Rafhan AR 2011

10 Years at a Glance
2011
2010 2009 2008 2007 2006 2005 2004 2003 2002*
Net Sales 18,271 13,913 11,428 10,747 7,578 6,127 5,194 4,534 4,031 4,390
Rs. Million
Cost of Sales 14,471 10,615 8,993 8,006 5,480 4,556 3,997 3,259 3,001 3,329
Rs. Million
Gross Profit 3,800 3,298 2,435 2,741 2,098 1,571 1,198 1,275 1,030 1,061
Rs. Million
%age of Sales 21 24 21 26 28 26 23 28 26 24 Profit After Tax 2,034 1,838 1,297 1,492 1,089 809 615 670 521 527
Rs. Million
Capital Expenditure 1,122 582 848 606 114 122 302 448 415 239
Rs. Million
Dividend Amount 1,062 924 831 924 831 647 323 286 259 259
Rs. Million
Dividend Percentage 1,150 1,000 900 1,000 900 700 350 310 280 280 Earnings per Share 220.20 198.99 140.43 161.57 117.92 87.62 66.57 72.51 56.43 57.06
Rupees
* Data for 15 months
In the name of Allah The Most Merciful, The Compassionate
Contents
02 Company Information 03 Organogram 04 Notice of Meeting 08 Chief Executives Review 20 Major Events 2011 21 Horizontal Analysis - P&L and B / S 22 Vertical Analysis - P&L and B / S 23 Directors Report 29 Forward Looking Statements 30 Stakeholders Information 31 Summary of Cash Flow Statements 32 Statement of Value Added & its Distribution 33 Review Report 34 Statement of Compliance 35 Auditors Report 36 Balance Sheet 38 Profit and Loss Account 39 Statement of Comprehensive Income 40 Cash Flow Statement 41 Statement of Changes in Equity 42 Notes to the Financial Statements 67 Pattern of Shareholding Proxy Form
Report 2 Annual for the year ended December 31, 201 1
Company Information
Chairman Jorgen Kokke Vice Chairman Rashid Ali - Non-Executive
Business Strategy and Planning Committee Jorgen Kokke Rashid Ali Ansar Yahya Anis A. Khan Shares Transfer Committee Rashid Ali Ansar Yahya Anis A. Khan Bankers Citibank, N.A. Habib Bank Ltd. Meezan Bank Ltd. MCB Bank Ltd. National Bank of Pakistan Standard Chartered Bank (Pakistan) Ltd. Auditors KPMG Taseer Hadi & Co. Chartered Accountants Lahore Karachi Legal Advisor
Shares Registrar FAMCO Associates (Pvt.) Ltd. 1st Floor, State Life Building 1-A, I.I. Chundrigar Road, Karachi-74000: Tel: (92-21) 32427012 - 32425467 Fax: (92-21) 32426752 - 32428310 Registered Office 1st Floor, Finlay House, I.I. Chundrigar Road, Karachi-74000, Pakistan Ph: (92-21) 32442516 32410848 Fax: (92-21) 32428651 Head Office & Shares Department Rakh Canal East Road, Faisalabad, Pakistan Ph: (92-41) 8540121-22-23 Fax: (92-41) 8711016 - 8502197 Website: www.rafhanmaize.com E-mail: corporate@rafhanmaize.com
Non-Executive
Chief Executive & Managing Director Ansar Yahya Directors Cheryl K. Beebe - Mary A. Hynes - James P. Zallie - Zulfikar Mannoo - Mian M. Adil Mannoo - Wisal A. Mannoo - Anis A. Khan - Chief Financial Officer Anis A. Khan Secretary M. Yasin Anwar Audit Committee Cheryl K. Beebe Rashid Ali Zulfikar Mannoo - - - Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Independent Independent Independent Executive - Executive
M. Ali Seena C/o Surridge & Beecheno, Karachi
Organogram
Board of Directors
Chief Executive & Managing Director
Chief Financial Officer & Director
Deputy Director Marketing & Business Development
Deputy Director Operations, Safety & Environment
Senior Procurement Manager (Agri-Produces & General Materials)
Senior Manager (Customer Service & Logistics)
Senior Manager HR & Admin
Company Secretary & Compliance Officer
Manager Maize Production
Internal Auditor
Manager Warehouses & Stores
Quality Assurance Manager
Notice of Meeting
Notice is hereby given that the 119th General Meeting (Annual Ordinary) of the shareholders of Rafhan Maize Products Co. Ltd. will be held on Thursday, March 29, 2012 at 10:00 a.m. at the Overseas Investors Chamber of Commerce and Industrys Hall, Talpur Road, Karachi to transact the following business: 1. To confirm minutes of the last General Meeting (Annual Ordinary) of the shareholders of the Company held on Tuesday, March 29, 2011 at Karachi. 2. To receive, consider and adopt the Audited Accounts of the Company for the year ended December 31, 2011 together with the Directors and Auditors Reports thereon. 3. To approve final cash dividend @650% for the year ended December 31, 2011 as recommended by the Board of Directors. 4. To appoint auditors and fix their remuneration. The present auditors Messrs KPMG Taseer Hadi & Co., Chartered Accountants, retire and being eligible, offer themselves for re-appointment. The Board of Directors, on recommendations of the Audit Committee, has proposed appointment of Messrs KPMG Taseer Hadi & Co., Chartered Accountants for the year 2012. Karachi March 7, 2012 By order of the Board M. Yasin Anwar Company Secretary
Notes: 1. The Share Transfer Book of the Company will remain closed from 21st to 29th March, 2012 (both days inclusive) and no transfer will be accepted for registration during this period. 2. A member entitled to attend, speak and vote at the meeting shall be entitled to appoint another person as his/her proxy to attend, speak and vote instead of him/ her, and a proxy so appointed shall have such rights with respect to attending, speaking and voting at the meeting as are available to a member. Proxies in order to be effective must be received by the Company not less than 48 hours before the meeting. A proxy need not be a member of the Company. Form of proxy is attached. 3. Shareholders are requested to notify change of address, if any, to Companys Shares Registrar immediately. 4. CDC shareholders desiring to attend the meeting are requested to bring their original Computerized National Identity Cards, Account and Participants ID numbers, for identification purpose, and in case of proxy, to enclose an attested copy of his/her CNIC.
Vision
To be the Premier Provider of Refined Agriculturally Based Products and Ingredients in the Region.
Mission Statement
To grow business consistently through positive relationship with customers to attain full customer satisfaction and to bring continual improvement by adopting only those business practices which add value to our customers, employees and shareholders.
Our Core Values
Safety Quality Integrity Respect Excellence Innovation
Nothing is more important Our goal: Zero accidents
Of the products we make, the services we provide, the relationships we build
Honesty & trust are the foundation of our business We will maintain the highest standards of conduct
We promote openness, teamwork, trust and mutual cooperation
We will relentlessly pursue excellence in all that we do and give employees the resources they need to excel
Continue to find new customer solutions and share those breakthroughs around the Corn Products World
Chief Executives Review

It is my pleasure to present the Annual Report and performance review of your Company for the financial year ended December 31, 2011. Your Company successfully delivered another profitable year in line with its strategy to grow business and achieved the historic turnover of over Rs.18 billion. Your Company maintained, by the grace of Allah Almighty, the momentum of growth through strong marketing efforts and operating efficiencies despite a highly challenging business environment.
OPERATING RESULTS ECONOMIC ENVIRONMENT
The year 2011 was a challenging year for the country; devastating floods for two consecutive years, the worsening energy crisis and the security situation have exerted significant pressure on the economy and the cost of living. The overall business environment remained tough due to the high cost of inputs. With severe energy shortfall, industrial and business activities slowed, to impact aggregate demand from different segments. Cost push inflation remained active throughout the year and the average CPI inflation rate was around 12%. These factors adversely affected the key macroeconomic fundamentals and the GDP growth rate dropped to 2.4% as compared to the target of 4.5%. The agricultural sector, however, could get a boost from improved cotton, wheat and rice production but stronger global crop production has put downward pressure on the prices of major crops and may not increase the farm incomes. In spite of low GDP growth, the adverse effects of the energy shortfall on domestic production, and increasing price pressures, the country was able to maintain a healthy level of foreign exchange reserves, a rising trend in exports, and a sharp increase in remittances and disbursements from international financial organizations. Net Sales Net Income After Tax Earnings Per Share Rs. (Million) Rs. (Million) (Rupees) Year ended December 31 2011 2010 18,271 2,034 220.20 13,913 1,838 198.99
By the grace of Almighty Allah, your Company achieved sound financial results for the year under review. All elements of our business contributed positively and your Company achieved the historic turnover figure of over Rs.18 billion. This represents 31% growth over the last year and reflects the strong level of customers confidence in the Company and its time tested products and services. Cost saving initiatives, reliable and efficient product supplies to the customers, effective business practices, teamwork and a clear strategy to move to valueadded products have played a key role in this achievement. Margins were radically eroded by high energy costs when extended power and gas breakdowns resulted in the use of expensive alternative energy sources. Cost saving initiatives were taken to partially offset the negative impact of escalating input costs. Hence, the net income after tax and the earnings per share improved by 11% over last year.
BUSINESS REVIEW
It has been a long journey of 58 years which allowed your Company to build an unbreakable trust with its customers through customized solutions, progressive marketing, strong capabilities and effective services. Our products have been built on providing relevant benefits and solutions to the customers by understanding their changing needs and responding to their expectations effectively and efficiently. Your Company offers pioneering solutions in the categories of Industrial, Food and Animal Nutrition & Health ingredients to serve more than 50 types of industries like textiles, confectionery, paper, corrugation, pharmaceuticals & chemicals, ice cream, processed foods, beverages, bakery, tobacco, poultry, livestock, aquaculture, edible oils and many other food and non -food industries. We have actively managed our strategy and continue to strive for the most value-creative solutions. The
Industries We Serve...
combination of our global presence and strong local relationships makes your Company a preferred supplier across all markets. Our journey towards excellence is directed by the strict adherence to our Core Values; Safety, Quality, Integrity, Respect, Excellence and Innovation.
Industries We Serve...
INDUSTRIAL BUSINESS
Diversified products with application technological support through a committed team of professionals, the use of leading edge technology and strict quality compliance have been the drivers of our success in the industrial ingredients business. The industrial portfolio includes wellknown ingredients like Penetrose, Fluidex TM, Amijel, Q-Tac, Amisol, Tex-o-Film and Coratex Starches and Coragum Dextrins. The business environment remained extremely tough for the industrial ingredients business due to soaring inflation, massive energy shortages and the high cost of manufacturing inputs. This situation made things difficult for the operation of downstream industrial customers. However, the adverse impact on the domestic business was partially mitigated through a stable demand for starches from export oriented textile industry. Paper producers also faced adverse effects of competition from cheaper imports. Your Companys sale of starches in this application dropped as compared to last year. Sales to the chemicals & allied industries were stable. The corrugating industry operated normally to meet demand for packaging materials for vegetables, fruits, textile, sports, etc. However, pharmaceutical, home & personal care applications continued to deliver sales growth on the back of strong volumes. We work hard to be seen as the key supplier in industrial business by strategically identifying customers benefits and through products differentiations.
includes Globe Snowflake and Starches, Flo-Sweet TM Liquid Glucose, Cerelose Dextrose Monohydrate and Liquid Caramel to meet different functionalities. The year under review was challenging for the food ingredients business. The acute energy shortage adversely affected the demand from downstream industries. Pressure on disposable incomes impacted the consumers wallet, resulting in a loss of demand for the food ingredients. The deepening energy crisis, after effects of floods, as well as the collapse of small size vendors and difficult business environment, created additional burden to operate food business. However, large scale and export led confectionery industry showed consistency in its operations which was quite supportive to our food business.
FOOD BUSINESS
Food is one of the fastest growing areas in Pakistan due to changes in life style and eating habits. Your Company is a leading manufacturer of food ingredients which add value in different food applications including confectionery, baking, desserts, beverages, savory products, soups, ice cream and many other processed foods. Our core food business line
led by the poultry, livestock and aquaculture sectors. The poultry business has shown strength despite high inflation and the spillover effects of floods. During the last few years, the dairy farming sector is being developed on scientific lines. The emergence of medium to large scale dairy farms has encouraged the growth of cattle feed rationing through shifting from conventional feeds to animal nutrition ingredients to increase milk production and yields. Aquaculture has also shown growth with the expansion of fish farms and we have successfully introduced our animal nutrition ingredients for fattening of fish. The Animal Nutrition product portfolio includes Prairie Gold Maize Gluten Meal, Buffalo TM Maize Bran, Rafhan Maize Gluten Feed and Germ Cake and Enzose Hydrol.
ANIMAL NUTRITION & HEALTH BUSINESS

The animal nutrition ingredients business continued to perform well,
EXPORTS
Your Company continues to focus on capacity expansion and diversification of ingredients for new applications and new markets.

With a formidable presence across the country, RafhanMaize is looking beyond geographic boundaries for new opportunities. We pursued the systematic implementation of strategy for growth and increased efficiency in 2011. The Company responded to market challenges by selectively expanding its base business activity in export markets to earn valuable foreign exchange. procurement practices to cope with the present challenging environment. As the maize consumption increased in other sectors, the need for quality maize (corn) grain and improved yields became critical for a sustainable supply chain. The Companys Agri Division is coping with situation by conducting meetings with farmers, to persuade them to use good quality seeds and motivating farmers community to grow maize as the profitable proposition. Our farm advisory services include crop informative seminars, farm visits, product demonstrations, technical literature and soil sample analysis. Our relations with the farmers community are strong and consistent, spanning over the last 50 years. Our efforts have been successful and the Company played a vital role by helping farmers to improve crop yield and productivity. Your Company has been able to increase area under maize
INVESTMENT PROJECTS
Your Company continued to implement its capital investment program in 2011 to reinforce its competitiveness in the market. RafhanMaize believes in the importance of investing in new technologies and, at the same time, upgrading its existing facilities. New products have always been evaluated for their potential to secure growth and capture new market opportunities. We are determined to continue our focus on increasing efficiency and maintaining our reputation as one of the leading corn refiners in the country. Over the years, the capacity of our plants has gradually been increased and now the Company operates from two plants with sufficient manufacturing capacity to respond to the customers needs. Your Company exploits growth opportunities both by investing in new plants and facilities and by offering new products. Our third plant is under construction in Kotri, Jamshoro and is expected to be completed by the last quarter of 2012 to meet growing demand from the southern region and the export markets. The Company invested around Rs.1,122 million on acquiring new technology, enhancing capacity and to safeguard environment during the year under review. We strongly resolved to build an efficient, high-performing organization capable of adapting quickly to changing business needs and exploiting innovative ideas. New channels in the glucose refinery and for pregelatinized starches provided new ventures in high growth areas.
Your Company aims to secure a reasonable place for its products in the international markets. The demand for our industrial and food ingredients is growing. In addition to our traditional export markets in the Middle East, we plan to enter into new markets by diversifying our products and utilizing increased capacities at Cornwala and Mehran plants. However, stiff competition in quality, soaring sea freights and price competition from neighbouring countries remain major bottlenecks for growth in the export business. We are taking necessary actions to remove these hurdles by capitalizing on our experience, knowledge and innovative product line to expand into the export business. We have explored new opportunities in far eastern and south east Asian countries by introducing specialty products and your Company hopes to capitalize on fast evolving business dynamics in value added potential markets in the export region.
RAW MATERIAL - MAIZE

Maize is our basic raw material. We are fully cognizant of the fact that our longterm success is linked to the prosperity of thousands of maize growing farmers. Your Company works with farmers in the fields for their guidance, training and support to improve crop yields. In our quest for professional excellence, RafhanMaize is striving hard for continuous improvement in
cultivation in Khyber PK and efforts are underway to improve crop yield which is very low in Khyber PK as compared to other parts of the country. New and improved methods of maize cultivation are being demonstrated to farmers so that the potential benefits of this crop can be realized. We have extended our maize development program to Sindh farmers for introducing a new high value crop in their cropping pattern through our Maize Contract Farming Program. We have started field trials in Hyderabad, Badin, Thatta Mirpur Khas, Sukkur and interior Sindh areas and the results will be followed up with the farmers from sowing to maturity of crop and buying from the fields. The Company considers farmers an important part of our business, and works closely with them to share best practices in crop management to enhance yields and reduce the risk of crop failure through balanced application of seeds and other allied services.
OPERATIONS
Our capacities and operating capabilities are one of the principal reasons for our strong business relationships with our valuable customers. Our plants have shown solid production performance over the years driven by continuous production enhancement, process optimization and continuous improvement. Our plants are equipped with modern facilities, highly skilled and motivated manpower, integrated management systems and an innovative product portfolio. The year under review was extremely challenging year for your Company due to massive electricity and gas load shedding, affecting overall productivity. Despite all adversities, your Company maintained its image as a reliable supplier through
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its coordinated inventory control and supply chain program. Our team of expert engineers worked day and night to bring continuous improvement through manufacturing optimization and cost saving initiatives. Operational Excellence initiatives like process capability, energy conservation and lean/six sigma processes have been highly successful and enabled to reduce per unit energy cost.
INTEGRATED QUALITY & ENVIRONMENTAL MANAGEMENT SYSTEM

Customer satisfaction has always been a fundamental goal in RafhanMaize. We strongly believe that our survival rests in the complete satisfaction and confidence of our valued customers, which is only possible through strict quality control and process monitoring. Quality has always been in the forefront of our operations and the Company is fully cognizant of the fact that our ultimate success lies in the strength of our customers. We are committed to provide them the high quality ingredients and service. The Company has embedded international standards of production and quality control into the system and secured a number of certifications and recognitions. Our quality re-certifications were achieved successfully for QMS, EMS, OHSAS and HALAL Certifications to drive the Companys strong commitment to quality and management
excellence. A Surveillance Audit was completed to ensure compliance of quality and relating systems. An ISO 9001:2008 system is in place and is providing guidance to control the quality of the products according to the international standards. The Company has implemented the standards 18001:2007 OHSAS and is making objective based efforts to eliminate unsafe and unhealthy working conditions. Hazards identification and risk assessment are regularly performed, reviewed and requisite preventive measures have been exercised to minimize accidents in all divisions of operations. All the above cited systems are in place and in use to meet our customers needs for products and processes that are in full compliance of internationally recognized quality and environmentprotection standards. The Company has highly qualified technical services department to foster development activities, to provide technical support to our customers and handle customers complaints. The Company is also certified for ISO 22000:2005 (Food Safety Management Systems) which further augment our quest for quality assurance. Your Company believes that its balanced model for enhancement in quality and productivity will fetch enormous opportunities for sustained growth, full customer satisfaction and value addition for all stakeholders.
PRODUCT DEVELOPMENT
Through our market management teams, we strive to know our customers needs ahead of their demand, and build a strong and focused base for future innovations. Innovation and growth are key cornerstones of our success. We consider diversification of our product line as a major factor behind corporate sustainability in the ever changing market scenario. Our abilities to forecast the future depends on developing our knowledge and technologies through our development capabilities. Innovation is the process through which we keep our products differentiated and customers relevant. It is driven by insights of our customers and by our own development breakthrough. The Company has a competent and efficient R & D team specialized in market driven product developments, value addition and capable of adapting new technology to meet the growing needs of customers. With this

Your Company has achieved an excellent safety profile over the years, and we continue to focus vigorously on behavior based safety programs. At the same time, RafhanMaize provides comprehensive information to the customers to help those customers to ensure that the products are used in safe manner and are not harmful to the environment. Periodic drills have been carried out to test the plans. Assembly zones and emergency exit points have been identified and marked in all Plants. Your Company has a well-structured RASCI (Responsible, Accountable, Supportive, Consulted and Informed) model to cope with emergency and disaster management. The Visual Factory concept has been rolled out to display safety arrangement in all the areas of operations for guidance and movement in case emergency situation. The Company has a systematic and pro-active behavioral program to embrace safety at work place. We have OHSE commitment to the highest standards not only for the health and safety of our employees, customers and stakeholders but also for the protection of the environment in the communities we operate. Your Company continuously guides its employees for safe travelling by issuing travel guidelines, conducting safe driving awareness training sessions (with the help of traffic police) and providing maintenance guidelines/ standards. OHSE performance of the Company remained excellent and the important milestones achieved in 2011 included: The goal of zero lost time accident was successfully achieved; over 20.92 million exposure hours achieved for the Company and contractors employees at Rakh Canal Plant and a milestone of over 16.9 million exposure hours were achieved for Cornwala Plant. Your Company celebrated OHSE week at all the business locations to involve and engage employees, contractors and other business partners in the efforts and initiatives of the Company with respect to OHSE. Your Company also observed November 2011 as OHSE month at both plants. Safety slogan for the year was Safety Round the Clock and Environment slogan
strength, the Company is confident of not only meeting the challenges but also converting those challenges into opportunities. Your Company specially aligns its development activities with market requirements. Emphasis is placed on providing enhancements for existing applications and optimizing manufacturing methods and processes to open up new business areas and markets. We continue to focus our efforts on satisfying customers needs and constantly seek promising applications that add value for our customers. OCCUPATIONAL HEALTH, SAFETY & ENVIRONMENT(OHSE) Occupational Health & Safety continues to be among the Companys top priorities. RafhanMaize invests in safety and environmental protection every year. We carefully consider environmental, safety and health impacts of our activities at all the spheres of the activity cycle. We have a proactive approach to take into consideration environmental protection and safety in all our activities. Each of our facilities strictly adheres to the principles of cleanliness and safety code as necessitated by the Environment, Safety & Health standards. We operate a global incident reporting and emergency management system, and have launched a global initiative to reduce accidents. The policies are prominently displayed at all of our offices, plants and all employees are required to promptly report any safety violations or incidents so that improvement in the situation is brought about on timely basis.
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Sports...
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was Forests: Nature at Your Service. More than 15,000 man hours of OHSE related trainings were conducted. Safety Pledge was signed by all the Company employees. No Smoking and Alcohol & Drug Policy were implemented at all locations. Emergency exercises were conducted to test the Emergency Response Plan.
of the environment. Our efforts have been very successful and the Company has reduced per unit gas and power consumption and all emissions remained within NEQS limits. Your Company has achieved Environment Excellence Award for the third successive year from National Forum for Environment and Health in recognition of our excellent environment protection initiatives and implementation of environment management systems. CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY Your Company has a strong belief in and endeavors to be a responsible corporate citizen in the community without any political affiliation. The management is well aware of its social obligations and has used a proactive approach to achieve the goodwill and respect for the Company within the areas of its operations. The Company focuses on community development through sustained investment in education, health, environment, infrastructural development and disaster relief initiatives. Our major contribution towards community activities include but are not limited to: Donations amounting to Rs.2.5 million were made to the following organizations / institutions to support the noble causes under Corporate Social Responsibility Policy of the Company:
ENVIRONMENT STEWARDSHIP PROGRAM Environment stewardship is a continuous program to contribute towards betterment of environment in and around our business locations. The management remained strongly committed to safe environment. A
* Pakistan Red Crescent Society, Karachi, to help flood affected people in Sindh region in the neighborhood of our Kotri Plant. * Harman Miners Save our Souls Children Village, in our neighborhood to provide family based care and education to abandoned, destitute and orphaned children. * Sindh Institute of Urology and Transplantation (SIUT), Karachi, a welfare organization to provide free of cost medicines. * Liver Foundation Trust, Faisalabad for the treatment of patients suffering from Hepatitis. * Educational Scholarships for the intelligent but poor students for college level studies through Rotary Club. * District Anti Tuberculosis (T.B.) Association and Patient Welfare Society of local hospitals for provision of free medicines and treatment. Your Company is recognized as an equal opportunity employer with reasonable compensation, benefits and working conditions. Green belt measuring 28,308 square feet was developed outside Samundri Road Warehouse in addition to existing one measuring
number of training programs have been conducted to create awareness among the employees for conservation

utilizing the latest developments in the information technology. The Company has recently upgraded communication link with Central Data Center by using MPLS technology which has resulted in highly reliable and faster processing of business applications. The Company has well structured plan to impart high quality technology to its employees instrumental for smooth discharge of their duties. The Company has recently initiated a group cascaded project to implement highly secure and reliable Lotus Notes System for communication and collaborative working. This will help to provide a more paper-less environment, instant messaging, online real time approvals and faster communications. HR MANAGEMENT & EMPLOYEE RELATIONS Our people are our identity and most valuable asset. Our human capital constitutes of a very dynamic and vibrant workforce with a positive attitude well placed to face the emerging challenges. These people are highly professional, ethical and result oriented. We acknowledge that sustained growth and business excellence depends on the recruitment, development and retention of
SOS
Children Village
109,890 square feet. Your Company is financing and facilitating a public primary school and a post office built at its premises for the benefit of surrounding community. A fully equipped dispensary is also available to meet emergency and general health care of the employees and their dependents. 29 students of different professional institutions were provided internship training in different departments of the Company. Extended 89 Scholarships to talented students for the facilitation and promotion of higher education. Contributed towards the uplift of economy by providing free agricultural advisory service to the farmers of various provinces. The Company celebrates with great fervor various internationally commemorative days like Earth Day, World Health Day and Earth Hour. World No Tobacco Day, World Environment Day and World Heart Day for creating awareness among employees. Apprenticeship training is provided to the young aspiring
students for 2-3 years. Employees participation in community welfare and development activities is encouraged. INFORMATION TECHNOLOGY Your Company is cognizant of the fact that information technology plays a pivotal role in the way we do our business. Accurate and timely business information is the backbone of all operational and strategic business decision-making processes, which can only be fulfilled through a fully integrated, interactive robust, secure and agile system/business solution package. The Company took timely decision to migrate from in house developed applications to the worlds renowned SAP system which started yielding benefits to support the Companys vision and long term strategy. SAP has the capability to align business strategies and operations, integrate distinct functions like production planning, quality management, plant maintenance, sales and marketing, warehousing and distribution, financial management, HR management and customer relationship management. Your Company is vigilant in effectively
competent human resources. Focusing on teamwork in all areas of our business is the key driving force in achieving high performance. Our human resources work tirelessly to translate our strengths into tangible results. The workforce is operating from all across the country and playing concrete roles for achieving the Companys goals. One of our critical objectives is to have the right people in the right place, at the right time with the right pay and to make the Company an employer of choice. The Company has taken a number of measures to develop its human capital to meet the challenges of todays competitive business environment. We maintain a robust
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6. Control on Consumption of Manufacturing Supplies 7. Local Development of Spares and Enhancing their Working Life 8. Re-engineering of Processes. 9. Root Cause Analysis to Improve Efficiencies of Equipment 10. HACCP and GMP 11. Electrical Safety and Arc Flash 12. Hazard Identification and Control VALUES AND BUSINESS CONDUCT POLICIES Your Company believes that any organization is recognized by its Core Values. Our Companys Core Values and Business Conduct Policies are critical in establishing the ethical and honest behavior of the whole organization. The training program titled PILLARS - VALUES AND BUSINESS CONDUCT WORKSHOP continued during the year and a number of sessions were held to promote the understanding of the Core Values and compliance with those Core Values and Policies by all employees at all levels of the Company. BUSINESS RISKS, CHALLENGES & FUTURE PROSPECTS The business environment of the country is expected to remain challenging in the year 2012. Any improvement in the business environment will largely depend on the economic policies of the government and the implementation of key reforms. The high inflation rate, rising energy deficit, volatile political situation and escalation in the costs of utilities and inputs may lead to a slowdown in the economic growth and performance of
leadership strategy to identify and use a systematic approach by providing growth oriented career opportunities to employees, thereby enabling them to perform exceptionally. We recognize that continuous improvement in management capability is a vital ingredient for growth. The Company is following the policy of capability review as a continuous process of managing a talent and developing succession for the critical positions. The Company has achieved a milestone by bringing management personnel into a pool where performance is monitored and evaluated against mutually agreed goals/objectives. An online performance management system, Achieve Raising the B.A.R. has been successfully implemented to manage well-coordinated efforts focusing on the Companys overall objectives. The Company firmly believes in retaining loyal and highly motivated human resources and, during the year under review, rewarded 86 employees for their long services (10 to 40 years) and tireless efforts. The Company has the policy to extend good number of education scholarships to the deserving children of employees in recognition of their efforts towards achieving excellence in academics. TRAINING & MANAGEMENT DEVELOPMENT Your Company has maintained a distinctive corporate culture by extending unique opportunities to its employees for self-development and career growth. The Company strongly believes that training and development is an investment and pursues to provide promising employees with
opportunities to obtain the best knowledge and skills. The Companys performance management system, Achieve, provides an excellent mechanism for assessing training needs and employees development plans are finalized in the Achieve System during mid year review process. The system provides a base for planning in-house, in-country and overseas training & development interventions. Employees are exposed to various kinds of training including technical courses, management courses, workshops and seminars, both in Pakistan and abroad in order to enhance their capabilities. During the year under review, 49 management personnel from different departments participated in 20 training sessions/workshops offered by various institutes of repute through our in-country training program. 714 in-house training courses were held at all three plants. These inhouse sessions imparted trainings to 8,280 employees to enhance their professional capabilities in the areas of OHSE, Crisis Management, Policies on Business Conduct and AchievePerformance Management System. During the year, the energy shortfall and escalating costs of utilities and manufacturing supplies were the major challenges. Hence, the Company focused on cost saving initiatives and safety in designing our in-house training programs on the following topics1. Lean/Six Sigma 2. Importance of Equipment Securities (Interlock) 3. Waste Control Management 4. Data Logging and Analysis 5. Energy and Water Conservation

the industrial sector. The purchasing power of the consuming segments is already eroded by the continued increase in prices of essential commodities, utilities and necessities of life. The gas supply is likely to worsen as compared to last year, leading to more dependence on high cost alternate fuels which will put further pressure on margins. The rising cost of alternative fuels and the continuous depreciation of the Pak Rupee against the US Dollar are expected to influence volumes and margins. The government has lately increased the minimum support price of wheat by 10% to motivate the farmers to grow more wheat. The same price trend is foreseen for the maize crop having the same cultivation season. The high price of wheat may also shift demand for poultry and livestock sector to maize, creating tough competition and an increase in the price of maize. Continued energy shortage and an increase in tariffs, coupled with inflationary pressure on other costs, are likely to continue to affect the working of the manufacturing sector. Consequently, it will be difficult to pass on the total impact on the cost of production to the end customers. The World Trade Organization has approved the European Unions waiver on duties of 75 products including textile products from Pakistan. This will have a positive impact on the textile exports to European countries from Pakistan. The management of your Company is fully abreast of the market situation and is proactive in managing the impact of emerging challenges with the help of well integrated strategies. The Company has also identified key areas in which productivity can be improved with many initiatives, cost reduction, marketing activities and new capacity openings. Your Company continues to grow in traditional revenue streams while exploring new products and technologies in line with customers needs and the dynamics of the industry. Your Company looks forward to a reasonable growth in volume and return for its shareholders. Despite the challenges being faced in
the country, we continue to see beyond 2012 positively while managing risks to optimize the returns. EXCELLENCE AWARDS & RECOGNITIONS Your Company continued to be recognized for high performance by the Karachi Stock Exchange which honored the Company with the Top 25 Companies of Pakistan Award for the fifteenth year in a row. Similarly, the Best Corporate Reports Award which was awarded by the Institute of Chartered Accountants of Pakistan and Institute of Cost & Management Accountants of Pakistan; was received by your Company for the eleventh year consecutively. Your Company has also been rewarded by various distinguished institutions including: FPCCI Special Merit Export Trophy Award for export of Corn (maize) derived products CSR National Excellence Award by Help International Welfare Trust, Karachi Best Practices on Occupational Health, Safety & Environment (OHSE) from Employers Federation of Pakistan/ International Labour Organization Environment Excellence Award from National Forum on Health and Environment Global Food Safety Award 2011 by Global Media Links and Food Association of Pakistan
the progress of RafhanMaize. Sheikh Gulzar Hussain resigned from Board of Directors in August, 2011 and the Board expressed its appreciation to Mr. Hussain for his farsightedness and thoughtful observations. The Board welcomes Mr. James P. Zallie as new director of the Board in place of Mr. Hussain. ACKNOWLEDGEMENT We can look ahead to 2012 with confidence, hope and resilience. We know that there are challenges ahead, but we also know that we have the right resources to meet those challenges. I would like to take the opportunity to thank and congratulate to the Board of Directors for their willful determination, focused involvement
BOARD OF DIRECTORS Mr. Jorgen Kokke has been appointed as Chairman of the Board in place of Mr. John F. Saucier in March 2011. The Board welcomed Mr. Kokke as new Chairman and placed on record its profound appreciation of the valuable contribution made by Mr. Saucier to
19
Board & Chief Executives Performance Review

and ongoing commitment in bringing RafhanMaize to the level and position it deserves. The Board of Directors sincerely appreciates the devotion and commitment of all our customers, distributors, vendors, banks and other stakeholders. The Board would also like to place on record its appreciation for the hard work, dedication, professionalism and sincere efforts of the senior management, officers, staff and workers of the Company for their significant contribution in achieving the tremendous results for the year 2011. We are also grateful to all our shareholders for their continued trust in our ability to provide the best possible services. We aim at creating value for the stakeholders by continuing to improving our competitiveness and reputation in the market. In these challenging times, we continue to focus on meeting the expectations of our stakeholders by following the strategy of sustainable growth, capitalizing on the right opportunities, maximizing productivity and delivering the best services to customers. We foresee many more heights for your Company in the years to come. May God bless all of us! Please join me in praying to Almighty Allah to give us the courage and wisdom to face the challenges ahead and work with more zeal for the prosperity of the Company and to create value for its shareholders. Ameen! On behalf of the Board Boards Performance
The Board is constituent of professionals of high caliber and diversely experienced. They are fully abreast of the regulations of Code of Corporate Governance and associated corporate laws as applicable in Pakistan. To meet the requirements of Code of Corporate Governance, our Vice Chairman and Director, Mr. Rashid Ali has qualified as Certified Director from Pakistan Institute of Corporate Governance. The Board members individually and collectively have been guiding and, wherever required, complementing management efforts on implementation of corporate strategy and Company policies. Their contribution on development and adherence to Statement of Ethics, Business Practices, Vision, Mission Statement, evaluation of internal controls and help in the recruitment of top ranking executives have been phenomenal throughout. The Board has been proactive in setting up of its Committees with specific jurisdictions, defining specific roles of Chairman and Chief Executive, conducting periodic meetings at least quarterly; and extending due consideration to significant business issues. Chief Executives Performance Review Chief Executive holds the office for three years. The Chief Executive acts and performs subservient to the Roles and Powers prescribed by the Board of Directors. Comprehensive business plans have been developed by the Chief Executive and presented to the Board for its approval and endorsement. Parent company, Corn Products International Inc; have a well-structured performance evaluation and review system for periodic review of Chief Executives performance. The performance is measured across all functions with foremost attention to financial metrics in addition to Safety, Environment, Health and Corporate Social Responsibility.
Ansar Yahya Chief Executive and Managing Director
February 14, 2012
Rafhan Calendar of Major Events - 2011

January 06 January 12 January 13 March 19 March 26 March 31 April 11 April 14 April 16 April 28 May 02 May 23 July 23 July 25 July 29 July 29 August 13 September 30 October 06 October 16 October 30 November November 11 December 24 December 30 December 30
Rafhan Long Service Awards Ceremony 2008 and 2009. Farmers Conference held at Mehran Plant. 5th CSR National Excellence Award 2010 and Corporate Social Responsibility Support of the Event Award. Safety Workshop conducted at Rakh Canal Plant. Pillars Values and Business Conduct Policies Workshop conducted at Rakh Canal Plant. Safety Training Workshop at Mehran Plant. Hajj balloting held to pick 16 lucky winners amongst workers and staff members. In-house Safety Training Course on Fire and Emergency conducted at Mehran Plant. Rafhan Long Service Awards Ceremony 2010. Certificate on following the Best Practices in Occupational Safety & Health by Employers Federation of Pakistan and International Labor Organization. Arranged Hari Melo at Agriculture Training Institute Sakrand, Sindh. Top 25 Companies Award from the Karachi Stock Exchange. Global Food Safety Award 2011 from the Global Media Links. Safety Training Workshop on Fall Prevention and Protection conducted at Rakh Canal Plant. Safety Training Workshop on Fall Prevention and Protection conducted at Mehran Plant. 8th Annual Environment Excellence Award 2011 from National Forum for Environment & Health. Safety Training Workshop on Fall Prevention and Protection conducted at Cornwala Plant. Pillars Values and Business Conduct Policies Workshop conducted at Rakh Canal Plant. Special Merit Export Award from the Federation of Pakistan Chamber of Commerce & Industry on export of Corn (Maize) derived products. Managers/Officers and Staff Picnic Party. Workers Picnic Party. November 2011 was observed as Safety Month. The safety slogan for the year was Safety Round The Clock. Best Corporate Report Award from Joint Committee of the Institute of Chartered Accountants of Pakistan and Institute of Cost and Management Accountants of Pakistan. Pillars Values and Business Conduct Policies Workshop conducted at Cornwala Plant. Nominated for the Top 25 Companies Award for the year 2010 by the Karachi Stock Exchange. Cricket Tournament arranged amongst the teams of Rakh Canal and Cornwala Plants.
21
Horizontal Analysis of Profit and Loss Account

Sales Cost of sales Gross profit Distribution cost Administrative expenses Operating profit Other operating income Finance cost Other operating expenses Profit before taxation Taxation Profit after taxation 2011 2010 2009 2008 2007 2006 131% 122% 106% 142% 124% 118% 136% 118% 112% 146% 120% 114% 115% 135% 89% 131% 134% 131% 111% 113% 73% 84% 179% 128% 120% 113% 113% 108% 107% 105% 115% 139% 88% 138% 133% 135% 128% 105% 87% 145% 141% 95% 183% 65% 135% 306% 58% 247% 112% 138% 88% 137% 135% 145% 115% 139% 88% 137% 134% 131% 123% 135% 89% 136% 134% 131% 111% 142% 87% 137% 135% 132%
Horizontal Analysis of Balance Sheet

NON CURRENT ASSETS Property, plant and equipment Intangible assets Capital work-in-progress Employees Retirement Benefits Long Term Loans CURRENT ASSETS Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and prepayments Other receivables Cash and bank balances TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Mark up accrued on short term running finances Short term running finances - secured Provision for taxation NON CURRENT LIABILITIES Deferred taxation SHARE CAPITAL AND RESERVES Share capital Reserves TOTAL LIABILITIES 2011 2010 2009 2008 2007 2006
105% 80% 186% 67% 73%
123% - 98% 411% 82%
114% - 196% 22% 451%
103% - 566% 75% 54%
112% - 33% 290% 58%
113% 55% 94% 103%
118% 96% 143% 57% 255% 70% 159%
112% 268% 120% 1055% 115% 191% 6%
99% 48% 92% 48% 85% 119% 4905%
128% 177% 105% 143% 123% 135% 4%
125% 117% 123% 197% 84% 104% 129%
109% 84% 123% 152% 100% 48% 1631%
114% 138% 100% 133% 112% 100%
122% 138% 63% 128%
151% 96% - 86%
96% 101% - 160%
130% 13970% - 188%
107% 3% - 143%
99% 61% 84%
106%
135%
111%
93%
133%
132%
100% 119%
100% 124%
100% 112%
100% 119%
100% 111%
100% 107%
114% 138% 100% 133% 112% 100% Note: No percentage has been worked out where there were no figures in current or corresponding year.
Vertical Analysis of Profit and Loss Account

Sales Cost of sales Gross profit Distribution cost Administrative expenses Operating profit Other operating income Finance cost Other operating expenses Profit before taxation Taxation Profit after taxation 2011 2010 2009 2008 2007 2006 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 79.2% 76.3% 78.7% 74.5% 72.3% 74.4% 20.8% 23.7% 21.3% 25.5% 27.7% 25.6% 0.8% 0.9% 1.0% 1.5% 2.5% 1.7% 1.4% 1.5% 1.6% 1.5% 2.0% 2.3% 18.6% 21.2% 18.6% 22.5% 23.2% 21.6% 0.6% 0.6% 0.7% 0.8% 0.8% 0.7% 0.3% 0.2% 0.4% 0.3% 0.2% 0.3% 1.3% 1.5% 1.3% 1.6% 1.6% 1.5% 17.6% 20.1% 17.6% 21.4% 22.2% 20.4% 6.5% 6.9% 6.3% 7.5% 7.8% 7.2% 11.1% 13.2% 11.3% 13.9% 14.4% 13.2%
Vertical Analysis of Balance Sheet

NON CURRENT ASSETS Property, plant and equipment Intangible assets Capital work-in-progress Employees Retirement Benefits Long Term Loans CURRENT ASSETS Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and prepayments Other receivables Cash and bank balances TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Mark up accrued on short term running finances Short term running finances - secured Provision for taxation NON CURRENT LIABILITIES Deferred taxation SHARE CAPITAL AND RESERVES Share capital Reserves TOTAL LIABILITIES 2011 2010 2009 2008 2007 2006
27.6% 0.3% 21.9% 0.5% -
29.9% 0.4% 13.4% 0.9% -
33.7% 18.8% 0.3% -
29.7% 9.6% 1.4% -
38.1% 2.3% 2.4% -
38.2% 7.7% 0.9% 0.1%
4.4% 36.3% 6.5% 0.9% 0.8% 0.1% 0.8%
4.3% 43.1% 5.2% 1.7% 0.4% 0.2% 0.5%
5.3% 22.2% 6.0% 0.2% 0.4% 0.1% 12.8%
5.4% 46.0% 6.6% 0.5% 0.5% 0.1% 0.3%
5.5% 34.5% 8.3% 0.4% 0.5% 0.1% 7.7%
5.0% 32.8% 7.6% 0.2% 0.7% 0.1% 6.7%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
16.4% 0.1% 4.8% 3.1%
15.3% 0.1% 8.7% 2.8%
14.0% 0.2% 0.0% 4.5%
14.6% 0.2% 9.4% 2.8%
14.8% 0.0% 0.0% 2.0%
15.7% 0.1% 0.0% 1.5%
4.5%
4.8%
5.0%
4.5%
6.4%
5.4%
1.1% 69.9%
1.3% 67.0%
1.8% 74.6%
1.8% 66.7%
2.3% 74.4%
2.6% 74.7%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
23
Directors Report
Disclosures under Code of Corporate Governance Corporate and Financial Reporting Framework
(a) The financial statements prepared by the management of the Company, fairly present state of its affairs, the result of its operations, cash flow and changes 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) International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed. (e) The system of internal control is sound in design and has been effectively implemented and monitored. (f) There are no significant doubts upon the Companys ability to continue as a going concern. (g) There has been no material departure from the best practices of corporate governance as detailed in the listing regulations.
The Directors of your Company feel pleasure in presenting the annual audited accounts along with auditors report thereon for the year ended December 31, 2011.
Financial Results
Profit and Appropriations
Year ended December 31 2011 2010 (Rupees in Thousands)
Profit after taxation
2,033,828 (43,934) 4,823,427 6,813,321 508,003 323,275 230,911 1,062,189 5,751,132 220.20
1,837,937 31,861 3,877,272 5,747,070 369,457 323,275 230,911 923,643 4,823,427 198.99
Actuarial gains/(losses) of employees retirement benefits Un-appropriated profit brought forward Appropriations Final Dividend 2010 @550% (2009: @400%) (2010: @350%)
Distribution of Sales
(Percentage) 7.74% 76.59%
1st Interim Dividend 2011 @350%
2nd Interim Dividend 2011 @250% (2010: @250%) Un-appropriated Profit Earnings per Share (Rupees)

The Directors of the Company endorse the contents of the Chief Executives Review which cover your Companys business review, salient activities in different fields of operations, outlook, investment plans for strategic growth and disclosures under corporate social responsibilities.
Corporate Governance
Your Company is committed to maintain high standards of good corporate governance without any exception. The Directors are pleased to state that your Company is compliant with the provisions of the Code of Corporate Governance as required by SECP and formed as part of stock exchanges listing regulations. The statement of compliance with Code of Corporate Governance is annexed.
11.13% 4.21% 0.01% 0.32%
Material & Services Taxation Dividend & Retention
Employee Cost Finance Cost Society Welfare
Sales
2011 2010 2009 2008 2007 2006
0
(Rupees in Million) 18,271 13,913 11,428 10,747 7,578 6,127

5000 10000 15000 20000
Profit after Tax

(Rupees in Million) 2011 2010 2009 2008 2007 2006
0 500
2,034 1,838 1,297 1,492 1,089 809

1000 1500 2000 2500
Key operating and financial data of last six years are as follows:
Net Sales Cost of Sales Gross Profit Operating Profit Profit Before Tax Profit After Tax Earnings per Share Dividend Amount Capital Expenditure (Rs. Million) (Rs. Million) (Rs. Million) (Rs. Million) (Rs. Million) (Rs. Million) Rupees (Rs. Million) (Rs. Million) 2011 18,271 14,471 3,800 21 3,400 19 3,216 2,034 220.20 1,062 1,150 1,122 2010 2009 2008 2007 2006 13,913 10,615 3,298 24 2,955 21 2,800 1,838 198.99 924 1,000 582 11,428 8,993 2,435 21 2,131 19 2,012 1,297 140.43 831 900 848 10,747 8,006 2,741 26 2,415 22 2,299 1,492 161.57 924 1,000 606 7,578 5,480 2,098 28 1,755 23 1,681 1,089 117.92 831 900 114 6,127 4,556 1,571 26 1,321 22 1,252 809 87.62 647 700 122
% of Sales % of Sales
Dividend Percentage
Ten Years Performance showing key indicators has been given on the inside cover sheet of this report.
25
Directors Report
Value of investments of employees retirement funds:
2011 2010 Rs. Million
Provident Fund Gratuity Fund Superannuation Fund
as at June 30 as at December 31 as at December 31
694.684 569.684 355.787
622.891 507.583 298.473
Board of Directors
Ten members Board of Director includes eight non-executive directors out of which three are independent non-executive directors who also represent minority shareholders. The current members of the Board of Directors have been listed in the Company Information. During the year under review, two casual vacancies occurred on the Board which were filled up within 30 days thereof.
Attendance at Board Meetings

During the year ended December 31, 2011, four meetings of the Board of Directors were held and attended as follows:
Name of Director Meetings attended Alternate Director in person Meetings attended by Alternate Director
Jorgen Kokke John F. Saucier Rashid Ali Ansar Yahya James P. Zallie Cheryl K. Beebe Mary A. Hynes Zulfikar Mannoo Mian M. Adil Mannoo Wisal A. Mannoo Anis A. Khan Sh. Gulzar Hussain
1 4 4 1 1 3 3 3 4 1
M. Maqbool Ahmad M. Maqbool Ahmad
2 1
Sh. Gulzar Hussain S. Yousuf Hashmi Abdul Khalil
1 2 3
Mr. John F. Saucier was replaced by Mr. Jorgen Kokke in March and Sh. Gulzar Hussain was replaced by Mr. James P. Zallie in August.
Transactions in Companys Shares

CEO, Directors, CFO, Company Secretary and their spouses and minor children have made no transactions in the Companys shares during the year except as stated below:
No. of Shares Purchased
Mian M. Adil Mannoo Anis A. Khan
Director Director
83 82
Further, during the year, one share was transferred from Mr. John F. Saucier to Mr. Jorgen Kokke, nominee directors of Corn Products International and one share in the name of Corn Products International was transferred to its nominee director Mr. James P. Zallie.
Parent Company
Corn Products International, Inc., USA is holding majority shares of the Company.
Earnings Per Share

(Rupees) 2011 2010 2009 2008 2007 2006
0 50
220.20 198.99 140.43 161.57 117.92 87.62

100 150 200 250
Capital Expenditure
(Rupees in Million) 2011 2010 2009 2008 2007 2006
0
1,122 582 848 606 114 122

200 400 600 800 1000 1200
Auditors
The retiring auditors, Messrs KPMG Taseer Hadi & Co., Chartered Accountants, being eligible, offer themselves for re-appointment. The Board of Directors, on recommendations of Audit Committee, has proposed appointment of Messrs KPMG Taseer Hadi & Co., Chartered Accountants for the year 2012.
of Corporate Governance. The Audit Committee also discussed with the external auditors their letter to the management. Related Parties Transactions were also placed before the Audit Committee. The Audit Committee has fully adopted the terms of reference as specified in Code of Corporate Governance.
Business Strategy & Planning Committee

The Board of Directors has established Business Strategy & Planning Committee comprising of following Board members Jorgen Kokke Chairman Rashid Ali Vice Chairman Ansar Yahya Member Anis A. Khan Member During the year, four meetings of the Committee were held. The Committee has to keep a vigilant eye on the Companys performance and work out strategy for enhancement of its business.
Audit Committee
The Board of Directors has established an Audit Committee in compliance with the Code of Corporate Governance with the following members Cheryl K. Beebe Rashid Ali Zulfikar Mannoo Chairperson Non Executive Director Member Non Executive Director Member Non Executive Director
Four meetings of the Audit Committee were held during the year. The Audit Committee reviewed the quarterly, half yearly and annual financial statements before submission to the Board and their publication. CFO, Head of Internal Audit and a representative of external auditors attended all the meetings where issues relating to accounts and audit were discussed. The Audit Committee also reviewed internal audit findings and held separate meetings with internal and external auditors as required under the Code
Shares Transfer Committee

The Board of Directors has established Shares Transfer Committee comprising of following Board members Rashid Ali Chairman Ansar Yahya Member Anis A. Khan Member
27
Directors Report
Twelve meetings of the Shares Transfer Committee were held during the year. The Committee met from time to time to consider and approve valid transfers and transmissions of shares or any business related thereto.
Terms of Reference:
The Company believes in having a happy and satisfied workforce. In order to ensure recruitment of dedicated and devoted employees and also retain existing ones, the responsibility of this committee is to formulate and implement packages for new employees, consider promotions of existing workforce through prescribed appraisal forms and review their remunerations.
Corporate Executive Management Committees

In order to strengthen team spirit and encourage participation in management decisions, following Corporate Executive Management Committees have been formed -
Executive Management Committee

Ansar Yahya Chief Executive & Managing Director Anis A. Khan Chief Financial Officer & Director M. Saeed Akhtar Deputy Director Operations, Safety & Environment All business decisions are finalized by this team. This committee collaborates to achieve and improve overall performance of the Company, develop and implement approved business plan objectives and strategies, identify potential problems, monitor investment projects, review expenditures, identify opportunities/ projects and implement good governance throughout RafhanMaize.
Crisis Management Committee:

Ansar Yahya Chief Executive & Managing Director Anis A. Khan Chief Financial Officer & Director M. Saeed Akhtar Deputy Director Operations, Safety & Environment Deputy Director Marketing & Business Dev. Muhammad Sarwar S. Raza Haider Plant Manager Iftikhar Anwer Khan Sr. Manager (Customer Service & Logistics) M. Anwarul Haq Siddiqui Senior Manager HR & Admin. M. Yasin Anwar Company Secretary & Compliance Officer M. Farooq Aslam Mian Manager Warehouses & Stores
Business Strategy Committee

Ansar Yahya Chief Executive & Managing Director Anis A. Khan Chief Financial Officer & Director M. Saeed Akhtar Deputy Director Operations, Safety & Environment Abdul Khalil Deputy Director Finance Muhammad Sarwar Deputy Director Marketing & Business Development
Terms of Reference:
To prepare RafhanMaize to effectively manage any unexpected crisis. To prepare Company as thoroughly as possible in advance for any crisis; whether involving personnel, plant, product and natural disaster or any unexpected event of similar nature. Compliance of Crisis Management Procedures as per Companys Crisis Management Manual and Emergency Action Plans.
Terms of Reference:
To consider all matters pertaining to Companys operations, day-to-day affairs requiring collective wisdom of the senior management. Preparation of annual business plan, budget, operational model and structure. Evaluate market, financial and operational risks, threats and opportunities and devise ways to mitigate the effects of risks on Companys performance efficiently and effectively. Monitor performance against achievement of goals. Provide inputs on new initiatives, products and projects.
Systems & Information Technology Committee

Ansar Yahya Chief Executive & Managing Director Anis A. Khan Chief Financial Officer & Director M. Saeed Akhtar Deputy Director Operations, Safety & Environment M. Tayyab Raza Deputy Director (IT)
Terms of Reference:
Rapid changes and improvements are taking place in the IT world. The role of the committee is to adopt appropriate technologies and modern systems for overall improvement in the IT area.
Remuneration & Compensation Committee:

Ansar Yahya Chief Executive & Managing Director Anis A. Khan Chief Financial Officer & Director M. Saeed Akhtar Deputy Director Operations, Safety & Environment M. Anwarul Haq Siddiqui Senior Manager HR & Admin.
Policies on Business Conduct Compliance Committee:

Ansar Yahya Chief Executive & Managing Director Anis A. Khan Chief Financial Officer & Director M. Saeed Akhtar Deputy Director Operations, Safety & Environment Muhammad Sarwar Deputy Director Marketing & Business Dev. M. Anwarul Haq Siddiqui Senior Manager HR & Admin. M. Yasin Anwar Company Secretary & Compliance Officer
Terms of Reference:
Effective communication of Policies on Business Conduct and Core Values. Review of implementation and compliance of Company policies. Promote compliance and investigate violation of policies, if any. Recommend appropriate disciplinary actions for violation of policies, if any.
- -
In addition to Corporate Executive Committees, Divisional Committees have also been formed which meet once in a month to review the performance of the respective divisions and find ways and means to further improve and achieve even better results. The Team Leaders are responsible to hold the meetings of the Committees.
- - -
Divisional Committees include 1. 2. 3. 4. 5. 6. 7. Finance & IT Committee CAPEX & Projects Review Committee Human Resources Committee Manufacturing Optimization and Regulatory Affairs Committee Supply Chain Task Force Quality Excellence Committee Business Segmentation & New Ingredients Development Committee
- - -
- One sub-committee under Finance & IT and one under Manufacturing Optimization and Regulatory Affairs have been formed. Moreover, following three additional sub-committees have also been formed to include the bottom line management in decisions making 1. Logistics & Inventory Control 2. Quality 3. Products Development -
Provided free of cost sites to a local bank, government primary school and a post office to facilitate service to the general public. Provided financial support to renovate the building and improve water supply system of the government school. Fully equipped dispensaries at Rakh Canal Plant, Faisalabad and Cornwala Plant, Jaranwala are being maintained to provide medical facility to employees. 648 saplings in surrounding area and 1,302 plants within Cornwala Plant premises were planted to protect the environment. Greenbelt along with Rakh Canal Plant is being maintained to generate healthy environment. 165 children of Rafhan employees were given scholarship to help them pursue their educational goals. Rs.2.5 million donated to various charitable institutions to help health and community sectors. Internship was provided to 29 students from professional institutions and 14 students were enrolled under Apprenticeship Training Scheme during 2011. Installation of water pumps alongside Rakh Canal for free supply of drinking water to the local community. Field visits were carried out to promote corn growing awareness in Sind area. Cost and energy savings measures like boiler waste heat recovery project, commission of cooling towers and gas consumption within NEQs limits were taken. Certification of both the plants for FSMS 22000 : 2005 was obtained in 2011. Safety slogan for 2011 was Safety Round the Clock. Safety month was observed in November. World Health Day, World No Tobacco Day, Earth Day, World Environmental Day, World Heart Day were observed during the year.
Dividend
The Company has already paid two interim dividends of 350% and 250%. The Directors now propose a final dividend of 650% making the total 1250% for the year.
Pattern of Shareholding
Pattern of Shareholding as on December 31, 2011 according to requirements of Code of Corporate Governance and a statement reflecting distribution of shareholding appears at the end of this report.
On behalf of the Board
Contribution to National Exchequer

Your Company has contributed Rs. 2,518 million (2010: Rs.1,773 million) during the year 2011 to the national exchequer on payments towards sales tax, income tax, import duties and statutory levies. An amount of Rs. 200 million (2010: Rs.129 million) was also paid as withholding income tax deducted by the Company from shareholders, employees, suppliers and contractors. February 14, 2012 Ansar Yahya Chief Executive and Managing Director
Corporate Social Responsibility

Your Company is fully aware of its responsibilities being a responsible corporate citizen. Detailed steps with figures have been mentioned in the Chief Executives Review. A few steps taken by the Company are being given below
29
Forward Looking Statements

serve, including, without limitation, the food and beverage, pharmaceuticals, paper, corrugated, textile and brewing industries; energy costs and availability, freight and shipping costs, and changes in regulatory controls regarding quotas, tariffs, duties, taxes and income tax rates; operating difficulties; boiler reliability; our ability to effectively integrate and operate acquired businesses, including National Starch; labor disputes; genetic and biotechnology issues; changing consumption preferences and trends; increased competitive and/ or customer pressure in the corn-refining industry; and the outbreak or continuation of serious communicable disease or hostilities including acts of terrorism. Our This Annual Report contains or may contain forward-looking statements. The Company intends these forward-looking statements to be covered by the safe harbor provisions for such statements. These statements include, among other things, any predictions regarding the Companys prospects or future financial condition, earnings, revenues, tax rates, capital expenditures, expenses or other financial items, any statements concerning the Companys prospects or future operations, including managements our expectations reflected in these forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement as a result of new information or future events or developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. forward-looking statements are based on reasonable assumptions, stockholders are cautioned that no assurance can be given that our expectations will prove correct. Actual results and developments may differ materially from the expectations expressed in or implied by these statements, based on various factors, including the effects of global economic conditions and their impact on our sales volumes and pricing of our products, our ability to collect our receivables from customers and our ability to raise funds at reasonable rates; fluctuations in worldwide markets for corn and other commodities, and the associated risks of hedging against such fluctuations; fluctuations in the markets and prices for our co-products, particularly corn oil; fluctuations in aggregate industry supply and market demand; the behavior of financial markets, including foreign currency fluctuations and fluctuations in interest and exchange rates; continued volatility and turmoil in the capital markets; the commercial and consumer credit environment; general political, economic, business, market and weather conditions in the various geographic regions and countries in which we manufacture and/ or sell our products; future financial performance of major industries which we
plans or strategies and objectives therefor and any assumptions, expectations or beliefs underlying the foregoing. These statements can sometimes be identified by the use of forward looking words such as may, will, should, anticipate, believe, plan, project, estimate, expect, forma, intend, forecast continue, or other pro similar
expressions or the negative thereof. All statements other than statements of historical facts in this report or referred to in or incorporated by reference into this report are forward-looking statements. These statements are based on current expectations, but are subject to certain inherent risks and uncertainties, many of which are difficult to predict and are beyond our control. Although we believe
Stakeholders Information
Performance Indicators for Six Years
Profit and Loss Account Net turnover Gross profit Operating profit Profit before tax Profit after tax Earnings before interest, taxes, depreciation and amortization (EBITDA) Balance Sheet Share capital Reserves Shareholders funds Property, plant and equipment Net current assets / (liabilities) Long term / deferred liabilities Total assets Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million 18,270.99 3,799.82 3,399.87 3,216.19 2,033.83 3,453.23 13,912.77 3,297.74 2,954.88 2,799.99 1,837.94 2,989.07 11,428.10 2,435.36 2,130.94 2,011.86 1,297.08 2,211.54 10,746.83 2,741.25 2,415.17 2,299.07 1,492.37 2,475.27 7,578.34 2,098.17 1,754.64 1,681.10 1,089.18 1,829.73 6,127.13 1,571.06 1,320.87 1,252.39 809.28 1,460.72
2011 2010 2009 2008 2007 2006
Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million Rs. Million
92.36 5,789.23 5,881.59 2,283.49 2,091.54 373.68 8,280.18
92.36 4,861.52 4,953.89 2,174.15 2,061.37 351.75 7,259.95
92.36 3,915.37 4,007.73 1,765.37 1,495.49 260.32 5,245.91
92.36 3,486.08 3,578.44 1,553.16 1,684.25 235.27 5,228.76
92.36 2,933.33 3,025.70 1,501.74 1,589.41 252.34 3,945.61
92.36 2,634.29 2,726.66 1,342.43 1,267.58 190.20 3,526.65

Profitability Ratios Gross profit ratio Net profit to sales EBITDA margin to sales Operating leverage Return on equity Return on capital employed Liquidity Ratios Current ratio Quick/ Acid test ratio Cash to current liabilities Cash flow from operations to sales Activity / Turnover Ratios Inventory turnover ratio No. of days in inventory Debtors turnover ratio No. of days in receivables Creditors turnover ratio No. of days in payables Total assets turnover ratio Fixed assets turnover ratio Operating cycle Investment / Market Ratios Earnings per share Price earning ratio Dividend yield ratio Dividend payout ratio Dividend cover ratio Cash dividend per share Stock Dividend (Bonus) per share Market value per share at the end of the year Market value per share during the year (High) Market value per share during the year (Low) Break-up value per share - Refer note below - Without surplus on revaluation of fixed assets - Including the effect of surplus on revaluation of fixed assets Capital Structure Ratios Times Times Times Times 2.03 0.37 0.03 0.13 2.05 0.30 0.02 0.02 2.53 1.05 0.69 0.25 2.19 0.29 0.01 0.07 3.38 1.01 0.46 0.13 3.08 0.89 0.39 0.19 Percentage Percentage Percentage Percentage Percentage Percentage 20.80 11.13 18.90 0.48 37.54 32.51 23.70 13.21 21.48 1.78 41.02 34.64 21.31 11.35 19.35 (1.86) 34.20 30.39 25.51 13.89 23.03 0.90 45.20 39.13 27.69 14.37 24.14 1.39 37.87 33.23 25.64 13.21 23.84 1.95 30.59 27.75
Times Days Times Days Times Days Times Times Days
4.29 85.08 33.97 10.74 10.68 34.18 2.21 8.00 63.92
3.09 118.12 36.91 9.89 9.58 38.10 1.92 6.40 61.31
6.23 58.59 36.24 10.07 12.25 29.80 2.18 6.47 63.89
2.98 122.48 31.28 11.67 10.45 34.93 2.06 6.92 77.78
3.47 105.19 23.08 15.81 9.30 39.25 1.92 5.05 73.43
3.41 107.04 22.97 15.89 8.24 44.30 1.74 4.56 85.11
Rupees Times Percentage Percentage Times Rupees Percentage Rupees Rupees Rupees Rupees Rupees
220.20 11.41 5.00 52.23 1.91 115.00 - 2,513.28 3,016.00 2,010.00 636.78 636.78
198.99 10.60 5.00 50.25 1.99 100.00 - 2,109.87 2,298.00 1,100.00 536.34 536.34
140.43 10.57 6.00 64.09 1.56 90.00 - 1,485.00 2,262.35 1,286.87 433.91 433.91
161.57 14.74 4.00 61.89 1.62 100.00 - 2,381.42 2,940.00 2,300.00 387.43 387.43
117.92 19.12 4.00 76.32 1.31 90.00 - 2,255.00 2,415.00 945.00 327.58 327.58
87.62 10.27 8.00 79.89 1.25 70.00 900.00 918.00 700.00 295.21 295.21
Financial leverage ratio Times 0.07 0.13 - Weighted average cost of debt Percentage 13.88 13.35 13.73 Debt : Equity ratio Times - - - Interest cover Times 56.70 89.75 42.26 Note: The Company has not carried out any revaluation, hence there is no surplus on revaluation of fixed assets.
0.14 12.66 - 64.65
- 8.91 - 143.38
9.28 62.38
31
Summary of Cash Flow Statement

Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Opening cash and cash equivalents Effect of exchange rate fluctuations Closing cash and cash equivalents 63,026 39,741 673,409 13,730 305,420 236,295 (2,602) (146) 475 420 6 (42) 39,741 673,409 13,730 305,420 236,295 14,484 (1,298,041) 25,887 (288,480) (633,522) (1,324,451) 659,204 (429,291) (292,110) (831,423) 69,119 (837,449) 221,853 (1,116,204) (577,499) (846,392) (604,368) (111,239) (119,926) 2,440,132 232,457 2011 2010 2009 2008 2007 2006 (Rupees in Thousand) 2,830,047 741,549 1,011,781 1,179,228
Statement of Value Added and its Distribution

2011 2010 (Rupees in thousand) VALUE ADDED Net sales Material and services Other income DISTRIBUTION EMPLOYEES AS REMUNERATION Salaries, wages and amenities FINANCIAL CHARGES TO PROVIDERS OF FINANCE Finance Cost GOVERNMENT AS TAXES Tax Workers profit participation fund Workers welfare fund SHAREHOLDERS AS DIVIDEND Cash dividend 1,062,189 23.8 923,643 23.9 1,182,362 172,411 59,540 1,414,313 26.5 3.9 1.3 31.7 962,052 150,198 56,245 1,168,495 24.9 3.9 1.5 30.3 57,740 1.3 31,548 0.8 769,347 17.3 661,374 17.1 % % 18,270,994 (13,919,975) 106,011 4,457,030 13,912,769 (10,137,486) 83,104 3,858,387
SOCIETY WELFARE Donations RETAINED WITHIN THE BUSINESS Depreciation/amortization Retained profit 179,302 971,639 1,150,941 4,457,030 4.0 21.8 25.8 100 157,533 914,294 1,071,827 3,858,387 4.2 23.7 27.9 100 2,500 0.1 1,500 -
33
Review Report to the Members
on Statement of Compliance with the Best Practices of Code of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of Rafhan Maize Products Company Limited (the Company) to comply with the Listing Regulations of Karachi and Lahore Stock Exchanges. 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 Companys compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code. As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out
any special review of the internal control system to enable us to express an opinion as to whether the Boards statement on internal control covers all controls and the effectiveness of such internal controls.
We have not carried out any procedures to determine whether the related party transactions were under taken at arms length price. Based on our review nothing has come to
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 Director for their consideration and approval of related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arms length transactions and transactions which are not executed at arms 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.
our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Companys 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 31 December 2011.
Lahore
KPMG Taseer Hadi & Co. Chartered Accountants (Bilal Ali)
February 14, 2012
Statement of Compliance
with the Code of Corporate Governance -Year ended December 31, 2011
This statement is being presented to comply with the Code of Corporate Governance contained in Listing Regulation No.35 of Karachi Stock Exchange (Guarantee) Limited and Chapter XI of Lahore Stock Exchange (Guarantee) Limited for the purpose of establishing a framework of good governance, whereby the 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. At present, the ten members Board includes eight non-executive directors out of which three are independent non-executive directors who also represent minority shareholders. 2. The directors of the Company have confirmed that none of them is serving as a director in more than ten listed companies, including this Company. 3. All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company. None of our directors is a member of Stock Exchange. 4. Two casual vacancies occurred in the Board during the year under review were filled up within 30 days of its occurrence. 5. The Company has prepared a Statement of Ethics and Business Practices, which has been signed by all the directors and employees of the Company. 6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies along with the dates on which those were approved or amended has been maintained. 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors, have been taken by the Board. 8. The meetings of the Board were presided over by the Chairman, and in his absence, by the Vice Chairman, and in their 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 within stipulated time. 9. The Directors of the Board were apprised of their duties and responsibilities from time to time during Board meetings. In accordance with mandatory requirement of SECP and Stock Exchanges, one Director got certification under The Board Development Series program offered by Pakistan Institute of Corporate Governance. 10. The Board approves appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment, as determined by the CEO. However, there was no new appointment against these posts during the year. 11. The directors report for the year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board. 13. The CEO, directors 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 comprising of three non-executive directors as members including the chairman of the committee. 16. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance. The related party transactions were placed before the audit committee and approved by the board of directors. All transactions were made at arms length basis under Comparable Uncontrolled Price Method. 17. The related party transactions have been placed before the audit committee and approved by the board of directors to comply with the requirements of Listing Regulations of Karachi and Lahore Stock Exchanges. 18. The Board has set-up an effective internal audit function. The Internal Auditor is suitably qualified and experienced for the purpose and is conversant with the policies and procedures of the Company. The Internal Auditor is involved in internal audit function on a full time basis. 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 Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan. 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. We confirm that all other material principles contained in the Code have been complied with.
On behalf of the Board
February 14, 2012
Ansar Yahya Chief Executive and Managing Director
35
Auditors Report to the Members

We have audited the annexed balance sheet of Rafhan Maize Products Co. Ltd. (the company) as at 31 December 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 purposes of our audit. It is the responsibility of the Companys 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 auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that: a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984; b) in our opinion: i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; ii) the expenditure incurred during the year was for the purpose of the Companys 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 Lahore February 14, 2012 KPMG Taseer Hadi & Co. Chartered Accountants (Bilal Ali) 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 Companys affairs as at 31 December 2011 and of the profit, its 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 the Central Zakat Fund established under section 7 of that Ordinance.
Balance Sheet
As at 31 December 2011
Note 2011 2010 ( Rupees in thousands)
NON CURRENT ASSETS Property, plant and equipment Intangible assets Capital work in progress Employees retirement benefits Long term loans - secured 5 6 7 8 9 2,283,486 23,415 1,811,331 43,362 2,139 4,163,733 365,115 3,005,990 537,810 70,878 65,095 8,531 63,026 4,116,445 1,355,244 11,458 397,902 260,302 2,024,906 2,091,539 6,255,272 2,174,145 29,392 973,017 64,800 2,920 3,244,274 310,521 3,125,746 376,923 124,966 25,522 12,254 39,741 4,015,673 1,108,503 8,298 634,460 203,047 1,954,308 2,061,365 5,305,639
Current assets Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Cash and bank balances 10 11 12 13 14 15 16
Current liabilities Trade and other payables Short term running finances - secured 17 18 Mark up accrued on short term running finances Provision for taxation
Working capital Total capital employed NON CURRENT LIABILITIES NET CAPITAL EMPLOYED The annexed notes 1 to 39 form an integral part of these financial statements. Deferred taxation 19
373,682
351,754
5,881,590
4,953,885
Anis Ahmad Khan Director
Ansar Yahya Chief Executive & Managing Director
Zulfikar Mannoo Director
37
Note 2011
2010
( Rupees in thousands)
Represented by: Share capital and reserves Share capital Reserves Contingencies and commitments 22 20 21 92,364 5,789,226 92,364 4,861,521
5,881,590
4,953,885
Profit and Loss Account

for the year ended 31 December 2011
Sales - net Cost of sales Distribution cost Administrative expenses
23 24
18,270,994 (14,471,176) 3,799,818 (146,109) (253,839) (399,948) 3,399,870 106,011 3,505,881 (57,740) (231,951) (289,691) 3,216,190 (1,182,362) 2,033,828
13,912,769 (10,615,033) 3,297,736 (131,768) (211,092) (342,860) 2,954,876 83,104 3,037,980 (31,548) (206,443) (237,991) 2,799,989 (962,052) 1,837,937
Gross profit 25 26
Operating profit Other operating income 27 Finance cost Other operating expenses 28 29
Profit before taxation Taxation Earnings per share - Basic and diluted (Rupees) The annexed notes 1 to 39 form an integral part of these financial statements. 31 30 Profit after taxation
220.20
198.99
39
Statement of Comprehensive Income

Profit for the year Other comprehensive Income Total comprehensive income for the year The annexed notes 1 to 39 form an integral part of these financial statements. Actuarial (loss) / gain of retirement benefits recognized directly in equity Deferred tax on actuarial gain / (loss) recognized directly in equity
2,033,828
1,837,937
(51,438) 7,504
49,016 (17,155)
1,989,894
1,869,798
Cash Flow Statement


Cash flows from operating activities Profit before tax Adjustment for non-cash charges and other items: Depreciation Amortization of intangible asset Provision for employees retirement benefits Provision for doubtful debts Provision for obsolete inventory Profit on sale of property, plant and equipment Interest income Finance cost Gain on foreign exchange transactions Markup capitalized Operating profit before working capital changes (Increase) / decrease in current assets: Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Increase / (decrease) in current liabilities: Trade and other payables Net decrease / (increase) in working capital Cash generated from operations Taxes paid Employees retirement benefits paid Interest received Finance cost paid Net cash generated from operating activities Cash flows from investment activities Capital expenditure incurred Sale proceeds from sale of property, plant and equipment Long term loans disbursed Repayment from long term loans Net cash used in investing activities Cash flows from financing activities Dividend paid Short term running finances - secured Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents Cash and cash equivalents at the end of the year 16 The annexed notes 1 to 39 form an integral part of these financial statements.
3,216,190 173,325 5,977 26,944 4,372 4,314 (4,040) (3,614) 57,740 2,602 38,999 3,522,809 (58,908) 119,756 (165,259) 54,132 (39,572) 3,723 (86,128) 246,035 159,907 3,682,716 (1,095,675) (56,944) 3,614 (93,579) (1,242,584) 2,440,132 (1,122,352) 5,411 (2,943) 3,680 (1,116,204)
2,799,989 157,026 507 23,438 2,471 8,210 (2,561) (6,685) 31,548 146 20,751 3,034,840 (40,759) (1,959,628) (64,029) (113,293) (3,295) (5,838) (2,186,842) 373,598 (1,813,244) 1,221,596 (919,784) (23,438) 6,685 (52,602) (989,139) 232,457 (581,897) 3,587 (1,500) 2,311 (577,499)
(1,061,483) (236,558) (1,298,041) 25,887 39,741 (2,602) 63,026
(922,940) 634,460 (288,480) (633,522) 673,409 (146) 39,741
41
Statement of Changes in Equity


Share Capital Reserves Revenue Reserves Unappropriated Total General profit Share capital premium Other
Balance as at 31 December 2009 Total comprehensive income for the year Transactions with owners of the Company, recognized directly in equity Final dividend 2009 @ Rs. 40 per share Ist interim dividend @ Rs. 35 per share 2nd interim dividend @ Rs. 25 per share Balance as at 31 December 2010 Total comprehensive income for the year Transactions with owners of the Company, recognized directly in equity Final dividend 2010 @ Rs. 55 per share Ist interim dividend @ Rs. 35 per share 2nd interim dividend @ Rs. 25 per share Balance as at 31 December 2011
92,364 - 92,364
36,946 - 36,946
941 - 941
207 - 207
3,877,272 1,869,798 5,747,070
4,007,730 1,869,798 5,877,528
- - - - 92,364 - 92,364
- - - - 36,946 - 36,946
- - - - 941 - 941
- - - - 207 - 207
(369,457) (323,275) (230,911) (923,643) 4,823,427 1,989,894 6,813,321
(369,457) (323,275) (230,911) (923,643) 4,953,885 1,989,894 6,943,779
- - - - 92,364
- - - - 36,946
- - - - 941
- - - - 207
(508,003) (323,275) (230,911) (1,062,189) 5,751,132
(508,003) (323,275) (230,911) (1,062,189) 5,881,590
The annexed notes 1 to 39 form an integral part of these financial statements.
Notes to the Financial Statements

1 The Company and its operations Rafhan Maize Products Company Limited (the Company) is incorporated in Pakistan and is listed on the Karachi and Lahore Stock Exchanges. Corn Products International Inc. Chicago, U.S.A, holds majority shares of the Company. The registered office of the Company is located at Finlay House, I.I. Chundrigar Road, Karachi. The Company uses maize as the basic raw material to manufacture and sell a number of industrial products, principal ones being industrial starches, liquid glucose, dextrose, dextrin and gluten meals. Basis of preparation 2.1

Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standard Board and Islamic Financial Reporting Standards (IFAs) issued by the Institute of Chartered Accountants of Pakistan as are notified under the provisions of the Companies Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of Companies Ordinance, 1984 or the requirements of the said directives shall prevail.
2.2 Standards and amendments to published approved International Financial Reporting Standards not yet effective

The following standards, amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after 01 January 2012. These standards are either not relevant to the Companys operations or are not expected to have a significant impact on the Companys financial statements other then increase in disclosures in certain cases: Amendments to IAS 12 deferred tax on investment property (effective for annual periods beginning on or after 1 January 2012). The 2010 amendment provides an exception to the measurement principle in respect of investment property measured using the fair value model in accordance with IAS 40 Investment Property. The measurement of deferred tax assets and liabilities, in this limited circumstance, is based on a reputtable presumption that the carrying amount of the investment property will be recovered entirely through sale. The presumption can be rebutted only if the investment property is depreciable and held within a business model whose objective is to consume substantially all of the assets economic benefits over the life of the asset. The amendment has no impact on financial statements of the Company. IAS 27 Separate Financial Statements (2011) - (effective for annual periods beginning on or after 1 January 2013). IAS 27 (2011) supersedes IAS 27 (2008). Three new standards IFRS 10 - Consolidated Financial Statements, IFRS 11- Joint Arrangements and IFRS 12- Disclosure of Interest in Other Entities dealing with IAS 27 would be applicable effective 1 January 2013. IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate financial statements, with some minor clarifications. The amendments have no impact on financial statements of the Company. IAS 28 Investments in Associates and Joint Ventures (2011) - (effective for annual periods beginning on or after 1 January 2013). IAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011) makes the amendments to apply IFRS 5 to an investment, or a portion of an investment, in an associate or a joint venture that meets the criteria to be classified as held for sale; and on cessation of significant influence or joint control, even if an investment in an associate becomes an investment in a joint venture. The amendments have no impact on financial statements of the Company. IAS 19 Employee Benefits (amended 2011) - (effective for annual periods beginning on or after 1 January 2013). The amended IAS 19 includes the amendments that require actuarial gains and losses to be recognized immediately in other comprehensive income; this change will remove the corridor method and eliminate the ability for entities to recognize all changes in the defined benefit obligation and in plan assets in profit or loss, which currently is allowed under IAS 19; and that the expected return on plan assets recognized in profit or loss is calculated based on the rate used to discount the defined benefit obligation. The actuarial gains / losses are already being charged to other comprehensive income. Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) - (effective for annual periods beginning on or after 1 July 2012). The amendments require that an entity present separately the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss. The amendments do not address which items are presented in other comprehensive income or which items need to be reclassified. The requirements of other IFRSs continue to apply in this regard. The amendments have no impact on financial statements of the Company. Disclosures Transfers of Financial Assets (Amendments to IFRS 7) - (effective for annual periods beginning on or after 1 July 2011). The amendments introduce new disclosure requirements about transfers of financial assets, including disclosures for financial assets that are not derecognized in their entirety; and financial assets that are derecognized in their entirety but for which the entity retains continuing involvement. The amendments have no impact on financial statements of the Company.
43

Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (effective for annual periods beginning on or after 1 January 2014). The amendments address inconsistencies in current practice when applying the offsetting criteria in IAS 32 Financial Instruments: Presentation. The amendments clarify the meaning of currently has a legally enforceable right of set-off; and that some gross settlement systems may be considered equivalent to net settlement. Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) (effective for annual periods beginning on or after 1 January 2013). The amendments to IFRS 7 contain new disclosure requirements for financial assets and liabilities that are offset in the statement of financial position or subject to master netting agreement or similar arrangement. The amendments have no impact on financial statements of the Company. IFRIC 20 - Stripping cost in the production phase of a surface mining (effective for annual periods beginning on or after 1 January 2013). The interpretation requires production stripping cost in a surface mine to be capitalized if certain criteria are met. The amendments have no impact on financial statements of the Company.
Basis of measurement These financial statements have been prepared under the historical cost convention, except for recognition of certain employees retirement benefits at present value. Summary of significant accounting policies 4.1 4.2 Trade debts Trade debts are carried at original invoice amount less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified. Revenue recognition Sale of goods Revenue represents the fair value of the consideration received or receivable for goods sold, net of discounts and sales tax. Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of revenue, and the associated cost incurred, or to be incurred, can be measured reliably. Revenue from sales is recognized upon transfer of significant risks and rewards of ownership of the goods to buyers i.e. dispatch of goods to customers. Interest Income from bank deposits and loans is recognized on accrual basis.
4.3 Taxation

Income tax expense comprises current and deferred tax. Income tax is recognized in profit and loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted after taking into account tax credits, rebates and exemptions, if any. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years.
Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary 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 are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax assets and liabilities are calculated at the rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except in the case of items credited or charged to equity in which case it is included in equity.

4.4 Earning per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the 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. Operating segments The financial statements have been prepared on the basis of a single reportable segment. 96.83% (2010: 96.46%) out of total sales of the Company relates to customers in Pakistan. All non current assets of the Company as at 31 December 2011 are located in Pakistan. Property, plant and equipment Property, plant and equipment except freehold land are stated at cost less accumulated depreciation and any identified impairment loss. Freehold land is stated at cost less any identified impairment loss. Cost in relation to certain property, plant and equipment signifies historical cost and borrowing costs as referred to in note 4.16. Depreciation on property, plant and equipment is provided on a straight-line-basis. Rates of depreciation, which are disclosed in note 5, are designed to write off the cost over the estimated useful lives of the assets. Depreciation methods, residual values and useful lives of the assets are reviewed at least at each financial year end and adjusted if impact on depreciation is significant. Depreciation on additions to property, plant and equipment is charged from the month in which the asset is acquired or capitalized, while no depreciation is charged for the month in which the asset is disposed off. The Company assesses at each balance sheet date whether there is any indication that property, plant and equipment may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in income currently. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. Where an impairment loss is recognized, the depreciation charge is adjusted in the future periods to allocate the assets revised carrying amount over its estimated useful life. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to income during the period in which they are incurred. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense. Intangible assets The Company reviews the rate of amortization and value of intangible assets for possible impairment on an annual basis. Any change in the estimates in future years might affect the carrying amounts of intangible assets with a corresponding affect on the amortization charge and impairment. Capital work-in-progress Capital work in progress and stores held for capital expenditure are stated at cost less any identified impairment loss and represents expenditure incurred on property, plant and equipment during the construction and installation. Cost also includes applicable borrowing costs. Transfers are made to relevant property, plant and equipment category as and when assets are available for use. Retirement and termination benefits Defined contributions scheme The Company operates a defined contribution approved provident fund for all its eligible employees, in which the Company and the employees make equal monthly contributions at the rate of 14% of basic salary including dearness allowance of employees.
4.5 4.6
4.7
4.8

4.9
45

Defined benefits schemes The Company also maintains an approved gratuity fund for all its employees and an approved pension fund for officers and above-grade employees, having a service period of minimum 10 years. The contributions are made to pension and gratuity funds in accordance with the actuarys recommendations based on the actuarial valuation of these funds as at 31 December 2011. The future contribution rates of these funds include allowances for deficit and surplus. Projected unit credit method is used for valuation of these funds based on the following significant assumptions:
Gratuity Fund 2011 2010
Pension Fund 2011 2010
Discount rate 13.50% 14.50% 13.50% 14.50% Expected return on plan assets 13.00% 13.50% 13.00% 13.50% Contribution rates (% of basic salaries) 8% 6% 13% 16% Annual increase in pension rate - - 5% 5% Expected rate of growth per annum in future salaries 13.50% 14.50% 13.50% 14.50% The actuarial gains and losses are recognized in the period in which they occur directly in shareholders equity and presented in the statement of comprehensive income. 4.10 Compensated absences The Company accounts for compensated absences on the basis of unavailed earned leave balance of each employee at the end of the year.
4.11 Stores and spares These are valued at lower of cost, which is calculated according to moving average method, and net realizable value. Stores in transit are valued at invoice value including other charges, if any, incurred thereon.
4.12 Stocks in trade

Stocks in trade have been valued at the lower of cost and net realizable value. Net realizable value signifies the estimated selling price in the ordinary course of the business less estimated costs to complete and to make the sale. Cost has been determined as follows: Raw materials Moving average cost Work in process Moving average cost Finished goods Moving average cost
4.13 Research and development cost

Research and development costs are charged to profit and loss account in the year in which these are incurred. 4.14 Foreign currencies All monetary assets and liabilities in foreign currencies are translated into rupees at exchange rates prevailing at the balance sheet date. Transactions in foreign currencies are translated into rupees at exchange rates prevailing at the date of transaction. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated into rupees at exchange rates prevailing at the date of transaction. Non-monetary assets and liabilities denominated in foreign currency that are stated at fair value are translated into rupees at exchange rates prevailing at the date when fair values are determined. Exchange gains and losses are included in the income currently.
4.15 Cash and cash equivalents For the purpose of cash flow statement, cash and cash equivalents comprise of cheques in hand, cash and bank balances.

4.16 Borrowing costs Borrowing costs incurred on related property, plant and equipment are capitalized till the date of commissioning. All other borrowing costs are included in the profit and loss of the period on an accrual basis.
4.17 Provisions Provisions are recognized when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. However, provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.
4.18 Financial assets and liabilities

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively. These financial assets and liabilities are subsequently measured at fair value, amortized cost or cost, as the case may be. The particular measurement methods adopted are disclosed in the individual policy statements associated with each item.
4.19 Off-setting of financial assets and financial liabilities

A financial asset and a financial liability is offset and the net amount is reported in the balance sheet if the Company has a legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
4.20 Trade and other payables Financial liabilities are initially recognized at fair value plus directly attributable cost, if any, and subsequently at amortized cost using effective interest rate method. Other amounts payable are carried at cost which is the fair value of the consideration to be paid in future for goods and services.
4.21 Impairment losses Financial assets A financial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on the estimated future cash flow of that asset. An impairment loss in respect of a financial asset measured at amortized cost is calculated as a difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.
Individually significant financial assets are tested for impairment on a individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. Non financial assets The carrying amounts of the Companys non-financial assets, other than biological assets, investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in profit and loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets of the unit on a pro-rata basis.
47

4.22 Derivative financial instruments These are initially recorded at fair value on the date a derivative contract is entered into and are re-measured to fair value at subsequent reporting dates. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as cash flow hedges. The Company documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items. Derivatives are carried as assets when fair value is positive and liabilities when the fair value is negative. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the profit and loss account. Amounts accumulated in equity are recognized in profit and loss account in the periods when the hedging items will effect profit or loss. However, when the forecast hedged transaction results in the recognition of a non-financial asset or a liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability. Any gain or loss from change in fair value of derivatives that do not qualify for hedge accounting are taken directly to profit and loss account.
4.23 Related party transactions Transactions with related parties are priced at comparable uncontrolled market price except for the assets sold to employees under the employees car scheme as approved by the board of directors. Parties are said to be related if they are able to influence the operating and financial decisions of the Company and vice versa.
4.24 Dividends Dividend distribution to the shareholders is recognized as a liability in the period in which it is approved by the shareholders.

5 Property, plant and equipment

COST DEPRECIATION Book value As at As at As at As at as at 01 January 31 December 01 January On Charge for 31 December 31 December 2011 Additions Disposals 2011 2011 disposals the year 2011 2011 Rate (Rupees in thousands) %
Free-hold land Factory building on free-hold land Furniture, fixture and office equipment
352,187 747,294 2,782,836
30,751 225,383 7,566 20,338 284,038
(1,139) (9,130) (10,269)
352,187 778,045
449,340
(1,048) (7,849) (8,897)
53,796 99,741 6,132 13,656 173,325
- 503,136
352,187 274,909 10 5 20 20
Plant, machinery and equipment
3,008,219 1,308,994 65,886 96,772 40,554 54,307
1,408,735 1,599,484 45,638 60,114 20,248 36,658
59,459 85,564 4,027,340
Automobiles 2011
4,301,109 1,853,195
2,017,623 2,283,486
COST DEPRECIATION Book value As at As at As at As at as at 01 January 31 December 01 January On Charge for 31 December 31 December 2010 Additions Disposals 2010 2010 disposals the year 2010 2010 Rate (Rupees in thousands) %
Free-hold land Factory building on free-hold land Plant, machinery and equipment Furniture, fixture and office equipment Automobiles 2010
265,322 711,557 2,365,659 49,941 82,973 3,475,452
86,865 35,737 425,892 9,519 8,819 566,832
(8,715) (1) (6,228) (14,944)
352,187 747,294
393,905
(8,715) (1) (5,202) (13,918)
55,435 84,392 4,921 12,278 157,026
449,340
352,187 297,954 10 5 20 20
2,782,836 1,233,317 59,459 85,564 35,634 47,231
1,308,994 1,473,842 40,554 54,307 18,905 31,257
4,027,340 1,710,087
1,853,195 2,174,145
5.1
The cost of fully depreciated assets which are still in use is Rs. (thousands) 774,109 (2010: Rs. (thousands) 689,858). Note 2011 2010
5.2
Depreciation charge for the year has been allocated as follows: Cost of sales Distribution cost Administrative expenses 24 25 26 161,098 5,631 6,596 173,325 145,768 4,859 6,399 157,026
5.3 Disposal of property, plant and equipment
Description Sold to Cost
Book Sale value Proceeds Profit Mode of disposal (Rupees in thousands)

279 Claim
Automobile

Jubilee General Insurance Company Limited 3rd Floor, Jubilee Insurance House, I. I. Chundrigar Road, Karachi. Iftikhar Anwar Khan H. No., 12/27/1 Saifi Market Model Colony, Karachi. Irfan Ahmed Bhatti H. No. P-258 Kashmir Road, Khayaban No. 2, Faisalabad.
1,289
1,010
1,289
969
97
194
97
Company policy
984 3,242
163 1,270
196 1,679
33 409
Company policy
Above represents sale of assets with book value of more than Rs. (thousand) 50.
49


2011
2010
Intangible assets
SAP computer software and implementation
Cost
As at 01 January Additions As at 31 December Amortization As at 01 January Charge for the year As at 31 December Book value as at 31December Rate of amortization
7 Capital work in progress

29,899 - 29,899
29,899 29,899
507 5,977 6,484 23,415 20%
507 507 29,392 20%
Cornwala/ Plant Mehran expansion projects projects Others

( Rupees in thousands )
2011 2010
Civil works and buildings Plant and machinery Advance for land - note 7.2 2011 2010 7.1
738,433 1,042,796 1,781,229 959,390
23,288 23,288 6,813
6,814 6,814 6,814
738,433 1,066,084 6,814 1,811,331
306,342 659,861 6,814 973,017
Cornwala/Mehran projects includes markup amounting to Rs. (thousands) 38,999 (2010: Rs. (thousands) 20,751) capitalized during the year at the rate ranging from 12.42% to 15.15% per annum (2010: 12.63% to 14.84%).
7.2 This represents full payment of Rs. (thousands) 1,814 (2010: Rs. (thousands) 1,814) and legal cost incurred Rs. (thousands) 5,000 (2010: Rs. (thousands) 5,000) for the Companys factory land in Faisalabad which was acquired from the government in 1953 but registration of title is still pending in the name of Company.

Note
2011
2010
Employees retirement benefits Gratuity Pension 8.1 8.1 78,098 (34,736) 43,362 92,030 (27,230) 64,800

8.1
Net assets/(liabilities) at the beginning of the year Expenses recognized Contribution paid Actuarial (loss) / gain recognized Net assets/(liabilities) at the end of the year 8.2 The amounts recognized in the profit and loss account are as follows:
Movements in the net assets/(liabilities) recognized in the balance sheet are as follows: Gratuity 2011 2010 Pension 2011 2010
92,030 (13,077) 13,077 (13,932) 78,098
83,988 (8,043) 8,043 8,042 92,030
(27,230) (13,867) 43,867 (37,506) (34,736)
(68,204) (15,395) 15,395 40,974 (27,230)
Current service cost Interest cost Expected return on plan assets 8.3 The amounts recognized in the balance sheet are as follows: 8.4 Present value of the obligation Fair value of plan assets Net asset/(liability) Movement in present value of defined benefit obligation Present value of defined benefit obligation as at the beginning of the year Current service cost Interest cost Actual benefits paid during the period Actuarial loss / (gain) on obligation. Present value of defined benefit obligation as at the end of the year 8.5 Movement in fair value of plan assets Fair value of plan asset as at the beginning of the year Expected return on assets Actual contribution by the employer Actual paid during the year Actuarial loss on plan asset Fair value of plan asset as at the end of the year 8.6 Actual return on plan assets
20,803 59,982 (67,708) 13,077
19,185 48,341 (59,483) 8,043
7,435 46,251 (39,819) 13,867
7,852 42,482 (34,939) 15,395
(491,586) 569,684 78,098
(415,553) 507,583 92,030
(390,523) 355,787 (34,736)
(325,703) 298,473 (27,230)
415,553 20,803 59,982 (14,428) 9,676 491,586
380,565 19,185 48,341 (23,257) (9,281) 415,553
325,703 7,435 46,251 (21,681) 32,815 390,523
339,240 7,852 42,482 (19,986) (43,885) 325,703
507,583 67,708 13,077 (14,428) (4,256) 569,684
464,553 59,483 8,043 (23,257) (1,239) 507,583
298,473 39,819 43,867 (21,681) (4,691) 355,787
271,036 34,939 15,395 (19,986) (2,911) 298,473
Expected return on plan assets Actuarial loss on plan assets
67,708 (4,256) 63,452
59,483 (1,239) 58,244
39,819 (4,691) 35,128
34,939 (2,911) 32,028
51

8.7 Plan assets consist of the following Debt instruments Cash and other deposits 8.8 Historical information-gratuity 8.9

(Percentage) (Percentage) 2011 2010 2011 2010 99% 1% 79% 21% 98% 2% 77% 23%
2011
2010 2009 2008 2007 (Rupees in thousands)
Present value of defined benefit obligation Fair value of plan assets Surplus in the plan Experience adjustment arising on plan liabilities Experience adjustment arising on plan assets Historical information-pension Present value of defined benefit obligation Fair value of plan assets Surplus/(deficit) in the plan Experience adjustment arising on plan liabilities Experience adjustment arising on plan assets
(491,586) 569,684 78,098
(415,553) 507,583 92,030
(380,565) 464,553 83,988
(492,403) 582,149 89,746
(416,871) 507,134 90,263
9,676
(9,281)
2,489
37,155
(408)
(4,256)
(1,239)
(3,269)
36,638
37,952
(390,523) 355,787 (34,736)
(325,703) 298,473 (27,230)
(339,240) 271,036 (68,204)
(260,636) 242,847 (17,789)
(205,827) 212,101 6,274
32,815
(43,885)
43,879
33,073
(13,183)
(4,691)
(2,911) Note
(6,536)
9,010
11,759 2010
2011
(Rupees in thousands)
Long term loans - secured considered good Staff loans outstanding for periods less than three years to: Executives 9.4 2,149 1,584 3,733 1,594 2,139 3,000 1,470 4,470 1,550 2,920 Other employees Less: Current maturity 13
9.1
Loans to other employees represent house building loans provided to employees in accordance with Companys policy and are repayable over a period of five years. These loans are secured against the employees provident fund. Loans to employees carry interest at the rate of approximately 8% per annum (2010: 8 % per annum). Maximum aggregate balance during the year, at the end of any month, of loans to executives was Rs. (thousands) 5,654 (2010: Rs. (thousands) 3,682). No loans were granted to the directors and chief executive of the Company.
9.2
9.3

Note 2011 2010
9.4 Loans to executives Opening balance Disbursement during the year Recoveries during the year Closing balance 10 Stores and spares Stores Spares Less: Provision for slow moving and obsolete items 10.1 Stores in transit 10.1 Provision for slow moving and obsolete items 11 Stock in Opening balance Provision for the year Closing balance trade
3,000 2,100 (2,951) 2,149
3,073 1,500 (1,573) 3,000
287,758 118,051 405,809 (47,122) 358,687 6,428 365,115
223,568 116,765 340,333 (42,808) 297,525 12,996 310,521
42,808 4,314 47,122
34,598 8,210 42,808
Raw materials - corn & cobs Work in process Finished goods 12 Trade debts Secured - against security deposits and bank guarantees Unsecured - considered good Related parties Others Considered doubtful Less: Provision for doubtful balances 12.1 12.1 Provision for doubtful balances Opening balance Provision for the year Closing balance
2,010,467 68,178 927,345 3,005,990
2,333,955 51,816 739,975 3,125,746
416,682 63,119 58,009 121,128 18,271 139,399 (18,271) 121,128 537,810
280,414 19,926 76,583 96,509 13,899 110,408 (13,899) 96,509 376,923
13
13,899 4,372 18,271
11,428 2,471 13,899
Loans and advances Loans and advances - considered good Suppliers of goods and services Employees 13.1 Current maturity of long term loans 9 13.1 65,353 3,931 1,594 70,878 118,585 4,831 1,550 124,966
No advances were given to executives, directors and chief executive of the Company during the year.
53


Note
2011
2010
14 15
Trade deposits and short term prepayments Security Deposits Prepayments L/C margin Other receivables 3,569 1,675 5,244 (1,675) 3,569 1,753 3,189 20 8,531 9,485 1,675 11,160 (1,675) 9,485 1,574 1,195 12,254 22,648 42,447 - 65,095 12,727 11,794 1,001 25,522
Other receivables - Farmers balances Considered good Considered doubtful Less: Provision for doubtful balances 15.1 Due from related parties Workers profit participation fund 15.2 Others 15.1 Provision for doubtful balances Opening balance Provision for the year Closing balance 15.2 Workers profit participation fund Opening balance Provision for the year 29 Payment to the fund Closing balance
1,675 - 1,675
1,675 1,675
(198) (172,411) 175,798 3,189
428 (150,198) 149,572 (198)
16
Cash and bank balances 1,516 17,134 18,650 19,957 1,134 21,091 39,741
Cash at banks - on current accounts 568 - on PLS accounts 16.1 424 992 Cheques in hand 57,593 Cash in hand 4,441 62,034 63,026 16.1 These carry profit at rates ranging from 5% to 8.25% per annum (2010: 5% to 11.5% per annum).


Note
2011
2010
17
Trade and other payables 367,045 153,469 417,195 977 331,746 65,795 - 6,410 7,540 - 5,067 1,355,244 328,796 140,386 299,713 855 244,536 57,075 198 6,588 22,441 3,554 4,361 1,108,503
Creditors Advances from customers Security deposits from dealers and contractors 17.1 Other deposits 17.2 Accrued liabilities Workers welfare fund 28 Workers profit participation fund 15.2 Employees provident fund Sales tax payable Special excise duty payable Unclaimed dividend
17.1
18 17.2
As per the terms of agreement between dealers and contractors, the Company can utilize these deposits in the normal course of business. These represent deposits held against tenders for the sale of scrap.
Short term running finance - secured
18.1
18.2
The aggregate financing facility available from commercial banks is Rs. (thousands) 3,000,000 (2010: Rs. (thousands) 3,000,000). The rate of markup ranges from 12.42% to 15.12% per annum (2010: 12.63% to 14.84% per annum). These facili ties are secured by joint pari passu hypothecation charge on current assets of the Company and are subject to repricing on monthly/quarterly basis.
18.3 The unutilized facility for letters of credit as on 31 December 2011 amounts to Rs. (thousands) 567,557 (2010: Rs. (thousands) 648,622). 19 Deferred taxation 2011 2010
The details of the tax effect of taxable and deductible temporary differences are as follows:

Taxable temporary difference on: Accelerated tax depreciation Employees retirement benefits Deductible temporary difference on: Others (24,218) 373,682 (21,721) 351,754 382,724 15,176 397,900 350,795 22,680 373,475
55

2011 Charged to
Charged to Other Opening Profit and comprehensive loss income
Closing

19.1 Taxable temporary difference Accelerated tax depreciation Employees retirement benefits Deductible temporary difference Others (21,721) 351,754 350,795 22,680
(Rupees in thousand)
31,929 (2,497) 29,432
(7,504) (7,504)
382,724 15,176 (24,218) 373,682
2010 Charged to
Charged to Other Opening Profit and comprehensive loss income
Closing

Taxable temporary difference Accelerated tax depreciation Employees retirement benefits Deductible temporary difference Others (17,163) 260,321 271,959 5,525
(Rupees in thousand)
78,836 (4,558) 74,278
17,155 17,155
350,795 22,680 (21,721) 351,754
20 Authorized, issued, subscribed and paid up capital Authorized share capital Ordinary shares of Rs.10 each
2011 2010 2011 2010 (Number of shares) (Rupees in thousands)
20,000,000
20,000,000
200,000
200,000
20.1
Issued, subscribed and paid up capital fully paid up for cash Issued other than cash - plant and machinery Issued as fully paid bonus shares 36,294 7,341,143 9,236,428 36,294 7,341,143 9,236,428 363 73,411 92,364 363 73,411 92,364 1,858,991 1,858,991 18,590 18,590
Ordinary shares of Rs. 10 each
20.2 December 2011.
Corn Products International Inc., USA holds 6,494,243 (2010: 6,494,243) ordinary shares of Rs. 10 each as at 31


Note
2011
2010
21 Reserves Capital Share premium Other 21.1 21.2 36,946 941 37,887 36,946 941 37,887
Revenue General reserve Unappropriated Profit
207 5,751,132 5,751,339 5,789,226
207 4,823,427 4,823,634 4,861,521
22 21.2 21.1
This reserve can be utilized in accordance with the provision of section 83(2) of the Companies Ordinance, 1984. This reserve was created under section 15BB of the Income Tax Act, 1922 to avail the tax exemption in prior years.
Contingencies and commitments a) Certain labour cases are pending before the labour courts and their financial effect cannot be reasonably determined due to their nature and uncertainty surrounding them. The possibility of any outflow for settlement of these claims is considered remote. Land registration fee as per Note 7.2. Commitments in respect of capital expenditure contracted but not provided amounts to Rs. (thousands) 709,703 (2010: Rs. (thousands) 476,247). Commitments in respect of purchase of corn amounts to Rs. (thousands) 3,813,776 (2010: Rs. (thousands) 3,488,519). Commitments in respect of counter guarantees given to banks in consideration of their guarantees in the normal course of business amount to Rs. (thousands) 141,950 (2010: Rs. (thousands) 120,370).
b) c)
d)
e)
2011 2010
23
Sales - net Domestic Export Less: Sales tax Special excise duty Trade discount and commission 18,903,859 619,591 19,523,450 1,183,807 54,880 13,769 1,252,456 18,270,994 14,120,519 518,656 14,639,175 674,803 42,022 9,581 726,406 13,912,769
57


Note 2011 2010

24
Cost of sales
Raw material consumed: Corn 10,304,970 7,744,004 Others (Purchased products) 883 Stores 259,004 263,587 Packing material 309,075 270,444 10,873,932 8,278,035 Factory expenses: Salaries, wages and amenities 24.1 545,957 469,325 Spares consumed 142,214 118,629 Fuel and power 2,515,123 1,667,190 Rent, rates and taxes 5,668 3,819 Repairs and maintenance 39,174 9,527 Depreciation 5.2 161,098 145,768 Insurance 7,809 10,942 Factory general expenses 383,933 193,998 3,800,976 2,619,198 14,674,908 10,897,233 Add: Opening work in process stock 51,816 34,715 14,726,724 10,931,948 Less: Closing work in process stock (68,178) (51,816) Cost of production 14,658,546 10,880,132 Add: Opening finished goods stock 739,975 474,876 15,398,521 11,355,008 Less: Closing finished goods stock (927,345) (739,975) 14,471,176 10,615,033 24.1 Salaries, wages and amenities include Rs. (thousands) 14,339 (2010: Rs. (thousands) 11,355) in respect of contribution to pension and gratuity fund and Rs. (thousands) 13,004 (2010: Rs. (thousands) 11,660) in respect of contributions to provident fund. Note 2011 2010
25 Distribution cost Salaries and amenities 25.1 50,993 44,803 Traveling and automobile expenses 9,307 6,950 Freight and distribution 68,719 66,019 Insurance 1,887 1,991 Rent, rates and taxes 1,167 1,113 Repair and maintenance 84 438 Electricity charges 574 113 Printing and stationery 324 379 Telephone and postage 1,585 1,713 Advertising and sales promotion 638 332 Depreciation 5.2 5,631 4,859 Market research and development 79 46 Provision for doubtful debts 12.1 4,372 2,471 Miscellaneous expenses 749 541 146,109 131,768 25.1 Salaries and amenities include Rs. (thousands) 3,061 (2010: Rs. (thousands) 2,780) in respect of contribution to pension and gratuity fund and Rs. (thousands) 1,911 (2010: Rs. (thousands) 1,951) in respect of contributions to provident fund.


Note
2011
2010
26
Administrative expenses
Salaries and amenities 26.1 Traveling and automobile expenses Insurance Rent, rates and taxes IT, networking and data communication Repair and maintenance Electricity charges Printing and stationery Telephone and postage Legal and professional charges Depreciation 5.2 Amortization on intangible assets 6 Auditors remuneration 26.2 Miscellaneous expenses Donation and charity 26.3
26.1
172,397 17,008 721 1,547 28,903 430 1,357 1,455 3,738 5,926 6,596 5,977 2,054 3,230 2,500 253,839
147,246 11,460 811 1,421 22,186 1,061 1,975 1,595 3,439 7,397 6,399 507 1,874 2,221 1,500 211,092
Salaries and amenities include Rs. (thousands) 9,545 (2010: Rs. (thousands) 9,303) in respect of contribution to pension and gratuity fund and Rs. (thousands) 6,931 (2010: Rs. (thousands) 5,891) in respect of contributions to provident fund. 2011 2010
26.2
Auditors remuneration 800 275 750 96 33 100 2,054 730 250 690 84 30 90 1,874
Statutory audit fee Review of half yearly accounts Services in connection with review and reporting of accounts to CPI Inc. Audit of gratuity and pension funds Miscellaneous certification Out of pocket expenses reimbursed
26.3
This represents donation to different associations and trusts. None of the Directors has any interest in the donee. 2011 2010
27
Other operating income Mark up on staff loans and profit on bank deposits Profit on sale of scrap Profit on sale of property, plant and equipment Profit on sale of pesticides and seeds Commission received Foreign exchange (loss)/gain Miscellaneous income 3,614 74,600 4,040 13,188 782 2,602 7,185 106,011 6,685 56,647 2,561 7,127 1,108 (146) 9,122 83,104
59


Note
2011
2010
28 29
Finance cost Mark up on short term running finances Bank charges and commission Other operating expenses Workers profit participation fund 15.2 172,411 59,540 231,951 150,198 56,245 206,443 Workers welfare fund 48,567 9,173 57,740 24,166 7,382 31,548
30 Taxation

Current Deferred 30.1
1,152,930 29,432 1,182,362
887,774 74,278 962,052
The Income Tax Department has charged tax of Rs. (thousands) 81,078 for the assessment year 2001-2002 (financial year ended 30 September 2000) under section 12(9A) of the Income Tax Ordinance, 1979 (Repealed) on the allegation that the dividend distribution by the Company was less than 40% of its after tax profits. Against this levy, the Company filed an appeal with the Commissioner of Income Tax (Appeals), which was rejected. The Company preferred an appeal with the Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals). The ITAT vide order dated 21 April 2006 decided the case in favor of the Company and confirmed that levy of tax under section 12(9A) was against the provisions of the law and directed the assessing officer for decision in accordance with the provisions of amended clause 59 of Part IV, Second Schedule to the repealed Income Tax Ordinance, 1979. The Income Tax Department has moved to Lahore High Court on 17 October 2006, against the orders of ITAT. The case has not been fixed for hearing so far. No provision has been made in these financial statements as according to the management of the Company, it is probable that this case will be decided in favour of the Company. The legal advisors of the Company have concurred with the managements view. 2011 2010 % %
30.2
Numerical reconciliation between average effective tax rate and applicable tax rate: Applicable tax rate Tax effect of inadmissible expenses Tax effect of admissible expenses Effect of presumptive tax regime and others Average effective tax rate (tax expense divided by profit before tax) 35.00 0.94 (0.29) 1.11 36.76 2011 35.00 0.54 (0.14) (1.04) 34.36 2010
31
Earnings per share - basic and diluted 31.1 Earning per share - Basic Profit attributable to ordinary shareholders Weighted average number of ordinary shares Earnings per share - basic Earning per share - Diluted There is no dilution effect on basic earnings per share as the Company has no such commitments. (Rupees in thousands) (Numbers) (Rupees) 2,033,828 9,236,428 220.20 1,837,937 9,236,428 198.99
31.2

32 Financial instruments The Companys financial liabilities mainly comprise trade and other payables and short term running finances. The main purpose of financial liabilities is to raise finance for the Companys financial assets which comprise long term loan, trade debts, Loans and advances, trade deposits and short term prepayments, other receivables and Cash and bank balances.
The company has exposure to the following risks from its use of financial instrumeants: - Credit risk - Liquidity risk - Market risk The Board of Directors has overall responsibility for the establishment and oversight of Companys risk management framework. The Board is also responsible for developing and monitoring the Companys risk management policies. 32.1 Credit risk Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail completely to perform as contracted and arise principally from long term loans, trade debts, loans and advances, trade deposits and short term prepayment and other receivables and cash and bank balances. Out of the total financial assets of Rs. 643,037 thousand (2010: Rs. 462,740 thousand) financial assets which are subject to credit risk amount to Rs. 582,036 thousand (2010: Rs. 442,783 thousand). To manage exposure to credit risk in respect of trade receivables, management performs credit reviews taking into account the customers financial position, past experience and other factors. Where considered necessary, advance payments are obtained from certain parties. Sales made to major customers are secured through security deposits, bank guarantees and letters of credit. To manage exposure to credit risk, the company applies credit limits to its customer and obtains advances from certain customers. All investing transactions are settled / paid for upon delivery. The Companys policy is to enter into financial instrument contract by following internal guidelines such as approving counterparties and approving credits. Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have similar economic features that would cause their abilities to meet contractual obligation to be similarly effected by the changes in economic, political or other conditions. The Company believes that it is not exposed to major concentration of credit risk. The carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximum exposure to credit risk at the reporting date is: 2011 2010
Long term loans 3,733 Trade debts 537,810 Loans and advances 3,931 Trade deposits and short term prepayments 22,648 Other receivables 8,531 Cash and bank balances 5,433 582,086 Secured 420,415 Unsecured 161,671 582,086 The company has placed its funds with banks which are rated A1+ by PACRA/JCR VIS The maximum exposure to credit risk for trade debts as at 31 December 2011 by geographic regions was: Domestic 491,754 Foreign 64,327 556,081
4,470 376,923 4,831 24,521 12,254 19,784 442,783 284,884 157,899 442,783
380,134 10,688 390,822
61

Past due 0 - 30 days Past due 31 - 60 days Past due 61 - 90 days Past due 366 & above 544,257 4,423 5,980 1,421 556,081 6,447 4,423 5,980 1,421 18,271 537,810 - - - 537,810 385,478 2,411 255 2,678 390,822 8,555 2,411 255 2,678 13,899 376,923 376,923 Gross debtors 2011 Provision Net debtors Gross debtors 2010 Provision Net debtors The aging of trade receivables at the reporting date is:
32.2 Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Companys approach to managing liquidity is to ensure as far as possible to always have sufficient liquidity to meet its liabilities when due. The Company is not materially exposed to liquidity risk as substantially all obligations / commitments of the Company are short term in nature and are restricted to the extent of available liquidity. In addition, the Company has obtained overdraft facilities from various commercial banks to meet any deficit, if required to meet the short term liquidity commitments. The table below summarizes the maturity profile of the Companys financial liabilities as at reporting date: 31 December 2011
More than 1 year
Carrying Contractual Less than 6 Between 6 amount cash flows months months to 12 months ( Rupees in thousands)
Financial Liabilities 1,201,775 1,201,775 717,808 11,458 12,948 12,948 397,902 397,902 397,902 1,611,135 1,612,625 1,128,658 483,967 483,967
Trade and other payables Mark up accrued on short term running finances Short term running finances - secured
31 December 2010
More than 1 year
Carrying Contractual Less than 6 Between 6 amount cash flows months months to 12 months ( Rupees in thousands)
Financial Liabilities 968,117 968,117 610,474 8,298 9,377 9,377 634,460 634,460 634,460 1,610,875 1,611,954 1,254,311 357,643 357,643
Trade and other payables Mark up accrued on short term running finances Short term running finances - secured 32.3 Market risk
Market risk is the risk that changes in market price, such as foreign exchange rates, interest rates and equity prices will effect the Companys income or the value of its holdings of financial instruments. 32.3.1 Currency risk goods mainly denominated in US dollars and on foreign currency bank accounts. The Companys exposure to foreign currency risk for US Dollars is as follows:
The Company is exposed to currency risk on import of project related and stores and spares items and export of


USD USD 2011 2010 715,105 100 715,205 - 715,205 124,795 100 124,895 (3,508) 121,387
Foreign debtors Foreign currency bank accounts Gross financial assets exposure Trade and other payables Net exposure
The following significant exchange rates have been applied: 2010 2011 2010 Reporting date rate 89.96 85.64 Average rate for the year 86.25 85.78
2011
USD to PKR
Sensitivity analysis:
At reporting date, if the PKR had strengthened by 10% against the foreign currencies with all other variables held constant, before tax profit for the year would have been lower by the amount shown below, mainly as a result of net foreign exchange gain on translation of foreign debtors, foreign currency bank account and trade and other payables. 2011 2010
Effect on profit and loss US Dollar 6,433 6,433 1,040 1,040
The weakening of the PKR against foreign currencies would have had an equal but opposite impact on the post tax loss. The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and assets / liabilities of the Company.
32.3.2 Interest rate risk At the reporting date the interest rate profile of the Companys significant interest bearing financial instruments was as follows:
2010 2011 2010 Carrying amount (Rupees in thousands)

2011 Effective rate (in Percentage)
Financial Assets Fixed rate instruments: Long term loans Variable rate instruments: 5 to 8.25 5 to 11.5 424 17,134 8 8 3,733 4,470
Cash and bank balances - saving Financial liabilities Variable rate instruments:
Short term borrowings 12.42 to 15.12
12.63 to 14.84
397,902
634,460
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 and loss. Therefore a change in interest rates at the reporting date would not affect profit and loss account.
63


Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have (decreased) / increased profit for the year by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2010. Profit and loss 100 bps Increase Decrease (Rupees in thousand) 486 242 (486) (242)
As at 31 December 2011 As at 31 December 2010
The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and assets / liabilities of the Company. 32.3.3 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 interest rate risk or currency risk). The company is not exposed to any price risk as there are no financial instruments at the reporting date that are sensitive to price fluctuations.
32.3.4 Fair value of financial instruments The carrying values of the financial assets and financial liabilities approximate their fair values. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms length transaction.
32.3.5 Capital risk management The Boards policy is to maintain an efficient capital base so as to maintain investor, creditor and market confidence and to sustain the future development of its business. The Board of Directors monitors the return on capital employed, which the Company defines as operating income divided by capital employed. The Board of Directors also monitors the level of dividends to ordinary shareholders. The Companys objectives when managing capital are: (i) to safeguard the entitys ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and to provide an adequate return to shareholders. The Company manages the capital structure in the context of economic conditions and risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may, for example, adjust the amount of dividends paid to shareholders and issue new shares. For working capital requirement and capital expenditure, the Company primarily relies substantially on short term borrowings.
(ii)

33

Remuneration of Chief Executive, paid Directors and Executives

Chief Executive & MD Director (Rupees in thousands) Executives
2011 2010 2011 2010 2011 2010
Managerial remuneration Rent, medical and other allowances Bonus and leave encashment Retirement benefits Club subscription Number
8,993 1,648 10,641 6,023 4,438 34
8,005 1,467 9,472 2,611 1,805 27
4,191 3,918 8,109 3,268 2,069 33
3,872 3,619 7,491 1,750 873 26
50,493 51,534 102,027 25,093 24,920 33
37,319 38,101 75,420 16,204 8,413 40
21,136 13,915 13,479 10,140 152,073 100,077 1 1 1 1 58 43
eeting fees aggregating to Rs. (thousands) 6 (2010: Rs (thousands) 9) were paid to 4 (2010: 4) non-executive directors for M attending board meetings. In addition Chief Executive & Managing Director, full time working director and some executives are also provided with Company maintained car. 34 Transactions with related parties and associates The related parties comprise parent company, related group companies, local associated company, directors of the company, key management personnel and staff retirement funds. Details of transactions with related parties, other than those disclosed else where in these financial statements are as follows:
2010 Total value of Closing

2011
Name of parties
Nature of relationship
Nature and description of related party transaction
Total value of transaction Closing
balance transaction balance (Rupees in thousands)

Unilever Pakistan Food Limited Corn Products International Corn Products Kenya Ltd. Corn Products Malaysia Corn Products Chilli National Starches Thailand National Starches Singapore Employees benefits Associate Holding company Associate Associate Associate Associate Associate Other related parties Sales Services received Export sales Export sales Imports Export sales Imports Contribution to funds 976,273 21,128 62,699 57,524 21,214 2 6,207 48,790 28,114 (5,447) 34,384 - - - - 36,952 798,858 - 12,528 97,334 - - - 42,940 15,455 4,471 58,212
The transactions were carried out at an arms length basis, in accordance with the accounting policy as stated in Note 4.23. No buying and selling commission has been paid to any associated undertaking.
65


2011
(Metric tons)
2010
35
Plant capacity and production Average grind capacity per day Grind capacity for 350 working days Actual days worked Actual grind The reduction in grind days/grind was attributable to acute energy crisis in the country. 1,516 530,600 303 458,409 1,408 492,683 303 425,528
36 Dividends The Board of Directors have proposed a final dividend for the year ended 31 December 2011 of Rs. 65 per share, amounting to Rs. (thousands) 600,368 at their meeting held on 14 February, 2012 for approval of the members at the Annual General Meeting to be held on 29 March, 2012 (2010: Rs. 55 per share amounting to Rs. (thousands) 508,003). 37 38 Use of estimates and judgments The preparation of financial statements in conformity with approved accounting standards requires management to make judgments, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated 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 judgment about 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. Revision to accounting estimates are recognized in the period in which the estimate is revised if the revision effects 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 Companys financial statements or where judgments were exercised in application of accounting policies are as follows: 39 General - - Figures in these financial statements have been rounded off to the nearest thousands of rupees. Comparative figures have been reclassified and re arranged where necessary in order to facilitate comparison. - - - - Taxation- (note 4.3 & 30) Useful life of depreciable assets- (note 4.6 & 5) Employees retirement benefits- (note 4.9 & 8) Provision and contingencies- (note 4.17 & 22) Date of authorization of issue These financial statements were authorized for issue on 14 February, 2012 by the Board of Directors of the Company.
Notes
67
Pattern of shareholding
As at 31 December 2011
Number of Shareholders 705 1 101 501 1001 5001 15001 30001 35001 40001 50001 55001 60001 65001 85001 100001 110001 140001 150001 165001 200001 235001 300001 6490001 Shareholding - - - - - - - - - - - - - - - - - - - - - - - 100 500 1000 5000 10000 20000 35000 40000 45000 55000 60000 65000 70000 90000 105000 115000 145000 155000 170000 205000 240000 305000 6495000 Total Shares Held 35,286 35,028 37,169 118,740 15,995 20,000 66,874 39,530 87,956 108,217 58,252 63,822 133,508 89,989 100,131 226,265 283,066 152,139 332,964 200,085 236,578 300,595 6,494,239 9,236,428
146 48 46 2 1 2 1 2 2 1 1 2 1 1 2 2 1 2 1 1 1 1 Sr.
972
Categories of Shareholders Individuals Investment Companies Insurance Companies Joint Stock Companies Modaraba Companies Foreign Investors Mutual Fund Financial Institution Others Total:
Number of Shareholders 936 1 3 11 2 6 6 1 6 972
Shares Held 2,529,731 60 113,322 1,736 3,378 6,494,288 86,723 4,809 2,381 9,236,428 Percentage 27.39 0.00 1.22 0.02 0.04 70.31 0.94 0.05 0.03 100.00
No. 1 2 3 4 5 6 7 8 9
The above two statements include 361 shareholders holding 400,872 shares through Central Depository Company of Pakistan Limited.
Pattern of Shareholding

As at 31 December 2011 as per format perscribed in Code of Corporate Governance

No. of Shares - Sponsor and Related Party 6,494,239 0 60 1 865 1 1 1 238,263 155,994 177,198 1,346
Associated Companies, undertakings and related parties Corn Products International Inc. NIT ICP Directors Directors Spouses CEO Executives 1,794 Public sector companies and corporations Banks, DFIs, Non-Banking FI, Insurance, Modaraba, Mutual Fund Shareholders holding ten percent or more voting interest Corn Products International Inc. 6,494,239 208,268 0 Mr. Ansar Yahya 82 Mrs. Sarwat Zulfikar W/o Mr. Zulfikar Mannoo 9,370 Mr. Jorgen Kokke Mr. Rashid Ali Ms. Cheryl K. Bebee Ms. Mary A. Hynes Mr. James P. Zallie Mr. Zulfikar Mannoo Mian M. Adil Mannoo Mr. Wisal A. Mannoo Mr. Anis Ahmad Khan
69
Proxy Form
119th General Meeting (Annual Ordinary)

The Company Secretary, Rafhan Maize Products Co. Ltd., Rakh Canal East Road, P. O. Box 62, Faisalabad.
I / We of being shareholder(s) of Rafhan Maize Products Company Limited hereby appoint of or failing him as my / our proxy to vote for me / us and on my / our behalf at the 119th General Meeting (Annual Ordinary) of the Company to be held at Karachi on Thursday, March 29, 2012 at 10:00 a.m. and / or at any adjournment thereof.
Dated this
day of
2012.
(Signature of Proxy)
Affix Revenue Stamp of Rs. 5/-
Witness Place No. of Shares held
Signature of Shareholder Folio No. / CDC No.
Notes: a) This Form of Proxy, duly completed and signed across a revenue stamp, must be deposited at the Companys Registered Office not less than 48 hours before the time of holding the meeting. A proxy need not be a member of the Company.
b)
AFFIX CORRECT POSTAGE
The Company Secretary,
Rafhan Maize Products Co. Ltd;

Rakh Canal East Road, P. O. Box 62, Faisalabad.
71
KSE Top Companies Award
ICAP & ICMAP Best Corporate Report Award
NFEH Annual Environment Excellence Award

Rafhan AR 2011

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10 Years at a Glance

2010 2009 2008 2007 2006 2005 2004 2003 2002*

In the name of Allah The Most Merciful, The Compassionate

Report 2 Annual for the year ended December 31, 201 1

Chairman Jorgen Kokke Vice Chairman Rashid Ali - Non-Executive

M. Ali Seena C/o Surridge & Beecheno, Karachi

Chief Executive & Managing Director

Chief Financial Officer & Director

Deputy Director Marketing & Business Development

Deputy Director Operations, Safety & Environment

Senior Procurement Manager (Agri-Produces & General Materials)

Senior Manager (Customer Service & Logistics)

Senior Manager HR & Admin

Company Secretary & Compliance Officer

Manager Maize Production

Manager Warehouses & Stores

Quality Assurance Manager

Report 4 Annual for the year ended December 31, 201 1

Report 6 Annual for the year ended December 31, 201 1

Our Core Values

Safety Quality Integrity Respect Excellence Innovation

Nothing is more important Our goal: Zero accidents

Of the products we make, the services we provide, the relationships we build

We promote openness, teamwork, trust and mutual cooperation

Report 8 Annual for the year ended December 31, 201 1

Chief Executives Review

ANIMAL NUTRITION & HEALTH BUSINESS

Report 10 Annual for the year ended December 31, 201 1

Chief Executives Review

RAW MATERIAL - MAIZE

INTEGRATED QUALITY & ENVIRONMENTAL MANAGEMENT SYSTEM

Report 12 Annual for the year ended December 31, 201 1

Chief Executives Review

Report 14 Annual for the year ended December 31, 201 1

Chief Executives Review

Report 16 Annual for the year ended December 31, 201 1

Chief Executives Review

Report 18 Annual for the year ended December 31, 201 1

Chief Executives Review

Board & Chief Executives Performance Review

Ansar Yahya Chief Executive and Managing Director

February 14, 2012

Report 20 Annual for the year ended December 31, 201 1

Rafhan Calendar of Major Events - 2011

Horizontal Analysis of Profit and Loss Account

Horizontal Analysis of Balance Sheet

105% 80% 186% 67% 73%

123% - 98% 411% 82%

114% - 196% 22% 451%

103% - 566% 75% 54%

112% - 33% 290% 58%

113% 55% 94% 103%

118% 96% 143% 57% 255% 70% 159%

112% 268% 120% 1055% 115% 191% 6%

99% 48% 92% 48% 85% 119% 4905%

128% 177% 105% 143% 123% 135% 4%

125% 117% 123% 197% 84% 104% 129%

109% 84% 123% 152% 100% 48% 1631%

114% 138% 100% 133% 112% 100%

122% 138% 63% 128%

151% 96% - 86%

96% 101% - 160%