Final without Border ARIF COMPANY SECRETARY - HAJI TARIQ SAMAD BANKERS -----NATIONAL BANK OF...

25th

Annual Report 2012

Khalid Siraj Textile Mills Ltd.

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KHALID SIRAJ TEXTILE MILLS LIMITED

25TH ANNUAL REPORT 2012

C O N T E N T S

COMPANY INFORMATION

VISION AND MISSION STATEMENT

NOTICE OF ANNUAL GENERAL MEETING

DIRECTORS' REPORT TO THE SHAREHOLDERS

STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE

REVIEW REPORT TO THE MEMBERS

PATTERN OF SHAREHOLDING

FINANCE HIGHLIGHTS

AUDITORS' REPORT TO THE MEMBERS

BALANCE SHEET

PROFIT AND LOSS ACCOUNT

STATEMENT OF COMPREHENSIVE INCOME

CASH FLOW STATEMENT

STATEMENT OF CHANGES IN EQUITY

NOTES TO THE ACCOUNTS

FORM OF PROXY

2

3

4

5-7

8

9

10-11

12

13

14

15

16

17

18

19-35

Khalid Siraj TEXTILE MILLS LIMITED

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COMPANY INFORMATION

CHIEF EXECUTIVE - MIAN TAYYAB IQBAL

DIRECTORS ------

MIAN TAHIR IQBAL MISS RABIA IQBAL MRS. TAYYABA WASEEM MRS. RUKHSANA ARIF KH. IFTIKHAR-UD-DIN MR. MUHAMMAD ASIF (NIT NOMINEE)

AUDIT COMMITTEE

- CHAIRMAN - MEMBERS

---

MIAN TAHIR IQBAL MISS RABIA IQBALMRS. RUKHSANA ARIF

COMPANY SECRETARY - HAJI TARIQ SAMAD

BANKERS -----

NATIONAL BANK OF PAKISTANHABIB BANK LIMITEDFAYSAL BANK LTDDUBAI ISLAMIC BANK HABIB METROPOLITAN BANK LTD

AUDITORS - QADEER AND COMPANYCHARTERED ACCOUNTANTS89/F, JAIL ROAD, LAHORE.

LEGAL ADVISOR - MR. MAJID ALI RANA (ADVOCATE)

REGISTERED OFFICE - 467-M BLOCK, MODEL TOWN EXTENSION,LAHORE.

MILLS - 48 - KM, LAHORE - MULTAN ROAD,PHOOL NAGAR (BHAI PHERU),TEHSIL PATTOKI, DISTT. KASUR.


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V i s i o nTo accomplish, build up and sustain a good reputation of the

project in textile sector locally and globally by manufacturing

and marketing high quality of yarn through team work by

means of honesty, integrity and commitment.

M i s s i o nTo provide maximum satisfaction to customers by supplying

fine quality yarn for knitting and Weaving for well known

textile Brands through effective utilization of men, material

and machines by encouraging, supporting and rewarding

the employees and sharing profits with our shareholders.

We do have social responsibility towards our community in

which we operate and we are committed to safety,

health and environment in all our operations.


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thNotice is hereby given that the 25 Annual General Meeting of the shareholders of Khalid Siraj Textile Mills Ltd. will be held at 467-M Block, Model Town Ext., Lahore, on Wednesday, October 31, 2012 at 10:30 a.m. to transact the following business:

Ordinary Business:

1. To confirm the minutes of the Annual General Meeting of the shareholders held on October 31, 2011.

2. To receive, consider and adopt the Audited Balance Sheet and Profit and Loss Account of the Company together with the Directors' and Auditors' Reports thereon for the year ended June 30, 2012.

3. To appoint Auditors for the year ending June 30, 2013 and fix their remuneration. The retiring Auditors are eligible for re-appointment.

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

By order of the Board Khalid Siraj Textile Mills Ltd.

Haji Tariq Samad Company Secretary

LahoreOctober 10, 2012

Notes:

1. The Share Transfer Books of the Company will remain closed from October 27, 2012 to November 03, 2012 (both days inclusive).

2. A member entitled to attend and vote at the General Meeting is entitled to appoint another member as a proxy to attend and vote instead of him / her.

3. The instrument appointing a proxy must be received at the Registered Office of the Company not later than 48 hours before the time fixed for the meeting. A member shall not be entitled to appoint more than one proxy. If a member appoints more than one proxy and more than one instrument of proxy is deposited by a member with the Company, all such instruments of proxy shall rendered invalid.

4. An individual beneficial owner of CDC entitled to attend and vote at this meeting, must bring his / her CNIC or Passport in original to prove his / her identity and in case of a proxy, must enclose an attested copy of his / her CNIC or Passport along with CDC A/C No. Representatives of corporate members should bring the usual documents required for such purpose.

5. Shareholders are requested to promptly notify the change in their addresses, if any, to the Company Registrar i.e. M/S Corplink (Pvt) Ltd., Wings Arcade, 1-K, Commercial, Model Town, Lahore. Fax: 042-35869037.

NOTICE OF ANNUAL GENERAL MEETING


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DIRECTORS' REPORT TO THE SHAREHOLDERS

IN THE NAME OF ALLAH, THE MOST GRACIOUS, THE MOST MERCIFUL

DEAR SHAREHOLDERS:

thThe Directors of your company welcome you at the 25 Annual General Meeting and are pleased to present the audited accounts and auditors' report thereon for the year ended June 30, 2012.

The company sold 3.749 million kilograms of yarn valuing Rs. 780.70 million during the year under review as compared to 3.962 million kilograms of yarn valuing Rs. 1,088.27 million in the previous year. There would have been a gross profit during the year under review, but charging of depreciation on revalued fixed assets amounting to Rs. 25.216 million turned the gross profit into a gross loss of Rs. 8.717 million as compared to the gross loss of Rs. 16.405 million in the previous year. During the year, the company suffered a pre tax loss of Rs. 38.624 million as compared to pre tax loss of Rs. 51.568 million in the previous year.

APPROPRIATIONS


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Loss before taxation (51,568,003)

Taxation (771,673)

Loss for the year (50,796,330)

Loss brought forward (88,737,847)

Transferred from surplus on revaluation of fixed assets on accountof incremental depreciation-net of deferred tax

18,183,336

Transferred from surplus on Revaluation of Property,Plant (26,349,426) and Equipment- Re-stated

Unappropriated loss carried forward to Balance Sheet (147,700,267)

Loss per share-basic (4.75)

(38,624,207)

4,694,331

(43,318,538)

(147,700,267)

16,390,511

-

(174,628,294)

(4.05)

2012 2011

Re-stated

Rupees

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CORPORATE AND FINANCIAL REPORTING FRAME WORK

The Board of Directors state that:

a) The financial statements prepared by the management, present fairly its state of affairs, the result of

its operations, cash flows and changes in equity;

b) Proper books of accounts have been maintained by the company;

c) Appropriate accounting policies have been consistently applied in preparation of financial

statements based on reasonable and prudent judgement;

d) International Financial Reporting Standards (IFRS), as applicable in Pakistan have been followed

in preparation of financial statements and any departure there from has been adequately disclosed;

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

monitored;

f) There is no significant doubt the company's ability to continue as a going concern;

g) The main reason for non declaration of dividend is after tax loss of Rs. 43.318 million;

h) There has been no material departure from the best practices of corporate governance, as detailed

in the listing regulations;

PATTERN OF SHAREHOLDINGS

A statement reflecting the pattern of shareholdings is attached to the Annual Report on page 10-11.

KEY OPERATING AND FINANCIAL DATA

A statement summarising the key operating and financial data of last six years alongwith current year is

attached to the Annual Report on page 12.

STATUTORY PAYMENTS

As on the closing date, no government taxes, duties, levies and charges were outstanding/overdue except

the routine payments of various levies.

TRADE IN THE SHARES OF THE COMPANY

There was no trading in the shares of the Company by the Chief Executive, Directors, Chief Financial

Officer, Company Secretary and their spouses and minor children during the year under review.


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BOARD MEETINGS

During the period under consideration, four (4) meetings were held and the attendance by the respective Directors was as follows:

DIRECTORS NUMBER OF MEETINGS ATTENDED

Mian Tayyab Iqbal 4Mian Tahir Iqbal 4Miss Rabia Iqbal 4Mrs. Tayyaba Waseem 3Mrs. Rukhsana Arif 3Kh.Iftikhar-ud-Din 3Mr. Muhammad Asif (NIT Nominee) 2Leave of absence was granted by the board to the non attending directors.

FUTURE PROSPECTS

AUDITORS

The Auditors M/s.Qadeer & Co., Chartered Accountants, are retiring at the conclusion of the Annual General Meeting, scheduled to be held on 31-10-2012. The retiring auditors have offered their services for re-appointment.

MANAGEMENT / EMPLOYEES RELATIONS

The labour management relations remained cordial throughout the year. The Directors take the opportunity to express their appreciation of the spirit of understanding and good will reciprocated by the workers of the company. We trust that this spirit of harmony and mutual understanding will prevail in the times to come, Insha Allah.

Your Directors also place on record their appreciation for the loyalty and devotion to duty of the officers and members of the staff of the company.

APPRECIATION

The Directors place on record their appreciation for the support and co-operation extended by its bankers and other financial institutions to the company.

During the earlier part of the year, the cotton prices were higher due to uncertain crop size. The sale price of cotton yarn did not increase in line with cotton prices and other production cost. For the coming year, the financial position of the Company will largely depend on the size and prices of cotton and improvement in yarn prices. The Directors of your Company are trying their best to improve the situation through better production and marketing strategies.

Lahore: 04 October 2012

For and on behalf of the Board of Directors

MIAN TAYYAB IQBAL CHAIRMAN/CHIEF EXECUTIVE


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Lahore: 04 October 2012

For and on behalf of the Board

MIAN TAYYAB IQBAL CHIEF EXECUTIVE

CNIC # 35202-7317351-7


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Category

Names

Executive Directors

Mian Tayyab Iqbal

Mian Tahir Iqbal

Kh. Iftikhar-ud-Din

Non - Executive Directors

Miss Rabia Iqbal Mrs. Tayyaba Waseem

Mrs. Rukhsana Arif

Mr. Muhammad Asif (NIT Nominee)

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

The Company has applied the principles contained in the CCG in the following manner:

1. The Company encourages representation of independent non-executive directors and directors representing minority interests on its board of directors. At present the board includes:

The independent directors meets the criteria of independence under clause i (b) of the CCG.

2. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this Company. 3. All the resident directors of the company are registered as taxpayers and none of them has defaulted in payment of any loan to a

banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.

4. No casual vacancy occurred on the board during the year.

5. The Company has prepared a "Code of Conduct" and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with its supporting policies and procedures.

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

7. All the powers of the board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive directors, have been taken by the board / shareholders.

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

9. The board arranged a training program for its directors during the year.

10. The board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment.

11. The directors' report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salient

matters required to be disclosed.

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

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

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

15. The board has formed an Audit Committee. It comprises 3 members, of whom two are non-executive directors and the chairman of the committee is an executive director.

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

17. The board has formed an HR and Remuneration Committee. It comprises 3 members, of whom two are non-executive directors and the chairman of the committee is an executive director.

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

19. The statutory auditors of the company have confirmed that they have been given a satisfactory rating under the quality control review program of the ICAP, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.

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

21. The 'closed period', prior to the announcement of interim/final results, and business decisions, which may materially affect the market price of Company's securities, was determined and intimated to directors, employees and stock exchange(s).

22. Material / price sensitive information has been disseminated among all market participants at once through stock exchange(s).

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

Statement of Compliance with the Code of Corporate GovernanceName of Company : Khalid Siraj Textile Mills Limited

Year ending : June 30, 2012

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We have reviewed the statement of compliance with best practices contained in the Code of Corporate Governance as applicable to Company for the year ended June 30, 2012 prepared by the Board of Directors of Khalid Siraj Textile Mills Limited (the Company) to comply with the Listing Regulation No. 35 of Karachi and Lahore Stock Exchanges, where the company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of 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 Company's compliance with the provisions of 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 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 are required to consider whether the Board's statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal control, the Company's corporate governance procedures and risks.

Further, Sub-Regulation (xiii a) of Listing Regulations 35 notified by 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 undertaken at arm's length price or not.

Based on our review, nothing has come to our attention, which causes us to believe that the statement of compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the Company for the year ended 30 June 2012.

REVIEW REPORT TO THE MEMBERS

ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

LahoreDated 05, October 2012:

QADEER AND COMPANYCHARTERED ACCOUNTANTS

NAWAZ KHAN, FCA

QADEER AND COMPANY CHARTERED ACCOUNTANTS

89/F, JAIL ROAD, LAHORE.

Ph: 042-37584617, 37578122 Fax: 042-37576728 E-mail: [email protected]

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PATTERN OF SHAREHOLDING


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4. No. of Shareholders From ----Shareholding---- To Total Shares Held

477

1

100

21,711

272

101

500

78,495

254

501

1,000

161,382

216

1,001

5,000

435,407

30

5,001

10,000

204,838

2

10,001

15,000

26,080

4

15,001

20,000

69,132

2

20,001

25,000

47,130

5

35,001

40,000

184,400

1

55,001

60,000

57,629

1

60,001

65,000

62,371

1

65,001

70,000

66,683

2

70,001

75,000

149,400

1

80,001

85,000

83,300

1

85,001

90,000

86,567

1

95,001

100,000

100,000

1

100,001

105,000

102,800

4

105,001

110,000

432,930

10

110,001

115,000

1,130,987

2

145,001

150,000

298,530

1

150,001

155,000

152,100

1

155,001

160,000

159,160

1

160,001

165,000

162,500

1

205,001

210,000

209,972

1 225,001 230,000 227,000

1 240,001 245,000 240,750 1 295,001 300,000 299,600 1 305,001 310,000 306,062 1 365,001 370,000 369,973 1

370,001

375,000

373,002

1

380,001

385,000

382,232 1

395,001

400,000

399,431

1

420,001

425,000

420,304

1

545,001

550,000

546,682

1

550,001

555,000

553,840

2

695,001

700,000

1,397,122

1

700,001

705,000

700,498

1,305

10,700,000

5. Categories of shareholders Shares held Percentage

5.1 Directors, Chief Executive Officers and their spouse and minor childern 219,429 2.050738%5.2 Associated Companies, undertakings and related parties 0 0.000000%5.3 NIT and ICP 726,437 6.789131%5.4 Banks Development Financial Institutions, Non Banking Financial Institutions 171,188 1.599888%5.5 Insurance Companies 425,654 3.978075%5.6 Modarabas and Mutual Funds 11,235 0.105000%5.7 Share holders holding 10% 0 0.000000%5.8 General Public 9,139,835 85.419019% a. Local 0.000000% b. Foreign 0.000000%5.9 Others (to be specified) 0.000000%1- Joint Stock Companies 5,907 0.055206%3- Others Companies 315 0.002944%

1. Incorporation Number 0017345

2. Name of the Company KHALID SIRAJ TEXTILE MILLS LIMITED

3. Pattern of holding of the shares held by the shareholders as at 30 June 2012

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Sr. No. NameNo. of Shares

HeldPercentage

Associated Companies, Undertakings and Related Parties: - -

Mutual Funds: -

-

Directors and their Spouse and Minor Chidren:

1 MIAN TAYYAB IQBAL 132,429 1.2377%

2 MISS TAYYABA IQBAL 74,600 0.6972%

3 MIAN TAHIR IQBAL 10,000 0.0935%

4 MISS RABIA IQBAL 1,400 0.0131%

5 MRS. RUKHSANA ARIF 500 0.0047%

6 KHAWAJA IFTIKHAR-UD-DIN 500 0.0047%

7 MR. MUHAMMAD ASIF (NIT NOMINEE) - 0.0000%

Executives: 1,454,546 13.5939%

Public Sector Companies & Corporations: - 0.0000%

Banks, Development Finance Institutions, Non Banking Finance, Companies, 608,077 5.6830%

Insurance Companies, Takaful, Modarabas and Pension Funds:

Shareholders holding five percent or more voting intrest in the listed company

S. No. NAME Holding %Age

1 NATIONAL BANK OF PAKISTAN- TRUSTEE DEPARTMENT. (CDC) 700,498 6.5467%

2 MIAN HASSAN BARKAT 926,230 8.6564%

3 MIAN HUSSAIN BARKAT 907,864 8.4847%

4 MIAN FAROOQ BARKAT 553,840 5.1761%

5 MIAN IQBAL BARKAT 546,682 5.1092%

All trades in the shares of the listed company, carried out by its Directors, Executives and theirspouses and minor children shall also be disclosed:

- -

CATAGORIES OF SHAREHOLDING REQUIRED UNDER CODE OF COPRORATE GOVERNANCE(CCG)As on June 30, 2012

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FINANCIAL HIGHLIGHTS Seven Years at a Glance

(All amounts in thousand)

2009 2008 2007 20062010Particulars

Turnover (Net)(Rupees)

Profit/Loss before taxation(Rupees)

Profit/Loss after taxation(Rupees)

Paid up capital(Rupees)

Number of Shares (Ordinary Shares)

Owner's equity(OrdinaryShareholders)(Rupees)

Break up value ofShare of Rs. 10 each (Rupees)

Earning pershare-basic(Rupees)

Total assets(Rupees)

655,468

(77,229)

(57,741)

107,000

10,700,000

35,660

3.33

(5.40)

682,004

431,304

(94,104)

(95,904)

107,000

10,700,000

(15,322)

(1.43)

(8.96)

545,760

492,753

(46,002)

(36,394)

107,000

10,700,000

69,863

6.53

(3.40)

491,048

421,978

(38,419)

(32,582)

107,000

10,700,000

92,302

8.62

(3.05)

507,073

2011

724,343

(25,146)

(6,421)

107,000

10,700,000

18,262

1.71

(0.60)

580,858


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796,442

(38,624)

(43,319)

107,000

10,700,000

(67,628)

(6.32)

(4.05)

515,368

2012

1,110,715

(51,568)

(50,796)

107,000

(14,351)

(1.34)

(4.75)

528,185

10,700,000

We have audited the annexed Balance Sheet of KHALID SIRAJ TEXTILE MILLS LIMITED ('the company') as at 30 June 2012 and the related Profit and Loss Account, Statement of Comprehensive Income, Cash Flow Statement and Statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

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

(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 30 June 2012 and of the loss, total comprehensive loss, its cash flows and changes in equity for the year then ended; and

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

Without qualifying our opinion, we draw attention to note 1.01 in the financial statements which indicate that the sales reduced from Rs.1,110,714,542 to Rs.796,441,695 and incurred the gross loss of Rs.8,717,910 and a net loss of Rs.43,318,537 during the year ended June 30, 2012 resulting in accumulated losses of Rs.174,628,294 at the close of the year and as of that date, the Company current liabilities exceeded its current assets by Rs.37,175,798 and sum of total liabilities and surplus on revaluation of fixed assets exceeded its total assets by Rs.67,628,294. These conditions along with other matters as set forth in note 1.01 indicate the existence of a material uncertainty which may cost significant doubt about the company ability to continue as a going concern.

The financial statements of KHALID SIRAJ TEXTILE MILLS LIMITED ('the company') for the year ended June 30, 2011 were audited by M/S Nazir Chaudhri & Co. (Chartered Accountants) who had included "Emphasis of matter Paragraph through their Report" on October 04, 2011.

AUDITORS' REPORT TO THE MEMBERS

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LahoreDated 05, October 2012:

QADEER AND COMPANYCHARTERED ACCOUNTANTS

NAWAZ KHAN, FCA

QADEER AND COMPANY CHARTERED ACCOUNTANTS

89/F, JAIL ROAD, LAHORE.

Ph: 042-37584617, 37578122 Fax: 042-37576728 E-mail: [email protected]

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BALANCE SHEET AS AT 30 JUNE 2012

CHIEF EXECUTIVE DIRECTOR


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

Share Capital and Reserves

Authorized capital

Rs. 10 each

Issued, subscribed and paid up capital

Accumulated losses

Surplus on Revaluation of Property,

Plant and Equipment

Non Current Liabilities

Sponsors' Loan

Sponsors' unclaimed dividend

Due to associated undertakings

Staff retirement benefits

Deferred Taxation -Net

Current Liabilities

Trade and other payables

Accrued interest / mark up

Short Term Borrowings

Contingencies and Commitments

ASSETS

Non Current Assets

Property, plant and equipment

Long term deposits

Due from ex associated undertakings

Current Assets

Stores, spares and loose tools

Stock in trade

Trade debts

Loans and advances

Trade deposits and short term prepayments

Other receivables

Tax Refund from the Govt

Cash and bank balances

12,000,000(2011:12,000,000) Ordinary shares of

CAPITAL AND LIABILITIES Note

120,000,000

4 107,000,000

(174,628,294)

(67,628,294)

5 164,647,043

6 144,535,612

7 24,058,182

8 32,329,798

9 8,538,379

10 23,854,228

233,316,199

11 86,311,623

3,542,234

12 95,179,352

185,033,209

13 -

515,368,156

14 349,924,018

1,936,000

15 15,650,727

367,510,745

16 37,649,062

17 59,052,936

18 8,519,036

19 59,560

20 1,778,275

21 2,800,449

34,152,737

22 3,845,355

147,857,411

515,368,156

120,000,000

107,000,000

(147,700,267)

(40,700,267)

181,037,562

156,072,362

24,058,182

32,329,798

7,218,446

27,134,062

246,812,850

67,631,135

5,024,011

68,379,275

141,034,421

-

528,184,566

388,862,098

1,979,700

15,650,727

406,492,525

38,824,540

24,991,842

8,435,220

174,409

2,228,952

1,723,116

39,621,457

5,692,505

121,692,041

528,184,566

2012 2011

Re-stated

Rupees

15

PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2012



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2012 2011

Note

Sales - Net 23 796,441,685 1,110,714,542

Cost of goods sold 24 805,159,595 1,127,119,681

(8,717,910) (16,405,139)

Operating expenses:

- Selling and distribution costs 25 1,879,814 1,890,187

- Administrative and general expenses 26 13,208,341 14,876,863

15,088,155 16,767,050

(23,806,065) (33,172,189)

Other operating income 27 - 630,190

Loss from operation (23,806,065) (32,541,999)

Finance cost 28 14,818,142 19,026,004

Loss before taxation (38,624,207) (51,568,003)

Taxation 29 4,694,331 (771,673)

Loss for the year (43,318,538) (50,796,330)

Earning per share - basic 30 (4.05) (4.75)


Gross Loss

Rupees

16

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012


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2012 2011Note

Loss after taxation (43,318,538)

(50,796,330)

16,390,511

18,183,336

Total comprehensive income/(Loss) for the year (26,928,027) (32,612,994)


Transferred from surplus on revaluation of fixed

assets on account of incremental depreciation-net

of deferred tax

Rupees


17

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2012



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2012 2011

CASH FLOW FROM OPERATING ACTIVITIESProfit / (loss) before taxation

Adjustments for:- Depreciation - Gain/(loss) on disposal of property, plant and equipment - Provision for gratuity - Finance cost

Operating profit before working capital changes

(Increase) / decrease in current assets:- Stores, spares and loose tools - Stock in trade (34,061,094) - Trade debts - Loans and advances - Trade deposits and short term prepayments

Other receivables

Increase / (decrease) in current liabilities:

-Trade and other payables

Cash generated from operations Income tax paid / deducted Gratuity paid Finance cost paid Net cash generated from/used in operating activities

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment purchased

Proceeds from disposal of property, plant and equipment

Net cash used in investing activities

CASH FLOW FROM FINANCING ACTIVITIESRepayment of long term financing Sponsors loans increase/(Decrease) in security deposit Lease rental paid Short term borrowings

Net cash used in financing activities

Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year 22

(38,624,207)

34,864,258650,320

4,184,78414,818,142

54,517,504

15,893,297

1,175,478

(83,816)114,849450,677

(1,077,333)

18,680,488

(14,800,759)

1,092,538(2,505,445)(2,864,851)

(16,299,919)

(20,577,677)

(326,500)3,750,000

3,423,500

-(11,536,750)

43,700-

26,800,077

15,307,027

(1,847,150)5,692,505

3,845,355

(51,568,003)

38,854,321 (630,190)

3,519,356 19,026,004

60,769,491

9,201,488

660,088 (6,991,075) 2,893,547 1,425,334

12,395,147 997,794

2,409,955

13,790,790

22,992,278 (8,120,292) (1,843,844)

(18,164,073)

(5,135,931)

(8,711,738) 715,000

(7,996,738)

(8,193,422) 5,423,750

- (318,835)

8,513,459

5,424,952

(7,707,717) 13,400,222

5,692,505


0

Rupees

18

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012


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Share

Capital

Accumulated

LossTotal

Re-stated

Balance as at July 01, 2010 107,000,000 (88,737,847) 18,262,153

Total comprehensive loss for the year ended June 30, 2011 - (32,612,994) (32,612,994)

Transferred from surplus on Revaluation of Property, Plant (26,349,426) (26,349,426)

and Equipment- Re-stated

Balance as at June 30, 2011 107,000,000

(147,700,267)

(40,700,267)

Total comprehensive loss for the year ended June 30, 2012 - (26,928,027) (26,928,027)

Balance as at June 30, 2012 107,000,000 (174,628,294) (67,628,294)


Rupees


19

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2012


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1 COMPANY AND ITS OPERATIONS

Khalid Siraj Textile Mills Limited ("the Company") was incorporated in Pakistan on January 17, 1988 as a Public Limited Company under the Companies Ordinance, 1984 and is listed on the Karachi and Lahore stock exchanges in Pakistan. The Registered Office of the Company is situated at 467-M Block, Model Town Extension, Lahore. It is principally engaged in the manufacture and sale of cotton yarn.

1.01 During the current year, the Company's sales reduced from Rs. 1,110,714,542 to Rs. 796, 441,685 and incurred a gross loss of Rs. 8,717,910 and a net loss of Rs. 43,318,537 during the year ended June 30, 2012 resulting in accumulated losses of Rs. 174,628,294 at the close of the year and as of that date, the Company's current liabilities exceeded its current assets by Rs. 37,175,798 and the sum of

total liabilities and surplus on revaluation of fixed assets exceeded its total assets by Rs. 67,628,294. These factors cast significant doubt about the Company's ability to continue as going concern, and therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business. However, anticipating improved market conditions in the near future, the management is

committed to enhance its operations with more operational efficiencies. In order to deal with this situation, the Company has taken the following measures:-

a) The ex-directors and associated undertakings have agreed to continue financing the operations of the Company. b) Switching over from manufacturing of fine cotton yarn counts to course yarn counts.

The Company, therefore believes that the going concern assumption is appropriate and has, as such, prepared these financial statements on this basis.

2 BASIS OF PREPARATION

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

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in the financial statements.

3.1 Accounting convention

These accounts have been prepared under the historical cost convention modified by the adjustment of revaluation of certain assets as stated in note 14.

3.2 Use of estimates and judgments

The preparation of financial statements in conformity with approved accounting standards requires management to make judgment, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associate assumptions and judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimated underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised if revision affects only that period, or in the period of revision and future periods if revision affects both current and future periods. The areas where various assumptions and estimates are significant to the Company's financial statements or where judgments are exercised in the application of accounting policies are as follows.

• Residual values and useful lives of property, plant and equipment (note 3.3)• Taxation (note 3.11)• Staff retirement benefits (note 3.14)• Provisions (note 3.12)

3.3 Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost or revalued amount less accumulated depreciation and impairment losses if any, except freehold land which is stated at revalued amount. Capital work in progress is stated at cost. These are transferred to property, plant and equipment as and when the assets are available for intended use. Depreciation is calculated using reducing balance method

at the rate stated in note 14. Depreciation charge commences from the month in which asset is available for use and continues until the month of disposal. Useful lives, methods and rates of depreciation and residual values are reviewed and adjusted, if appropriate on

regular basis. Any change in estimates in future years might affect the carrying amounts of the respective items of property, plant and equipment with corresponding effect on depreciation charge and impairment. The carrying amount of the assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. If any such indication exist the assets recoverable amount is estimated in order to determine the extent of impairment loss, if any. Impairment losses are recognized in profit and loss account. An impairment loss is reversed if there had been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Normal repairs and maintenance is charged to revenue as and when incurred, while major renewals and replacements are capitalized. Gains and losses on disposal of property, plant and equipment are included in current year's income.

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3.4 Stores, spares and loose tools

These are valued at cost using moving average method except for items in transit which are valued at cost comprising invoice value plus other charges paid thereon.

3.5 Stock in trade

These are valued at lower of cost or net realizable value.

Cost is determined by following basis:

Raw material - At weighted average cost.Work in process - Estimated manufacturing cost including appropriate overheadsFinished goods - Average manufacturing cost including appropriate overheadsWastes - At net realizable value.

Net realizable value signifies the estimated selling price at which goods in stock could be currently sold less any further costs that would be incurred to complete the sale.

3.6 Leased assets

Assets subject to finance lease are stated at lower of present value of minimum lease payments under the lease agreements and the fair value of the assets less accumulated depreciation. Depreciation is charged at the rates and basis applicable to owned assets. The outstanding obligation under the lease less financial charges allocated to the future periods is shown as liability. The financial charges are calculated at the interest rate implicit in the lease and charged to profit and loss account.

3.7 Trade and other receivables

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

3.8 Cash and cash equivalents

These are carried in balance sheet at cost. For the purpose of cash flow statement, cash and cash equivalent comprise of cash in hand and balance with banks on current account.

3.9 Trade and other payables

Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in future for goods and services received, whether or not billed to the Company.

3.10 Related party transactions

Transactions with related parties are based on the transfer pricing policy that all transactions between the Company and the related party or between two or more segments of the Company are at arm's length prices using the comparable uncontrolled price method except in circumstances where it is in the interest of the Company not to do so.

3.11 Taxation

Current

The charge for taxation for the year is based on minimum tax at the current rates of taxation after taking into account tax rebates and credits available, if any.

Deferred

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets, as required by IAS - 12 (Income Taxes), are recognized to the extent of potential available taxable profit against which temporary differences, unused tax losses and tax credits can be utilized. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except where deferred tax arises on the items credited or charged to equity in which case it is included in equity.

3.12 Provisions

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

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3.13 Financial instruments

The Company classifies its financial assets into fair value through profit or loss, loans and receivables, available for sale and held to maturity. The classification depends on the purpose for which the financial assets acquired. Management determines the classification of its financial assets at initial recognition. a) Financial assets at fair value to profit or loss are financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit of loss. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets. b) Loans and receivable are non-derivative financial assets with fixed or determinable payments date that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the balance sheet date, which are classified as non- current assets. c) Financial assets with fixed or determinable payments and with fixed maturity, where management has intention and ability to hold till maturity are classified as held to maturity. d) Available-for-sale financial assets are non- derivatives that are either designated in this category or not classified in any of the other categories. They are included in non- current assets unless management intends to dispose off the investments within twelve months from the balance sheet date. Financial instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of investments are recognised on trade date-the date on which the Company commits to purchase or sell the asset. Financial asset are initially recognised at fair value plus transaction costs except for financial asset at fair value through profit & loss. Financial assets are derecognised when the right to receive cash flow from the assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held to maturity investments are carried at amortized cost using the effective interest rate method. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists for available for sale financial asset, the accumulative loss that has been recognised in other comprehensive income shall be reclassified from equity to profit and loss account as reclassification adjustment. Impairment losses recognised in the profit and loss account on equity investments classified as available for sale are not reversed through profit and loss account.

Financial Liabilities:

All financial liabilities are recognised at the time when the company becomes a party to the contractual provisions of i n s t r u m e n t . A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. Where the terms of an e x i s t i n g liability are modified, such a modification is treated as a derecognition of original liability and the recognition of new liability, and the difference in respective carrying amounts is recognised in the profit and loss account.

3.14 Staff retirement benefits

The Company operates an unfunded defined benefit gratuity scheme covering all of its permanent employees who are eligible under the scheme. Gratuity is based on employees last drawn salary and the amount recognized in the balance sheet represent the present value of defined benefit obligation as adjusted for unrecognized actuarial gains and losses. Provision is made annually to cover the obligation under the scheme on the basis of projected unit credit method. The most recent valuation was carried out as on June 30, 2011. The Company policy with regard to actuarial gains/losses is to follow minimum recommended approach under IAS-19 "Employee Benefits".

3.15 Revenue recognition

Revenue from sales is recognized on dispatch of goods to the customers .

3.16 Share capitalOrdinary shares are classified as equity and are recorded at their face value.

3.17 Borrowing cost

Borrowing costs are recognized as expense in the period in which these are incurred except to the extent of borrowing cost that are directly attributable to the acquisition, construction or production of qualifying assets. Such borrowing costs, if any, are capitalized as part of the cost of asset.

3.18 Off setting

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

3.19 Foreign currency transactions

Transactions in foreign currencies are converted into Pak Rupees at the rate of exchange prevailing on the date of transaction. Monetary assets and liabilities in foreign currency are translated in to Pak Rupees at the rate of the exchange prevailing at the balance sheet date. Exchange gains and losses are included in current year's income.

3.20 Earning per share (EPS)

The Company presents basic and diluted earning per share (EPS) data for its ordinary shares. Basic EPS calculated by dividing profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

3.21 Changes in accounting policies and disclosures

3.21.1 Standards, interpretations and amendments to published approved accounting standards that are effective in the year ended June 30, 2012.

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The following standards, amendments and interpretations of approved accounting standards became effective during the year. However these standards are either not relevant or do not have a significant impact on the Company financial statements:

IAS 1 Presentation of Financial StatementsIAS 24 Related Party DisclosuresIAS 34 Interim Financial ReportingIFRS 1 First Time Adoption of International Financial Reporting StandardsIFRS 7 Financial Instruments : DisclosuresIFRS 13 Customer Loyalty ProgrammesIFRS 14 The limit on a defined benefits assets, minimum funding requirements and their interaction

3.21.2 New/ Revised accounting standards, amendments to published accounting standards, and interpretation that are not yet effective.

The following standards, amendments and interpretations of approved accounting standards are only effective for annual periods beginning from the dates specified below. Except for the amendment in International Accounting Standards (IAS)19 which results in immediate recognition of actuarial gains or losses and revised basis of calculation for net finance costs, these standards are either not relevant to the Company operations or are not expected to have a significant impact on the Company financial statements, other than increased disclosures in certain areas.

a) Amendments to IAS 12-Deferred tax on investment property (effective for annual periods beginning on or after 1 January 2012). The amendments provide an exception to the measurements principle in respect of investment property measured using the fair value model in accordance with IAS 40 (Investment property).

b) IAS 19 Employees Benefits (amended 2011)-(effective for annual periods beginning on or after 1 January 2013). The amended IAS 19 includes the amendments that require actuarial gains and losses to be recognized immediately. In other comprehensive incomes this change will remove the corridor method and eliminate the ability for entities to recognize all changes in the defined benefits obligation and in plan assets in profit or loss, which currently is allowed under IAS 19 and that the expected return on plan assets recognized in profit or loss is calculated based on the rate used to discount the defined benefits obligations.

c) Presentation of items of other comprehensive income (Amendment to IAS 1)-( effective for annual periods beginning on or after 1 July 2012).

The amendments require that an entity present separately the items of other comprehensive income that would be reclassified to profit or loss in the future, if certain conditions are met from those that would never be reclassified to profit or loss .

d) Offsetting financial assets and financial liabilities (Amendments to IAS 32)- (effective for annual periods beginning on or 1 January 2014). The amendments address inconsistencies in current practice when applying the offsetting criteria in IAS 32 Financial Instruments.

e) Presentation : The amendments clarify the meaning of 'currently has a legally enforceable right of set off'; and that some gross settlement systems may be considered equivalent to net settlement.

f) Annual improvements 2009-2011(effective for annual periods beginning on or after 1 January 2013). The new cycle of improvements contains amendments to the following standards, with consequential amendments to other standards and interpretations.

g) Offsetting financial assets and financial liabilities (Amendments to IFRS 7)- (effective for annual periods beginning on or 1 January 2013).The amendments to IFRS 7 contain new disclosure requirements for financial assets and liabilities that are offset in the statement of financial position or subject to master netting agreement or similiar arrangement.

h) IAS 1 Presentation of financial statements is amended to clarify that only one comparative period which is the preceding period is required for a complete set of financial statements.

i) IAS-16 Property, Plant and Equipment is amended to clarify the accounting of spares parts stand by equipment and servicing equipment.

j) IAS -32 Financial Instruments: Presentation is amended to clarify that IAS 12 Income Taxes applies to the accounting for income taxes relating to distributions to holders of an equity instrument and transaction costs of an equity transaction.

k) IAS -34 Interim Financial Reporting is amended to align the disclosure requirement for segment assets and segment liabilities in interim financial reports with those in IFRS 8 Operating Segment.

There are other new accounting standards amendments to approved accounting standards and interpretations that are not yet effective, however, they are currently not considered to be relevant to the Company and therefore have not been detailed in these financial statements.

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5 SURPLUS ON REVALUATION OF FIXED ASSETS

Land

Building-Factory

Building-Others

Textile Machinery

Electrical Installation

Labortary equipment

6 SPONSORS’ LOAN

SPONSORS

EX- DIRECTORS

Less: Incremental Depreciation net of Deferred Tax

Re-stated

10,245,246 10,245,246

20,435,343 24,672,605

11,442,876 11,953,047

117,109,754 129,331,632

10,585,067 11,132,685

11,219,267 11,885,683

181,037,553 199,220,898

(16,390,511) (18,183,336)

164,647,043 181,037,562

6.01 30,400,000

114,135,612

144,535,612

30,400,000

125,672,362

156,072,362

6.01 The amount was provided by the Sponsors of the Company , terms and conditions of which are still unsettled. Matter of sponsors loan is sub judice before the Honouarable Lahore High Court, Lahore.

7 SPONSORS’ UNCLAIMED DIVIDEND

This amount is related to sponsors of the company and this matter is also subjudice before the Honorable Lahore Court, Lahore along with the case of sponsors loan.

8 DUE TO EX- ASSOCIATED UNDERTAKINGS

The amount includes principal amount of Rs.13,440,113 (2011:13,440,113) and mark up payable of Rs.18,889,685 (2011:18,889,685) on unsecured loans of various Companies which were previously associated undertakings but have now been allocated by the Honourable Lahore High Court , Lahore to other families of EX-ITTEFAQ GROUP. However the matter is still under litigation.

4 ISSUED, SUBSCRIBED AND PAID UP CAPITAL

There is no movement in ordinary share capital of the Company during year.

700,000 (2011: 700,000) Ordinary Shares of Rs. 10 each issued as

fully paid bonus shares

10,000,000 (2011: 10,000,000) Ordinary Shares of Rs. 10 each fully

paid in cash

NOTE

2012 2011

100,000,000 100,000,000

7,000,000 7,000,000

107,000,000 107,000,000

Rupees

STAFFS RETIREMENT BENEFITS-GRATUITY

Less:Unrecognized transitional liability

9.01.1 Present value of defined benefits obligation as at July, 01

Balance Sheet liability as at June 30

Balance as at July 01 7,218,446 5,542,934

Benefits payments during the year (2,864,851) (1,843,844)

Balance as at June 30 9.01 8,538,379 7,218,446

9.01 Present value of defined benefits obligation as at july, 01 9.01.1 11,421,975 7,567,801

Actuarial gain/(Loss) to be recognized in later periods 9.01.2 (18,745) (18,745)

11,403,230 7,549,056

2,864,851 330,610

8,538,379 7,218,446

7,567,801 6,143,913

Current service cost 2,794,682 2,451,475

9

Present value of defined benefits obligation as at June, 30

9.01.2

Actuarial gains/(losses) during the year

Unrecognized actuarial gains/(losses)as at June, 30

Unrecognized actuarial gains/(losses)as at July, 01

Benefits payments during the year - (1,843,844)

Actuarial (gain)/Loss - 78,987

11,421,975 7,567,801

(18,745) 60,242

- (78,987)

(18,745) (18,745)

Amount recognized for the year 9.02 4,184,784 3,519,356

Interest cost 1,059,492 737,270

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9.02

Current service cost

Interest Cost

Total amount Recognized -

Liability charged due to application of IAS 19

2,794,682 330,611

1,059,492 2,451,475

330,610 737,270

4,184,784 3,519,356

14% 14%

13% 13%

7 Years 7 Years

Re-stated

27,134,062

(3,279,834)

23,854,228

9.03

9.04

DEFERRED TAXATION-NET

Taxable temporary difference

Deductible temporary differences-unusal tax losses provision forstaff retirement benefits- gratuity and others

Recent actuarial valuation of plan was carried out on June 30, 2012 by Nauman Associates.

Significant actuarial assumption used for valuation of these plans are as follows:

Average expected remaining working life time of employees

Discount rate

Expected rate of salary increase

104,089,406

(76,955,344)

27,134,062

10

NOTE

2012 2011Rupees

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12.01 This facility has been obtained against the aggregated sanctioned limit of Rs .160 millions (2011:Rs. 160 millions). These facilities carry

mark up of 3 months KIBOR plus 3.0% with a floor of 5.5%(2011: 6months KIBOR plus 3.0%with a floor of 5.5%) per annum payable

on quarterly basis and is secured against first pari passu charge of Rs .67 Millions on fixed assets, Hypothecation of stores ,spares and

packing material, floating charge on all movable assets, pledge of cotton bales and yarn, ranking charges of Rs. 178 millions on current

assets of the Company and personal guarantees of the directors of the company. The balance includes unfavorable balance in banks

amounting to Rs. 23,681,295.

12.02 This facility against an aggregate limit of Rs.15 million (2011:Rs.15 Millions) is a sublimit of cash finances (pledge) with limit of Rs 120

millions. it carries mark up at the rate of 3 months KIBOR plus 3% with floor of 5.5 %(2011: 6 months KIBOR + 3.0% with a floor of

5.5% ) first parri passu charge of Rs. 25 millions on fixed assets of the Company and the personal guarantee of directors of the

company. Bank has offered this facility to the Company but the Company has not availed this facility during the year.

13 Commitments in respect of letters of credit other than for capital expenditure were nil (2011: Nil) as on balance sheet date.

The movement for the year in company net deferred tax position is given below:

Balance as at June 30,2010

Charged/(credited) to Profit & Loss account

Balance as at June 30,2011

Charged/(credited) to Profit & Loss account

Balance as at June 30 ,2012

116,248,642

(12,159,236)

104,089,406

(2,060,424)

102,028,982

(68,217,576)

(6,211,312)

(74,428,888)

(757,433)

(75,186,321)

(8,647,890)

6,121,434

(2,526,456)

(461,977)

(2,988,433)

39,383,176

(12,249,114)

27,134,062

(3,279,834)

23,854,228

Accelerated

tax

Depreciation

Unused Tax Depreciation

provision for

staff retirement

benefits- gratuity

and others

Net Liability

Deferred tax liability

NOTE

2012 2011

38,326,924

-

9,164,404

500,000

11.01 19,434,250

205,557

67,631,135

TRADE AND OTHERS PAYABLES

Creditors

Advances from Debtors

Accrued liabilities

Refundable securities

Due to associated undertakings

income tax deducted at source

11.01 This represents unsecured and interest free loan from an associated undertakings

Rupees11

12.01 53,379,275

12.02 15,000,000

41,433,194

12,766,178

16,756,609

500,000

14,190,500

665,142

86,311,623

95,179,352

-

95,179,352 68,379,275

SHORT TERM BORROWINGS

Cash finance/ overdraft

Finance against trust receipts

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27

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g: F

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1

26

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6,5

96

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63

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63

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24

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24

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57

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2

Pla

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chin

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61

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97

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36

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92

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87

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38

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33

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d o

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g th

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of b

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of p

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gin

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g

3,2

51

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0

1,0

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0

2,2

12

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0

1,6

50

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0

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2,5

00

ca

sh

Po

we

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AT

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erg

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ms

3,2

51

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0

1,0

63

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0

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0

2,1

00

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0

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0

ca

sh

6,5

02

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0

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02

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0

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00

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0

3,7

50

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0

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0,3

20

Accu

mu

late

d

de

pre

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tio

n

20

12

20

11

Pa

rtic

ula

rs

STORES, SPARES AND PACKING MATERIAL

Stores

Spares

Packing material

STOCK IN TRADE17

Cotton waste purchased

Work in process

Cotton Waste Produced

TRADE DEBTS-unsecured and considered Goods18

ADVANCES -Considered Good

Advances to:

Suppliers

Contractors

TRADE DEPOSITS AND SHORT TERM PREPAYMENTS

19

Trade Deposits

Short term Prepayments

OTHER RECEIVABLES

20

Excise Duty

Sales-tax -Net

Raw material Cotton

Finished Goods and waste

1,825,232

22,144,078

13,679,752

37,649,062

18,445,431

18,372,557

15,804,380

6,161,400

269,169

59,052,936

8,519,036

8,519,036

59,560

-

59,560

1,271,175

507,100

1,778,275

300,713

2,499,736

2,800,449

15 DUE FROM ASSOCIATED UNDERTAKINGS

This represents the amount receivable from various companies which were previously associated undertakings but have now been allocated by the Honorable Lahore High Court, Lahore to other families of Ex- Ittefaq Group. However, the matter is still under litigation.

NOTE 2012 2011

2012 2011

Rupees

16

21

CASH AND BANK BALANCES

Cash In hand

Balances with bank

1,103,220

2,742,135

3,845,355

1,027,149

24,189,615

13,607,776

38,824,540

11,402,177

1,841,560

7,396,933

2,678,940

1,672,232

24,991,842

8,435,220

8,435,220

-

174,409

174,409

979,814

1,249,138

2,228,952

300,713

1,422,403

1,723,116

990,008

4,702,497

5,692,505

22

-

-

28


i

tt

e

fa

q

29


i

tt

e

fa

q

24.01

24.02

14.01

SALES23

Less:Commission

COST OF SALES24

Raw material consumed

Stores, Spares and packing material consumed

Fuel and power

Salaries and wages

Insurance

Repairs and maintenance

Factory Expenses

Depreciation

Yarn

Waste

Polyester

780,701,041

677,790

16,037,651

797,416,482

(974,797)

796,441,685

600,724,555

15,572,465

96,614,241

64,826,702

1,283,260

1,270,719

1,536,167

33,818,330

815,646,439

Work in process

opening stock

Closing Stock

Finished goods

opening stock

Closing Stock

24.01 Raw Material Consumed

Purchase

Closing Stock

24.02 Store Spares Consumed

Purchase

Closing Stock

Opening Stock

Opening Stock

7,396,933

(15,804,380)

(8,407,447)

4,351,172

(6,430,569)

(2,079,397)

805,159,595

13,243,737

624,298,805

637,542,542

(36,817,987)

600,724,555

38,824,540

14,396,987

53,221,527

(37,649,062)

15,572,465

NOTE 2012 2011

Rupees

1,088,269,212

25,401,263

1,113,670,475

(2,955,933)

1,110,714,542

918,196,788

14,688,654

89,195,921

63,063,575

1,999,615

1,266,261

2,155,779

37,688,691

1,128,255,284

5,412,062

(7,396,933)

(1,984,871)

5,200,440

(4,351,172)

849,268

1,127,119,681

7,549,219

923,891,306

931,440,525

(13,243,737)

918,196,788

39,484,628

14,028,566

53,513,194

(38,824,540)

14,688,654

30


i

tt

e

fa

q

1,196,476

-

186,922

147,773

-

14.01 348,643

1,879,814

840,000

6,659,152

535,950

170,688

140,825

331,773

149,271

72,547

18,024

301,081

695,536

836,349

237,138

26.01 597,400

26.02 -

82,395

14.01 697,285

650,320

192,607

13,208,341

500,000

40,000

30,000

27,400

597,400

25 DISTRIBUTION COST

Salaries and other benefits

Inland transportation

Postage, telegram and telephone

Freight and octroi

Depreciation

26 ADMINISTRAVTIVE EXPENSES

Director remuneration

Salaries and other benefits

Repair and maintenance

Electricity

26.01

26.02

Electricity

Annual audit fee

Advertisement

Depreciation

Vehicles running and maintenance

Newspaper and periodicals

Entertainment

Half year reviews

Impairment loss

Auditors’ Remuneration

Fee taxes and subscription

Legal and professional fee

Traveling and conveyance

Printing and stationery

Telephone and fax

Miscellaneous expense

Postage and courier

Charity and donation

Code of corporate

Governance review

Out of pocket expenses

The directors and their spouses do not have any interest in the donee.

Auditors’ remuneration

847,963

168,800

291,563

187,789

5,530

388,542

1,890,187

840,000

7,180,090

632,944

187,789

191,887

239,640

220,772

59,176

11,615

252,794

734,677

464,278

617,004

597,400

10,000

88,668

777,088

1,771,041

14,876,863

500,000

40,000

30,000

27,400

597,400

NOTE 2012 2011

Rupees

31


i

tt

e

fa

q

NOTE 2012 2011

-

-

1,996

14,401,481

-

414,665 593,365

14,818,142

7,974,165

(3,279,834) (12,249,114)

4,694,331 (771,673)

(38,624,207)

7,974,165

-

(3,279,834) (12,249,114)

4,694,331

(43,318,538)

10,700,000

630,190

630,190

1,041,339

17,348,105

43,195

19,026,004

11,477,441

51,568,003

11,136,705

340,736

(771,673)

(50,796,330)

10,700,000 -

(4.05) (4.75)

Rupees

OTHER OPERATING INCOME27

FINANCE COST28

TAXATION29

Current

Deferred

29.01 Relationship between accounting and tax expense

Accounting loss before taxation

Tax at the applicable rate of 1% (2011:1%)

Tax effects of ;

Flood Surcharge levied

Deferred Tax

LOSS PER SHARE30

Loss after taxation

Weighted average no. of ordinary shares

Loss per share-Basic

Income from disposal of fixed assets other than financial assets

Mark up on loan term loan

Mark up on short term borrowings

Lease financial charges

Bank charges

31 TRANSACTIONS WITH RELATED PARTIES

The related parties comprise associated undertakings, other related parties, directors, key management personnel and employees f und s . Amount due from and due to these undertakings are shown under receivables and payables. Transactions with related parties during the year, other than those which have been disclosed elsewhere in these financial statements, are as follows.

Associated Undertakings

Purchases

Sales

Transfer of funds

Receipts of funds

Key management personnel

Rumeneration including fees

Housing and utilities

266,676

95,759,420

277,519

96,357,196

560,000

280,000

967,555

74,691,018

7,900,000

5,856,250

560,000

280,000

32


i

tt

e

fa

q

Directors Directors

-

Total 850,000 -

Number of persons 1

2 1

32.1 The Chief Executive Officer has been provided with company maintained car

Chief ExecutiveChief Executive

2012 2011

Managerial remuneration - Executives (Rupees) - 560,000 - 560,000

House rent - 224,000 - 224,000

Utilities - 56,000 - 56,000

Board meeting fee 10,000 - 20,000

860,000

2

RupeesPLANT CAPACITY AND PRODUCTION33

Plant capacity

UNAVAILED CREDIT FACILITY34

Short term running finance

FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES35

35.01 Financial risk factors

2012

64,820,648

2011

Number of spindles installed 17,280 17,280

Number of spindles operated during the year. 17,280 17,280

Installed capacity at 20/s count 4,668,2244,668,224

Number of days worked during the year 356 359

weight of yarn counts actually produced during the year converted into 20/s based on

three shifts per day 3,764,484 3,944,171

91,620,725

The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on having cost effective funding as well as to manage financial risk to minimize earnings volatility and provide maximum return to shareholders.

Risk management is carried out by the Company’s finance department under policies approved by the Board of Directors. 35.02 Market risk

(i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currency.

(ii) 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. As the Company has no significant interest-bearing assets, the Company’s income and operating

cash flows are substantially independent of changes in market interest rates.

(iii) Other price risk

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

CHIEF EXECUTIVE'S, DIRECTORS' AND EXECUTIVES' REMUNERATION32

33


i

tt

e

fa

q

35.03 Credit risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties fail to perform as contracted and arises principally from trade and other receivables. The Company policy is to enter into financial contracts with reputable counter parties in accordance with the internal guidelines and regulatory requirements.

The maximum exposure to credit risk at the reporting date was as follows:

The credit quality of company's Bank balances can be assessed with reference to external credit ratings are as follows:

Rating

agency

PACRA

PACRA

JCR-VIS

PACRA

JCR-VIS

PACRA

PACRA

PACRA

PACRA

Rupees

A1+

A1+

A1+

A1+

A1+

A1+

A1+

A1+

A1+

Short TermBorrowings

AA

AA

AA+

AA+

AAA

AA-

AAA

AA

AA+

Long TermLoans

Trade debts

Advances

Trade deposits

other receivables

ASKARI BANK LIMITED

BANK ALFALAH LIMITED

HABIB BANK LIMITED

MCB BANK LIMITED

NATIONAL BANK LIMITED

SONERI BANK LIMITED

STANDARD CHARTERED BANK LIMITED

FAYSAL BANK LIMITED

HABIB METROPOLITAN BANK LIMITED

Bank

Balance with banks on

current account

1,936,000 Long term deposits 1,979,700

2012

8,519,036

59,560

1,271,175

2,800,449

2,742,135

17,328,355

2011

8,435,220

174,409

979,814

1,723,116

4,702,497

17,994,756

Rating

35.04 Liquidity risk

Liquidity risk represents the risk that the Company will encounter difficulties in meeting obligations associated with financial liabilities. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities. Due to growing nature of the businesses the Company maintains flexibility in funding by maintaining committed credit lines available. At the reporting date the company had Rs.160 million available borrowing limits from financial institutions and Rs.3.845 million cash and bank balances.

35.05 Fair value estimation

The carrying value of financial instruments reflected in the financial statements approximate their fair value. Fair value is determined on the basis of objective evidence at each reporting date. The fair value of financial instruments traded in active markets is based on quoted market price at the balance sheet date. However , the company does not hold any quoted financial instruments.

34


i

tt

e

fa

q

Financial assets and liabilities

Financial assets

Total - - - 13,695,126 17,586,727 31,281,853 31,281,853

Financial Liabilities

Total 95,179,352 - 95,179,352 89,188,715 185,403,789 274,592,504 369,771,856

Financial assets

Total 17,630,427 15,281,948 32,912,375 32,912,375

- - - 59,560 - 59,560 59,560 Advances

- - - - 144,535,612 144,535,612 144,535,612 Sponsor loan

- - - - 32,329,798 32,329,798 32,329,798 Due To associated undertaking

- - - - 8,538,379 8,538,379 8,538,379 Staff retirement gratuity

- - - 85,646,481 - 85,646,481 85,646,481 Trade and other payables

- - - 3,542,234 - 3,542,234 3,542,234 Accrued Mark up

95,179,352 - 95,179,352 - - - 95,179,352 Short term borrowings

- - - 3,845,355 - 3,845,355 3,845,355 Cash and bank balances

- - - - 1,979,700 1,979,700 1,979,700 Long term deposit - - - - 15,650,727 15,650,727 15,650,727 Due from Ex associated

undertakings - - - - 8,435,220 8,435,220 8,435,220 Trade debts

- - - - 979,814 979,814 979,814 Trade deposits - - - - 5,692,505 5,692,505 5,692,505 Cash and bank balances

- - - - 174,409 174,409 174,409 Advances

- - - 8,519,036 - 8,519,036 8,519,036 Trade debts

- - - 1,271,175 - 1,271,175 1,271,175 Trade deposits

- - - - 15,650,727 15,650,727 15,650,727 Due from Ex associated undertakings

- - - - 1,936,000 1,936,000 1,936,000 Long term deposit

68,379,275 - 68,379,275 72,449,589 195,620,606 268,070,195 336,449,470

Financial Liabilities - - - - 156,072,362 156,072,362 156,072,362 Sponsor loan

68,379,275 - 68,379,275 - - - 68,379,275 Short term borrowings

- - - 5,024,011 - 5,024,011 5,024,011 Accrued Mark up

- - - - 7,218,446 7,218,446 7,218,446 Staff retirement gratuity - - - - 67,425,578 67,425,578 67,425,578 Trade and other payables

- - - - 32,329,798 32,329,798 32,329,798 Due To associated undertaking

Maturity up to

one year

Maturity after one

year

SubTotal

SubTotal

Interest /Mark up Bearing

2012

Total

Non- interest / Mark up Bearing

Maturity after one

year

Maturity up to

one year

(Rupees)

35.6

Maturity up to

one year

Maturity after one

year

SubTotal

SubTotal

Interest /Mark up Bearing

2011

Total

Non- interest / Mark up Bearing

Maturity after one

year

Maturity up to

one year

(Rupees)

35


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CAPITAL RISK MANAGEMENT

The Company's objectives when managing capital are to safeguard the company's ability to continue as on going concern in order to to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure the company may adjust the amount of dividend paid to shareholders, issue new shares and other measures commonsurating to the circumstances. The company monitors the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital employed. Borrowings represents long term financing obtained by the company from ex- directors of the company and short term borrowings from banks as referred to in the note 6 and 12. Total capital employed includes total equity as shown in the balance sheet plus 'borrowing'.

209,314,964

(67,628,294)

141,686,670

147.73

Re-stated

194,051,637

(40,700,267)

153,351,370

126.54Gearing ratio

Borrowing

Total equity

Total capital employed

NOTE 2012 2011

Rupees

36

37 AUTHORIZATION OF FINANCIAL STATEMENTS

These Financial Statements have been authorized for issue by the Board of Directors of the Company on October 04 , 2012.

38 GENERAL

38.01 Figures have been rounded off to the nearest of rupees;

38.02 Comparative figures have been rearranged / reclassified, wherever necessary, to facilitate comparison. During the year

surplus on revaluation of fixed assets has re arranged from their grouping to individual assets.

38.03 During the year the company had reverse the transaction for surplus on revaluation of Land that has understated in previous

years and charged this effect to deferred tax liability. Now due to incorporation of this effect surplus on revaluation of land has

increased by Rs.8,664,162 and deferred tax liabilty decreased by Rs. 8,664,162.The effect of the restatement on the financial

statement is summarized below. There is no effect in 2012.

Effect on 2011

Balance Sheet

(increase )/ Decrease in Deferred Liability (8,664,162)

increase / (Decrease) in revaluation surplus 8,664,162

38.04 Moreover the Company has overstated retained earning and understated surplus on revaluation of fixed assets in previous

years by Rs.4,850,055, Rs.11,314,402 and Rs.10,184,969 in 2008, 2009 and 2010 respectively. Now the total effect of Rs.

Rs.26,349,426 has reversed back and Surplus on revaluation of fixed assets has increased by Rs.26,349,426 and retained

earning has decreased by Rs.26,349,426.

Balance Sheet

Decrease in retained earning (26,349,426)

increase in Surplus on revaluation of Fixed Assets 26,349,426


FORM OF PROXY

No. of Shares Please Quote Folio No.

I/We

a member(s) of KHALID SIRAJ TEXTILE MILLS LIMITED and holding

ordinary shares, as per Register folio / CDC A/c No.

hereby appoint Mr.

of failing his

who is also a member of the company vide Register Folio / CDC A/c No.

proxy to vote for me/us and on my/our behalf at the 25th Annual General Meeting of

on 31st October 2012 at 10:30 a.m. and at any adjournment thereof

the Company to held

of

of

of

as my/our

As witness my/our hand this day of 2012.

REVENUE

STAMP 1. Witness

2. Witness

SIGNATURE OF MEMBER (S)

A member entitled to attend a General Meeting is entitled to appoint a proxy to attend and vote instead of his behalf. No person shall act as proxy (except for a corporation) unless he is entitled to be present and vote in his own right.

The instrument appointing a proxy should be signed by the member or by his attorney duly authorised in writing. If the member is a corporation its common seal (if any) should be affixed to the instrument.

The proxies shall be lodged with the company not later than 48 hours before the time of meeting.

For CDC account holders:

-

-

-

The proxy form shall be witnessed by two persons where names, addresses and CNIC numbershall be mentioned on the form.

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

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


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Final without Border ARIF COMPANY SECRETARY - HAJI TARIQ SAMAD BANKERS -----NATIONAL BANK OF...

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Transcript of Final without Border ARIF COMPANY SECRETARY - HAJI TARIQ SAMAD BANKERS -----NATIONAL BANK OF...