From 14-09-2007.

19.20 Ranking Charge over fixed assets of the company of Rs. 80 (M). Total facility amount is Rs. 13.060 million, markup payable
quarterly @ SBP RATE + 2.5%Loan is repayable in 20 semi annual installments commencing from 20-09-2009.

19.21 Security charge same as notes no. 8.20. Total facility amount is Rs. 13.060 million, markup payable quarterly @ 3MK+3% Loan is
repayable in 20 semi annual installments commencing from 22-08-2009.

19.22 First pari passu hypothecation charge of Rs. 61.33 (M) over Plant and Machinery of the company. Total Facility amount is Rs.46

Million, markup payable quarterly @ SBP rate + 2%. Loan is repayable in 24 quarterly installments commencing From 14-09-2007.

19.23 Exclusive charge over imported machinery of the company. Total facility amount is Rs. 26 million, markup payable quarterly @
6MK + 3%. Loan is repayable in 08 semi annual installments commencing from 03-05-2011.

19.24 Our first specific charge over imported Machinery for Rs. 155 million of the company. Total facility amount is Rs. 128.3 million,
markup payable quarterly @ SBP Rate + 2.5%. (11.10%) Loan is repayable in 16 quarterly installments commencing from 23-02-
2012.

19.25 Ranking charge of RS. 66.700 (M) over the company's present and future fixed assets of the company with 25% margin. Total
facility amount is Rs. 35 million, markup payable quarterly @ 3MK + 2.5%. Loan is repayable in 10 semi annual installments
commencing from 25-09-2009.
33
19.26 Joint pari pasu EMP charge over fixed assets for Rs. 300 million situated at unit 1. Total facility amount is Rs. 30 million, markup
payable quarterly @ 3MK + 2.0%. Loan is repayable in 14 quarterly installments commencing from 29-06-2011.

19.27 Security charge same as note 19.26 above. Total facility amount is Rs. 30 million, markup payable quarterly @ SBP rate + 2.0%.
The loan is repayable in 14 quarterly installments commencing from 24-06-2011.

2011 2010
20 Redeemable capital - Sukuk Note Rupees Rupees

Diminishing musharaka sukuk certificate 1,292,666,667 1,361,916,667

Less: Current portion shown under current liabilities (115,416,667) (69,250,000)

1,177,250,000 1,292,666,667

20.1 The company had issued privately placed Sukuk Certificates of Rs. 1,385,000,000 divided into 277,000 certificates of Rs. 5,000
each. The significant terms and conditions and security of the Sukuk / certificates are as follows:

Tenure 7 years 7 years

Date of first installment March 31, 2010 March 31, 2010
Rate of return 6 M-KIBOR + 1.5 6 M-KIBOR + 1.5
Convertible/non convertible Non Convertible Non Convertible
Redeemable/perpetual Redeemable Redeemable

20.2 Security
First Pari Passu charge of Rs. 1.846 (2010: Rs. 1.846) billion on all fixed assets of the company.

2011 2010
Note Rupees Rupees
21 Liabilities against assets subject to finance lease

Payable within one year 135,040,713 123,682,966

Payable after one year but not more than 05 years 197,967,626 223,095,403
333,008,339 346,778,369

Less: deferred finance cost (72,967,336) (80,134,550)

260,041,003 266,643,819

Add: security deposit 7 23,495,868 14,487,318

Less: Current portion shown under current liabilities (96,526,585) (84,358,911)

Present value of minimum lease payments 187,010,286 196,772,226

21.1 The Company has entered into lease agreement/ Ijarah of Plant and Machinery with various leasing companies and financial
institutions on half yearly payment basis. The lease contains bargain purchase option.

21.2 The lease is secured by ranking charge of Rs. 321 million (2010: Rs. 266 million) over immovable assets of the Company, personal
guarantees of two directors and security deposit equivalent to 0.1% to 10% of the facility amount.

21.3 Implicit rate of return on lease varies ranging from 14.07% to 18.07% (2010: 14.67% to 17.70 %).

21.4 Taxes, repairs and maintenance, insurance and other cost relating to the lease assets are borne by the Company.

2011 2010
22 Deferred liabilities Note Rupees Rupees

Deferred taxation 22.1 & 22.2 178,298,025 96,436,547

Staff retirement benefits - gratuity 22.3 & 22.7 87,414,829 67,761,911
Deferred tax on Surplus on revaluation of property, plant and equipment 196,263,206 207,327,688

461,976,060 371,526,146
22.1 Deferred taxation

Deferred tax credits / (debits) arising in respect of:

Taxable temporary differences (deferred tax liabilities)

Accelerated tax depreciation allowances 187,747,673 239,188,824

Deferred debit arising in respect of provisions, tax losses and refunds 22.2 9,449,648 142,752,277

178,298,025 96,436,547

34
 2011 2010
Note Rupees Rupees
22.2 Deferred debit arising in respect of provisions, tax losses and refunds

Opening balance 96,436,547 51,185,649

Closing balance of deferred tax liability reversal/(provision) of differed tax liability (178,298,025) (96,436,547)

(81,861,478) (45,250,898)

22.3 Movement in the net liability recognized in the balance sheet

Opening net liability 67,761,911 59,490,576

Expense for the year 35,354,520 28,433,052

103,116,431 87,923,628

Benefits paid during the year (15,701,602) (20,161,717)

Closing net liability 87,414,829 67,761,911

22.4 Expense recognized in the profit and loss account

Current service cost 14,098,008 11,485,767

Interest cost 9,106,445 7,589,155
Net actuarial (gain) / loss recognized in the year 12,150,067 9,358,130

35,354,520 28,433,052

22.5 Historical information

2011 2010 2009 2008 2007

Present value of defined benefit

obligation 87,414,829 67,761,911 59,490,576 49,670,677 30,871,145

22.6 General description

The scheme provides for terminal benefits for all of its permanent employees who attain the minimum qualifying period. Annual
charges is made using the actuarial technique of Projected Unit Credit Method.
2011 2010
Note Rupees Rupees
22.7 Principal actuarial assumption

Following are a few important actuarial assumption used in the valuation.

% %
Discount rate 14.5% 14%
Expected rate of increase in salary 12% 12%

23 Trade and other payables

Trade creditors 180,364,861 105,372,372

Accrued liabilities 135,776,183 119,442,390
Workers' profit participation fund 23.1 40,843,711 20,189,866
Workers' welfare fund 2,600,762 10,265,895
Unclaimed dividend 234,720 -
Others 1,114,990 1,581,347

360,935,227 256,851,870
23.1 Workers' profit participation fund

Balance at the beginning of the year 20,189,866 5,089,676

Allocation for the year 40,744,918 20,171,404

Interest on fund utilized in the Company's business 937,985 213,629
41,682,903 20,385,033

61,872,769 25,474,709

Less: Payments during the year (21,029,058) (5,284,843)

Balance at the end of the year 40,843,711 20,189,866

35
 2011 2010
24 Accrued interest / mark-up Note Rupees Rupees

Accrued interest / mark-up on secured:

- long term finances 20,032,837 24,700,065
- redeemable capital - Sukuk 52,824,377 50,417,407
- short term borrowings 95,492,709 42,106,464

168,349,923 117,223,936

25 Short term borrowings

Secured - Banking companies

Finances under mark-up arrangement 25.1 3,641,533,673 3,183,277,905

Unsecured 25.2
Directors 947,117 5,442,963
Others 9,781,321 5,107,691
10,728,438 10,550,654

3,652,262,111 3,193,828,559

25.1 Aggregate facilities amounting to Rs. 6.530 billion (2010 : Rs. 5.295 billion) were available to the Company from banking
companies. These are secured against hypothecation charge and pledge of stock in trade, book debts, plant & machinery,
export bills under collection. These loans carry mark up at the rate ranging from 15.62% to 17.02% (2010: 11.02% to 17.94 %) per
annum payable quarterly and on the maturity dates. The above facilities are expiring on various dates and renewable annually.

25.2 These are non mark up bearing and unsecured. These are renewable and due on various dates within one year.

2011 2010
26 Contingencies and commitments Note Rupees Rupees

26.1 Contingencies

Guarantees issued by banks on behalf of the Company 135,822,000 183,218,000

26.2 Commitments

Civil work 83,000,000 90,000,000

Confirmed letter of credit in respect of:

- raw material 117,608,268 157,388,380

- Stores and spares 60,104,487 1,896,719

177,712,755 159,285,099

27 Sales

Export Sales Local Sales Total

2011 2010 2011 2010 2011 2010
Rupees

Yarn 4,281,252,035 3,463,356,078 4,965,046,417 2,881,694,169 9,246,298,452 6,345,050,247

Fabric 2,401,545,482 1,248,306,240 2,432,145,899 1,572,455,525 4,833,691,381 2,820,761,765
Waste - - 263,563,591 95,858,009 263,563,591 95,858,009
Cotton - - - 63,513,008 - 63,513,008
Other - - - 8,928,674 - 8,928,674

6,682,797,517 4,711,662,318 7,660,755,907 4,622,449,385 14,343,553,424 9,334,111,703

36
 2011 2010
Rupees Rupees
28 Cost of sales

Raw material consumed 28.1 9,849,834,174 5,515,387,477

Salaries, wages and benefits 28.2 694,853,447 580,917,565
Stores and spares consumed 380,015,350 287,660,379
Fuel, power and water 1,051,199,266 695,157,855
Rent, rates and taxes 1,118,527 2,878,677
Insurance expenses 23,959,381 21,822,630
Repairs and maintenance 15,148,914 14,112,695
Other expenses 33,603,792 25,219,068
Depreciation expenses 4.1 191,718,797 190,779,888

12,241,451,648 7,333,936,234
Work in process
Opening stock 123,573,750 95,959,817
Closing stock (166,068,957) (123,573,750)
(42,495,207) (27,613,933)

Cost of goods manufactured 12,198,956,441 7,306,322,301

Cost of cotton sold - 54,914,222

Cost of other material sold - (6,501,398)

12,198,956,441 7,354,735,125

Finished goods
Opening balance 957,605,080 756,673,509

Goods purchased:
Cotton purchases - 6,501,398
Yarn for processing 194,026,950 388,842,807
Fabric for processing 102,614,372 76,993,294
296,641,322 472,337,499

Closing stock (1,403,239,291) (957,605,080)

12,049,963,552 7,626,141,053

28.1 Raw material consumed

Opening balance 1,188,025,027 1,376,560,571

Purchases 9,847,083,582 5,381,766,155

11,035,108,609 6,758,326,726

Less: Cost of cotton sold - (54,914,222)

Closing stock (1,185,274,435) (1,188,025,027)

9,849,834,174 5,515,387,477

28.2 Salaries, wages and benefits include Rs. 28,357,006 (2010: Rs. 27,672,518) in respect of staff retirement benefits.

2011 2010
29 Selling and distribution expenses Rupees Rupees
On export sales
Export development surcharges 14,791,863 10,036,721
Regulatory duty on export 787,285 565,515
Freight 125,662,502 99,313,950
Commission 71,880,324 48,744,376
Clearing and forwarding 111,154,972 91,219,467
324,276,946 249,880,029

On local sales
Freight 18,080,778 15,461,593
Commission 47,412,042 21,423,811
65,492,820 36,885,404

389,769,766 286,765,433

37
 2011 2010
Rupees Rupees
30 Administrative expenses

Director's remuneration 30.1 3,298,350 1,632,000

Salaries and benefits 30.2 10,401,404 10,270,091
Printing and stationery 1,491,330 1,174,615
Communication 1,691,177 1,980,344
Traveling and conveyance 1,881,985 2,317,709
Legal and professional charges 1,244,925 863,887
Auditors' remuneration 30.3 1,281,450 1,169,950
Rent, rates and taxes 288,670 384,862
Entertainment 691,951 464,185
Electricity, gas and water charges 2,309,400 1,859,715
Fees and subscription 351,377 408,977
Repairs and maintenance 365,600 66,600
Charity and donation 30.4 3,647,403 2,943,630
Depreciation 4.1 6,792,728 7,203,609
Brokerage and discount 18,000 22,000

35,755,750 32,762,174

30.1 Chief Executive

Remuneration 480,024 279,996

House rent allowance 192,024 112,008
Perquisites 96,002 27,996

768,050 420,000

Number of person 1 1

Director

Remuneration 1,480,074 807,996

House rent allowance 592,074 323,208
Perquisites 458,152 80,796

2,530,300 1,212,000

Number of person 3 3

30.2 Salaries, wages and benefits include Rs. 663,860 (2010: Rs. 935,940) in respect of staff retirement benefits.

30.3 Auditors' remuneration

Audit fee 1,100,000 1,000,000

Half yearly review fee 126,450 114,950
Code of corporate governance review fee 30,000 30,000
Out of pocket expenses 25,000 25,000

1,281,450 1,169,950

30.4 Directors and their spouse have no interest in the donees.

31 Other operating expenses

Loss on sale of shares 80,620,887 45,310,563

Workers' profit participation fund 23.1 40,744,918 20,171,404
Workers' welfare fund 31.1 685,104 7,665,133

122,050,909 73,147,100

31.1 Honorable High Court in writ petition bearing number W.P. No. 8763/2011 has decided that the amendment made in the
Workers' Welfare Fund ordinance through Finance Act 2006 and 2008 is unconstitutional and unlawful. Therefore, provision for
workers welfare fund has been made in the financial statements based on the taxable income.

38
 2011 2010
32 Finance cost
Rupees Rupees
Interest / mark-up on
- short term finances 689,304,030 650,096,999
- long term loans 240,979,232 266,484,068
- lease 35,876,571 39,244,449
- Workers' profit participation 937,985 213,629
Bank charges, commission and others charges 11,130,608 6,269,963
978,228,426 962,309,108

Less: Finance income

- on TDR - National Bank of Pakistan 11,345 -

978,217,081 962,309,108
33 Other operating income

Profit on sale of property, plant and equipment 14,928 18,001

Rental income 3,597,564 2,286,448
Dividend income 1,086,169 3,161,389
Electric power income 33.1 - 16,314,675
Appreciation in the fair value of investment 973,310 824,187

5,671,971 22,604,700
33.1 Electric power income

Salaries and wages 15,019,021 12,469,719

Fuel and store consumed 820,001,923 777,069,461
Repair and maintenance 4,211,815 3,484,661
Other expenses 4,633,074 5,707,974
Depreciation 4.1 36,022,337 35,836,815
879,888,170 834,568,630

Less: Self use - spinning 496,486,482 423,002,467

weaving 383,401,688 178,615,312
879,888,170 601,617,779

- 232,950,851

Sale out side - 249,265,526

Less expense - (232,950,851)

Profit - 16,314,675

34 Taxation

Current
- for the year 107,811,409 75,306,598

Deferred 81,861,478 45,250,898

189,672,887 120,557,496

35 Earnings per shares

Profit after taxation 583,795,450 255,034,039

Number of shares

Weighted average number of ordinary shares 13,000,000 9,025,000

(Rupees)
Earnings per share - basic and diluted
44.91 28.26
35.1 There is no dilutive effect on basic earnings per share.

39
 2011 2010
36 Cash generated from operations Rupees Rupees

Profit before taxation 773,468,337 375,591,535

Adjustment for items involving non movement of fund

Depreciation 234,533,862 233,820,311

Financial charges - net 978,217,081 962,309,108
(Gain) / loss on sale of fixed assets (14,928) (18,001)
Dividend income (1,086,169) (3,161,389)
Provision for gratuity 35,354,520 28,433,052
Provision for (appreciation)/ diminution in the value of investment (973,310) 824,187
Provision for workers' profit participation fund 40,744,918 20,171,404
1,286,775,974 1,242,378,672

Profit before working capital changes 2,060,244,311 1,617,970,207

(Increase)/decrease in current assets
Stocks, stores and spares (691,551,502) (174,928,523)
Trade debts (134,335,440) 361,956,787
Loans and advances, prepayments, sales tax and (62,592,030) 3,226,825
other receivables
1,171,765,339 1,808,225,296
Increase in current liabilities
Creditors, accrued and other liabilities 83,194,792 61,036,458

1,254,960,131 1,869,261,754

40
37 Segment Analysis
The segment information for the reportable segments for the year ended June 30, 2011 is as follows:
37.1 Operating results
Spinning Weaving Power Generation Company
Note
2011 2010 2011 2010 2011 2010 2011 2010
Rupees Rupees
Sales
Export 4,281,252,035 3,463,356,078 2,401,545,482 1,248,306,240 - - 6,682,797,517 4,711,662,318
Local 4,965,046,417 2,881,694,169 2,432,145,899 1,572,455,525 - 249,265,526 7,397,192,316 4,703,415,220
Waste 263,563,591 95,858,009 - - - 263,563,591 95,858,009
Cotton - 63,513,008 - - - - - 63,513,008
Other - 8,928,674 - - - - - 8,928,674
9,509,862,043 6,513,349,938 4,833,691,381 2,820,761,765 - 249,265,526 14,343,553,424 9,583,377,229
Inter - segment sales 1,621,408,283 913,250,691 - - 879,888,170 601,617,779 2,501,296,453 1,514,868,470
Total sales 11,131,270,326 7,426,600,629 4,833,691,381 2,820,761,765 879,888,170 850,883,305 16,844,849,877 11,098,245,699
Cost of sales 39 (9,585,365,878) (6,115,260,886) (4,086,005,957) (2,424,130,858) (879,888,170) (834,568,630) (14,551,260,005) (9,373,960,374)
Gross profit 1,545,904,448 1,311,339,743 747,685,424 396,630,907 - 16,314,675 2,293,589,872 1,724,285,325

41
Selling and distribution expenses 40 (325,460,632) (242,031,872) (64,309,134) (44,733,561) - - (389,769,766) (286,765,433)
Administrative expenses 41 (23,706,277) (22,902,119) (12,049,473) (9,860,055) - - (35,755,750) (32,762,174)
(349,166,909) (264,933,991) (76,358,607) (54,593,616) - - (425,525,516) (319,527,607)
Operating Results 1,196,737,539 1,046,405,752 671,326,817 342,037,291 - 16,314,675 1,868,064,356 1,404,757,718
37.2 Segment assets 6,078,248,832 5,335,708,913 2,499,990,924 2,234,381,883 834,557,746 759,182,899 9,412,797,503 8,329,273,695
37.3 Unallocated assets 233,941,307 178,828,069
9,646,738,810 8,508,101,764
37.4 Segment liabilities 176,338,420 119,678,298 127,007,902 90,946,440 57,588,905 46,227,132 360,935,227 256,851,870
37.5 Unallocated liabilities 6,350,667,999 5,950,960,825
6,711,603,226 6,207,812,695
37.6 Depreciation 145,118,210 144,157,039 53,393,315 53,826,457 36,022,337 35,836,815 234,533,862 233,820,311
37.7 Inter-segment pricing
Transactions among the business segments are recorded at arm's length prices using admissible valuation methods.
37.8 There were no major customer of company which formed 10 percent or more of the company's revenue.
 2011 2010
Note Rupees Rupees

38 Reconciliations of reportable segments sales, cost of sales, assets and liabilities

38.1 Sales

Total sales for reportable segment 37.1 16,844,849,877 10,848,980,173

Elimination of inter-segment 37.1 (2,501,296,453) (1,514,868,470)

Total sales 14,343,553,424 9,334,111,703

38.2 Cost of sales

Total cost of sales for reportable segment 39 14,551,260,005 9,141,009,523

Elimination of inter-segment 39.1 (2,501,296,453) (1,514,868,470)

Total cost of sales 12,049,963,552 7,626,141,053

38.3 Assets

Total assets for reportable segments 37.2 9,412,797,503 8,329,273,695

Long term investments 6 2,786,576 26,988,433

Long term deposits 7 26,742,702 17,503,512
Other financial assets 11 15,898,000 11,449,354
Income tax and sales tax 14 188,514,029 122,886,770
Unallocated assets 37.3 233,941,307 178,828,069

9,646,738,810 8,508,101,764

38.4 Liabilities

Total liabilities for reportable segments 37.4 360,935,227 256,851,870

Loans from directors 18 78,776,000 23,900,000

Long term finances 19 413,100,367 601,434,380
Redeemable capital - Sukuk 20 1,292,666,667 1,361,916,667
Liabilities against assets subject to finance lease 21 283,536,871 281,131,137
Deferred liabilities 22 461,976,060 371,526,146
Accrued interest / mark-up 24 168,349,923 117,223,936
Short term borrowings 25 3,652,262,111 3,193,828,559
Unallocated liabilities 37.5 6,350,667,999 5,950,960,825

6,711,603,226 6,207,812,695

42
 Spinning Weaving Power Generation Company
Note
2011 2010 2011 2010 2011 2010 2011 2010
Rupees Rupees
39 Cost of sales
Raw material consumed 39.1 7,983,655,009 4,355,855,494 3,487,587,448 2,072,782,674 - - 11,471,242,457 6,428,638,168
Stores and spares consumed 277,166,889 209,852,540 37,863,194 77,807,822 820,001,923 777,069,461 1,135,032,006 1,064,729,823
Sizing material consumed - - 64,985,267 - - - 64,985,267 -
Salaries, wages and benefits 573,483,789 479,286,889 121,369,658 101,630,676 15,019,021 12,469,719 709,872,468 593,387,284
Fuel, power and water:
Inter-segment 496,486,482 423,002,467 383,401,688 178,615,312 - - 879,888,170 601,617,779
Others 165,438,266 87,674,046 5,872,830 5,866,030 - - 171,311,096 93,540,076
Repairs and maintenance 11,869,778 10,463,523 3,279,136 3,649,172 4,211,815 3,484,661 19,360,729 17,597,356
Insurance expenses 17,833,326 17,147,886 6,126,055 4,674,744 - - 23,959,381 21,822,630
Rent, rates and taxes 1,118,527 2,878,677 - - - - 1,118,527 2,878,677
Other expenses 24,198,389 19,224,798 9,405,403 5,994,289 4,633,074 5,707,974 38,236,866 30,927,061
Depreciation expenses 140,614,591 139,134,556 51,104,206 51,645,331 36,022,337 35,836,815 227,741,134 226,616,702
9,691,865,046 5,744,520,876 4,170,994,885 2,502,666,050 879,888,170 834,568,630 14,742,748,101 9,081,755,556
Work in process
Opening stock 79,216,170 54,917,687 44,357,580 41,042,129 - - 123,573,750 95,959,816
Closing stock (94,863,445) (79,216,170) (71,205,512) (44,357,580) - - (166,068,957) (123,573,750)
(15,647,275) (24,298,483) (26,847,932) (3,315,451) - - (42,495,207) (27,613,934)
Cost of goods manufactured 9,676,217,771 5,720,222,393 4,144,146,953 2,499,350,599 879,888,170 834,568,630 14,700,252,894 9,054,141,622
Cost of cotton sold - 54,914,222 - - - - - 54,914,222

43
Cost of other material sold - (6,501,398) - - - - - (6,501,398)
9,676,217,771 5,768,635,217 4,144,146,953 2,499,350,599 879,888,170 834,568,630 14,700,252,894 9,102,554,446
Finished goods
Opening balance 271,176,839 222,458,303 686,428,241 534,215,206 - - 957,605,080 756,673,509
Finished goods purchased:
Cost of other material sold - 6,501,398 - - - - - 6,501,398
Yarn 194,026,950 388,842,807 102,614,372 76,993,294 - - 296,641,322 465,836,101
194,026,950 395,344,205 102,614,372 76,993,294 - - 296,641,322 472,337,499
Closing stock (556,055,682) (271,176,839) (847,183,609) (686,428,241) - - (1,403,239,291) (957,605,080)
9,585,365,878 6,115,260,886 4,086,005,957 2,424,130,858 879,888,170 834,568,630 14,551,260,005 9,373,960,374
39.1 Raw material consumed
Opening balance 1,014,368,879 1,276,470,008 173,656,148 100,090,563 - - 1,188,025,027 1,376,560,571
Purchases:
Inter-segment - - 1,621,408,283 913,250,691 - - 1,621,408,283 913,250,691
Other 8,017,700,530 4,148,668,587 1,829,383,052 1,233,097,568 - - 9,847,083,582 5,381,766,155
8,017,700,530 4,148,668,587 3,450,791,335 2,146,348,259 - - 11,468,491,865 6,295,016,846
Cost of cotton sold - (54,914,222) - - - - - (54,914,222)
Closing stock (1,048,414,400) (1,014,368,879) (136,860,035) (173,656,148) - - (1,185,274,435) (1,188,025,027)
7,983,655,009 4,355,855,494 3,487,587,448 2,072,782,674 - - 11,471,242,457 6,428,638,168
 Spinning Weaving Power Generation Company
Note
2011 2010 2011 2010 2011 2010 2011 2010

Rupees Rupees
40 Selling and distribution expenses

On export sales
Export development surcharge 9,502,903 7,593,933 5,288,960 2,442,788 - - 14,791,863 10,036,721
Regulatory duty on export 787,285 565,515 - - - - 787,285 565,515
Freight 89,032,681 72,588,954 36,629,821 26,724,996 - - 125,662,502 99,313,950
Commission 65,005,683 45,630,902 6,874,641 3,113,474 - - 71,880,324 48,744,376
Clearing and forwarding 104,839,061 82,941,371 6,315,911 8,278,096 - - 111,154,972 91,219,467
269,167,613 209,320,675 55,109,333 40,559,354 - - 324,276,946 249,880,029

On local sales
Freight 17,826,053 15,104,193 254,725 357,400 - - 18,080,778 15,461,593
Commission 38,466,966 17,607,004 8,945,076 3,816,807 - - 47,412,042 21,423,811
56,293,019 32,711,197 9,199,801 4,174,207 - - 65,492,820 36,885,404

325,460,632 242,031,872 64,309,134 44,733,561 - - 389,769,766 286,765,433

Spinning Weaving Power Generation Company

Note
2011 2010 2011 2010 2011 2010 2011 2010

Rupees Rupees
41 Administrative expenses

Director's remuneration 2,186,826 1,134,077 1,111,524 497,923 - - 3,298,350 1,632,000

Salaries and benefits 6,896,193 7,136,686 3,505,211 3,133,405 - - 10,401,404 10,270,091
Printing and stationery 988,761 816,240 502,569 358,375 - - 1,491,330 1,174,615
Communication 1,121,261 1,332,357 569,916 584,980 - - 1,691,177 1,917,337
Traveling and conveyance 1,247,767 1,610,576 634,218 707,133 - - 1,881,985 2,317,709
Legal and professional charges 825,393 600,315 419,532 263,572 - - 1,244,925 863,887
Auditors' remuneration 849,609 931,987 431,841 237,963 - - 1,281,450 1,169,950
Rent, rates and taxes 191,390 267,441 97,280 117,421 - - 288,670 384,862
Entertainment 458,768 322,562 233,183 141,623 - - 691,951 464,185
Electricity, gas and water charges 1,531,146 1,292,316 778,254 567,399 - - 2,309,400 1,859,715
Fees and subscription 232,965 284,198 118,412 124,779 - - 351,377 408,977
Repairs and maintenance 242,395 90,064 123,205 39,543 - - 365,600 129,607
Charity and donation 2,418,250 2,045,529 1,229,153 898,101 - - 3,647,403 2,943,630
Depreciation 4,503,619 5,022,483 2,289,109 2,181,126 - - 6,792,728 7,203,609
Brokerage and discount 11,934 15,288 6,066 6,712 - - 18,000 22,000

23,706,277 22,902,119 12,049,473 9,860,055 - - 35,755,750 32,762,174

44
 42 FINANCIAL INSTRUMENTS

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

42.1 - Credit risk

42.2 - Liquidity risk
42.3 - Market risk

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

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

42.1 Credit risk

42.1.1 Exposure to credit risk

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, and arises principally from the trade debts, loans and advances, trade deposits and short term
prepayments, other receivables, other financial assets and cash and bank balances. Out of total financial assets of Rs. 927.331
million (June 30, 2010 : Rs. 767.929 million), financial assets which are subject to credit risk aggregate to Rs. 902.669 million (June 30,
2010 : Rs. 764.711million). The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure
to credit risk at the reporting date is as follows.
2011 2010
Rupees Rupees

Long term investments 2,786,576 26,988,433

Long term deposits 26,742,702 17,503,512
Trade debts 658,397,688 524,062,248
Other financial assets 15,898,000 11,449,354
Loans and advances 192,394,294 184,707,178
Short term prepayments 6,450,130 -
Cash and bank balances 24,661,647 3,218,580

927,331,037 767,929,305

42.1.2 The maximum exposure to credit risk for trade debts at the reporting date by geographical region is as follows.

Domestic 510,427,309 518,200,716

Export 147,970,379 5,861,532

658,397,688 524,062,248

42.1.3 The maximum exposure to credit risk for debts at the reporting date by type of product is as follows:

Yarn 356,711,252 232,550,422

Fabric 302,633,434 279,837,420
Waste - 4,907,551
Others 552,822 6,766,856

659,897,508 524,062,249

42.1.4 The aging of trade debts at the reporting date as follows:

Not past due 264,676,275 210,194,526

Past due 0 - 30 days 228,019,067 181,082,946
Past due 31 - 90 days 141,930,968 112,715,477
Past due 91 - 1 year 25,271,198 20,069,300
More than one year - -

659,897,508 524,062,249

45
42.2 Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated with financial liabilities. Prudent
liquidity risk management implies maintaining sufficient cash and the availability of funding trough an adequate amount of
committed credits facilities. The Company's treasury department maintains flexibility in funding by maintaining availability under
committed credits lines.

Financial liabilities in accordance with their contractual maturities are presented below:

2011
Carrying Contractual Between 1 to 5 5 years and
Up to 1 year
amount cash flow years above
Rupees

Loan from directors 78,776,000 78,776,000 - - 78,776,000

Long term finances 413,100,367 503,443,930 214,610,870 288,833,060 -
Redeemable capital - Sukuk 1,292,666,667 1,752,874,990 299,880,200 1,452,994,790 -
Finance lease 283,536,871 387,415,910 142,090,960 245,324,950 -
Trade and other payables 360,935,227 360,935,227 360,935,227 - -
Accrued interest / mark-up 168,349,923 168,349,923 168,349,923 - -
Short term borrowings 3,652,262,111 4,248,311,288 4,248,311,288 - -

6,249,627,165 7,500,107,268 5,434,178,468 1,987,152,800 78,776,000

2010
Carrying Contractual Between 1 to 5 5 years and
Up to 1 year
amount cash flow years above
Rupees

Loan from directors 23,900,000 23,900,000 - - 23,900,000

Long term finances 601,434,380 677,518,364 257,069,971 420,448,393 -
Redeemable capital - Sukuk 1,361,916,667 2,099,518,879 182,955,372 1,716,536,621 200,026,886
Finance lease 281,131,137 361,265,687 76,362,284 284,903,403 -
Trade and other payables 256,851,870 256,851,870 256,851,870 - -
Accrued interest / mark-up 117,223,936 117,223,936 117,223,936 - -
Short term borrowings 3,193,828,559 3,518,980,728 3,518,980,728 - -

5,836,286,549 7,055,259,464 4,409,444,161 2,421,888,417 223,926,886

42.2.1 The contractual cash flow relating to the above financial liabilities have been determined on the basis of mark-up / interest rates
effective at the respective year-end. The rates of mark-up / interest have been disclosed in the respective notes to these financial
statements.

42.3 Market risk

Market risk is the risk that changes in market price, such as foreign exchange rates, interest rates and equity prices will affect the
Company's income or the value of its holding of financial instruments.

42.3.1 Currency risk

The company is exposed to currency risk on trade debts, borrowing and import of raw material and stores that are denominated in
a currency other than the respective functional currency of the company, primarily in US Dollar and Euro. The currencies in which
these transactions primarily are denominated is US Dollar and Euro. The company's exposure to foreign currency risk is as follows.

US Dollar Euro Others Rupees

Trade debts 2011 1,723,592 - - 147,970,379

Trade debts 2010 68,862 - 5,861,532

46
 The following significant exchange rates applied during the year.

Average rates Reporting date rates

2011 2010 2011 2010

US Dollar to Rupee 85.63 82.90 85.85 85.40

42.3.2 Sensitivity analysis

5% strengthening of Pak Rupee against the following currencies at June 30, would have increased / (decreased) equity and profit
and loss by the amount shown below. The analysis assumes that all other variables, in particular interest rates, remain constant. 5%
weakening of Pak Rupee against the above currencies at periods ends would have had the equal but opposites effect on the
above currencies to the amount shown below, on the basis that all other variables remain constant.
2011 2010
Rupees Rupees

US Dollar (7,398,519) (293,077)

The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and liabilities of the company.

42.3.3 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. Majority of the interest rate exposures arises from short and long term borrowings from bank and term
deposits and deposits in PLS saving accounts with banks. At reporting date the interest rate profile of the company's interest
bearing financial instrument is as follows.

Carrying Amount

2011 2010
Rupees Rupees
Fixed rate instruments

Financial assets 300,000 -

Financial liabilities 176,620,491 353,846,736

Variable rate instruments

Financial assets - -

Financial liabilities 5,464,945,525 5,184,464,007

42.4 Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit & loss. Therefore, a
change in mark-up / interest rates at the reporting date would not affect profit & loss account.

42.5 Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at reporting date would have increased / (decreased) equity and profit or loss 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 June 30, 2010.

Profit and loss Equity

100 bps 100 bps 100 bps 100 bps
increase decrease increase decrease
Rupees

Cash flow sensitivity - variable rate instruments 2011 54,649,455 (54,649,455) - -

Cash flow sensitivity - variable rate instruments 2010 51,844,640 (51,844,640) - -

47
42.6 Fair value of financial assets and liabilities

The carrying value of all financial instruments reflected in the financial statements approximate to their fair values. Fair value is
determined on the basis of objective evidence at each reporting date.

2011 2010
42.7 Off balance sheet items Rupees Rupees

Bank guarantees issued in ordinary course of business 135,822,000 183,218,000

Letters of credit for raw material 117,608,268 157,388,380

Letters of credit for stores and spares 60,104,487 1,896,719

The effective rate of interest / mark up for the monetary financial assets and liabilities are mentioned in respective notes to the
financial statements.

42.8 Capital risk management

The company's prime object when managing capital is to safeguard its ability to continue as a going concern in order to provide
adequate returns for shareholder 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 or sell assets to reduce debt.

Consistent with others in the industry, the company monitors capital on the basis of the gearing ratio. The ratio is calculated as

total borrowings divided by total capital employed. Borrowings represent long term financing, long term financing from directors

and others and short term borrowings. Total capital employed includes total equity as shown in the balance sheet plus borrowings.

2011 2010
Rupees Rupees

Borrowings 5,641,566,016 5,438,310,743

Total equity 3,013,911,584 2,324,189,069

Total capital employed 8,655,477,600 7,762,499,812

Gearing ratio Percentage 65.18 70.06

48
43 Plant capacity and production
2011 2010
Spinning

Total no of spindles installed 73,488 73,488

Total no of rotors installed 1,104 1,104
Average no of spindles worked 73,488 73,488
Average no of rotors worked 1,104 1,104
Numbers of shift worked per day 3 3
Capacity of industrial unit after conversion into 20/s count - KGS 29,438,125 29,438,125
Actual production after conversion into 20/s count - KGS 27,623,440 26,266,460

It is difficult to describe the production capacity in textile industry since it fluctuates widely depending upon various factors
such as count of the yarn spun spindles speed twist per inch and raw material used etc.

Weaving 2011 2010

Rated capacity converted into 60 picks - Square meters 70,763,414 70,763,414

Actual production converted to 60 picks - square meters 64,344,192 65,614,543
Total numbers of looms worked 234 234
Number of shifts worked per day 3 3

Power Plant

Installed capacity MW 36.2 35.6

Installed capacity per hour per day MWH 317.112 311.856
Prime capacity MW 20 19.3
Stand by MW 16.2 16.2
Installed prime capacity per hour per day MWH 175.2 169.944
Actual generated per hour per day MWH 117.587 148.324

Reason for Short Fall if Any

The installed capacity includes the stand by generation which is only used case of emergency shutdown of the prime engines.

44 Non adjusting event after balance sheet date

The Board of Directors have proposed a final cash dividend for the year ended June 30, 2011 of Rs. 1.5/- (June 30, 2010: Rs. 2/-)
per ordinary share amounting to Rs. 19,500,000 (June 30, 2010: Rs. 26,000,000) at their meeting held on October 8, 2011 for
approval of the members at the Annual General meeting to held on October 31, 2011. These financial statements don't reflect
this impact.

45 Corresponding Figures

Comparative information has been rearranged and reclassified, wherever necessary, for better presentation and comparison.

46 General

The figures have been rounded off to the nearest Rupees.

47 Date of authorization for issue

These financial statements were authorized for issue by the Board of Directors of the Company on October 8, 2011.

TARIQ IQBAL OMER KHALID

Karachi: October 08, 2011 Chief Executive Director

49