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coerce. harass. or any other confidential information gained in the performance of Company's duties as a means of making private profit. employees are to avoid not only impropriety. regulation or corporate policy. but also the appearance of impropriety. honesty and respect for others • • Employees shall conduct their employment activities with the highest principles of honesty. shareholders and the general public. The code of conduct and ethics. truthfulness and honor. colleagues. as stated below. regulation or corporate policy. recommend or cause to be made any expenditure of funds known or believed to be in violation of any law. proprietary confidential information. gain or benefit. are foundation of our business principles: Abide by the law • • Employees shall not make. 21 Annual Report 2011 . Integrity. Employees shall not make. Employees shall not use their position to force. whether financial or otherwise. integrity. • Confidentiality • Employees shall not use or disclose the Company's trade secrets. including subordinates. to provide any favor. induce. recommend or cause to be taken any action known or believed to be in violation of any law. To this end. gift or benefit. to themselves or others.Code of Conduct and Ethics Integrity and good corporate conduct guide us towards our business partners. intimidate or in any manner influence any person. Employees representing the Company to the third parties shall not allow themselves to be placed in a position in which an actual or apparent conflict of interest exists.

I. 2011 are encouraged to participate and vote.gulahmed. Ownership On June 30.(+92-21) 32426752. Chundrigar Road.00 Announcement of Financial Results The tentative dates of the announcement of financial results and payment of cash dividend (if any) for the year 2011-12 are as follows: Period 1st Quarter 2nd Quarter 3rd Quarter Annual Accounts Financial Results October 29. Web Reference Annual/Quarterly reports are regularly posted at the Company's website: www. I. Any shareholder may appoint a proxy to vote on his or her behalf. 2012 Dividend Payment (if any) ------November 30.com Karachi Stock Exchange Share Prices 2010-11 Price in Rupees Period 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter High 23. Fax: (+92-21) 35018838 22 .com.1-A. Company Secretary Email: salim.24 46. 32426597 & 32425467 and Fax No. 2011 February 27. verification of transfer deeds and share transfers should be directed to our Share Registrar Famco Associates (Private) Limited. Phone Nos. 1st Floor. Shareholders as of October 24. UAN: (+92-21) 111-485-485 & 111-486-486.01 53.m at Moosa D. Investor Relations Contact Mr. 2012 April 28. State Life Building No. dividend payments. Karachi.00 29. CDC shareholders or their proxies are requested to bring with them copies of their Computerized National Identity Card along with the Participant's ID Number and their account number at the time of attending the Annual General Meeting in order to facilitate their identification.982 shareholders. Proxies should be filed with the Company at least 48 hours before the meeting time. change of address. Institute of Chartered Accountants of Pakistan. Clifton.65 Low 18.01 27. 2012 September 29. G-31/8. Mohammed Salim Ghaffar.Shareholders' Information Annual General Meeting The annual shareholders' meeting will be held on October 31. Share Registrar Enquiries concerning lost share cer tificates. Dessai ICAP Auditorium. Karachi.ghaffar@gulahmed. Char tered Accountants Avenue.12 45. 2011 at 10:00 a.(+92-21) 32427012. 2012 The Company reserves the right to change any of the above dates. 2011 the Company has 1.53 20.

To receive. To approve the issue of bonus shares in the ratio of one share for every one share held i. State Life Building No. 3.Notice of Meeting Notice is hereby given that the 59th Annual General Meeting of Gul Ahmed Textile Mills Limited will be held at Moosa D. Clifton. Share Transfer Books of the Company will remain closed from October 24. October 31. 4. must bring their original Computerized National Identity Card (CNIC) or Original Passport at the time of attending the meeting. I.1-A. Chundrigar Road. Shareholders are requested to immediately notify the change of address. 5. Chartered Accountants Avenue. If proxies are granted by such shareholders the same must be accompanied with attested copies of the CNIC or the Passport of the beneficial owners. 2. A proxy must be a member of the Company. Representatives of corporate members should bring the usual documents required for such purpose. Dessai ICAP Auditorium. By Order of the Board Karachi October 01. 2011 (both days inclusive) for determining entitlement of bonus shares. to transact the following business: 1. must be received at the Registered Office of the Company duly stamped and signed not later than 48 hours before the meeting. if any. Proxies in order to be effective. A member entitled to vote at the meeting may appoint a proxy. on Monday. G-31/8. 2011 at 10:00 a. 6.I. Karachi. 2011 to October 31. 1st Floor. To appoint Auditors for the year 2011-2012 and fix their remuneration. 2011 Mohammed Salim Ghaffar Company Secretary NOTES : 1. consider and adopt the Audited Accounts of the Company for the year ended June 30. Institute of Chartered Accountants of Pakistan. Shareholders who have deposited their shares into Central Depository Company of Pakistan Limited. 23 Annual Report 2011 . 100% as recommended by the Board. Karachi at the earliest. to the Share Registrar of the Company. Members who have not yet submitted photocopy of their CNIC are requested to send the same to the Share Registrar of the Company Famco Associates (Private) Limited.e.m. 2011 together with the Directors’ and Auditors’ Reports thereon. 3. 2.

Industry Overview Textile industry in Pakistan constitutes 46% of total manufacturing sector and 38% of manufacturing labor is employed in this industry. improve the efficiency of public sector spending and facilitate the industries to generate revenues and keep up with and increase efforts to further bring foreign currency earnings into the country and create employment. encourage business activities in the country. Now the recent flood catastrophe. In short. Financial Performance The Company has shown improvement in all areas – sales have increased by 29%. Performance Highlights Pakistan’s textile industry which is the major contributor to the country’s exports is dependent on cotton. Economy Overview During the year international uncertainties regarding the future economic outlook re-emerged.5% (FY 2010: 4. It mainly remained the victim of power outages and lower domestic demand. Your Company’s financial performance despite the sharp increase in cotton price is par excellence. particularly in Sind. as growth figures for many economies had to be adjusted downward due to the devastating earthquake in Japan and doubts about the sustainability of public debt in Europe and the United States which undermined confidence in the ability of governments to take the necessary steps to restore growth. Table comparing the current FY 2011 with FY 2010 is given below: 24 . operating and corporate social responsibility performance of the Company and highlights the key business challenges to the business of the Company.9% in June 2011 is higher than the target by 4.1%). due to heavy rains has multiplied Pakistan’s economic problems. At the same time. CPI inflation at 13. Our passion for designing and creating the world of new style and fashion is also critically important to Gul Ahmed. The positive growth in the export market is mostly the effect of price and the contribution of increase in production impact is minimal. falling private investment and low growth and rising total public debt due to a low tax to GDP ratio. fallout of the global financial crisis and the unprecedented calamity of the floods which caused a massive damage of $10 billion on country’s economic structure.0%) against the target of 3. Business Review Gul Ahmed Textile Mills Limited (Gul Ahmed) is a Company listed on the Karachi and Lahore Stock Exchanges.8%. The economy grew by 2.4%. in the industry. In this context. This was fur ther compounded by export ban by India as well as lower availability of cotton from the major cotton producing countries. It is a composite textile mill and is engaged in the manufacture of textile products. policymakers across all regions are facing difficult economic management challenges and many policy dilemmas. For the country. Textile sector accounted for 62% in export growth. This report represents the financial.7% (FY 2010: 4. Pakistan is currently facing challenges like persistence of high inflation.4% against the target of 4. Keeping the international background. The jolts to the economy continue in the form of adverse shocks of commodity and oil prices. It has state of the art production facilities in its two segments.Directors’ Report Dear Shareholders The directors of your Company are pleased to present the Annual Report and the audited financial statements for the year ended June 30. are pioneers in setting up a chain of our own retail outlets in Pakistan. Similarly cotton prices worldwide also rose sharply. more effective consolidated fiscal policy is needed. 2011 together with auditors’ report thereon. yarn and processing.2% (FY 2010: 2. The economic management team of Pakistan needs to restructure the policy framework targeted to improve the welfare of public. We. During the year local cotton prices witnessed a steep increase of around 120% as compared to the previous year. Lower growth in agriculture is because of the impact of devastating floods destroying major crops rice. The large scale manufacturing sector grew at 1. droughts in USA and unfavorable weather conditions. severe energy shortages and volatile security conditions have rendered the domestic economic environment least conducive for productive activities. the year under review (FY 2011) remained difficult. broaden tax base for better resource mobilization.4%). gross profit by 46%. profit after tax and earnings per share (EPS) by 150%. Agriculture grew at 1. FY 2011 witnessed a significant increase in cotton prices mainly as a result of floods in Pakistan. cotton and also the livestock.

1.an increase of 78% over last year. 000s Balance of unappropriated profit brought forward Transfer from capital reserve for issue of bonus shares Available for appropriation Transfer to reserves for issue of bonus shares in ratio of one share for every one share held Transfer to general reserve Unapprpriated profit carried forward 1.297 8. Management continues to focus on rationalization of the gearing ratio. Health. 000s Profit after providing depreciation/ amortization of Rs. 750 million to Rs. 829 117. 483 million) in various federal.454 (340.09 718 150. Projected cash flows are regularly compared with actual results and corrective actions are taken wherever it appears necessary.949 (652) (7.642 450.689 5. 4.303 25 Annual Report 2011 .676.197. The Company incurred a total of Rs.173 1. 2010: 38:62).97:1) The Company ensures that funds are available as and when required. The debt to equity ratio as at the end of June 30.740 6. Safety and Environment (HSE) is of prime concern and we give priority to implement HSE standards in all business segments.197.724 million Provision for taxation Profit after tax Unappropriated profit brought forward Amount available for appropriation Appropriations Final dividend for the FY 2010 @ Rs.03:1 (FY 2010: 0. 1.747 4. For this purpose.58 29. provincial and local taxes .349 400.117 million to Rs.399 25.537 1.997) 1. Shareholders' equity increased by Rs. authorized share capital was increased from Rs.000) 13. 2011 improved to 32:68 (June 30.33 150. 2011 have proposed the following: Rs. while on the sales side export quantities of processed fabric have increased. the HSE department has implemented a number of training sessions and (634.991 Subsequent Effects The Board of Directors of the Company in their meeting held on October 01.627 1.196.29) 59.000 1.713 million as a result of profits retained in the business. production was somewhat stagnant/curtailed. As a result of efficient fund management procedures current ratio at the year end has improved to 1.457 480.446 1. 2.) 8.088 1.52 11.648.21 Capital Structure During the year. Safety and Environment Health.676.991 Funds Management The Company considers cash flows as its lifeline. 858 million in 2011 (2010: Rs. 7. 3.785) (1.66 Operating results of the Company are summarized below: Rs.185 million (2010: Rs.139 10.FY 2011 FY 2010 Growth Rupees in Millions % Local Sales Exports Total Sales Gross Profit Profit before tax Profit after tax EPS (Rs.500 million to cater the future needs of the Company.537.436 19. 1.642 1. Contribution t o National Exchequer The benefit of your Company's growth and profitability is also shared by the government.196 18. The Company also has Rs.82 17.000.080 million) unutilized credit lines with various banks to cover any temporary mismatches.25 per share General reserve Amount carried forward 79.454 708 478 Operational Performance Operationally due to the cotton price scenario. Interest and foreign exchange rates are closely monitored to take timely decisions to manage risks or avail the opportunities.85 3.19 45.534 1. whereas yarn exports and local sales quantities were lower.

Your Company stands by the core ethical and moral values and therefore we do not discriminate on the basis of religion.programs in order to impart knowledge and raise the awareness of employees in relation to HSE. Considering the necessity and needs of the users. instead of providing short term help provides training to special persons enabling them to be capable of earning the livelihood. race. Currently for ty six (46) special persons are on the Company’s payroll. education and housing facilities Support social causes Continuously striving to improve greenery. as the income earned by them supports their families. at Gul Ahmed. Corporate Social Responsibility At Gul Ahmed we consider it our moral duty to invest and work for the betterment of the community and environment in which it is growing.500 cubic meters per day is operating efficiently. Teach a man to fish and you feed him for life time”. We. The Company continues to pursue the following guidelines to be a good corporate citizen: • Execute and implement projects to alleviate the poverty Providing civic amenities. have employed more than one thousand female workers and staff. 26 . training and career advancement. • • Employment of Women and Special Persons Employment of women improves the country’s social environment. Your Company continues to provide medical facilities like ambulances and dispensary having full time doctor on permanent basis to the workers. sports competitions are also arranged for the recreation and health of the employees. Efforts in this regard are detailed in the earlier part of the Annual Report. Management Information System Timely and accurate reporting which caters the specific needs of the users and to make the decision making process more effective is the basis on which we have set up a well integrated and tested information system. Recycling The Company’s waste water treatment plant with the recycling capacity of 4. Community Development Gul Ahmed gives great importance to the wellbeing and safety of the local community. Caustic soda recovery plant has been successfully refurbished and revamped during the year to ensure maximum recovery of caustic soda. Instead. Some of them are given jobs in the Company. sex or disability in the process of recruitment. maintain a clean and green environment around the factory and better housekeeping Encouraging women employment Encouraging employment of special people • • • Human Excellence Human Resource Management is an impor tant management unit of the organizational strategy and plays a role that links employees and organizational success. Following the famous Chinese proverb. first aid and emergency quick response drills are routine matters. similarly Gul Ahmed. health. Healthy and content employees can perform at the optimum level is the philosophy of the management. by enabling them to meet their unattended needs. Gul Ahmed promotes hiring of female and special persons and facilitates them with the suitable work environment. Fire fighting. Human resource function is playing a major role by nurturing the culture of value addition and adopting positive attitudes. “Give a man a fish and you feed him for a day. In the current year a cricket tournament was arranged beside other healthy activities and was participated by the teams from all departments. we regularly review and upgrade our system. Staff members are covered under the health insurance plan. At Gul Ahmed.

Environment The Company has set in environment friendly steps within the production processes. Increase in the prices of these commodities will affect the Company’s profit margins unless there is a corresponding increase in selling prices. The Company has arranged with its customers flexible deliver y schedules but in case of prolonged shortages supplies will be affected. etc. • Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. Environmental and Fire Loss Risks Company is also exposed to the risk of natural disasters and fire. 76. The incidents of terrorism. Fire is considered as an inherent risk in the textile industry. Energ y Your Company generates its own power. • Proper books of accounts of the Company have been maintained. Energy Shortage So far. 27 Annual Report 2011 . Efforts in this regard are detailed in the earlier part of the Annual Report. evaluate.The Company has also obtained insurance cover for terrorism risks. 38 to the financial statements on page no. are discussed below: Commodity Price Risk The Company is exposed to the fluctuations in international prices of cotton and oil. Natural disasters include heavy rains. We also have about 15% to 20% furnace oil power generation capacity. 200 million. Steam generation will save the country’s precious gas resources. We are now in the process of installing a steam turbine with rated capacity of 2. Business Risks and Challenges The Company operates in a challenging environment which may affect its financial and non financial performance. Future shortages will affect its production schedule. are exchange rate risk and liquidity risk and are discussed in detail in note no. The management has developed a system built in its strategy to separately identify. cash flows and changes in equity. Donations/Charities for National Cause Our nation is going through the most difficult days in its history.We are planning to convert/ install dual fuel and alternate energy power generation facility and are also considering to avail electricity supply from KESC. the Company’s production facilities have not faced any significant gas cur tailment. Some of the risks.5 MW power generation costing more than Rs. All possible fire and safety measures have been put in place. the result of its operations. on which its power generation system depends. Security Conditions To ensure the smooth running of operations safety and security are important. Fire in cotton spreads like wild fire. The management is fully aware with this scenario and is incurring substantial cost for protection of employees and assets by deploying security guards and has established a system of surveillance through IP cameras installed at every location. Code of Corporate Governance The management of the Company is committed to good corporate governance and complying with the best practices. As required under the Code of Corporate Governance. flooding. thus reducing the burden on the power generation capacity of the country. Efforts of the Company in this regard are detailed in earlier portion of Annual Report. The Company has also obtained insurance cover of all its assets against the risk of natural disasters and fire. It affects the full utilization of production capacity and meeting the shipment targets as agreed with the customers. Pricing of both commodities is based on the open market mechanism. Environmental disasters and the war on terror have worsen the social life of our beloved countrymen. Along with surplus production capacities. timely address and manage each and every risk. including non–financial risks. considered important for the management. Major financial risks. the Directors are pleased to state as follows: • The financial statements prepared by the management of the Company present fairly its state of affairs. ear thquakes. the Company can overcome the gas shortage problem partially. violent strikes and extortion force the business to remain closed.

retire and present themselves for reappointment.• International Financial Reporting Standards. Auditors The present auditors Hyder Bhimji & Co. 2011 BASHIR ALI MOHOMMAD Chairman & Chief Executive 28 . we take this opportunity to thank all our stakeholders for the loyalty they have shown us during these difficult times. Future Outlook Locally. The Audit Committee comprises three members. • There has been no material departure from the best practices of corporate governance. 2011 and new directors assumed office thereafter. Consolidated Financial Statements Consolidated Financial Statements for the year ended June 30.Key financial data for the last six years. Acknowledgement Finally. . 2011 of the Company and its subsidiaries Gul Ahmed International Limited (FZC) and GTM (Europe) Limited are attached.Pattern of shareholding. Five out of the nine directors on the Board are non-executive. The Company is progressively diversifying its product mix as well as product destination. 2011 is Rs. as detailed in the listing regulations. Chief Executive. elections of the directors were held on March 31. where diminishing economic conditions and governments’ austerity programs have chilled business and consumer confidence. Chartered Accountants.. The Company is in the export market mostly to Europe and Nor th America. Chief Financial Officer and Company Secretary and their spouses and minor children. Board Changes The current members of the Board are listed on page no. For and on behalf of the Board Karachi October 01. two of whom are non-executive directors. availability of cotton due to recent floods in Sind. We could not have achieved these positive results without the cooperation. .Number of Board meetings held and attendance by directors. worsening security situation. as applicable in Pakistan. business faces volatility in cotton and energy prices and energy shortages. shareholders. • The system of internal control is sound in design and has been effectively implemented and monitored. All the directors have diverse exposures. • There are no significant doubts upon the Company's ability to continue as a going concern. all the necessary skills and understanding to deal with various business issues and have the ability to review and challenge management performance. • The value of investment of provident fund based on its un–audited accounts as on June 30. have been followed in preparation of financial statements and any depar ture therefrom has been adequately disclosed. The newly elected Board has an optimum combination of executive. None of the directors on the Board is a director of more than ten listed companies.The Chairman is an independent nonexecutive director. 276 million (FY 2010: Rs. 207 million). On completion of statutory term of three years. banks. high inflation and a fragile economy. three of whom are independent nonexecutive directors. The Company has come through a difficult period and we look towards your continuous support as always to help us navigate through what looks like another challenging year ahead. various government bodies and board of directors. non-executive and independent non-executive directors.Trading in shares of Company by its Directors. • Statements regarding the following are annexed or are disclosed in the notes to the financial statements: . 2. support and loyalty of our employees. The Company is fully live to these areas of concern. .

Million Rs. Million Rs.025 635 2.726 1. Million (2.483 3.906 2. Million Rs.900) 29 Annual Report 2011 .475 745 262 164 - 2006 8.223 1. Million 6.659 1. Million Rs.211 635 2.196 635 2010 19. loans.537 Rs.828 28 78 (687) 5.210 2.151 74 4.529 4. Million 635 4.835 5.107 2.141) (3. Million Rs. Million Rs.775 936 202 103 55 - 2007 9.567 149 5.653 708 478 79 - 2009 13.832) (3.286 598 12 (35) - Balance Sheet Property. advances and deposits Net current assets Total assets employed Represented by: Share capital Reserves Shareholders' equity Long term loans Deferred liabilities Total capital employed Cash Flow Statement Operating activities Investing activities Financing activities Cash and cash equivalents at the end of the year Rs.140 16 93 (224) 6.211 6.078 4.233) (5.209 170 80 - 2008 11. plant and equipment Intangible Long term investment.660) (5. Million 422 7.762 2.247 4.703 30 74 (278) 4. Million Rs.961 3.851 2. Million Rs. Million Rs. Million (9. Million Rs.247 552 2.410 39 71 16 4. Million 2011 25.617) (1.250) (148) 454 (711) (170) 442 (931) 398 (339) (1.359 1. Million Rs.713 2. Million Rs.596 2. Million Rs.199 299 7.676) (5.627 2.689 3.635 1.537 Rs.173 1.537 1.772 98 4.Financial Performance at a Glance Profit & Loss Sales Gross profit Operating profit Profit before tax Profit / (loss) after tax Cash dividend Bonus share Rs.649) 680 774 (713) 6 10 (813) 412 Rs.529 460 1.354 130 5.848 1.835 552 2.654 39 96 Rs. Million Rs. Million Rs.106 29 90 (390) 5.311 2.118 2.223 207 6. Million Rs.435 4.025 6.

57 13.95 0.02 56.50 991 Rupees % % Times Rupees Rupees Rupees Rupees Rs.45 18.14 1.04 13.02 Turnover ratios Inventory turnover Inventory turnover ratio Debtor turnover Debtor turnover ratio Creditor turnover Creditor turnover ratio Fixed assets turnover ratio Total assets turnover ratio Operating cycle Days Days Days 134 0.80 39.95 0.82 16.74 0.25 16.10 0.60 1.17 2.68) (60.88 11.75 1.45 15.65 49.28 2.82 1.16 2.67 1.21 2.20 3.80 19.45 26.21 4.01 - Capital structure ratios Financial leverage ratio Weighted average cost of debt Debt to equity ratio Interest cover ratio 2.98 1.00 67.62 1.92 2.03 0.13 0.87 50.67 0.68 0.30 0.10) 0.359 7.23 11.12 0.93 1.95 106 104 0.85 2.15 2.23 3.29 66 0.18 76 0.85 0.00 0.11 0.28 74 0.465 3.96 1.49 0.16 100 74.88 3.12 0.07 0.58 2.06 (0.39 0.Financial Ratios 2011 Profitability ratios Gross profit ratio Operating leverage ratio EBITDA margin to sales Net profit to sales Return on equity Return on capital employed % Times % % % % 18.12 38.14 14.19 0.82 131 Days Investor information Earnings per share Price earning ratio Price to book ratio Dividend yield ratio Cash dividend per share Bonus shares issues Dividend payout ratio Dividend cover ratio Break .84 17.860 1.11 14.20 61 0.23 84 0.34 12.47 0.37 31 0.00 28.73 53.86 21.18 0.40 37.46 0.75 2.18 49.53 38.19 50.01 (0.08 0.43 14.60 16.25 83 98 0.08 0.24 41.64 1.90 1.53 3.03) 0.01 0.02 97 95 0.25 12.95 25.03 0.09 82 0.35 70 107 0.85 1.23 82 0.20 56 0.53) 13.98 122 130 0.40 2.70 28.03 1.22 27.01 0.90 23.95 0.37 0.00 51.95 0.60 6.26 72 0.27 1.17 45.82 15.21 1.25 48.47 2.87 16.68 1.00 53.04 40.07 1.65 18.27 45 0.00 0.40 2.79 0. million 30 .19 2.67 6.40 0.12 73 0.69 0.08 0. low during the year EBTIDA Rupees 18.84 49.97 0.08 1.73 21.82 1.42) (1.42 0.up value per share Market value per share at the end of the year high during the year.01 0.01 (0.51 0.34 0.54 2.347 1.52 2.21 1.25 1.42 2010 2009 2008 2007 2006 Liquidity ratios Current ratio Quick / acid test ratio Cash to current liabilities Cash flow from operations to sales 1.47 0.29) 0.24 51.02 0.171 (0.90 0.

45 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 31 Annual Report 2011 .17% 66.24 50.up value per share (in Rupees) 74.17 50.000 2006 2007 2008 2009 2010 2011 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2006 Local and Export Sales 2007 2008 Export 2009 2010 Local 2011 Equity Growth 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Break . advances and deposits Current assets Fixed Assets Growth 1.000 15.80% Assets 2010 42. advances and deposits Current assets 0. plant and equipment Long term investment Long term loans.000 800 600 400 200 - 7000 6000 5000 4000 3000 2000 1000 0 2006 2007 2008 2009 2010 2011 (200) 2006 2007 2008 2009 2010 2011 Sales Growth 30.000 25.Assets 2011 32.29% 57.12 56.73% Property.04 49. plant and equipment Long term investment Long term loans.000 10.40% Property.24 48.000 5.000 20.18% 0.200 Profit After Tax 1.20% 0.

'000 % Distribution of Wealth 2011 Distribution of Wealth 2010 Cost of Sales Distribution and Administration Expenses Employees’ Remuneration Government Taxes Finance Cost Contribution to Society Profit Retained Cost of Sales Distribution and Administration Expenses Employees’ Remuneration Government Taxes Finance Cost Contribution to Society Profit Retained 32 . etc.435.225 2.079.19 5.116 19.379.00 14.Our Value Addition and its Distribution 2011 Rs.932 1.910 74.39 100.019.910 99.668.460. '000 Value Addition Net sales Other operating income 25.465 24.713. WWF.931 25.241 477.191.01 4.135 944.460.42 4.13 100.42 100.671 79.117.601.00 19.17 11.48 3.743 2.90 0. duties.10 100.01 2.396 72. WPPF.794 25.11 10.12 2.603 2.688. duties and taxes) Distribution and administration expenses (Excluding employees' remuneration and taxes) Employees' remuneration Government taxes (Includes income tax.07 5.733 1.460 831.533 19.00 2010 % Rs.87 0.00 99.109 25.647 1.713.) Providers of capital (Finance cost) Dividend Contribution to society (Donations) Profit retained 18.300.440 477.396 Value Distribution Cost of sales (Excluding employees' remuneration.27 4. federal & provincial taxes.31 0.486 1.24 0.79 0.349 3.

88 2.583.041.205) (563.000) (34.247 8.09 41.594 1.48 12.000) 102.293) (53.454 6.232 2.227 (230.600 6.28) 23.970.712.583.547.966) (249.85 (17.76 0.867) (464.090.725.202.651) 80.99) 29.51) 18.595.32 (9.24 108.603) (1.599.749.24 11.429.224.76 15.90 19.050) 18.981) 1.604) 24.702 10.05 32.869.02 10.116 1.20 49.038.191 2.47 291.949 9.69 32.734 12.317 1.06 39.69 (89.691 13.400 12.331.435.949 Profit & loss account Net sales Cost of sales Gross profit Distribution expenses Administrative expenses Other expenses Other income Operating profit Financial expenses Profit before taxation Income tax expense Profit for the year 25.884 7.759 745.860 (776.285.250 935.838 (99.58 32.688.94 24.30 19.43 22.39 10.31 9.679 3.774.079 598.459 (1.635.091 8.484.234) (715.88) (145.88 (15.497.249.312 5.58 43.679 3.454 (340.576 20.32 (4.46 0.38 85.434.07 2.391 31.17 150.55) 10.009.404.951.331.52 18.515.233 4.73 (9.765 2.934) (11.906.04 (0.69 14.45 16.35 (22.657) (572.77 147.618 2.54 109.51) 1.097.88 39.47 7.272 5.08 316.859) (279.622 (1.02) 2.475.74) 59.561 1.009.103 13.800 (278.462 7.416 32.112 5.84 1.191 (97.48 4.035) 201.69 14.404.31 (10.465 19.465 11.260 13.457 3.437) (6.222.546 20.949 9.381 (47.652.609 (585.926 5.020) 4.983) (13.619) 51. '000s Variance % Balance sheet Total equity Total non-current liabilities Total current liabilities Total equity and liabilities 4.71 11.76 20.172.27 23.64 (76.90 9.118.350.843) (16.00) (37.891) 13.55) 0.679 6.795 2.225.861 (89.16 1.80 53.808.495 8.08) (8.60 16.194.990) 708.677 (19.856) (9.99 45.19 0.210 (733.931 2.02 34.208.89) (24.832 2.19 25.851 9.072) (8.196.742) 58.970.359.716 5.45) (574.085.520.763 7.42 41.762.268) (586.715.794 13.63 63.933.029 2.44) 1.Horizontal Analysis of Financial Statements 2011 2010 2009 2008 2007 2006 2011 2010 2009 2008 2007 2006 Rs.54) 117.52 24.820 29.38 10.788.616.16 36.450.336) (473.017.91 15.19 6.85 5.691 13.937.15 3.390 4.480.659.81 157.36 (944.807.50 13.873 2.84) (23.40 13.851 1.01 117.533 169.949 Total non-current assets Total current assets Total assets 6.626.734 12.372.16 32.85 (75.15 23.702 10.42 (20.847.87 15.358.599.588) (808.65 (10.80 29.40 66.86 20.779 1.08 1.997) 1.516) (15.31) 25.95 (15.574.694) 477.57 764.712) 22.98 23.65 7.34) 1.398.74 42.07 18.61) 33 Annual Report 2011 .86 0.82 40.07 2.20 41.34 (4.838 262.39 14.754 8.310.619) 25.435 (1.537.926) (116.839) (483.830 2.791) 164.84) 47.55 495.

934) (83.484.358.937.860 (776.63) 0.546 20.225.381 (47.009.112 22.035) 12.079 (1.96 (4.247 8.64 58.808.13 (0.372.16 (0.832 57.210 (6.00 Total non-current assets Total current assets Total assets 6.600 42.40 1.20 6.891) 745.58 1.820 100.873 2.00 11.14 1.70 3.04 (1.01) 5.336) 18.465 (20.933.17) 6.232 2.583.64 (2.26) (483.679 33.17) 2.81) (16.04) 0.13) 7.194.96 19.533 16.10) 8.951.84) 0.450.949 100.103 13.250 (15.090.00 12.742) 598.594 (13.00 (81.949 100.599.47) 1.970.12) 0.205) (464.457 100.765 2.60 (1.40 2.884 7.404.80) (1.00 9.072) (84.795 2.435.96) 0.32) 6.50 100.434.807. '000s % Balance sheet Total equity Total non-current liabilities Total current liabilities Total equity and liabilities 4.331.172.233 51.679 23.537.359.791) 164.00) 0.38) (3.794 100.779 (278.759 (19.18 22.906.009.12) 2.856) (83.454 (340.118.595.34 54.867) 0.966) (563.626.293) 25.38) (249.861 (89.618 22.926) 24.00 13.116 (53.515.39 2.715.970.843) 4.317 (2.725.599.997) 1.80) (473.702 100.622 (1.652.574.00 13.227 (230.99 57.851 100.497.88) (11.11 (0.480.691 100.30) (4.22 (0.851 16. '000s % 2006 Rs.983) 22.712) 1.222.981) 1.00 12.520.00 8.459 14.616.04) (9.712.691 100.465 100.576 20.00 9.990) 3.10 12.02 51.495 45.800 (279.416 (586.091 8.98 4. '000s % 2010 Rs.272 45.085.400 34 .45 5.847.391 23.12 (0.603) 708.734 100.609 (585.000) (34.50 (0.32 54.202.838 (99.020) (84.754 100.830 (944.429.83) 1.097.43 169.749. '000s % 2008 Rs.677 (733.68 54.21) (4.694) 477.10 (0.00 Profit & loss account Net sales Cost of sales Gross profit Distribution expenses Administrative expenses Other income Other expenses Operating profit Financial expenses Profit before taxation Income tax expense Profit for the year 25.13) (4.475.619) 1.57 18.89 5.00 13.208.82 54.18) 0.196. '000s % 2009 Rs.00 10.437) (85.18 5.547.435 (1.312 48.604) 2.73 3.838 15.36) 18.80 57.859) (4.46) 10.000) 102.774.260 13.94) (3.24 (0.619) 15.64) 0.734 100.88 262.11 4.285.404.224.583.191 (97.00 9.69 (7.561 7.75 2.688.63 16.635.27) 8.00 19.29) (3.516) 58.10 (5.86) (8.02) (6.98 (2.390 6.869.15 1.839) 201.657) (572.249.72 (0.949 100.98 13.191 20.788.310.19 (4.763 5.00 10.949 100.34) 4.651) 80.659.00 14.36 (4.16 (0.66 3.12 (3.926 26.931 (116.Vertical Analysis of Financial Statements 2011 Rs.588) (808.24 64.762.00 14. '000s % 2007 Rs.234) (715.350.454 5.038.462 7.05 2.398.050) 935.66 100.27 66.331.716 48.73 6.679 24.40) (0.702 100.029 2.36 (4.268) 1.

Statement of Compliance with the Code of Corporate Governance
This statement is being presented to comply with the Code of Corporate Governance (”the Code”) contained in the Listing Regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The Company has applied the principles contained in the Code in the following manner: 1. The Company encourages representation of independent non-executive directors and directors representing the minority interest on its Board of Directors (”the Board”). At present the Board includes three independent non-executive directors and two non-executive directors. The directors have confirmed that none of them is serving as a director in more than ten listed companies, including this Company. All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI. None of the directors is a member of a stock exchange. No casual vacancy occurred in the Board during the year. The Company has prepared "Statement of Ethics and Business Practices", which has been signed by all the nine directors and other managerial and secretarial staff of the Company. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. 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 Chief Executive Officer (CEO) and other executive directors, have been taken by the Board. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. The directors have been provided with copies of the Listing Regulations of the Karachi and Lahore Stock Exchanges, Company’s Memorandum and Articles of Association and the Code of Corporate Governance and they are well conversant with their duties and responsibilities. In compliance of sub clause (xiv) of clause 35 of the Listing Regulations, four directors have attended and completed Corporate Governance Leadership Skills program under the Board Development Series of Pakistan Institute of Corporate Governance (PICG). No new appointment of Chief Financial Officer (CFO), Company Secretary and Head of Internal Audit was made during the year. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment, as determined by the CEO. The directors' report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board. The directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.

2.

3.

4. 5.

6.

7.

8.

9.

10.

11.

12. 13.

35

Annual Report 2011

14. 15.

The Company has complied with all the corporate and financial reporting requirements of the Code. The Board has formed an Audit Committee. It comprises three members, two of whom are non-executive directors. The Chairman of the Committee is an independent non-executive director. 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 Board has set-up an effective internal audit function. The statutory auditors of the Company have confirmed that they have been given a satisfactor y rating under the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan. 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. The related party transactions have been placed before the Audit Committee and approved by the Board of Directors to comply with the requirements of the Listing Regulations of the Karachi and Lahore Stock Exchanges. We confirm that all other material principles contained in the Code have been complied with.

16.

17. 18.

19.

20.

21.

BASHIR ALI MOHOMMAD
Chairman and Chief Executive

ZAIN BASHIR
Director

Karachi October 01, 2011

36

Review Report to the Members on Statement of Compliance with Best Practices of the Code of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance for the year ended June 30, 2011 prepared by the Board of Directors of Gul Ahmed Textile Mills Limited (”the Company”) to comply with the Listing Regulations of the respective Stock Exchanges, where the Company is listed. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code. As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board's statement on internal control covers all controls and the effectiveness of such internal controls. Further, Sub-Regulation (xiii a) of Listing Regulations 35 notified by the Karachi and Lahore Stock Exchanges requires the Company to place before the Board of Directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price recording proper justification for using such alternate pricing mechanism. Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the audit committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. Based on our review nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the best practices contained in the Code of Corporate Governance, as applicable to the Company for the year ended June 30, 2011.

Karachi October 01, 2011

HYDER BHIMJI & CO.
Chartered Accountants Engagement Partner: Hyder Ali Bhimji

37

Annual Report 2011

Our responsibility is to express an opinion on these statements based on our audit. It is the responsibility of the Company's management to establish and maintain a system of internal control. evaluating the overall presentation of the above said statements. on a test basis. and are in agreement with the books of account and are further in accordance with accounting policies consistently applied. Zakat deductible at source under the Zakat and Ushr Ordinance. 2011 and of the profit. the Balance Sheet. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. Cash Flow Statement and Statement of Changes in Equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan. Statement of Comprehensive Income. Profit and Loss Account. for the year then ended and we state that we have obtained all the information and explanations which. d) Karachi October 01. Cash Flow Statement and Statement of Changes in Equity together with the notes forming part thereof. were necessary for the purposes of our audit. proper books of account have been kept by the Company as required by the Companies Ordinance. 1984. as well as. was deducted by the Company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance. An audit includes examining. and b) ii) iii) the business conducted. 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. in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at June 30. c) in our opinion and to the best of our information and according to the explanations given to us. to the best of our knowledge and belief. We believe that our audit provides a reasonable basis for our opinion and. total comprehensive income. and give the information required by the Companies Ordinance. 1984. 2011 and the related Profit and Loss Account. evidence supporting the amounts and disclosures in the above said statements. 1984. investments made and the expenditure incurred during the year were in accordance with the objects of the Company. 1984. 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. 1980 (XVIII of 1980). its cash flows and changes in equity for the year then ended. after due verification. and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance. Statement of Comprehensive Income. 2011 HYDER BHIMJI & CO. we report that: a) in our opinion. An audit also includes assessing the accounting policies and significant estimates made by management. and in our opinion. the expenditure incurred during the year was for the purpose of the Company's business. Chartered Accountants Engagement Partner: Hyder Ali Bhimji 38 .Auditors' Report to the Members We have audited the annexed Balance Sheet of Gul Ahmed Textile Mills Limited (”the Company”) as at June 30.

679 14.597 CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current maturity of long term financing Provision for taxation .650 194.863 31.044 13.785 2.446 480.net of payment 9 10 11 2.586.222.574.546 1.642 4.727 676.589 5. 2011 2011 Note EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital Reserves Unappropriated profit 4 5 634.404.194.969 156.712.197.514 216.765 2010 Rs.563 14.679 CONTINGENCIES AND COMMITMENTS 12 20.669 2.759.798 9.480.591 284.880.283 206.534 3.964.198.595.531 8.873 634.314 12.744.190 632. 000s NON-CURRENT LIABILITIES Long term financing Deferred liabilities Deferred taxation .Balance Sheet As at June 30.691 39 Annual Report 2011 .599.446 1.net Staff retirement benefits 6 7 8 2.785 2.106 298.

030.350 10.679 14.422 4.725 38.691 The annexed notes 1 .249.2011 2010 Note ASSETS NON-CURRENT ASSETS Property.939 237.057 6.450 1.360 2.546 48.42 form an integral part of these financial statements.349 58.486 212.846 32.600 20.599.334.943.966 8.905 84.904 2.114 16.263 47.350.241 33. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 40 .576 475.788.140.936 63.830 40.091 CURRENT ASSETS Stores.404.359. 000s 6.450 4.723 159.616.355 13. spares and loose tools Stock-in-trade Trade debts Loans and advances Prepayments Other receivables Tax refunds due from government Cash and bank balances 17 18 19 20 21 22 23 706. plant and equipment Intangible assets Long term investment Long term loans and advances Long term deposits 13 14 15 16 6.332 6.630 58.926 83.653.103 Rs.265 137.

146) 1.454) 340.860) 791.118) 2.504) Other operating income Operating profit Finance cost Profit before taxation Provision for taxation Profit after taxation Earnings per share .515.442 700.843) 4.627.714) 25.997) 1.016.227) 230.603) 708.545.097.457) 18.116) 1.588 808.85) Rs. 000s 19.42 form an integral part of these financial statements.172.537.Profit and Loss Account For the Year Ended June 30.604 2.652.533) 7.688.926 116.934) 3.931) 2.794) 16.981) 1. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 41 Annual Report 2011 .465) 20.196.435.085 53.694) 477.622) 1.) 32 31 30 29 24.basic and diluted (Rs.52) The annexed notes 1 .626.435) 1.830) 944.610.808.090.635.619 1. 2011 2011 2010 Note Sales Cost of sales Gross profit Distribution cost Administrative expenses Other operating expenses 26 27 28 24 25 25.

533 The annexed notes 1 .42 form an integral part of these financial statements.533 477. 000s Profit after taxation Other comprehensive income .196.457 1. 2011 2011 2010 Rs.net of tax Total comprehensive income 1.Statement of Comprehensive Income For the Year Ended June 30. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 42 .196.457 477.

298) (711.963) 621.055.284.360) (38.617.051 (826.714 (725) (1. 000s 708.877) 3.Cash Flow Statement For the Year Ended June 30.454) 708. plant and equipment scrapped Profit on sale of property.419) (121.656) (14.006) 30.146) 43 Annual Report 2011 . plant and equipment Addition to intangible assets Proceeds from sale of property.418) (36.537.772) (304.097.304) 29.736) 19.138) 35.621) (1.621) 229.232) (5.129) (9.223) 2.008) (77.672) 7.187) (10.142) Cash (used in)/generated from operations (Payments) for/receipts from: Gratuity Finance cost Income tax Long term loans and advances Net cash (used in)/generated from operating activities (1.242. 2011 2011 2010 Note CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments for: Depreciation Amortisation Provision for gratuity Finance cost Provision for slow moving/obsolete items Provision for doubtful debts Property.397.522) 16.663.372.407) (2.725) 8.057.031) 1. plant and equipment Long term deposits Net cash used in investing activities (1.226) (1.395) (2.570) 1.390.712) (241.103 CASH FLOWS FROM INVESTING ACTIVITIES Addition to property.456) 299.657) (12.733) 154.342 (439) 7.979) (5.739) (966.095) (1.015) 944.250.444) 1.545 (4.255) 15.200) 2.284 (14.227) 677.603) 7.470) (4.981) 10.143) Changes in working capital: (Increase)/decrease in current assets Stores.765) (4.037.377) (738.275) (6.390) 14.297) 416 454. spares and loose tools Stock-in-trade Trade debts Loans and advances Prepayments Other receivables Tax refunds due from government Increase in current liabilities Trade and other payables Rs.453) 25.055 (3. plant and equipment 1.266.546.

BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 44 .at the beginning of the year Cash and cash equivalents . 000s 328.349) (148.634) (170.987) (676.at the end of the year 34 607.761) The annexed notes 1 .761) (9.675.659.232.835) Rs.541) (5.016.220) (5.659.457) (498.865) (79.074) (5.42 form an integral part of these financial statements.2011 2010 Note CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term loans Repayments of long term loans Dividend paid Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents .177) (427.227) (4.

446 - 83. 2010 Transfer to revenue reserve Transaction with owners Final dividend for the year ended June 30. 000s Balance as at June 30.873 The annexed notes 1 .118.765 (400.000) - - - - (79.457 1.000 450.533 480.534 3.457 1.446 1.232 (80.785 - 1.196.Statement of Changes in Equity For the Year Ended June 30.950.642 4.457 - 1.42 form an integral part of these financial statements.000 450. 2011 Share capital Revenue reserve Capital reserve Rs.000 400.197.595.457 1. 2011 634.533 477.533 477.785 2.196.001 3.430.000) - 634.349) (79. 2009 Transfer to revenue reserve Total comprehensive income Profit for the year Other comprehensive income Total comprehensive income for the year Balance as at June 30.030.000 80. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 45 Annual Report 2011 .712.349) Total comprehensive income Profit for the year Other comprehensive income Total comprehensive income for the year Balance as at June 30.000 450.196.785 - 2.533 477.446 - 477.196. 2010 Unappropriated profit Total 634.

The Company’s registered office is situated at Plot No.2 Standards. provisions of and directives issued under the Companies Ordinance.21 (Income Taxes: Recovery of revalued non-depreciable assets) will no longer apply to investment properties accrued at fair value.Notes to the Accounts For the Year Ended June 30. 2010 but considered not to be relevant or to have any significant effect on the Company’s operations and are. not disclosed in these financial statements. The Company is a composite textile mill and is engaged in the manufacture and sale of textile products. interpretations and amendments to published approved accounting standards that are mandatory for accounting periods beginning on or before January 01. therefore. statement of comprehensive income. SIC . the provisions or directives of the Companies Ordinance.1 Standards. interpretations and amendments to published approved accounting standards that are not yet effective Following accounting standards. Karachi. 2011 1 THE COMPANY AND ITS OPERATIONS 1.2. converted into public limited company in 1955 and was listed on Karachi and Lahore Stock Exchanges in 1970 and 1971 respectively. 1984 shall prevail. Approved accounting standards comprise such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. profit and loss account. 2. - 46 . 1984.2 Standards. 2. Landhi. 82.2. interpretations and amendments to published approved accounting standards 2. 2. As a result of the amendments.(effective for annual periods beginning on or after January 0I. 2012). cash flow statement and statement of changes in equity together with explanatory notes and have been prepared under the ‘historical cost convention’ except as has been specifically stated below in respective notes. 1984. These amendments provide presumption that the carrying amount of an asset measured using the fair value model in IAS 40 will be through sale. This amendment is not likely to have any impact on the Company’s financial statements. In case requirements differ. 2 BASIS OF PREPARATION These financial statements comprise balance sheet. amendments and interpretations to approved accounting standards have been published that are mandatory to the Company’s accounting periods beginning on or after the da tes ment ione d below: IAS 24 Related Party Disclosures (revised 2009) . Main National Highway.Deferred Tax: Recovery of Underlying Assets (effective for annual periods beginning on or after January 0I. The amendment is not likely to have any impact on the Company’s financial statements. interpretations and amendments to published approved accounting standards that became effective during the year There are certain new standards.1 Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. The revision amends the definition of a related party and modifies cer tain related party disclosure requirements for government related entities and include an explicit requirement to disclose commitments involving related parties. Amendments to IAS 12 .1 Gul Ahmed Textile Mills Limited (The Company) was incorporated in 1953 in Pakistan as a private limited company. 2011).

Further. but may be presented either in the statement of changes in equity or in the notes.These amendments remove unintended consequences arising from the treatment of prepayments where there is a minimum funding requirement. 2013 January 1. The amendment may result in certain changes in disclosures. 2013 January 1. Estimates and judgments are continually evaluated and are based on historical experience. These amendments clarify that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income is also required to be presented. The amendment may result in certain changes in disclosures.Consolidated Financial Statements IFRS 11 .4 Critical accounting estimates and judgments The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates.Joint Agreements IFRS 12 .IFRS 7 Financial Instruments: Disclosures (effective for annual periods beginning on or after January 0I.IAS 19 The limit on a Defined Benefit Assets.- Amendments to IFRIC 14 . Improvements to IFRSs 2010 . 2015 January 1. including expectations of future events that are believed to be reasonable under the circumstances.3 Functional and presentation currency These financial statements are presented in Pakistan Rupee which is the Company's functional currency. 47 Annual Report 2011 . - - There are other amendments to the approved accounting standards and interpretations that are mandatory for accounting periods beginning on or after January 01. 2013 January 1. These amendments result in prepayments of contributions in certain circumstances being recognised as an asset rather than an expense. International Financial Reporting Standards (IFRSs) IFRS 9 . Any changes in these assumptions in future years might affect unrecognised gains and losses in those years.IAS 1 Presentation of Financial Statements (effective for annual periods beginning on or after January 01. These amendments add an explicit statement that qualitative disclosure should be made in the context of the quantitative disclosures to better enable users to evaluate an entity’s exposure to risks arising from financial instruments.The areas where various assumptions and estimates are significant to the Company's financial statements or where judgment was exercised in application of accounting policies are as follows: Defined benefit plan Cer tain actuarial assumptions have been adopted as disclosed in note 8 to the financial statements for valuation of present value of defined benefit obligations and fair value of plan assets. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies. 2. the following new standards have been issued by IASB which are yet to be notified by the Securities and Exchange Commission of Pakistan (SECP) for the purpose of applicability in Pakistan. In addition. Minimum Funding Requirements and their Interaction (effective for annual periods beginning on or after January 0I.Fair Value IASB effective date annual periods beginning on or after January 1.Disclosure of Interests in other Entities IFRS 13 . 2011).This amendment is not likely to have any impact on the Company’s financial statements.Financial Instruments IFRS 10 . the IASB amended and removed existing disclosure requirements. 2013 2. 2011 but are considered not to be relevant or to have any significant effect on the Company's operations and are therefore not detailed in these financial statements. 2011). 2011). Improvements to IFRSs 2010 .

3. 3 SIGNIFICANT ACCOUNTING POLICIES 3. The results of valuation are summarised in note 8. useful life.2 Borrowing cost Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition. 48 . The Company accounts for gratuity provision on the basis of actuarial valuation using the projected unit credit method. Provision against trade debts. an estimate of recoverable amount of assets is made for possible impairment on an annual basis.6 of these financial statements. 3. Transactions in foreign currencies are translated into Pak Rupees at exchange rate prevailing at the date of transaction. advances and other receivables The Company reviews the recoverability of its trade debts.Contingencies The assessment of the contingencies inherently involves the exercise of significant judgment as the outcome of the future events cannot be predicted with cer tainty. Such borrowing costs are capitalized as part of the cost of that asset up to the date of its commissioning. Stock-in-trade and stores & spares The Company reviews the net realisable value of stock-in-trade and stores & spares to assess any diminution in the respective carrying values. Deferred tax calculation has been made based on estimate of future ratio of export and local sales based on past history.3 Staff retirement benefits Defined benefit plan The Company operates unfunded gratuity schemes for all its eligible employees who are not part of the provident fund scheme.1 Foreign currency transactions and translation All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date or as fixed under contractual arrangements. advances and other receivables to assess amount of bad debts and provision required there against on annual basis. All nonmonetar y items are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. estimates the value of contingent assets and liabilities which may differ on the occurrence/non . Property. construction or production of a qualifying asset. Net realisable value is determined with reference to estimated selling price less estimated expenditures to make the sales. based on the availability of the latest information.occurrence of the uncertain future event(s). The Company. plant and equipment The Company reviews appropriateness of the rate of depreciation. Income taxes The Company takes into account relevant provisions of the prevailing income tax laws while providing for current and deferred taxes as explained in note 3. Foreign exchange gains and losses on translation are recognized in the profit and loss account. Provision for obsolescence Provision for obsolescence and slow moving spare parts is based on parameters set out by management. Further where applicable. residual value used in the calculation of depreciation.

Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate.1. Gains and losses on disposal of operating assets are included in profit and loss account.Actuarial gains and losses arising at each valuation date are recognized immediately in the profit and loss account. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all taxable 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 taxable profit.33% of the basic salary. Depreciation is charged on reducing balance method at rates specified in the note 13.5 Provisions Provisions are recognized when the Company has present obligation (legal or constructive) as a result of past event. 3. plant and equipment Operating assets Operating assets are stated at cost less accumulated depreciation and any identified impairment loss except leasehold land which is stated at cost. The Company takes into account the current income tax law and decisions taken by the taxation authorities. 3. Full year's depreciation is charged on additions except major additions or extensions to production facilities which are depreciated on pro-rata basis for the period of use during the year and no depreciation is charged on assets in the year of their disposal. The charge for current tax also includes adjustments.7 Property. Defined contribution plan The Company operates a recognized provident fund scheme for its eligible employees to which equal monthly contribution is made by the Company and the employees at the rate of 8. 49 Annual Report 2011 . 3. 3. to provision for taxation made in previous years arising from assessments framed during the year for such years.4 Accumulated employee compensated absences The Company provides for compensated absences for all eligible employees in the period in which these are earned in accordance with the rules of the Company. Deferred tax liabilities are 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. based on tax rates that have been enacted. where considered necessary. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse. unused tax losses and tax credits can be utilized.6 Taxation Current Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. No amor tisation is provided on leasehold land since the lease is renewable at the option of the lessee. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Benefits under the scheme are payable to employees on completion of the prescribed qualifying period of service under the scheme.

the carrying amount is reduced to recoverable amount and the difference is recognized as an expense.11 Stock-in-trade Stock of raw materials. Where an impairment loss subsequently reverses. 3.13 Trade and other payables Liabilities for trade and other payables are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received.9 Investments Investments in subsidiary company are initially stated at cost. If such indication exists. Net realizable value signifies the estimated selling prices in the ordinary course of business less costs necessarily to be incurred in order to make the sale. Amortisation is charged over the useful life of the assets on a systematic basis to income applying the straight line method at the rate specified in note 14. work-in-process and finished goods are valued principally at lower of weighted average cost and net realizable value. Waste products are valued at net realisable value.14 Financial assets and liabilities All financial assets and liabilities are initially measured at cost. the Company reconsiders the carrying amount of the investments to assess whether there is any indication of impairment loss. 3. These are translated into Pak Rupees at the rates ruling on the balance sheet date or as fixed under contractual arrangements. Cost of work-in-process and finished goods includes cost of direct materials. 3. 3. A provision is made for any excess of book value over net realizable value. plant and equipment as and when the assets star ts operation. except for those in transit. 3. as the case may be.12 Trade debts Trade debts are carried at original invoice amount except export receivables. Items in transit are stated at cost comprising invoice value and other incidental charges paid thereon. These financial assets and liabilities are subsequently measured at fair value. 3.Capital work-in-progress Capital work-in-progress is stated at cost accumulated up to the balance sheet date and represents expenditure incurred on property. spares and loose tools These are stated at moving average cost less slow moving provision and goods-in-transit are valued at cost accumulated to the balance sheet date. 50 . Cost of raw materials and trading stock comprises of the invoice value plus other charges paid thereon.These expenditures are transferred to relevant category of property. which is the fair value of the consideration given and received respectively. 3. plant and equipment in the course of construction. Debts considered irrecoverable are written off and provision is made for debts considered doubtful. labour and appropriate portion of manufacturing overheads. At subsequent reporting dates. the carrying amount of the investment is increased to the revised recoverable amount.10 Stores. or amortised cost.8 Intangible assets Intangible assets are stated at cost less accumulated amortisation. The reversal of such impairment loss is recognized as an income not exceeding the amount of original cost.

1 Authorised capital 2011 150.233.566 5.478. Revenue from sale of goods is measured at the fair value of consideration received or receivable.16 Impairment The carrying amounts of the Company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss.000 2010 Rs.10 each fully paid in cash Ordinary shares of Rs.233.566 5.10 each issued as fully paid bonus shares 387. subscribed and paid .17 Revenue recognition Sales are recorded on dispatch of goods and in case of export when the goods are shipped.337 634.337 634.326 2010 38.000 2010 75.473 387.656 63.up capital 2011 38.000 Ordinary shares of Rs.785 192.10 each 1. cash and cheques in hand and cash with banks on current.975 54.000. Impairment losses are recognized as expense in profit and loss account. if any.18 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. running finance under mark-up arrangements and short term borrowings. 2011 4 SHARE CAPITAL 4.548 192.10 each fully paid under scheme of arrangement for amalgamation Ordinary shares of Rs. net of returns and trade discounts.473 19. For the purposes of the cash flow statement.975 54.656 63.785 51 Annual Report 2011 .3. 3. cash and cash equivalents comprises short term investment.2 Issued. 3.797.447. the assets’ realizable value is estimated in order to determine the extent of the impairment loss.500.478. If any such indication exist. 3.15 Offsetting of financial assets and liabilities All financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if the Company has a legal enforceable right to set off the recognized amounts and intends either to settle on net basis or to realize the assets and settle the liabilities simultaneously. 3.19 Dividend and appropriation to reserves Dividend and appropriation to reserves is recognized in the financial statements in the period in which these are approved.447. 000s 750.000 4.548 19.797.326 Ordinary shares of Rs. savings and deposit accounts.000.

1 1.5 a) Under State Bank of Pakistan (SBP) 12 half yearly scheme of Long Term FinanceJune-2010 Export Oriented Projects (LTF-EOP) b) Under LTF-EOP scheme 12 half yearly November-2010 5. 6.000 2.000 400.a.030.450 7.000 Capital reserve Share premium Book difference of share capital under scheme of arrangement for amalgamation Rs.592 104.00% p.5 12 half yearly February-2010 6.5 12 half yearly January-2010 2.1. 000s Mark-up rate per annum 2011 2010 Rs.446 5. 6 LONG TERM FINANCING .a.510 778 7.887 21. payable quarterly 44.000 80.710 30.559 450.999 8. 000s Habib Bank Limited Loan 4 6.405 Habib Bank Limited Loan 5 Under LTF-EOP scheme Habib Bank Limited Loan 6 Under LTF-EOP scheme Habib Bank Limited Loan 7 Under LTF-EOP scheme 6.000 2.1. payable quarterly 7.430.a.416 7.571 9.1 This represents appropriation of profit in past years to meet future exigencies.887 21. payable quarterly 48.747 59.1. 6. 000s 5.480.2011 2010 Note 5 RESERVES Revenue reserve General reserve .504 53. 6.SECURED Note Number of installments and commencement month Installment amount Rs.446 2.a.612 6.950. payable quarterly 25.00% p.851 85.880.559 450.5 12 half yearly December-2010 6.555 52 .000 428.a.00% p. payable quarterly 7.00% p.446 2.1.030.446 428. 6.579 4.00% p.opening Transfer from profit and loss account 2.

241 Average six months 192.5 7. 6.319 557 128 13. 6.00% p.3. payable quarterly 8.50% p. payable quarterly 10.995 11.1.a.1.a.866 6. payable quarterly 7.3 12 half yearly April-2010 6 half yearly August-2010 931 48. 6.190 6.00% p.359 4.a.000 Average six months 125.000 Average three 250.000 United Bank Limited Loan 5 Under LTFF scheme United Bank Limited Loan 6 6.359 4. 000s 1.1.00% payable half yearly 10.540 United Bank Limited Loan 7 Under LTFF scheme United Bank Limited Loan 8 Under LTFF scheme United Bank Limited Loan 9 Under LTFF Scheme 6. payable quarterly 5.00% p.614 8.25% p.25% payable half yearly 10. 6.a. 6. 6.5 6.6 6. 6.a.00% p. payable quarterly 10.1.247 176.a.3 16 half yearly November-2010 6 half yearly March-2011 363 25.536 50.00% payable half yearly 7.6 6.192 KIBOR Ask rate + 1.a. 6.6 6.a.a.524 176.Note Number of installments and commencement month 12 half yearly January-2010 12 half yearly February-2010 Installment amount Rs.690 1.000 months KIBOR Ask rate +1. 000s 18.698 139 11.000 10. payable quarterly 10. 6.a.995 11.a.080 5.690 - 53 Annual Report 2011 .430 56.00% p.430 56.6 10 half yearly December-2012 12 half yearly December-2011 12 half yearly January-2012 1. payable quarterly 10.190 6.00% p. payable quarterly 15.199 10. payable quarterly 10.614 350.3.00% p.3.a.3 16 half yearly August-2011 16 half yearly October-2011 16 half yearly March-2012 16 half yearly August-2012 10 half yearly March-2009 562 710 277 3.50% p. 6.6 6.806 150.50% p.678 1. payable quarterly 8.1.1.6 6.866 Habib Bank Limited Loan 8 a) Under LTF-EOP scheme b) Under LTF-EOP scheme Habib Bank Limited Loan 10 Under State Bank of Pakistan (SBP) Scheme of Long Term Financing Facility (LTFF) Habib Bank Limited Loan 11 Under LTFF scheme Habib Bank Limited Loan 12 Under LTFF scheme Habib Bank Limited Loan 13 Under LTFF scheme Habib Bank Limited Loan 14 Under LTFF scheme United Bank Limited Loan 2 6.6 6.054 Mark-up rate per annum 2011 2010 Rs.282 1.000 KIBOR Ask rate + 1. payable quarterly 10.6 16 half yearly July-2011 6.3.795 289.379 United Bank Limited Loan 3 Under LTF-EOP scheme United Bank Limited Loan 4 6.3.00% p. 6. payable quarterly 13.6 6.

6.a.a. Loan 5 6.706 4. 6.212 1.6 Under LTFF scheme Habib Metropolitan Bank Ltd.719 2. 6.20% p.916 62. 6. payable quar terly Average six months KIBOR Ask rate + 1.495 40.Note Number of installments and commencement month 12 half yearly February-2012 12 half yearly April-2012 19 half yearly Novemebr-2011 19 half yearly December-2011 Repaid during the year Repaid during the year Installment amount Rs.00% p.a.a.a.458 Habib Metropolitan Bank Ltd.00% p. 6.3.00% p.410 68.315 37. payable quar terly 10. payable quar terly 11.504 4.860 - 54 . payable quar terly 11.145 684 2.1 10.6 6.374 7.6 6.615 23. payable quarterly 11. payable quar terly 7.50% p.804 3. 6.296 24.a.516 37.441 5.065 67.000 43.2.6 Under LTFF scheme 194.40% p. 6.589 United Bank Limited Loan 10 Under LTFF scheme United Bank Limited Loan 11 Under LTFF scheme United Bank Limited Loan 12 Under LTFF scheme United Bank Limited Loan 13 Under LTFF scheme National Bank of Pakistan Loan 1 Under LTF-EOP scheme National Bank of Pakistan Loan 2 6.25% p.328 6.592 48.065 67.149 18. Loan 4 6.5 16 quar terly September-2011 12 half yearly December-2008 12 half yearly March-2010 12 half yearly April-2010 12 half yearly November-2010 16 half yearly February-2012 16 half yearly March-2012 16 half yearly June-2012 16 half yearly July-2012 10 half yearly December-2013 2.6 Under LTFF scheme Habib Metropolitan Bank Ltd.20% p.373 28. payable quarterly 10.2.00% p.2.042 19.2. 6.a.00% p. Loan 2 6.20% p.a.615 18.00% payable quar terly 10.6 6.000 National Bank of Pakistan Loan 4 Under LTFF scheme Bank Al-Habib Limited Loan 1 Under LTF-EOP scheme Habib Metropolitan Bank Loan 1 a) Under LTF-EOP scheme b) Under LTF-EOP scheme 6.351 2.6 6.373 28.822 84.00% p. Loan 3 6.2. 000s 124.895 44. payable quar terly Average three months KIBOR Ask rate + 1. Loan 6 6.495 40.385 112.2.5 6. 6.6 Under LTFF scheme Habib Metropolitan Bank Ltd. Loan 7 6.000 11. payable quarterly 10.a.5 Under LTF-EOP scheme Habib Metropolitan Bank Ltd. 6. payable quar terly 7.1.2.2.a. '000s 741 3. 6.516 22.227 141.280 43. payable quar terly 7.000 22.166 233. payable quar terly 7.400 - National Bank of Pakistan Loan 2-A Under LTF-EOP scheme National Bank of Pakistan Loan 3 6.6 6. payable quar terly 7.3.5 6.50% payable half yearly 7. payable quar terly 10.2.5 6.25% p. payable quar terly 8.a.a.3.20% p.6 Under LTFF scheme Habib Metropolitan Bank Ltd.860 33. 6.2.a.a. 6.3.00% p.a.3 6 half yearly September-2008 25 quar terly September-2009 5.a.2. payable quar terly 11.295 Mark-up rate per annum 2011 2010 Rs. 6. 6. 6.417 2.685 7.00% p.

2.3 12 half yearly December-2010 12 half yearly February-2010 12 half yearly March-2010 12 quarterly March-2010 100.6 6.253 31.3 32 quarterly July-2010 6 half yearly February-2011 9.00% p.222 22.00% p. payable quarterly 7.a.886 31.256 15.a. 6. 6.594 67.247 8.00% p.00% payable quarterly 10.667 Allied Bank Limited Loan 2 Under LTFF scheme Meezan Bank Ltd Diminishing Musharaka 1 6.2.a. payable quarterly 11.667 Mark-up rate per annum 2011 2010 Rs.10% p.3 6 half yearly July-2011 5.6 6. 000s 34. 6. payable quarterly 28.6 16 quarterly June-2010 16 quarterly September-2010 10 half yearly January-2014 8 half yearly October-2012 8 half yearly November-2012 2. 6.578 30.038 1.2.591 2.3.a.266 259. payable quarterly 7. 6.20% p.839 1.883 1. payable quar terly 11. payable quar terly 11.6 6.a.222.a.513 (632.833 10.599 12.720 2.100 42.6 6.285 HSBC Bank Middle East Ltd Loan 1 a) Under LTF-EOP scheme b) Under LTF-EOP scheme HSBC Bank Middle East Ltd Loan 2 Under LTF-EOP scheme HSBC Bank Middle East Ltd Loan 3 Under LTF-EOP scheme HSBC Bank Middle East Ltd Loan 4 Under LTF-EOP scheme Allied Bank Limited Loan 1 6. 6.198.594 Meezan Bank Ltd Diminishing Musharaka 2 6.5 6.00% payable half yearly Average six months KIBOR Ask rate + 1.3.a.899.830.201 76.3.3.00% p. 6.50% payable half yearly Average six months KIBOR Ask rate + 1.a.Note Number of installments and commencement month 12 half yearly October-2010 12 half yearly November-2010 Installment amount Rs.a. 6.516 31.2.650 55 Annual Report 2011 .2.376 18. 6.883 6.00% p.200 23. payable quarterly Average six months KIBOR Ask rate + 1.516 NIB Bank Limited Loan 1 Under LTFF scheme NIB Bank Limited Loan 2 Under LTFF scheme Faysal Bank Limited Under LTFF scheme Standard Chartered Bank Loan 1 Under LTFF scheme Standard Chartered Bank Loan 2 Under LTFF scheme 6.449 7.3.696 Meezan Bank Ltd Diminishing Musharaka 3 6.061 9.177 296.3 6 half yearly June-2011 1.00% p.635 2.451 22.a.00% p.623 9.863) 2.960 175. payable quarterly 9.6 6.000 166.328 91.044) (676.5 6.5 7.596 6.a.5 6. 6.995 21.125 - Current portion shown under current liabilities 2.838 875 844 16.384 7.10% p.50% payable half yearly 9. 000s 2. payable quarterly Average three months KIBOR Ask rate + 1. payable quarterly 7.00% p. payable quarterly 7.873 7.

379) (19.1 Principal actuarial assumptions Following principal actuarial assumptions were used for the valuation: Estimated rate of increase in salary of the employees Discount rate Average expected remaining working life time of employees 11 % p. Habib Metropolitan Bank Limited is a related party. The loans availed under the facility shall be repayable within a maximum period of ten years including maximum grace period of two years from the availment date.739) 12. 12 % p. However. 2007.889) (6. 2009.1 6. 07 dated December 31. 000s 7 DEFERRED TAXATION .NET Taxable temporary difference in respect of Accelerated tax depreciation allowance Deductible temporary differences in respect of Provision for gratuity Provision for doubtful debts Provision for slow moving items 303. These loans are secured by charge over specified machinery.763 (1.993) (10.a.a.563 208.300) (14. 10 years 11 % p. where financing facilities have been provided for a period of upto five years maximum grace period shall not exceed one year as per State Bank of Pakistan MFD Circular No.a.621) 14.106 10.3 6.a. These loans are secured by way of pari passu charge over the fixed assets of the Company.2 Movement in liability Balance as at opening Charge for the year Payments during the year Balance as at closing 8.281) (5.314 8 STAFF RETIREMENT BENEFITS 8.007 7.4 6. 10 years Note 8. 12 % p.2 6. 01 dated January 22.6 These loans are secured by first pari passu charge over present and future fixed assets of the Company and equitable mortgage over land and building. Grace period of one year in payment of principal outstanding under LTF-EOP facilities was allowed by the banks as per State Bank of Pakistan SMEFD Circular No.5 6.283 56 .824 (1. 2011 2010 Rs.444 (6.4 12.6.283 8.015 (4.261) 284.449) 194.868) (7.

4 Charge for the year Current service cost Interest cost Actuarial gain 6.964.630 76.444 6.287 5.854 124.283 6.1 9.290 38.589 57 Annual Report 2011 .923.621) 14.424 527 18.130 2.469 66.020 411 18.570 2.474 Rs.474 8.329 39.007 6.310 (10.223 1.501 (709) 7.867 151.020) 85.586.223 1.1 Workers' profit participation fund Opening balance Provision for the year Interest for the year Payments made during the year Closing balance 39.009 104.283 (6.580 156.970 1.970 1.833 1.106 8.036 984 49.SECURED Mark-up on long term financing Mark-up on short term borrowings 64.931 216.2011 2010 Note 8.340 85.559 4.969 9.020 10 ACCRUED MARK-UP .996 22.739) 12.798 52.189 420.514 918.3 Changes in present value of defined benefit obligation Balance as at opening Current service cost Interest cost Actuarial gain on present value of defined benefit obligation Benefits paid Balance as at closing 12.045 9.015 9 TRADE AND OTHER PAYABLES Creditors Due to related parties Murabaha Accrued expenses Advance from customers Advance from related parties Payable to employees’ provident fund Workers' profit participation fund Unclaimed dividend Others 1.290) 39.501 (709) (4.424 10.872 461.020 82. 000s 10.339 2.444 (39.083 478.

2011 Note 11 SHORT TERM BORROWINGS - SECURED
Short term bank borrowings Short term running finance 11.1 9,266,752 492,438 9,759,190

2010 Rs. 000s
5,013,222 731,505 5,744,727

11.1 It includes short term istisna amounting to Rs. 493 million (2010: Nil). 11.2 Short term borrowings are secured by pari passu hypothecation charge over stores and spares, stockin-trade, trade debts, other receivables and pledge over cotton. Unavailed facility at the year end was Rs. 2,185 million (2010: Rs. 3,041 million). The facility for short term borrowings mature within twelve months. Short term borrowings include Rs. 587 million (2010: Rs. 27 million) from related party. Mark-up rates range from 1.54% to 16.65% (2010: 1.54% to 16.30%) per annum.

12

CONTINGENCIES AND COMMITMENTS
12.1 Company owns and possesses a plot of land measuring 44 acres in Deh Khanto, which is appearing in the books at a cost of Rs. 64 million. Company holds title deeds of the land which are duly registered in its name. Ownership of the land has been challenged in the Sindh High Court by some claimants who claim to be the owners, as this land was previously sold to them and subsequently resold to the Company. The claim of the alleged owners is fictitious. The Company is confident that its title to the land is secure and accordingly no provision has been made in these financial statements. 12.2 The Company has filed a suit in the Sindh High Court for recovery of Rs. 33.409 million (2010: Rs. 33.409 million) included in other receivables. Company's management and its legal counsel are of the opinion that the case will be decided in the Company's favour and as such no provision has been made there against. 12.3 The Company has filed a petition in the Sindh High Court against order passed by the Board of Trustees, Employees Old Age Benefits Institution (EOBI) for upholding the unjustified additional demand of payment raised by EOBI for accounting years 2000-01 and 2001-02 amounting to Rs. 50.827 million (2010: Rs. 50.827 million). This demand has been raised after lapse of more than two years although the records and books of the Company were verified by the EOBI to their entire satisfaction and finalization of all matters by EOBI. The Honorable Sindh High Court has already restrained EOBI from taking any action or proceedings against the Company. No provision has been made there against in these financial statements as the Company is confident of the favourable outcome of the petition.

58

12.4 Guarantees (a) Rs. 257 million (2010: Rs. 146 million) against guarantees issued by banks which are secured by pari passu hypothecation charge over stores and spares, stock-in-trade, trade debts and other receivables. (b) Post dated cheques Rs. 71 million (2010: Rs. 42 million) issued to various Government Agencies. (c) Bills discounted Rs. 1,306 million (2010: Rs. 1,156 million). (d) Corporate guarantee of Rs. 96.965 million (2010: Rs. 85.795 million) has been issued to a bank in favour of subsidiary company. 12.5 The Company is committed for capital expenditure as at June 30, 2011 of Rs. 340 million (2010: Rs. 444 million). 12.6 The Company is committed for non capital expenditure items under letters of credits as at June 30, 2011 of Rs. 581 million (2010: Rs. 412 million). 12.7 The Company is committed for minimum rental payments for each of the following period as follows:

Note
Not Later than one year Later than one year and not later than five years Later than five year

2011
192,728 828,357 907,230 1,928,315

Rs. 000s

2010

186,611 802,963 1,125,353 2,114,927

13

PROPERTY, PLANT AND EQUIPMENT

Operating assets Capital work in progress

13.1 13.2

6,582,082 71,643 6,653,725

6,088,782 51,332 6,140,114

59

Annual Report 2011

13.1 Operating assets
Leasehold Buildings and Plant and Office Furniture and Vehicles land structures on machinery equipment fixtures leasehold land Rs. 000s Net carrying value basis year ended June 30, 2011 Opening net book value (NBV) 234,107 Additions (at Cost) Disposal at NBV Depreciation charge Closing net book value Gross carrying value basis as at June 30, 2011 Cost Accumulated depreciation Net book value Net carrying value basis year ended June 30, 2010 Opening net book value (NBV) 234,107 Additions (at Cost) Disposal at NBV Depreciation charge Closing net book value Gross carrying value basis as at June 30, 2010 Cost Accumulated depreciation Net book value 234,107 234,107 1,832,873 8,315,723 (762,465) (3,875,946) 1,070,408 10 4,439,777 10 318,042 (181,575) 136,467 79,320 316,510 11,096,575 (35,142) (152,665) (5,007,793) 44,178 163,845 6,088,782 20 234,107 1,109,874 83,638 (123,104) 1,070,408 4,442,184 484,100 (10,318) (476,189) 4,439,777 115,753 55,525 (2,606) (32,205) 136,467 47,440 120,867 6,070,225 2,651 97,126 723,040 (853) (13,184) (26,961) (5,060) (40,964) (677,522) 44,178 163,845 6,088,782 234,107 234,107 1,921,565 9,282,567 (880,921) (4,369,547) 1,040,644 4,913,020 336,613 (195,239) 141,374 99,154 364,281 12,238,287 (34,577) (175,921) (5,656,205) 64,577 188,360 6,582,082 234,107 1,070,408 88,692 (118,456) 1,040,644 4,439,777 975,122 (551) (501,328) 4,913,020 136,467 40,641 (2,333) (33,401) 141,374 44,178 163,845 6,088,782 33,169 84,425 1,222,049 (4,792) (12,818) (20,494) (7,978) (47,092) (708,255) 64,577 188,360 6,582,082 Total

Depreciation rate % per annum

15 to 30 10 to 12

13.1.1 Structures on leased retail outlets are depreciated over the respective lease term. 13.1.2 Depreciation charge for the year has been allocated as follows:

Note
Cost of goods manufactured Distribution cost Administrative expenses 25.1 26 27

2011
591,974 45,412 70,869 708,255

Rs. 000s

2010
583,463 34,235 59,824 677,522

13.1.3 Disposals include assets scrapped during the year amounting to Rs. 2.657 million (2010: Rs. 1.129 million)

60

Chundrigar Road. Karachi Popular Furniture Garden. No. Karachi Insurance Claim Vacuum cleaners 673 163 164 Various wooden furniture 1. Abdul Fatah Bhutto P.850 1. Ghulam Hussain Area Old Thana Village.000s Particulars of purchasers Office equipment.Taluka Ratodero.558 586 610 Electrical appliance 340 82 86 Computers 440 106 109 Various wooden furniture 728 261 350 Various office. Karachi Ghaziani Furniture Mart Liaquatabad Furniture Market.722 496 1. 6. Aga Khan Road. furniture and fixtures Various wooden furniture 648 242 313 Al-Mustaqeem Furnishers Liaquatabad Furniture Market. electrical & furniture items Vehicles Toyota Corolla 21. District Larkana Mr. Tahsil & District Malir. Karachi Toyota Estima 2.4 Details of operating assets sold (by negotiation except where stated) Particulars Plant and machinery Auto mach coner splicer 7. Bangul Dero. Khayaban-e-Badar. Karachi Mr. Farhan Shahzad House No. Basti Lal Khan. Karachi Pak Computer Accessories Uni Tower. Malir Colony. Saddar. I. DHA. Street No. Sector 16.189 265 450 Mr. Saudabad. Gulistan-e-Johar. C Area. Shershah. Anjum Anis Ansari Phase No. O.800 Rajab Enterprises H. Block-9.165 709 918 Honda City 845 188 601 Suzuki Baleno 699 100 125 61 Annual Report 2011 . Tooba Road. Karachi Mr.063 2.13. Karachi Masha Allah Communication Electronic Market. Jhang Cost Written down Sale value proceeds Rs.I.1. A-304. C-42. PIA Housing Society. 4. Bahadur Khan Kabari Market.116 1. Karachi Mr.

B-30. Karachi Mr. Karachi Mr. Karachi Mr. Karachi Mr. B-13. Malir. Muhammad Aamir House No.H. Muhammad Arif House No. Sector-11E. Gulshan-e-Iqbal. Kher Mohammad House No.Particulars Vehicles (continued) Toyota Corolla Cost Written down Sale value proceeds Rs.228 274 393 Suzuki Alto & Suzuki Bolan Suzuki Alto & Suzuki Cultus Suzuki Cultus 904 296 756 1. Mohammad Faheem Khan House No. New Qadri. Block-B. D. Gulshan-e-Iqbal. 3rd Floor. G-935. Rab Nawaz Wakeel Railway Road Banno. Gulshan-e-Iqbal.000s Particulars of purchasers 1.086 216 776 610 250 366 Suzuki Bolan 396 88 339 62 . Sector-11-C/1. Saima Heaven. 8/B. North Karachi. Gulshan Centers. Adamjee Road..189 265 718 Suzuki Cultus 585 104 238 Suzuki Alto & Toyota Corolla Honda City 1. New Fatima Jinnah Colony. Phase II. Mohinuddin Office # 8.A. Mohammad Yasin (Employee) House No. Gul Dad House No.189 265 667 Mr. HK-579. Extention. North Karachi. A-24. Karachi Mr. 6th Commercial Street. Block # 4. B-514.746 917 375 513 Suzuki Cultus 590 164 427 Honda City 897 294 359 Honda Civic 1. Mohammad Arif House No. Irtaza Akbar Baloch House No. Phase-4. Karachi Mr. 5. 15 Commerical Street. B-30. Karachi Mr.945 1. 37/D Area. Street No. B-12. A-209. Mohammad Asif Gadit House No. 182/B. Karachi Mr. 9-C-1. Karachi Mr. Muhammad Furqan House No. 308. D. Street No. Mohammad Ameen Khan (Employee) House No.A. Block 13-C. Karachi Suzuki Alto 496 111 202 Toyota Corolla 1.. Gulshan-e-Iqbal. KPT Building.H. Muhammad Asif Khan (Employee) Flat No. Landhi No. Al-Haram Garden Appartment. 55/1. Karachi Mr. 1. 11-C/1. Karachi Mr. Karachi Mr.247 1.

Karachi Mr. Landhi.1. Landhi No. Islamabad Syed Kabir Ahmed House No.000s Particulars of purchasers 453 101 367 Mr. 644.Particulars Vehicles (continued) Suzuki Bolan Cost Written down Sale value proceeds Rs. Muhammad House No. Noman Hassan Khan House No. Metro Well. 1167.808 517 1. Karachi Syed Irfan Ali Rizvi House No. Federal “B” Area.Tapal Ghar New Town.. Muhammad Sadiq House No. Karachi Mr. J. Federal B Area. Karachi Suzuki Alto 496 111 402 Toyota Corolla 1. Nisar Ahmed House No. Fatima Jinnah Colony. 664. Federal ‘B’ Area. Block-3.T. 875/3. Shahzad Zahoor House No. Karachi Mr. Ancholi. B-473. E-106. A-908. 102/6. B-Area. Karachi Mr. Sector-1-D. Jamshed Road. Karachi Mr.G-935.018 286 408 Toyota Corolla 1. Muhammad Haroon Flat No. Karachi Mr. Karachi Mr.E. Section G-10/1. Block-9. Muhammad Hamid House No.052 354 950 Honda Civic & Suzuki Cultus Daihatsu Coure 1. Block-1. S. Adamjee Road.403 399 57 262 Suzuki Alto 513 210 465 Honda City 899 250 450 Suzuki Alto 496 111 325 63 Annual Report 2011 . Muhammad Shakeel House No. 5-C-8/11.I. Malir Colony. Chandni Chowk. Karachi Mr. Metro View.M. Muhammad Yameen House No. Mail Service Road. 25-CA-401. 23. Soni Appartment. Quaidabad. Nazimabad. Block-12. Paposh Nager. Block-2. Sindhi Muslim Society. Muhammad Yaqoob Diwan House No. Karachi Mr. Gulburg. Ghulam Hussain Qasim Road. New Town. Block-A. B-14. Rehan-ul-Haq House No. Karachi Mr.189 265 727 Suzuki Alto 496 88 331 Suzuki Alto 496 138 407 Suzuki Alto 496 111 176 Toyota Corolla 1.

Street No.000 each 5. 50.198 334 479 Mr. Landhi.000s Particulars of purchasers 1.925 74.618 Various 2011 2010 72.Particulars Vehicles (continued) Honda Civic Cost Written down Sale value proceeds Rs.340 6.301 2.592 1. 6.222 4.832 30.055 64 .068 Written down value below Rs.714 35. Karachi Insurance Claim Various 6.837 25. Zulfiqar Ali House No.835 17. Area 37-D. 364.

valued at cost.608 51.507 35.281 28.1 2011 Rs.035 (436.101 407.382 28.The Investment value on net assets basis as per the audited accounts for the year ended June 30.450 15.220 1.672 14.318) (528. Remaining useful life range from one to four years.630 28. 000s 30.883 4.FZC UAE is a wholly owned unquoted subsidiary (the subsidiary) of the Company having 10.006 (15.382 77.900 Total 2010 Machinery and Building Other Total store items construction assets held for capitalisation Rs. 187 million) 65 Annual Report 2011 .006) 9.725) 38.000 (2010:10.823) 38.2 Capital work-in-progress 2011 Machinery and Building Other store items construction assets held for capitalisation Cost as at July 1 Capital expenditure incurred during the year Transferred to property.670) (16.672) 16.218 543.900 Note 14 INTANGIBLE ASSETS .672) 37.798 (75. 000s 2010 58.883 14.332 (60.138 (16.332 27. plant and equipment Transferred to intangible assets Cost as at June 30 1.349 38.349 147.808 13.050 921.086) 1.050 5.FZC UAE 15.725 1.1 Gul Ahmed International Limited .488 (897.000) ordinary shares of USD 100 each.643 21.13.098) 16.453 (108.630 109.450 58.006) (38.The subsidiary is incorporated in United Arab Emirates (UAE).990) (8.074) 51.673 (38.1 16.447 (93.COMPUTER SOFTWARE Net carrying value as at June 30 Opening net book value (NBV) Additions (at Cost) Amortisation charge Closing net book value Gross carrying value as at June 30 Cost Accumulated amortisation Net book value Amortisation rate is 20% per annum and the charge has been allocated as follows: Distribution cost Administrative expenses 26 27 2011 Rs.917 15.789 16.202 million (2010: Rs.989 91. Note 15 LONG TERM INVESTMENT Gul Ahmed International Limited . 000s 2010 14.371 71.545 45.743) (967.349 1. 2011 is Rs.1 The cost is being amortised over a period of five years.025.599 21.939) 24.

668) (919) (2.350 250.241 16.845 2. 000s 2010 2.262 (34.850 521 (2.232 2. Note 16.387 8.845 2.144) 706.968 17 STORES.968 4.2 Reconciliation of carrying amount of loans to executives Balance at the beginning of the year Disbursement during the year Transfer from non-executive to executive employees Repayment during the year Balance at the end of the year 2011 Rs.433 (1.1 (45.6 million) which carry no interest.2 2011 Rs.Due from non-executive employees 20 (3.846 Current portion of .Due from executives .1 Loans and advances have been given for the purchase of cars. outstanding balance of provident fund.880 510. SPARES AND LOOSE TOOLS Stores Spares Loose tools 296.954 256.991) 4.494 Provision for slow moving/obsolete items 17.058 3.Note 16 LONG TERM LOANS AND ADVANCES .059 million (2010: Rs. The maximum aggregate amount due from executives at the end of any month during the year was Rs.The balance amount carries interest ranging from 10.021 751.587) 1. scooters and household equipments and housing assistance in accordance with the terms of employment and are repayable in monthly installments. 6.968 1. 0. 000s 2010 5.840) 475.016) (975) (3.422 66 . Included in these are loans of Rs.1 million (2010: Rs.465 4.892 851 (2.866) 5.SECURED Considered good Due from executives Due from non-executive employees 16.654 million).416 2. 4.415 452.5% to 15%. end of service dues and/or guarantees of two employees. 1. These loans are secured against cars.428 2.819) 2.

114 million).631 1.863 4.1 Raw materials amounting to Rs.334. Nil) has been pledged with the banks.1 3.304 45.2 Finished goods include stock of waste valuing Rs.1 Includes Rs. 000s 27.secured Local debts . 000s 1. 35. 19.1 Movement in provision for slow moving/obsolete items Balance at beginning of the year Charge for the year Balance at end of the year 34.864 29.064 2010 28. 000s 19.160 6.864 1.158.736 34.147.769 84.064 888.904 18.unsecured . 2011 Note 19 TRADE DEBTS Export debts .318 310. 133 million (2010: Rs.763 167.Considered good . 704 million (2010: Rs.943.807.3 19.216.064) 2.1 1.2 The maximum aggregate month end balance due from related parties during the year is Rs.864 67 Annual Report 2011 .144 2010 Rs.657 (77.032 47.723 2010 Rs.278 3.748 million) determined at net realizable value.265 19.832 19.259.200 77.840 18 STOCK-IN-TRADE Raw materials Stock-in-transit Work-in-process Finished goods 18.130 811. 190 million) due from Gul Ahmed International Limited (FZC)-UAE and GTM (Europe) Limited being wholly owned subsidiar y and sub-subsidiary of the Company respectively.3 Movement in provision for doubtful trade debts Balance at beginning of the year Charge for the year Balance at end of the year 47.Considered doubtful Provision for doubtful trade debts 19. 31.864) 2.211. 2011 Rs.882 10.2011 Note 17.360 1.994 1.532.634 47.498 (47.807.030. 18. 589 million ( 2010: Rs.359.840 10.318 3.104 7.593 77.611 million (2010: Rs.2 18.617.219.

407 70.128 15.344 43.507 159.753 237.991 118.966 23.355 4.net of provision Letters of credit 3.281 84.926 48.1 22 TAX REFUNDS DUE FROM GOVERNMENT Sales tax Income tax 48.936 33.Foreign currency 23.348 117.Executives .713 47.303 6.974 28.915 57.016 975 3.1 Bank balances include Rs.307 80. 31 million (2010: Rs.204 22.546 12.421 15.1 6.499 58.926 58.639 5.753 21.861 75.Other employees 16 Suppliers Income tax .409 13. 68 .948 83.255 137.668 919 2.905 23 CASH AND BANK BALANCES Cash and cheques in hand With banks in current accounts .2 33.122 212.587 119.908 43.830 2010 Rs. 61 million) with related party.1 Others Receivable against sale of property Others 999 20.409 10.645 76.968 26.Local currency .263 21 OTHER RECEIVABLES Research and development claim Duty drawback local taxes and levies Duty drawback receivable Mark-up rate subsidy Others 21.109 47.266 63.122 1.685 51. 000s 1.2011 Note 20 LOANS AND ADVANCES Considered good Current portion of loans and advances to employees .

560 16.046 10.698 10.206.008.160) (142. 57.071 8.794 2011 Note 25 COST OF SALES Opening stock of finished goods Cost of goods manufactured Purchases and processing charges Closing stock of finished goods 25.599 2010 Rs.758 25.486 1.769) 7.435.843 25.733.452.076 651.148 (3.2 Raw materials consumed Opening stock Purchases during the year Closing stock 1.1 10.781.1 Cost of goods manufactured Raw materials consumed Stores consumed Staff Cost Fuel.296.774 19.330 51.046 209.318) 10.265.572.158.803.863) 16.716 673.036.532.157.123 (29.2 27.484) 13.253 583.1 3.823 1.733.882) 20.126.1 Sales are exclusive of sales tax amounting to Rs. power and water Insurance Repairs and maintenance Depreciation Other expenses Cost of samples shown under distribution cost 25.415 591.573 2.385.950 1.974 71.463 56.515.486 69 Annual Report 2011 . 2010 Rs. 000s 8.688.769 13.480 (41.974.599 2.404.934 7.1 8.758 5.532.592 75.307 13.518.611 650.164 million (2010: Rs.025.863 18.404.716 3.297.278 (310.158.063.104 27.184 (1.640 Work-in-process Opening Closing 167.063.585 (50.176.674.278) (47.572.725 (6.465 24.488.794 (167.797 (3.799) 18.200 119.467) 13.151 (53.284 million). 000s 3.948.489 17.430) 19.216.807.297.2011 Note 24 SALES Local Export Direct export Indirect export Duty drawback Brokerage and commission 24.625 1. 16.808.100 132.093.211 495.882) 18.318) 25.

736 35.757 23.090.917 1.769 7.065 .707 68.054 257.129 47.411 34.116 8.229 31.396 2.069 155 257.460 2.592 34. 000s Note 177.2011 26 DISTRIBUTION COST Freight and shipment expenses Staff cost Insurance Advertisement and publicity Cost of samples transferred from cost of goods manufactured Rent.031 7.235 1.633 59.232 67. rates and taxes Repairs and maintenance Vehicle up keep Conveyance and traveling Printing and stationery Postage and telecommunication Legal and consultancy fees Depreciation Amortisation Auditors' remuneration Donations Insurance Provision for doubtful trade debts Provision for slow moving/obsolete items Other expenses 27.004 29.Gratuity .069 7.125 70.929 45.656 139.1 185.824 14.782 1.332 36.412 1.085 Total 2011 2010 27.572 5.550 50.668.919 49.572 301 176.052 176.440 70 .271 40.442 27 ADMINISTRATIVE EXPENSES Staff Cost Rent.541 700.331 26.869 13.3 27.775 2.116 17.610 8.506 19.549 808.325 50.684 11.722.719 3.Contribution to provident fund .191.939 2.950 7.799 195.861 5.015 34.015 20.467 140.878 292. wages & benefits Retirement benefits .394 791.708 52.569 220.708 31.834 1.684 1.808 41.926 232.200 10.126.076 58.898 2.486 11.572 32.016 32.625 7.304 39.992 8.629 8.113.037 2. rates and taxes Depreciation Amortisation Export development surcharge Other expenses 2010 Rs.863 284.719 5.700 42.676 54.Salaries.610 3.Staff compensated absences 2.235 59.241 7.588 27.444 23.2 27.495 170.629 38.988 270.214 27.971 53.682 1.444 42.061.954 232.582.422 3.883 27.396 41.861 11.789 1.1 284. 000s 250.793 36.1 Staff cost Cost of sales 2011 2010 Distribution cost Administrative expenses 2011 2010 2011 2010 Rs.781.

603 30.1 Mark-up on long term financing/short term borrowings include Rs.3 None of the directors or their spouses have any interest in the donees.610 198 944.2 Auditor's Remuneration Audit fee Review of half yearly accounts Fee for consolidation of holding and subsidiaries Review of statement of compliance with code of corporate governance Out of pocket expenses Others 1.854 60.000 30 150 50 62 130 1.097.657 116. plant and equipment .628 9. 28 OTHER OPERATING EXPENSES Workers' profit participation fund Workers' welfare fund Property. plant and equipment scrapped 82.756 593.570 31.360 706.981 305.396 27. 71 Annual Report 2011 . 000s 27.619 29 OTHER OPERATING INCOME Income from financial assets Interest income from loans and advances Income from non-financial assets Profit on sale of property.116 30 FINANCE COST Mark-up on long term financing Mark-up on short term borrowings Interest on workers' profit participation fund Bank charges Exchange loss 307.604 38.524 20. 64 million) in respect of long term financing/short term borrowings from related party.129 53.000 30 199 167 1.454 1.931 590 9.223 268 5.055 984 44.586 3.407 25.377 2. 102 million (2010: Rs.036 14.877 7.2011 Rs.422 2010 1.799 1.444 2.702 24.net Unclaimed liabilities written back Scrap sales Others 766 12.

for the year .041 230.228) (56. 2011 Rs.548 7. 72 .694 31.252) 250.1 Reconciliation between accounting profit and tax expense Net profit for the year before taxation Tax rate Tax on accounting profit Tax surcharge levied Tax on prior periods Tax effect of minimum tax / FTR Others 1.457 63.196.769) 340.454 35% 538.227 35% 247.478.2011 Note 31 PROVISION FOR TAXATION Current . 000s 181.694 31.2 Income tax assessments of the Company have been finalised upto fiscal year 2009-10 (Tax year 2010). 000s 32 EARNINGS PER SHARE .1 266.879 (5.137 (15.748 90.85 2010 477.537.252) (136.918 230.109 11.653 55.548 18.347) (28.) 1.52 There is no dilutive effect on the earnings per share of the Company.478.997 2010 Rs.756) 16.000 (5.249 340.997 708.basic and diluted Profit for the year Weighted average number of shares Earnings per share (Rs.prior Deferred 31.533 63.347) 175.000 (15.

070.626.579 12.931) 340. 33.890 1.566.196.691 15.062.228 1.293 1.924 1.268.3 Unallocated items represent those assets and liabilities which are common to all segments and investment in subsidiary.515.619 (25.100 1.622 3.679 14.899.121 6.491.860 1.691.435.172.374.097.794 20.870 751.514 1.681.943 9.992) 25.235.489 1.453) (1.188 (4.599.843 16.724.618 833.836 1.116) 230.33 SEGMENT INFORMATION The Company has the following two reportable business segments: a) b) Spinning : Production of different qualities of yarn using both natural and artificial fibers.926 Unallocated 2011 2010 Total Company 2011 2010 33.2 Segment assets and liabilities Spinning 2011 2010 Processing 2011 2010 Rs.533 33.465 19.112.678 11.727.1 Segmental profitability Spinning 2011 2010 Processing 2011 2010 Rs. Transactions among the business segments are recorded at cost.665 16.604 (24.623.934 4. 73 Annual Report 2011 .527 Elimination of inter segment transactions 2011 2010 2011 Total 2010 Financial charges Other operating expenses Other operating income Provision of taxation Profit after taxation 1.997 1.992) (4.137.604 10.632 105.694 477.823.808.806 11.596.171.479.763 4.786 3.108 1. its processing into various types of fabrics for sale as well as to manufacture home textile products.277.020 2. Processing : Production of grey fabric.343.457 944.260 6.494 7.247.405.289 1. 000s Assets Liabilities 6.568 13.453) (1.040 2.603 53. 000s Sales Cost of sales Gross profit Distribution & Administrative expenses Profit before tax and unallocated expenses & income 757.792.350 9.981 116.003.312.238 930.511 20.677.404.339 20.386.806.035.333 10.312.560.806.507 3.969.688.251.732 76.337.437 3.

324 66. whose basic salary exceeds five hundred thousand rupees in a financial year.081 25.317 132.355 (9. 000s 167.348 240.624 71.4 Executive means an employee other than the Chief Executive and Director.933 8.4 Information by geographical area Revenue 2011 2010 Rs.329 13.450 6.800 2.653 58.744.764 3.413 1.907.734.773 5 2.681 166 178.242 2.091 Non-current assets 2011 2010 2011 34 CASH AND CASH EQUIVALENTS Cash and bank balances Short term borrowings 2010 Note 23 11 Rs.800 1 6.625.554 823. 74 .061 278.595.2 The Chief Executive and two Directors are also provided with free residential telephones.759.367 12.042 465.835) 84.326 53.720 1.320 1.964 1.449 34.623 1.200 500 250 4.794 6.249. 126 thousand (2010: four Directors Rs.002 297.453.218.268 3.188.761) 35 REMUNERATION OF CHIEF EXECUTIVE. 35.929 32.33. DIRECTORS AND EXECUTIVES 2011 Chief Directors Executive Executives Total 2010 Chief Directors Executives Executive Total Rs.279.287.256 169.465 8.729.006 25.007 566 11.3 Aggregate amount charged in the accounts for the year for meeting fee to seven Directors was Rs.824 1.400 960 240 200 3.966 (5.073.675.127.236 19. 6 thousand).092 1.253.226.727) (5.115 1.435.129 1.688.000 1.300 3.103 6.242 222.686 26.913 9.641 58.659.190.788. 000s Pakistan United Kingdom Germany China United States Netherlands France Brazil United Arab Emirates Other Countries Total 8.901 2.1 The Chief Executive. Directors and certain Executives are provided with free use of Company cars and are covered under Company's Health Insurance Plan along with their dependents.267.452 1.278 359.404 172 Managerial remuneration House rent allowance Other allowances Contribution to provident fund Number of persons 3.517 49.450 6.950 1 8. 35. 000s 83.462 691 13.828.093 4 123.135 127 132 35. 35.677 3.679 207.190) (9.

(20 Counts converted) Capacity 124. 2011 are included in respective notes to the financial statements.716 Working 3 shifts 3 shifts 2010 000s Capacity 121.530 750 30.36 TRANSACTIONS WITH RELATED PARTIES Related parties comprise subsidiaries. Loans and remuneration of the key management personnel are disclosed in notes 16 and 35 respectively.620 1. The Company in the normal course of business carried out transactions with various related parties.530 750 3.903 26.850 42.423 334 4. Relationship with the Company Subsidiaries Nature of Transactions 2011 2010 Rs.227 Production 84.988 Production is lower due to variation in production mix and various technical factors.436 48.472 862.433.471 506.199 34.965 31.185 106. meters (50 Picks converted) Kgs.943 747 4. companies where directors also hold directorship.980 41.329 61.935.018. 37 CAPACITY AND PRODUCTION 2011 000s Cloth Yarn Unit Sq. Related parties status of outstanding receivables and payables as at June 30.136 48.227 Production 85.238 7.521 85.067 38.073 1.904 64.483 Associated companies and others related parties There are no transactions with directors of the Company and key management personnel other than under the terms of employment.119 470.933 203.113 101. 75 Annual Report 2011 .508 1.250 33.795 22.860 96. associated companies. directors of the Company and key management personnel. 000s Purchase of goods Sale of goods Corporate guarantee issued in favour of Subsidiary Company (at year end) Purchase of goods Sale of goods Rent paid Fees paid Commission/Rebate Deposit with bank (at year end) Borrowing from bank (at year end) Bank guarantee (at year end) Bills discounted Commission/Bank charges paid Mark-up/interest charged Provident fund contribution 1.

Foreign exchange risk arises mainly from future economic transactions or receivables and payables that exist due to transactions in foreign exchange.369 6.62 85. The Company manages market risk as follows: a.The Company's overall risk management programme focuses on the unpredictability of financial markets and seek to minimize potential adverse effects on the Company's financial performance. 000s 2010 121.1 Market risks Market risk refers to fluctuation in value of financial instruments as a result of changes in market prices.754) Foreign currency commitments outstanding at year end are as follows: 2011 EURO USD JPY CHF 253.951 675.247) (7.38 FINANCIAL INSTRUMENTS 38.651 The following significant exchange rates were applied during the year.503 812.90 84.46 85.550) (1. Rupee per USD Average rate Reporting date rate 85.70 / 85.711 332 (21.559 641.60 76 . Foreign exchange risk management Foreign exchange risk represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.938) USD 000s 2010 1. Risk management is carried out under policies and principles approved by management.957 12. 38.567) (6.1 Financial risk management objectives The Company's activities expose it to a variety of financial risks: market risk (including foreign exchange risk. credit risk and liquidity risk.000 13.420 2. interest rate risk and price risk).523 3. Exposure to foreign currency risk The Company is exposed to foreign exchange risk arising from currency value fluctuations due to the following: 2011 Long term investment Trade debts Cash and bank Borrowings from financial institutions Trade and other payables Net exposure 1. All treasury related transactions are carried out within the parameters of these policies and principles.226 77 (36.40 / 85.000 14.1.622 377.674) (27.073 Rs.

Applicable interest rates for financial assets and liabilities are given in respective notes. The Company is exposed to interest/mark-up rate risk on long and short term financing and these are covered by holding "Prepayment Option" and "Rollover Option". c.374 A 10 percentage weakening of the PKR against the USD at June 30. Interest rate risk on short term borrowings is covered by holding " Prepayment Option" which can be exercised upon any adverse movement in the underlying interest rates. 2011 Rs. b. in particular interest rates. 12. 2011 would have had the equal but opposite effect on USD to the amounts shown above.990 2010 66. 4 million) which are subject to interest rate risk.Foreign currency sensitivity analysis A 10 percentage strengthening of the PKR against the USD at June 30.675 million (2010: Rs. Price risk Price risk represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest or currency rate risk). 77 Annual Report 2011 . 7 million (2010: Rs. 9. on the basis that all other variables remain constant.This analysis assumes that all other variables. The analysis is performed on the same basis for June 30. whether those changes are caused by factors specified to the individual financial instrument or its issuer. Financial liabilities include balances of Rs. Interest/mark-up rate risk management Interest rate risk is the risk that the value of financial instruments will fluctuate due to change in the interest/mark-up rates. 2011 would have decreased equity and profit or loss by the amounts shown below. The Company has long term finance and short term borrowings at fixed and variable rates. or factors affecting all similar financial instruments traded in the market. Financial assets include balances of Rs. 000s Profit and loss account 239. The Company is not exposed to equity price risk since there are no investments in equity securities.144 million) which are subject to interest rate risk. remain constant. 2010.

484.546 83. Therefore.798 156.718.484.798 2.030.007 2.029 33. 000s Financial assets Loans and receivables Long term deposits Trade debts Loans and advances Other receivables Cash and bank balances 3.355 2.759.146 2. mainly as a result of higher / lower interest expense on floating rate borrowings.854 2.424 9.061 257.727 2.359.460 10.759.675.803 2.586 3.360.524 7.092 1.759.122 8.424 2.306.190 85. 78 .620.589 2.355 84.413 2.488.591 12.158.744. Cash flow sensitivity analysis for variable rate instruments At June 30.190 85.837 1.367.198.723 405 212.044 2.403.082 1.899.355 83.092 1.375 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 or loss.913 2.723 2.190 5.620.007 2.598 10.057 32.854 920.403.524 3.769 216.030. a change in interest rate at the balance sheet would not effect profit or loss of the Company.966 2.513 At fair value through profit and loss account Short term borrowings Trade and other payables Accrued interest 9.030.649.830. 14 million) higher / lower.932 Financial liabilities At amortised cost Long term loans 632.147 920.057 33.061 1.327.295.156.265 1.854 856.936 83.591 2.484.774 33. if interest rates on long term financing had been 1% higher / lower with all other variables held constant.110 2.306.007 257.110 7.413 216.635 2.061 146.198.232 4.433 212.658 2.211 15.FINANCIAL ASSETS AND LIABILITIES Interest / mark-up bearing Maturity Maturity upto one after one year year Sub total Non interest / mark-up bearing Maturity Maturity upto one after one year year Sub total 2011 Total 2010 Total Rs.586 3.211 9.306.057 717 33. post tax profit for the year would have been Rs.476.546 212.249 Off balance sheet items Guarantees Bills discounted Commitments 257.332 2. 11 million (2010: Rs.723 2.798 216.830.635 2.092 920. 2011.848.546 237.

281 2.2. 79 Annual Report 2011 .514 38.1.2.991 47. The maximum exposure to credit risk at the reporting date was: 2011 2010 Rs. The Company manages credit risk interalia by setting out credit limits in relation to individual customers and/or by obtaining advance against sales and/or through letter of credits and/or by providing for doubtful debts. management does not expect that any counter party will fail to meet their obligations.929 23. mainly as a result of higher / lower interest expense on floating rate borrowings.1.1.532 58.057 2. 71 million) higher / lower.1 Trade debts Trade debts are essentially due from local and foreign companies and the Company does not expect that these companies will fail to meet their obligations.2 Credit risk Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed to perform as contracted.846 32.578. if interest rates on short term borrowings had been 1% higher / lower with all other variables held constant.3 Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure.At June 30. 93 million (2010: Rs.450 4.2 Bank balances The Company limits its exposure to credit risk by investing in liquid securities and maintaining bank accounts only with counter-parties that have stable credit rating. 38.332 2.359.1.2.587 43. 000s 2010 77.281 38. The Company is exposed to credit risk from its operating and certain investing activities and the Company's credit risk exposures are categorised under the following headings: 38.948 Rs. The Company established an allowance for the doubtful trade debts that represent its estimate of incurred losses in respect of trade debts.265 2.254. 000s Long term investment Long term loans and advances Long term deposit Trade debts Loans and advances Other receivables Bank balances 58. This allowance is based on the management assessment of a specific loss component that relates to individually significant exposures.1. 2011. Also the Company does not have significant exposure in relation to individual customer.4 Financial assets that are either past due or impaired The credit quality of financial assets that are either past due or impaired can be assessed by reference to historical information and external ratings or to historical information about counter party default rates.241 33.948 2.2. Given these high credit ratings. 38.122 76.986 33 76.753 80.518 2.450 1. the Company believes that it is not exposed to any major concentration of credit risk.030. The bank balances along with the credit ratings are tabulated below: 2011 A1+ A1 A2 52. Consequently.736 27 80. post tax profit for the year would have been Rs.723 3.

080 million) and also has Rs. b. 11. cash against documents and other acceptable banking instruments. 80 .2 Fair value of financial instruments Fair value is an amount for which an asset could be exchanged. 3.229 2. 21. c.723 2010 2. Consequently. 2.359. 77 million (2010: Rs. management believes the liquidity risk is insignificant. Unutilized borrowing facilities of Rs. the Company has Rs. The Company is actively pursuing for the recovery of the debt and the Company does not expect these companies will fail to meet their obligations. The Company believes that no impairment allowance is necessary in respect of trade debts past due other than the amount provided. the guarantor will pay the outstanding amount if the counter party will not meet their obligation. In addition.1. between knowledgeable willing parties in an arm's length transaction. The Company believes that no impairment allowance is necessary in respect of loans that are past due.3 Liquidity risk Liquidity risk represent the risk where the Company will encounter difficulty in meeting obligations associated with financial liabilities.030. Trade debts are essentially due from local and foreign companies. Based on the above.944 million (2010: Rs. Trade debts The movement in allowance for impairment in respect of trade debts during the year can be assessed by reference to note no.19.286 million) available borrowing limit from financial institutions. 2011. or a liability settled. Other receivables The Company believes that no impairment allowance is necessary in respect of receivables that are past due. At June 30. Further.947. The carrying values of all the financial assets and liabilities reflected in the financial statements approximate their fair values except those which are described in respective notes. 16. these loans are secured against outstanding balance of provident fund and end of service dues of the relevant employee.The Company is actively pursuing for the recovery and the Company does not expect that the recovery will be made soon and can be assessed by reference to note no.265 Rs. The carrying amount of guarantees are up to the extent of loans outstanding as at the date of default. 9. 38.824 26. differences may arise between the carrying values and the fair value estimates. 80 million) being balances at banks.572 92. document acceptance. 000s Export debts are secured under irrevocable letter of credit.761 2.a. Ageing of trade debts is as follows: 2011 1 to 6 months 6 months to 1 year 1 year to 3 years 1.932 87.185 million (2010: Rs. The Company manages liquidity risk by maintaining sufficient cash and ensuring the fund availability through adequate credit facilities. The Company is actively pursuing for the recovery of the debt and the Company does not expect these employees will fail to meet their obligations. Long term loans The Company obtains guarantees by two employees against each disbursement made on account of loans and these can be assessed by reference to note no.178.670 56. 38.

e.559.470 4.825 (83. 450 million and Rs.To maintain or adjust the capital structure. The gearing ratios as at June 30. 1. 184 million from un-appropriated profit to reserve for issue of bonus shares.000 million (2010: Rs.155. 2011 by the Board of Directors of the Company.343 73 Rs. 41 CORRESPONDING FIGURES For better presentation.3 Capital risk management The primary objectives of the Company when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 81 Annual Report 2011 .966) 8.355) 12. borrowings and management of working capital with a view to maintain an appropriate mix amongst various sources of finance to minimize risk.240 (84. in light of changes in economic conditions.595.219.589.644. the Board of Directors have approved transfer to revenue reserve from unappropriated profit of Rs.765 12. In addition. 39 EVENTS AFTER THE BALANCE SHEET DATE The Board of Directors in their meeting held on October 01. 2011 have proposed to issue bonus shares in the ratio of one share for every one share held (2010: Nil) i.506. the Company may adjust the dividend payment to shareholders or issue new shares.873 17. reclassification made in the financial statements is as follows: Reclassification from component Administrative expenses Depreciation Reclassification to component Distribution cost Depreciation Amount Rs. 2011.38.208 42 GENERAL Figures have been rounded off to the nearest thousand rupees. The Company manages its capital structure and makes adjustment to it.039 70 The Company finances its operations through equity. 2011 and 2010 were as follows: 2011 Total borrowings Less: Cash and bank Net debt Total equity Total equity and debt Gearing ratio (%) 12. 40 DATE OF AUTHORIZATION These financial statements were authorized for issue on October 01. 000s 15. They have also decided to transfer from capital reserve Rs.712.274 3. 000s 2010 8. 100% bonus shares. During 2011 the Company's strategy was to maintain leveraged gearing. 400 million) subject to the approval of members at Annual General Meeting to be held on October 31.

Amjad Waheed Adnan Afridi Total number of meetings* 4 4 4 4 4 4 3 3 4 1 1 Number of meetings attended 4 4 4 4 4 4 3 3 3 1 1 * held during the period the concerned Director was on the Board. 2011 Name of Director Bashir Ali Mohommad Zain Bashir Ziad Bashir Mohammad Zaki Bashir Abdul Aziz Yousuf S.Attendance at Board Meetings For the Year Ended June 30. Nadim Shafiqullah Mohammed Saleem Sattar Khwaja Fazlur Rahman Abdul Razak Bramchari Dr.M. 82 .

031 12.000 11.558.000 50.001 15.716 11.812 6.00 83 Annual Report 2011 .000 6.555.172 10.200 71.548 Percentage 73.000 Categories of Shareholders Individuals Investment Companies Insurance Companies Joint Stock Companies Modaraba Companies Financial Institutions Foreign Investors Charitable Institutions Government Departments Number 1.644.082 5.001 5.377 30.001 65.000 25.583 56.185.829 5.001 30.478.548 From From From From From From From From From From From From From From From From From From From From From From From From From From From From From 1 101 501 1.468 124.000 5.001 5.920 31.000 75.495 63.560.037.001 155.09 0.392 166. of Shareholders 978 687 150 109 20 10 4 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1.000 2.020.425.525 771.413.000 170.001 4.025.001 45.01 100.001 5.677.001 55.511 475.Pattern of Shareholding As at June 30.280.680.000 10.001 70.05 0.001 11.000 160.000 5.224 57.415.157 1.001 1.275.277 5.104 36.78 0.000 12.398 6.000 60.024.035.040.423 71.001 6.000 70.675.157 63.716.148 103.421.709 49.003 63.512.001 20.336 145.205.001 475.963 161.410.001 770. 2011 No.982 Shareholding to to to to to to to to to to to to to to to to to to to to to to to to to to to to to Shares held 45.001 100 500 1.190.974 2.001 5.001 2.000 5.96 0.200.000 165.000 20.189.203.02 19.262 221.275.59 3.498 123 12.559.001 6.000 1.720.50 2.001 12.084 1.000 4.000 35.000 480.359 155.001 10.591 2.000 15.000 5.982 Shares Held 46.001 165.658.942 14 4 8 3 1 4 4 2 1.478.035 5.001 35.001 160.000 6.009 4.420.715.000 775.000 40.646 69.503 142.

172 10.142.794 1.559.655 2.504 2.275.394 shares Purchased 4.875 2.452.495 1 1 1 1 1 1 1 1 1 4.716.000 shares Purchased 4.500 1 1 5.035 1 1 12.029 2.558.024.277 5.920 31.283.003 11.094.392 shares Number Shares held 1 1 1 11 4 8 3 1 4 4 2 1.421.000 shares Purchased 5.794 220.413.031 Purchased 2.Trustee Department National Investment Trust Limited Investment Companies and Mutual Funds Insurance Companies Joint Stock Companies Modaraba Companies Financial Institutions Foreign Investors Charitable Institutions Government Departments DIRECTORS Bashir Ali Mohommad (Chairman & Chief Executive) Zain Bashir Ziad Bashir Mohammad Zaki Bashir Abdul Aziz Yousuf S.825 shares Note: All the above purchase transactions were among consortium of family members.829 5.Pattern of Shareholding As at June 30.500 2.498 123 12.031 4. Amjad Waheed Adnan Afridi DIRECTORS'/CEO'S SPOUSES Parveen Bashir Tania Zain Shareholders holding 10% or more voting interest Ziad Bashir (Director) Mohammad Zaki Bashir (Director) Detail of trading in the shares by: DIRECTORS Bashir Ali Mohommad (Chairman & Chief Executive) Zain Bashir Ziad Bashir Mohammad Zaki Bashir DIRECTORS'/CEO'S SPOUSES Parveen Bashir Tania Zain Purchased 635.398 12.677.000 shares Purchased 180.974 8.583 56.082 5.003 11. M.024.275. Nadim Shafiqullah Abdul Razak Bramchari Dr. 2011 Additional Information Categories of Shareholders NIT and ICP IDBP (ICP Unit) National Bank of Pakistan . 84 .512.

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for the year then ended. In our opinion. Our responsibility is to express an opinion on these financial statements based on our audit.Auditors' Report on Consolidated Financial Statements We have audited the annexed consolidated financial statements comprising consolidated Balance Sheet of Gul Ahmed Textile Mills Limited (the Holding Company) and Gul Ahmed International Limited (FZC) and GTM (Europe) Limited (Subsidiaries) as at June 30. These financial statements are the responsibility of the Holding Company's management. consolidated Cash Flow Statement and consolidated Statement of Changes in Equity together with the notes forming part thereof. 2011 Chartered Accountants Engagement Partner: Hyder Ali Bhimji 86 . in so far as it relates to the amounts included for such Subsidiaries. HYDER BHIMJI & CO. present fairly the financial position of Gul Ahmed Textile Mills Limited and its Subsidiaries as at June 30. 2011 and the result of their operations for the year then ended. Our audit was conducted in accordance with the International Standards on Auditing and accordingly included such tests of accounting records and such other auditing procedures as we considered necessary in the circumstances. Subsidiaries have been audited by other firms of auditors. We have also expressed separate opinion on the financial statements of the Holding Company. 2011 and the related consolidated Profit and Loss Account. consolidated Statement of Comprehensive Income. whose reports have been furnished to us and our opinion. the consolidated financial statements examined by us. Karachi October 01. is based solely on the report of such other auditors.

297 CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current maturity of long term financing Provision for income tax .946.636.028 NON-CURRENT LIABILITIES Long term financing Deferred liabilities Deferred taxation .707 1.198.Consolidated Balance Sheet As at June 30.818. 2011 2011 2010 Note EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Share capital Reserves Unappropriated profit 4 5 634.558 8.752 3. 000s 634.671.469 2.966 CONTINGENCIES AND COMMITMENTS 12 20.824.332 Rs.099 14.863 32.510 216.559 676.355 632.846.524 1.650 202.524.044 13.785 2.278.933.net Staff retirement benefits 6 7 8 2.315.717 310.281 15.710.net of payment 9 10 11 2.491 550.591 292.016 217.648.023 4.941 87 Annual Report 2011 .222.786.589 5.752 17.397 156.798 9.785 2.

929.430. spares and loose tools Stock-in-trade Trade debts Loans and advances Prepayments Other receivables Tax refunds due from government Cash and bank balances 16 17 18 19 20 21 22 706.846 32.42 form an integral part of these financial statements.638 13.556 131.422 4.802 20.188 8. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 88 .811 2.241 33.2011 2010 Note ASSETS NON-CURRENT ASSETS Property.877 157.582.465.236.373 56.708 21.991.639 237.741.204.214 2.967 475.546 51.099 14.132 Rs.057 6.671.941 The annexed notes 1 .786.148.661.512 42.263 45.332 6.322 4. 000s 6.402 160.350 10.253 1.139 CURRENT ASSETS Stores.936 66.827 212.727 86. plant and equipment Intangible assets Long term loans and advances Long term deposits 13 14 15 6.

131.259 707.212 Other operating income Operating profit 28 25.basic and diluted (Rs.03 The annexed notes 1 . BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 89 Annual Report 2011 .Consolidated Profit and Loss Account For the Year Ended June 30.168 1.093.962 911.853 1.759 Rs.863 2.414 3.42 form an integral part of these financial statements.688 468.923 815.713 1.) 29 1.582.667.751.176 20.337 16.643.297 116. 000s 19.047 53.268 793.103.425 1.046 959.208.302.619.38 30 342.551.871 1.101 4.075 1. 2011 2011 2010 Note Sales Cost of sales Gross profit Distribution cost Administrative expenses Other operating expenses 25 26 27 23 24 25.892.180 Finance cost Profit before taxation Provision for taxation Profit after taxation Earnings per share .921 239.233 7.755 26.175 31 19.640.547 2.662.604 2.885.644.

2011 2011 Rs.478 1.653 468.42 form an integral part of these financial statements.Foreign operations Total comprehensive income 1.756 The annexed notes 1 .175 7.233 3.Consolidated Statement of Comprehensive Income For the Year Ended June 30. 000s 2010 Profit after taxation Foreign currency translation differences . BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 90 .523 471.215.208.

033.954 (8.194) 3.395) (2.200 2.006.484 91 Annual Report 2011 .397) (4.113 (4.461 1.203 (806.551.314 (9.150 (5.095) (1.063) (122. plant and equipment 1.402 9.322.742) (36.093.760) (1.504) (305. plant and equipment scrapped Profit on sale of property. 000s 707.668) (77.629) Cash (used in)/generated from operations (Payments) for/receipts from: Gratuity Finance cost Income tax Long term loans and advances Net cash (used in)/generated from operating activities (1.232) (5.122) 1.393.810 959.255) (1.Consolidated Cash Flow Statement For the Year Ended June 30.586.737 17.436.413) 10.170 7.076 Changes in working capital: (Increase)/decrease in current assets Stores.921 711.304 29. spares and loose tools Stock-in-trade Trade debts Loans and advances Prepayments Other receivables Tax refunds due from government (241.209 (5.657 (13.440) (14.734.736 19.403) 199.247 7.867) 188.209) (10.390 15.050.046 Rs.713 10.435) (2.438. 2011 2011 2010 Note CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments for: Depreciation Amortisation Provision for gratuity Finance cost Provision for slow moving/obsolete items Provision for doubtful debts Property.954 Increase in current liabilities Trade and other payables 702.670.739) (981.412.084) 416 479.303) (6.325) 200.282 18.812 25.031 1.326 681.435) 2.

371) The annexed notes 1 .523 (405.478 (4. plant and equipment Addition to Intangible assets Proceeds from sale of property.253. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 92 .542 (3.987 (676.245.177) 3.349) (148.346) (5.634) (170.865) (79.778) (5.602) (5.298) (718.717) 328.769) (5.at the beginning of the year Cash and cash equivalents .432) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term loans Repayments of long term loans Dividend Paid Net cash used in financing activities Exchange difference on translation of foreign subsidiaries Net decrease in cash and cash equivalents Cash and cash equivalents .760 (725) (1.764) (38.457 (498.064.2011 2010 Note CASH FLOWS FROM INVESTING ACTIVITIES Addition to property. 000s (745.261.667. plant and equipment Long term deposits Net cash used in investing activities (1.42 form an integral part of these financial statements.731.898) 36.471) 31.227) 7.667.371) (9.200) Rs.at the end of the year 33 607.

785 2.478 1.653 Balance as at June 30.430.000 37.555 (400. 2009 Transfer to revenue reserve Transfer to statutory reserve Total comprehensive income Profit for the year Other comprehensive income Total comprehensive income for the year 3.710.290 1.787 450.208.478 7.278.000) (148) 3.175 1.175 7.523 468.555) - - - - - - (79. 2010 634.208.175 1.332 The annexed notes 1 .215.023 4.030.233 468.Consolidated Statement of Changes in Equity For the Year Ended June 30.752 3. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 93 Annual Report 2011 . 2011 634.523 3.785 2.208.446 8.233 3.587 148 162.788 450.233 468.000 44.846.42 form an integral part of these financial statements.667 (80.756 634. 2011 Share capital Revenue reserve Exchange Capital reserve difference on translation of foreign subsidiaries Statutory Unappropriated reserve profit Total Rs.478 - - 1.785 1.000 - - - 1.446 6.272 - Balance as at June 30.349) (79.000 33. 000s Balance as at June 30.000) (1.446 6.028 Transfer to revenue reserve Transfer to statutory reserve Transaction with owners Final dividend for the year ended June 30.238.310 450.735 550.523 471.349) - - 7.950. 2010 Total comprehensive income Profit for the year Other comprehensive income Total comprehensive income for the year - 400.000 80.

Subsidiary companies are consolidated from the date on which more than 50% voting rights are transferred to the Holding Company or power to govern the financial and operating policies over the subsidiary and is excluded from consolidation from the date of disposal or cessation of control. Landhi. not disclosed in these financial statements. In case requirements differ. 2.UAE . profit and loss account.2 Basis of consolidation The consolidated financial statements include the financial statements of the Holding Company and its subsidiaries . therefore."The Group". 2 BASIS OF PREPARATION These financial statements comprise balance sheet. statement of comprehensive income.Gul Ahmed Textile Mills Limited . 2. The financial statements of the subsidiaries are prepared for the same reporting period as the Holding Company. 1984. the provisions or directives of the Companies Ordinance.Consolidated Notes to the Accounts For the Year Ended June 30. converted into public limited company in 1955 and was listed on Karachi and Lahore Stock Exchanges in 1970 and 1971 respectively.1 Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Material intra-group balances and transactions are eliminated. 2010 but considered not to be relevant or to have any significant effect on the Group’s operations and are. provisions of and directives issued under the Companies Ordinance.Gul Ahmed International Limited (FZC) . Main National Highway. The Group’s registered office is situated at Plot No. Approved accounting standards comprise such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. Gul Ahmed Textile Mills Limited (The Company) was incorporated in 1953 in Pakistan as a private limited company.2. 94 . 1984 shall prevail.2 Standards. interpretations and amendments to published approved accounting standards that are mandatory for accounting periods beginning on or before January 01. using consistent accounting policies. cash flow statement and statement of changes in equity together with explanatory notes and have been prepared under the ‘historical cost convention’ except as has been specifically stated below in respective notes.UK Gul Ahmed International Limited (FZC) . interpretations and amendments to published approved accounting standards that became effective during the year There are certain new standards.1 Standards. 82. Both subsidiaries are engaged in trading of textile related products. Karachi. The assets and liabilities of the subsidiary company have been consolidated on a line-by-line basis and the carrying value of investment held by the Holding Company is eliminated against the subsidiary's share capital.1 Gul Ahmed Group comprises the following: . The Company is a composite textile mill and is engaged in the manufacture and sale of textile products.GTM (Europe) Limited . 2011 1 THE GROUP AND ITS OPERATIONS 1.UAE is a wholly owned subsidiary of Gul Ahmed Textile Mills Limited and GTM (Europe) Limited is a wholly owned subsidiary of Gul Ahmed International Limited (FZC) .UAE. interpretations and amendments to published approved accounting standards 2. 1984. 1.

2. 2011 but are considered not to be relevant or to have any significant effect on the Group's operations and are therefore not detailed in these financial statements.IAS 19 The limit on a Defined Benefit Assets. This amendment is not likely to have any impact on the Group’s financial statements. 2013 95 Annual Report 2011 . The amendment may result in certain changes in disclosures. 2013 January 1. the following new standards have been issued by IASB which are yet to be notified by the Securities and Exchange Commission of Pakistan (SECP) for the purpose of applicability in Pakistan. Improvements to IFRSs 2010 .IFRS 7 Financial Instruments: Disclosures (effective for annual periods beginning on or after January 01. These amendments provide presumption that the carrying amount of an assets measured using the fair value model in IAS 40 will be through sale. Amendments to IAS 12 .2. As a result of the amendments. International Financial Reporting Standards (IFRSs) IFRS 9 . These amendments remove unintended consequences arising from the treatment of prepayments where there is a minimum funding requirement. SIC .Fair Value IASB effective date annual periods beginning on or after January 1. 2011).21 (Income Taxes: Recovery of revalued non-depreciable assets) will no longer apply to investment properties accrued at fair value. 2011). but may be presented either in the statement of changes in equity or in the notes. In addition. The amendment may result in certain changes in disclosures. Improvements to IFRSs 2010 . The amendment is not likely to have any impact on the Group’s financial statements. 2011). These amendments result in prepayments of contributions in cer tain circumstances being recognised as an asset rather than an expense.Financial Instruments IFRS 10 . 2012).2 Standards. These amendments clarify that disaggregation of changes in each component of equity arising from transactions recognised in other comprehensive income also is required to be presented. 2011).Deferred Tax: Recovery of Underlying Assets (effective for annual periods beginning on or after January 01.Consolidated Financial Statements IFRS 11 . 2015 January 1. 2013 January 1. the IASB amended and removed existing disclosure requirements. amendments and interpretations to approved accounting standards have been published that are mandatory for accounting periods beginning on or after the da tes mentioned below: IAS 24 Related Party Disclosures (revised 2009) . 2013 January 1. Minimum Funding Requirements and their Interaction (effective for annual periods beginning on or after January 01.IAS 1 Presentation of Financial Statements (effective for annual periods beginning on or after January 01.This amendment is not likely to have any impact on the Group’s financial statements. Further. Amendments to IFRIC 14 .Disclosure of Interests in other Entities IFRS 13 . These amendments add an explicit statement that qualitative disclosure should be made in the context of the quantitative disclosures to better enable users to evaluate an entity’s exposure to risks arising from financial instruments.(effective for annual periods beginning on or after January 0I. The revision amends the definition of a related party and modifies cer tain related party disclosure requirements for government related entities and include an explicit requirement to disclose commitments involving related parties. interpretations and amendments to published approved accounting standards that are not yet effective Following accounting standards.Joint Agreements IFRS 12 . - - - - There are other amendments to the approved accounting standards and interpretations that are mandatory for accounting periods beginning on or after January 01.

Provision against trade debts. 3 SIGNIFICANT ACCOUNTING POLICIES 3. Net realisable value is determined with reference to estimated selling price less estimated expenditures to make the sales. Any changes in these assumptions in future years might affect unrecognised gains and losses in those years. based on the availability of the latest information. It also requires the management to exercise its judgment in the process of applying the Group's accounting policies. advances and other receivables to assess amount of bad debts and provision required there against on annual basis.6 of these financial statements. useful life. Stock-in-trade and stores & spares The Group reviews the net realisable value of stock-in-trade and stores & spares to assess any diminution in the respective carrying values. Deferred tax calculation has been made based on estimate of future ratio of export and local sales based on past history. Further where applicable. The Group.2.1 Foreign currency transactions and translation All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date or as fixed under contractual arrangements. 96 . Provision for obsolescence Provision for obsolescence and slow moving spare parts is based on parameters set out by management. estimates the value of contingent assets and liabilities which may differ on the occurrence/non . plant and equipment The Group reviews appropriateness of the rate of depreciation. The areas where various assumptions and estimates are significant to the Group's financial statements or where judgment was exercised in application of accounting policies are as follows: Defined benefit plan Cer tain actuarial assumptions have been adopted as disclosed in note 8 to the financial statements for valuation of present value of defined benefit obligations and fair value of plan assets. including expectations of future events that are believed to be reasonable under the circumstances. Estimates and judgments are continually evaluated and are based on historical experience. Contingencies The assessment of the contingencies inherently involves the exercise of significant judgment as the outcome of the future events can not be predicted with certainty. advances and other receivables The Group reviews the recoverability of its trade debts. Property. 2.4 Critical accounting estimates and judgements The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. Transactions in foreign currencies are translated into Pak Rupees at exchange rate prevailing at the date of transaction. Income taxes The Group takes into account relevant provisions of the prevailing income tax laws while providing for current and deferred taxes as explained in note 3.occurrence of the uncertain future event(s). residual value used in the calculation of depreciation. an estimate of recoverable amount of assets is made for possible impairment on an annual basis.3 Functional and presentation currency These financial statements are presented in Pakistan Rupee which is the Group's functional currency.

All monetary and non monetary assets and liabilities are translated at the exchange rate prevailing at the balance sheet date except for share capital which is translated at historical rate. The results of valuation are summarised in note 8. income and expense items of the foreign subsidiaries are translated at annual average exchange rate. 3. and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. All non-monetary items are translated into Pak Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. The charge for current tax also includes adjustments. construction or production of a qualifying asset.Foreign exchange gains and losses on translation are recognized in the profit and loss account. to provision for taxation made in previous years arising from assessments framed during the year for such years. The Group takes into account the current income tax law and decisions taken by the taxation authorities. Benefits under the scheme are payable to employees on completion of the prescribed qualifying period of service under the scheme. Actuarial gains and losses arising at each valuation date are recognized immediately in the profit and loss account. 3. 3.2 Borrowing cost Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition.33% of the basic salary. Such borrowing costs are capitalized as part of the cost of that asset up to the date of its commissioning.5 Provisions Provisions are recognized when the Group has present obligation (legal or constructive) as a result of past event. 97 Annual Report 2011 . Defined contribution plan The Group operates a recognized provident fund scheme for its eligible employees to which equal monthly contribution is made by the Group and the employees at the rate of 8.6 Taxation Current Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The Group accounts for gratuity provision on the basis of actuarial valuation using the projected unit credit method. Exchange differences arising on the translation of foreign subsidiaries are classified as equity reserve until the disposal of interest in such subsidiaries. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. 3. For the purpose of consolidation. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year.4 Accumulated employee compensated absences The Group provides for compensated absences for all eligible employees in the period in which these are earned in accordance with the rules of the Group. 3. where considered necessar y.3 Staff retirement benefits Defined benefit plan The Group operates unfunded gratuity schemes for all its eligible employees who are not part of the provident fund scheme.

1.Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all taxable 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 taxable profit. Net realizable value signifies the estimated selling prices in the ordinary course of business less costs necessarily to be incurred in order to make the sale. Waste products are valued at net realisable value. Gains and losses on disposal of operating assets are included in profit and loss account. Cost of work-in-process and finished goods includes cost of direct materials. 3. 3.10 Stock-in-trade Stock of raw materials. Deferred tax liabilities are 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. Items in transit are stated at cost comprising invoice value and other incidental charges paid thereon. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Capital work-in-progress Capital work-in-progress is stated at cost accumulated up to the balance sheet date and represents expenditure incurred on property.7 Property. unused tax losses and tax credits can be utilized. No amortisation is provided on leasehold land since the lease is renewable at the option of the lessee. based on tax rates that have been enacted. 98 . except for those in transit.8 Intangible assets Intangible assets are stated at cost less accumulated amor tisation.These expenditures are transferred to relevant category of property. plant and equipment in the course of construction. plant and equipment as and when the assets starts operation. 3. Cost of raw materials and trading stock comprises of the invoice value plus other charges paid thereon. plant and equipment Operating assets Operating assets are stated at cost less accumulated depreciation and any identified impairment loss except leasehold land which is stated at cost. Full year's depreciation is charged on additions except major additions or extensions to production facilities which are depreciated on pro-rata basis for the period of use during the year and no depreciation is charged on assets in the year of their disposal.9 Stores. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse. work-in-process and finished goods are valued principally at lower of weighted average cost and net realizable value. Depreciation is charged on reducing balance method at rates specified in the note 13. 3. labour and appropriate portion of manufacturing overheads. A provision is made for any excess of book value over net realizable value. Amortisation is charged over the useful life of the assets on a systematic basis to income applying the straight line method at the rate specified in note 14. spares and loose tools These are stated at moving average cost less slow moving provision and goods-in-transit are valued at cost accumulated to the balance sheet date.

or amortised cost. savings and deposit accounts. Revenue from sale of goods is measured at the fair value of consideration received or receivable. cash and cash equivalents comprises short term investment. Impairment losses are recognized as expense in profit and loss account. as the case may be. These financial assets and liabilities are subsequently measured at fair value. 3.16 Revenue recognition Sales are recorded on dispatch of goods and in case of export when the goods are shipped.3.11 Trade debts Trade debts are carried at original invoice amount except export receivables. if any. 3.12 Trade and other payables Liabilities for trade and other payables are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received.18 Dividend and appropriation to reserves Dividend and appropriation to reserves is recognized in the financial statements in the period in which these are approved. 3.13 Financial assets and liabilities All financial assets and liabilities are initially measured at cost. For the purposes of the cash flow statement.14 Offsetting of financial assets and liabilities All financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if the Group has a legal enforceable right to set off the recognized amounts and intends either to settle on net basis or to realize the assets and settle the liabilities simultaneously. running finance under mark-up arrangements and short term borrowings. 3. 3. cash and cheques in hand and cash with banks on current. net of returns and trade discounts. which is the fair value of the consideration given and received respectively.15 Impairment The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. 99 Annual Report 2011 .17 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. the assets’ realizable value is estimated in order to determine the extent of the impairment loss. These are translated into Pak Rupees at the rates ruling on the balance sheet date or as fixed under contractual arrangements. 3. If any such indication exist. Debts considered irrecoverable are written off and provision is made for debts considered doubtful. 3.

326 5.000 2010 Note Rs.10 each fully paid in cash Ordinary shares of Rs.up capital 2011 2010 38.797.500.887 21.233.656 63.447.478.975 5.2011 4 SHARE CAPITAL 4.000.337 634.10 each fully paid under scheme of arrangement for amalgamation Ordinary shares of Rs.524.000 2.000 44.000 75.1 2. 000s 150.430.887 21.559 450.030.000 4.310 Exchange difference on translation of foreign subsidiaries Capital reserve Share premium Book difference of share capital under scheme of arrangement for amalgamation Statutory reserve 428.975 387.548 63.447.000 37.030.1 Authorised capital 2011 2010 Ordinary shares of Rs.1 This represents appropriation of profit in past year to meet future exigencies.797.735 2.2 Issued.473 19.10 each issued as fully paid bonus shares 387.446 6.566 Ordinary shares of Rs.933. subscribed and paid .524 428.000 80. 100 .656 19.000 2.478.950.788 1.446 8.548 192.000.10 each 1.559 450.233.566 38.000 400.473 54.491 5.opening Transfer from profit and loss account 5.000 750.785 192.337 634.785 5 RESERVES Revenue reserve General reserve .326 54.290 2.

1.995 11.614 250.00% p.25% p.a.555 1.6 16 half yearly October-2011 6.a. 6.00% p.999 8. payable quarterly 10.00% p.00% p.450 7.a.00% p. 000s Mark-up rate per annum 2011 2010 Rs.359 4.00% p.571 9.866 6.5 12 half yearly January-2010 12 half yearly February-2010 6.579 4. payable quarterly 8.995 11. 6.000 10.5 12 half yearly January-2010 6.a. 6.1.430 56.1.3 10 half yearly March-2009 562 710 277 3.a.510 778 7.1.3.00% p.524 176.a.000 350.00% p.1. payable quarterly 10.430 56. 6.1. payable quarterly 15.1.6 LONG TERM FINANCING .00% p.6 16 half yearly March-2012 6. payable quarterly 10.379 10.a.710 30.5 12 half yearly December-2010 6.678 1. payable quarterly 7.851 85.405 Habib Bank Limited Loan 5 Under LTF-EOP scheme Habib Bank Limited Loan 6 Under LTF-EOP scheme Habib Bank Limited Loan 7 Under LTF-EOP scheme Habib Bank Limited Loan 8 a) Under LTF-EOP scheme b) Under LTF-EOP scheme Habib Bank Limited Loan 10 Under State Bank of Pakistan (SBP) Scheme of Long Term Financing Facility (LTFF) Habib Bank Limited Loan 11 Under LTFF scheme Habib Bank Limited Loan 12 Under LTFF scheme Habib Bank Limited Loan 13 Under LTFF scheme Habib Bank Limited Loan 14 Under LTFF scheme United Bank Limited Loan 2 6.00% p.a.5 12 half yearly April-2010 931 8.a.6 16 half yearly August-2011 6. 6. payable quarterly 10.1. payable quarterly 7.1.536 50.504 53.416 7.00% p. 000s Habib Bank Limited Loan 4 6.6 16 half yearly July-2011 2. payable quarterly Average three months KIBOR Ask rate +1.a. payable quarterly 7.5 12 half yearly February-2010 6.282 1.747 59.a.a. 6. payable quarterly 25.698 139 11.6 16 half yearly August-2012 6.247 18.241 101 Annual Report 2011 .1.a.614 8. payable quarterly 44. 6.612 6. payable quarterly 48.359 4. 6.5 a) Under State Bank of Pakistan (SBP) 12 half yearly scheme of Long Term FinanceJune-2010 Export Oriented Projects (LTF-EOP) b) Under LTF-EOP scheme 12 half yearly November-2010 5.592 104.054 7.866 176.SECURED Note Number of installments and commencement month Installment amount Rs. 6. 6. 6.00% payable half yearly 7.00% p.000 United Bank Limited Loan 3 Under LTF-EOP scheme 6.

1.685 7.3 Average six months 192.227 United Bank Limited Loan 7 Under LTFF scheme United Bank Limited Loan 8 Under LTFF scheme United Bank Limited Loan 9 Under LTFF Scheme United Bank Limited Loan 10 Under LTFF scheme United Bank Limited Loan 11 Under LTFF scheme United Bank Limited Loan 12 Under LTFF scheme United Bank Limited Loan 13 Under LTFF scheme National Bank of Pakistan Loan 1 Under LTF-EOP scheme National Bank of Pakistan Loan 2 6.00% p.20% p.000 11. payable quarterly 10.6 6.6 6.190 6.296 24. 6.295 13.50% p.192 KIBOR Ask rate + 1.3.6 6.3. 6.20% p.00% p.000 KIBOR Ask rate + 1. 6.6 6.540 8.516 37. 6.592 48. 6.400 payable quarterly 7.895 44.a. payable quarterly 10. payable quarterly - National Bank of Pakistan Loan 2-A Under LTF-EOP scheme National Bank of Pakistan Loan 3 6.3.199 Mark-up rate per annum 2011 2010 Rs. 6.000 Average six months 125.5 6. 6.a.589 11.690 124.385 payable quarterly 11.3.a.a.a.00% payable half yearly 10.2.615 23.a. 6.00% p.145 102 .3.441 5.2.000 22. payable quarterly 11.50% payable half yearly 7.6 6.25% payable half yearly 10. 141.20% p.000 United Bank Limited Loan 5 Under LTFF scheme United Bank Limited Loan 6 6.a.3. payable quarterly 7.a. payable quarterly 13. 000s 48.6 6.000 National Bank of Pakistan Loan 4 Under LTFF scheme Bank Al-Habib Limited Loan 1 Under LTF-EOP scheme 6.a.315 37.3 6 half yearly September-2008 25 quarterly September-2009 5.3 16 half yearly November-2010 6 half yearly March-2011 363 25.a.822 84.3. payable quarterly Average three months KIBOR Ask rate + 1.00% payable quarterly 10. 6.50% p. 112.319 557 128 741 3.Note Number of installments and commencement month 6 half yearly August-2010 Installment amount Rs. 6.916 62.190 6.6 6. payable quarterly Average six months KIBOR Ask rate + 1. 6.690 1.806 150.5 6. 6.2.706 4.50% p.615 18. payable quarterly 5.3.2.40% p.410 68.a.50% p.6 16 quarterly September-2011 6.00% p.080 5.a.351 2.1 10 half yearly December-2012 12 half yearly December-2011 12 half yearly January-2012 12 half yearly February-2012 12 half yearly April-2012 19 half yearly Novemebr-2011 19 half yearly December-2011 Repaid during the year Repaid during the year 1.6 6.5 12 half yearly December-2008 2. payable quarterly 10. 000s United Bank Limited Loan 4 6. 6.795 289.

6.2.6 6.212 1.495 40.a.a.6 6. payable quarterly 7. payable quarterly 7. 6. payable quarterly 11.833 10. Loan 2 Under LTF-EOP scheme Habib Metropolitan Bank Ltd. 6.280 43. 6.3 32 quarterly July-2010 6 half yearly February-2011 9.a.328 7.860 33.719 2.061 9.a.00% p.2.285 12 half yearly November-2010 16 half yearly February-2012 16 half yearly March-2012 16 half yearly June-2012 16 half yearly July-2012 10 half yearly December-2013 684 2.038 1.2. 6.495 40.838 875 844 16.458 194.166 233.00% p.504 4. Loan 3 Under LTFF scheme Habib Metropolitan Bank Ltd.373 28.25% p.599 12. payable quarterly 7.000 166.a.2. payable quarterly 10.00% payable half yearly 28.3 12 half yearly December-2010 12 half yearly February-2010 12 half yearly March-2010 12 quarterly March-2010 2. payable quarterly 6. payable quarterly 10.256 15.00% p.5 6. payable quarterly 10.00% p.177 296.6 6.3.417 2.a.a.594 103 Annual Report 2011 .883 1.516 22.873 7.2.596 34. Loan 7 Under LTFF scheme HSBC Bank Middle East Ltd Loan 1 a) Under LTF-EOP scheme b) Under LTF-EOP scheme HSBC Bank Middle East Ltd Loan 2 Under LTF-EOP scheme HSBC Bank Middle East Ltd Loan 3 Under LTF-EOP scheme HSBC Bank Middle East Ltd Loan 4 Under LTF-EOP scheme Allied Bank Limited Loan 1 6.00% p.00% p.2. 6.2.5 12 half yearly March-2010 12 half yearly April-2010 6.266 259.a.6 6. payable quarterly 10.a.a.384 7. Loan 4 Under LTFF scheme Habib Metropolitan Bank Ltd.00% p.5 6. 000s Habib Metropolitan Bank Loan 1 a) Under LTF-EOP scheme b) Under LTF-EOP scheme Habib Metropolitan Bank Ltd. 6.a. payable quarterly 7.Note Number of installments and commencement month Installment amount Rs.5 6. Loan 6 Under LTFF scheme Habib Metropolitan Bank Ltd.042 19. 6.373 28.25% p. 000s Mark-up rate per annum 2011 2010 Rs.374 7.00% p.00% p.451 22. payable quarterly 7.065 67.2.00% p.149 18. 6.623 9. 6.a.201 76.00% p.328 91.5 12 half yearly October-2010 12 half yearly November-2010 6.2.20% p. payable quarterly 7.5 6. payable quarterly Average six months KIBOR Ask rate + 1.376 18.000 43. 6.2.804 3. Loan 5 Under LTFF scheme Habib Metropolitan Bank Ltd.2.667 7.667 Allied Bank Limited Loan 2 Under LTFF scheme Meezan Bank Ltd Diminishing Musharaka 1 6. 6.a.860 - 100.065 67.6 6.00% payable quarterly 10.a.6 6. payable quarterly Average three months KIBOR Ask rate + 1.

6 104 .Note Number of installments and commencement month 6 half yearly June-2011 Installment amount Rs. 6.3.995 21.a.3 6 half yearly July-2011 5.696 Meezan Bank Ltd Diminishing Musharaka 2 6.883 6.839 1. 000s 8. payable quarterly 9.125 - Current portion shown under current liabilities 2. 6.00% p. 2009.899. Grace period of one year in payment of principal outstanding under LTF-EOP facilities was allowed by the banks as per State Bank of Pakistan SMEFD Circular No.222 22.a.198.10% p. 6.2.6 6.720 2.00% p. Habib Metropolitan Bank Limited is a related party.594 67.222. 2007.2 6.247 Meezan Bank Ltd Diminishing Musharaka 3 6.3.6 6.a.5 6.578 30.a. payable quarterly 11.591 2.3 Average six months KIBOR Ask rate + 1. 07 dated December 31.6 6.650 6.1 These loans are secured by first pari passu charge over present and future fixed assets of the Group and equitable mortgage over land and building.516 NIB Bank Limited Loan 1 Under LTFF scheme NIB Bank Limited Loan 2 Under LTFF scheme Faysal Bank Limited Under LTFF scheme Standard Chartered Bank Loan 1 Under LTFF scheme Standard Chartered Bank Loan 2 Under LTFF scheme 6.10% p.253 31.3. 6. payable quarterly 11.635 2.100 42. 6.044) (676.516 31. 000s 1. These loans are secured by way of pari passu charge over the fixed assets of the Group. 01 dated January 22.3. These loans are secured by charge over specified machinery.6 16 quarterly June-2010 16 quarterly September-2010 10 half yearly January-2014 8 half yearly October-2012 8 half yearly November-2012 2.830.449 Mark-up rate per annum 2011 2010 Rs.50% payable half yearly Average six months KIBOR Ask rate + 1. payable quarterly 7. where financing facilities have been provided for a period of upto five years maximum grace period shall not exceed one year as per State Bank of Pakistan MFD Circular No.3 6. payable quarterly 11.513 (632.50% payable half yearly 9. 6.200 23.863) 2.4 6. However.960 175.6 6.a.20% p.886 31. The loans availed under the facility shall be repayable within a maximum period of ten years including maximum grace period of two years from the availment date.

3 Changes in present value of defined benefit obligation Balance as at opening Current service cost Interest cost Actuarial gain on present value of defined benefit obligation Benefits paid Balance as at closing 15.763 7.189 312.013 Rs.a.2011 7 DEFERRED TAXATION .NET Taxable temporary differences in respect of Accelerated tax depreciation allowance Provision for income of subsidiaries Deductible temporary differences in respect of Provision for gratuity Provision for doubtful debts Provision for slow moving items 303. 000s 11.379) (19.281) (5.760) 17.717 11.739) 15.717 Rs.945 6. 12% p.945 7.4 15.987 1.760) 17.2 Movement in liability Balance as at opening Charge for the year Payments during the year Balance as at closing 8. 12% p.752 8 STAFF RETIREMENT BENEFITS 8.810 (4.a.967 216.a.016 9. 10 years Note 8.449) 202.016 105 Annual Report 2011 .1 Principal actuarial assumptions Following principal actuarial assumptions were used for the valuation: Estimated rate of increase in salary of the employees Discount rate Average expected remaining working life time of employees 11% p.993) (10.461 (6.a.928 1.824 8.281 (1.730 (1.300) (14.671 (789) (4.868) (7.889) (6. 000s 2010 208.739) 15.474 (6.016 7. 10 years 11% p.016 8.261) 292.

854 124.041 46.444 (39.648.SECURED Mark-up on long term financing Mark-up on short term borrowings 64.872 461.290 38.798 52.2011 Note 8.009 104.833 1.928 1.987 1.397 9.036 984 49.570 2.020 10 ACCRUED MARK-UP .580 156.339 2.867 151.810 9 TRADE AND OTHER PAYABLES Creditors Due to related parties Murabaha Accrued expenses Advance from customers Payable to employees’ provident fund Workers' profit participation fund Unclaimed dividend Others 9.189 449.468 2.020) 85.446 5.020 411 18.960 66.947.424 527 18.329 39.671 (789) 7.310 (10.284 190 524.1 1.340 85.1 Workers' profit participation fund Opening Provision for the year Interest for the year Payments made during the year Closing balance 39. 000s 6.510 924.020 82.461 2010 Rs.474 9.234 4.424 10.290) 39.931 216.4 Charge for the year Current service cost Interest cost Actuarial gain 7.946.589 106 .

stockin-trade.917 492. 587 million (2010: Rs. The Group holds title deeds of the land which are duly registered in its name. 107 Annual Report 2011 . 50.1 It includes short term istisna amounting to Rs. counter guarantee of the ultimate Parent Company and lien on deposit of Gul Ahmed International FZC.1 9.043 million). The Honorable Sindh High Court has already restrained EOBI from taking any action or proceedings against the Group. No provision has been made there against in these financial statements as the Group is confident of the favourable outcome of the petition. 2. 493 million (2010: Nil). other receivables. 64 million.409 million) included in other receivables.2011 Note 11 SHORT TERM BORROWINGS . 12 CONTINGENCIES AND COMMITMENTS 12.54% to 16. Mark-up rates range from 1. 000s 5. 33. Short term borrowings include Rs.505 5.054 731.2 Short term borrowings are secured by pari passu hypothecation charge over stores and spares.355 2010 Rs. 12.SECURED Short term bank borrowings Short term running finance 11.325.65% (2010: 1. 50. pledge over cotton.30%) per annum.438 9. 33.093. The Group's management and its legal counsel are of the opinion that the case will be decided in the Group's favour and as such no provision has been made there against.559 11. as this land was previously sold to them and subsequently resold to the Group.The facility for short term borrowings mature within twelve months. 27 million) from related party.827 million).1 The Group owns and possesses a plot of land measuring 44 acres in Deh Khanto. which is appearing in the books at a cost of Rs.54% to 16. Employees Old-Age Benefits Institution (EOBI) for upholding the unjustified additional demand of payment raised by EOBI for accounting years 2000-01 and 2001-02 amounting to Rs. Ownership of the land has been challenged in the Sindh High Court by some claimants who claim to be the owners.3 The Group has filed a petition in the Sindh High Court against order passed by the Board of Trustees.818.409 million (2010: Rs.223 million (2010: 3. This demand has been raised after lapse of more than two years although the records and books of the Group were verified by the EOBI to their entire satisfaction and finalization of all matters by EOBI. The Group is confident that its title to the land is secure and accordingly no provision has been made in these financial statements.827 million (2010: Rs. trade debts. 12.824. 11. Unavailed facility at the year end was Rs.2 The Group has filed a suit in the Sindh High Court for recovery of Rs. The claim of the alleged owners is fictitious.

6 The Group is committed for non capital expenditure items under letters of credit as at June 30.357 907. (b) Post dated cheques Rs.611 802. 85.728 828.156 million) (d) Corporate guarantee of Rs. 000s 186.4 Guarantees (a) Rs. 96. (c) Bills discounted Rs.353 2. 1.795 million) has been issued to a bank in favour of subsidiary company.332 6.148.661. 412 million). 1.315 Rs.306 million (2010: Rs. stock-in-trade.928.7 The Group is committed for minimum rental payments for each of the following period as follows: 2011 2010 Note Not Later than one year Later than one year and not later than five years Later than five year 192. trade debts and other receivables.963 1.114. PLANT AND EQUIPMENT Operating assets Capital work in progress 13. 257 million (2010: Rs.230 1. 581 million (2010: Rs. 12.1 13.643 6.927 13 PROPERTY. 340 million (2010: Rs. 2011 of Rs.5 The Group is committed for capital expenditure as at June 30.512 6. 42 million) issued to various Government Agencies. 71 million (2010: Rs.12.097. 12.125.965 million (2010: Rs. 444 million). 146 million) against guarantees issued by banks which are secured by pari passu hypothecation charge over stores and spares.376 51. 2011 of Rs.2 6. 12.589.708 108 .869 71.

421) (681.023 11.107 1.171 6.608) 140.113.107 1.022 40.040.1.318) (476.333) (33. 13.408 4.3 Disposals include assets scrapped during the year amounting to Rs.363 million) 109 Annual Report 2011 .921.1.280 (198. 2010 Cost Accumulated depreciation Net book value Depreciation rate % per annum 234.886) 44.798) 144.022 47.456) 234.796 87.1 25 26 2011 2010 Rs.017 Plant and machinery Office equipment Rs.097.107 1.439.817 (2.851 (14.644 9.913.921) 234.1 OPERATING ASSETS Leasehold Buildings and lands structures on leasehold land Net carrying value basis as at June 30.292 374.831) 168. 000s 591.171 12.070.873 (762.107 1.638 (123.869 234.282 13.550) 44.657 million (2010: Rs.017 343.285) 193.070.040.799) 193.649 (1.225.453 (21.721 (13.097) 6.328) 4.581) 140.412 74.376 1.100 (10.974 45.792) (8.774 119.949) 4.463 34.737 583.235 63.550) 4.376 20 to 25 234.016.410) (43.2 Depreciation charge for the year has been allocated as follows: Note Cost of goods manufactured Distribution cost Administrative expenses 24.486 (157.104) 234.774 10 324.408 10 8.644 4.699) 64.567 (4.991 (35.223) (711.157 (35.832.315.282) 6.271 10 to 12 326.796 6.439.108) 168.122 (551) (501.723 (3.055 (28.369.796 6.869 13.638 44.565 (880.874 83. 1.227) (5.070.465) 234.022 15 to 30 80.356) 64.087) (5. 2011 Cost Accumulated depreciation Net book value Net carrying value basis year ended June 30.271 124. 2011 Opening net book value (NBV) Additions (at Cost) Disposal at NBV Depreciation charge Closing net book value Gross carrying value basis as at June 30. 000s Furniture and fixtures Vehicles Total 140.913.282.107 1.181 484.169 (4.589.774 975.408 88.13.259 3.107 1.966 (5.189) 4.1 Structures on leased retail outlets are depreciated over the respective lease term.589.692 (118.271 33.737) 6.456 (181.606) (32.1.439.638 99.077.376 234.642) 144.255.109.547) (49.584 681.747 (2.097.603 (184.419 55.026 730.186 102.292 168.666.107 1.875. 2. 2010 Opening net book value (NBV) Additions (at Cost) Disposal at NBV Depreciation charge Closing net book value Gross carrying value basis as at June 30.351 711.107 1.442.097.

No. Karachi Mr. Bangul Dero.558 586 610 Electrical appliance 340 82 86 Computers 440 106 109 Various wooden furniture 728 261 350 Various office. Karachi Mr. Malir Colony. Abdul Fatah Bhutto P. Karachi Toyota Estima 2. Tooba Road. Tahsil & District Malir. Jhang Cost Written down Sale value proceeds Rs. Street No. 4.1. C Area.063 2. Bahadur Khan Kabari Market.800 Rajab Enterprises H. Ghulam Hussain Area Old Thana Village. District Larkana Mr.850 1.4 Details of operating assets sold (by negotiation except where stated) Particulars Plant and machinery Auto mach coner splicer 7. Anjum Anis Ansari Phase No. Chundrigar Road. Shershah. I. Karachi Ghaziani Furniture Mart Liaquatabad Furniture Market. furniture and fixtures Various wooden furniture 648 242 313 Al-Mustaqeem Furnishers Liaquatabad Furniture Market. Karachi Popular Furniture Garden Aga Khan Road. 6.O. PIA Housing Society. Taluka Ratodero. Karachi Mr.13. Gulistan-e-Johar.116 1. DHA.000s Particulars of purchasers Office equipment. electrical & furniture items Vehicles Toyota Corolla 21.189 265 450 Mr. Block-9. Khayaban-e-Badar. Basti Lal Khan. Karachi Pak Computer Accessories Uni Tower.I. Sector 16.722 496 1. Karachi Masha Allah Communication Electronic Market. Saudabad.165 709 918 Honda City 845 188 601 Suzuki Baleno 699 100 125 110 . Karachi Insurance Claim Vacuum cleaners 673 163 164 Various wooden furniture 1. Saddar. A-304. C-42. Farhan Shahzad House No.

H.086 216 776 610 250 366 Suzuki Bolan 396 88 339 111 Annual Report 2011 . Gulshan-e-Iqbal. Mohammad Asif Gadit House No. Karachi Mr.189 265 667 Mr. Karachi Suzuki Alto 496 111 202 Toyota Corolla 1. Karachi Mr. KPT Building. HK-579. G-935. D. Sector-11E. 3rd Floor. Karachi Mr. Adamjee Road. Muhammad Aamir House No.189 265 718 Suzuki Cultus 585 104 238 Suzuki Alto & Toyota Corolla Honda City 1. Muhammad Asif Khan (Employee) Flat No. Saima Heaven.945 1. Street No.A. Extention. Block # 4. Gulshan Centers. Karachi Mr. Karachi Mr. 9-C-1. Block 13-C.746 917 375 513 Suzuki Cultus 590 164 427 Honda City 897 294 359 Honda Civic 1. Landhi No. New Qadri. Mohinuddin Office # 8. B-12. Sector-11-C/1. A-24. D. Gulshan-e-Iqbal. Street No. Karachi Mr. 1. Karachi Mr.247 1. North Karachi. 11-C/1. Irtaza Akbar Baloch House No. Mohammad Ameen Khan (Employee) House No. Karachi Mr. Mohammad Faheem Khan House No. 37/D Area. Gul Dad House No. Kher Mohammad House No. Karachi Mr. 55/1. Karachi Mr. New Fatima Jinnah Colony. North Karachi. Gulshan-e-Iqbal. 8/B. Phase II. B-13. Mohammad Yasin (Employee) House No. A-209. Muhammad Furqan House No. Rab Nawaz Wakeel Railway Road Banno.000s Particulars of purchasers 1. B-30. B-514. Block-B.H. 308. 15 Commerical Street. Malir.A. 6th Commercial Street.. Muhammad Arif House No. 182/B. Mohammad Arif House No. B-30. Karachi Mr. Karachi Mr.228 274 393 Suzuki Alto & Suzuki Bolan Suzuki Alto & Suzuki Cultus Suzuki Cultus 904 296 756 1..Particulars Vehicles (continued) Toyota Corolla Cost Written down Sale value proceeds Rs. Gulshan-e-Iqbal. Al-Haram Garden Appartment. 5. Phase-4.

Sector-1-D.808 517 1. Muhammad Yameen House No. S.189 265 727 Suzuki Alto 496 88 331 Suzuki Alto 496 138 407 Suzuki Alto 496 111 176 Toyota Corolla 1. Quaidabad. 1167. Adamjee Road. Block-12. Noman Hassan Khan House No.Tapal Ghar New Town. Block-A. Jamshed Road. Mail Service Road. Block-1. Islamabad Syed Kabir Ahmed House No. Karachi Syed Irfan Ali Rizvi House No. Muhammad Yaqoob Diwan House No. Section G-10/1. B-Area. 102/6. Malir Colony. Karachi Mr.Particulars Vehicles (continued) Suzuki Bolan Cost Written down Sale value proceeds Rs. Metro Well. 875/3. Block-3.M. Muhammad Hamid House No. Ancholi. E-106. Ghulam Hussain Qasim Road. Karachi Mr. Karachi Mr. Federal ‘B’ Area.1. Karachi Mr. 23. Karachi Mr.052 354 950 Honda Civic & Suzuki Cultus Daihatsu Coure 1. Paposh Nager. Nazimabad. Nisar Ahmed House No. Chandni Chowk. Landhi. A-908.403 399 57 262 Suzuki Alto 513 210 465 Honda City 899 250 450 Suzuki Alto 496 111 325 112 . Muhammad House No. Soni Appartment.I. Muhammad Sadiq House No. 25-CA-401. Karachi Mr. Karachi Mr. Muhammad Haroon Flat No. Karachi Mr. Block-9. B-14. Sindhi Muslim Society. New Town.E.000s Particulars of purchasers 453 101 367 Mr. Block-2. 644. Karachi Mr.. B-473. 664. Metro View.T. Rehan-ul-Haq House No. Shahzad Zahoor House No.G-935. Karachi Suzuki Alto 496 111 402 Toyota Corolla 1. Gulburg. Muhammad Shakeel House No. Landhi No.018 286 408 Toyota Corolla 1. Karachi Mr. 5-C-8/11. Federal B Area. Federal “B” Area. J. Fatima Jinnah Colony.

Egerton. Landhi.566 27.198 334 479 Mr. Zulfiqar Ali House No.301 2. Bolton. U.000 each 5.Particulars Vehicles (continued) Honda Civic Cost Written down Sale value proceeds Rs. Masood Malik P.A.222 4.O. Area 37-D. Blackburn Road. 364. Mr. 6. Philp Hodson 63.760 36.340 6.618 Various 2011 2010 75.E.011 Various 6. Street No. Box 85665 Sharjah.559 77.592 1. BL7 9ES Insurance Claim Nissan Sunny Audi 226 2.408 127 602 35 1.058 31.542 113 Annual Report 2011 .000s Particulars of purchasers 1. Karachi Mr.177 18. 50.068 Written down value below Rs.

2 Capital work-in-progress 2011 Machinery and Building Other store items construction assets held for capitalisation Cost as at July 1 Capital expenditure incurred during the year Transferred to property.615 42.677) 3.371 71.898 (18.692 2011 2010 Rs.507 35.287 18.939) 24.630 Trade Marks 4.692 10 Computer Software 16.900 Total 2010 Machinery and Building Other Total store items construction assets held for capitalisation Rs.006 (15.808 15.883 16.025.470) (114.525 5.293) Note Amortisation charge for the year has been allocated as follows: Distribution cost Administrative expenses 25 26 2011 2010 Rs.891) 21.630 20 9.823) 38.162 3. Remaining useful life range from one to nine years.453 (108. 114 .402 1.599 21.322 118.471 (17.144 (96.170 14.220 1.253 (5.608 51.488 (897. 000s 30.050 5.672) 37.904 465 (1.074) 51.643 21.990) (8.253 38.545 45.725) 38.006) (38.900 14 INTANGIBLE ASSETS Net carrying value as at June 30 Opening net book value (NBV) Additions (at cost) Amortisation charge Closing net book value Gross carrying value as at June 30 Cost Accumulated amortisation Net book value Amortisation rate % per annum 147.281 28.101 407.170) 21. plant and equipment Transferred to intangible assets Cost as at June 30 1.322 33.318) (528.13.086) 1. 000s 1.253 156.050 921.673 (38.670) (16.382 28.989 91.035 (436.743) (967.382 77.349 38.594 17.332 27.006) 9.332 (60.798 (75.1 The cost is being amortised over a period of ten years. 000s Total 21.218 543.402) 42.

end of service dues and/or guarantees of two employees.1 million (2010: Rs.5% to 15%.Due from non-executive employees Current portion of .058 3.840) 475.819) 2.1 Movement in provision for slow moving/obsolete items Balance at beginning of the year Charge for the year Balance at end of the year 34.059 million (2010: Rs.241 15.968 16 STORES. 1.Due from non-executive employees Note 15. These loans are secured against cars.6 million) which carry no interest.433 (1.428 2.892 851 (2.2 2011 2010 Rs. 0.15 LONG TERM LOANS AND ADVANCES .991) 4.654 million).954 256.845 2.2 Reconciliation of carrying amount of loans to executives Balance at the beginning of the year Disbursement during the year Transfer from non-executive to executive employees Repayment during the year Balance at the end of the year 2.415 452.104 7. Included in these are loans of Rs.840 250.845 2010 Rs.Due from executives .587) 1.262 (34.968 1. 2011 Note 15. scooters and household equipments and housing assistance in accordance with the terms of employment and are repayable in monthly installments. The maximum aggregate amount due from executives at the end of any month during the year was Rs.465 4.736 34. 000s 2.SECURED Considered good .968 4.1 (45.350 16.304 45.850 521 (2. 000s 5.144 27.668) (919) (2.144) 706.840 10. The balance amount carries interest ranging from 10.387 8.880 510.866) 5.016) (975) 2.494 Provision for slow moving/obsolete items 16. 4. SPARES AND LOOSE TOOLS Stores Spares Loose tools 296.Due from executives .021 751.416 2.846 19 (3.1 Loans and advances have been given for the purchase of cars. 6.232 (3.422 115 Annual Report 2011 . outstanding balance of provident fund.

35.312.1 Movement in provision for doubtful trade debts Balance at beginning of the year Charge for the year Balance at end of the year 47.465.736 10.922 1.1 Raw materials amounting to Rs.278 3. 2010 Rs.770 4.318 3.200 77.556 18.424.064) 2. 000s 1.611 million (2010: Rs.864 29.2 17.064 28.206. 589 million (2010: Nil) has been pledged with the banks.864 1.498 (47.1 811.657 Provision for doubtful trade debts (77.864) 2.1 3.994 1.259.unsecured Considered good Considered doubtful 18.430.secured Local debts .032 47.211.2011 Note 17 STOCK-IN-TRADE Raw materials Stock-in-transit Work-in-process Finished goods 17.2 Finished goods include stock of waste valuing Rs.809 2010 Rs.864 116 .593 77.763 167. 2011 Note 18 TRADE DEBTS Export debts .991.253. 31.214 17.748 million) determined at net realizable value.617.634 47.532. 000s 1.236.807.160 6.807.318 310.811 17.402 1.832 19.769 84.064 888.

373 20 OTHER RECEIVABLES Research and development claim Duty drawback local taxes and levies Duty drawback receivable Mark-up rate subsidy Others 20.255 131.531 15.908 43.1 Others Receivable against sale of property Others 12.2011 Note 19 LOANS AND ADVANCES Considered good Current portion of loans and advances to employees Executives Other employees 15 Suppliers Income tax .507 160.122 212.402 79.727 51.991 120. 61 million) with related party.477 15. 000s 1.611 5.933 4.705 86.936 21 TAX REFUNDS DUE FROM GOVERNMENT Sales tax Income tax 51.122 33.1 999 20.188 6.423 157.348 117.765 117 Annual Report 2011 . 51.974 100.499 58.861 75.409 13.263 2010 Rs.288 20.449 152.713 47.968 26.877 22 CASH AND BANK BALANCES Cash and cheques in hand With banks in current accounts Local currency Foreign currency 22.109 47.266 66.546 20.915 57.1 Bank balances include Rs.753 1.753 237.1 70.016 975 3.668 919 2.587 113.727 61.638 22.net of provision Letters of credit 3.344 43.2 33.303 9.409 10. 31 million (2010: Rs.

769 13.076 651.2 Raw materials consumed Opening stock Purchases during the year Closing stock 1.488.297.309 27.882) 18.160) (142.599 118 .164 million (2010: Rs.123 (29.486 24.885. 2010 Rs.560 16.592 75.278) (47.489 17.463 56.415 591.823 1.950 1.071 8.640 167.716 3.063.1 Sales are exclusive of sales tax amounting to Rs.807.532.404.184 (3.297.467) 13.236.2 26.2011 Note 23 SALES Local Export Direct export Indirect export Duty drawback Brokerage and commission 23.768.204.781.892.974 71.200 119. 000s 2010 3.278 (310.184 (1.934.430) 19. 57.1 Cost of goods manufactured Raw materials consumed Stores consumed Staff cost Fuel.733.643.063.206.532.582.573 2.211 495.593.733.811 132.698 10.1 8.414 24.176 23.008.794 (167.480 (41.736) 20. 16.589 10.148 (3.243.758 7.758 5.625 1.484) 13.079 13.206.716 673.157.322 650.1 2011 3.518.101 Rs.253 583.452.330 51.799) 18.337 24 COST OF SALES Opening stock of finished goods Cost of goods manufactured Purchases and processing charges Closing stock of finished goods 24. power and water Insurance Repairs and maintenance Depreciation Other expenses Cost of samples shown under distribution cost Work-in-process Opening Closing Note 24.585 (50.126.948.974.284 million).404.206.486 1.768.151 (53.318) 25.837 (6. 000s 8.265.389 19.296.789.769) 7.599 2.148.770 18.312.318) 10.770) 16.589 209.1 10.

808 41.047 119 Annual Report 2011 .254 176. rates and taxes Depreciation Amortisation Export development surcharge Other expenses 26.962 2010 Rs.749 257.002 53.656 157.400 793.486 13.844 3.594 2.995 19.103.031 7.424 52.268 26 ADMINISTRATIVE EXPENSES Staff cost Rent.929 45.594 44.721 73. rates and taxes Repairs and maintenance Vehicle up keep Conveyance and traveling Printing and stationery Postage and telecommunication Legal and consultancy fees Depreciation Amortisation Auditors' remuneration Donations Insurance Provision for doubtful trade debts Provision for slow moving/obsolete items Other expenses 26.592 34.757 25.675 37.107 57.847 50.084 911.987 815.584 16.836 29.207 52.351 15.925 68.736 50.287 3.297 282.1 342.039 25.883 27.799 195.620 48.358 64.719 3.954 60.241 9.2011 Note 25 DISTRIBUTION COST Freight and shipment expenses Staff cost Insurance Advertisement and publicity Cost of samples transferred from cost of goods manufactured Rent.331 28.902 45.636 42.348 2.653 32.412 1.467 140.064 1.082 63.2 26.3 26.1 178.878 302.304 51. 000s 189.126 74.200 10.861 5.235 1.

572 5.834 1.financial assets Profit on sale of property.377 2.657 116.726.275 36.061.782 1.719 5.1 Staff cost Cost of sales 2011 2010 Distribution cost Administrative expenses 2011 2010 2011 2010 Rs.604 38.475 269.405 2011 Rs.2 Auditor's Remuneration Audit fee Half yearly review Fee for consolidation of holding and subsidiaries Review of statement of compliance with code of corporate governance Out of pocket expenses Others 26.988 327.625 7.325 51.879 34. plant and equipment scrapped 82. plant and equipment .804 2.425 1.781.547 9.474 3.422 30 150 2010 2.229 31. wages & benefits Retirement benefits .166 Total 2011 2010 .241.570 31.684 12.594 9.461 42.628 9.950 7.126.363 53.039 864 8.036 14.017 11.484 268 5.214 27.015 20.954 282.194 7. 000s 250.069 7.093 8.853 28 OTHER OPERATING INCOME Income from financial assets Interest income from loan and advances Income from non .407 26.383 2.26.Staff compensated absences 2.Contribution to provident fund .572 32.016 32.786 34.610 9.572 301 176. 000s 26.454 1.net Unclaimed liabilities written back Scrap sales Others 13.Salaries.586 3.396 42.065 1.863 342.639.861 1.037 2.722. 50 62 130 2.702 25.701 1.069 155 257.495 170.163.Gratuity .939 2.952 30 199 167 3.348 27 OTHER OPERATING EXPENSES Workers' profit participation fund Workers' welfare fund Property.3 None of the directors or their spouses have any interest in the donees.844 2.775 2.638 120 .793 7.444 23.

921 35% 247. 31 EARNINGS PER SHARE .713 2010 305.756 564.252) (136.471 342.1 30.) There is no dilutive effect on the earnings per share of the Group. 000s 182.175 63.652 (15.478.935 2.093. 2011 1.2011 Rs.553 1. 000s 2010 468.967 16.697) 7.400 90.548 7.2 Income tax assessments of the Group have been finalised upto to fiscal year 2009-10 (Tax year 2010). 2011 30 PROVISION FOR TAXATION Current .137 (3.1 Reconciliation between accounting profit and tax expense Net profit for the year before taxation Tax rate Tax on accounting profit Tax surcharge levied Tax on income of subsidiaries Tax on prior periods Tax effect of minimum tax / FTR Tax effect of temporary differences of subsidiaries Others 1.259 29.866 11.252) 252.981 984 76.for the year .551.859 239.680 63.548 19. 102 million (2010: Rs.347) 176.360 709.478.871 2010 Rs.120 959.03 Rs.871 267.228) 222 (56.134 (5. 64 million) in respect of long term financing/short term borrowings from related party.854 64. 000s 29 FINANCE COST Mark-up on long term financing Mark-up on short term borrowings Interest on workers' profit participation fund Bank charges Exchange loss 307.688 Note 707.688 30.347) (28.prior Deferred 30.027 (5.38 121 Annual Report 2011 .769) 342.basic and diluted Profit for the year Weighted average number of shares Earnings per share (Rs.208.046 35% 542.418 11.105) (15.008 239.233 63.1 Mark-up on long term financing/short term borrowings include Rs.772 1.011 9.

122 .

093 4 123.800 2.002 297.185 106.731. 34.462 691 13.018.686 26. 000s Managerial remuneration House rent allowance Other allowances Contribution to provident fund Number of persons 3. associated companies. 6 thousand).818. directors of the Group and key management personnel.943 747 4.950 1 8.508 1.472 862.913 9.2 The Chief Executive and two Directors are also provided with free residential telephones.483 123 Annual Report 2011 . 000s 31.933 203. Directors and certain Executives are provided with free use of Company cars and are covered under Company's Health Insurance Plan along with their dependents. 34.530 750 30. DIRECTORS AND EXECUTIVES 2011 Chief Directors Executive Executives Total 2010 Chief Directors Executives Total Executive Rs.119 470.320 1.624 71.329 13.238 22. 000s Note 22 11 86. whose basic salary exceeds five hundred thousand rupees in a financial year.904 64.638 (9.000 1.679 207.530 750 3.929 32.006 25. companies where directors also hold directorship.850 42.355) (9.242 222.188 (5.620 1.200 500 250 4.824.2011 33 CASH AND CASH EQUIVALENTS Cash and bank balances Short term borrowings 2010 Rs.717) 157.329 61.300 3.423 334 4.324 66.Rs.199 34. 35 TRANSACTIONS WITH RELATED PARTIES Related parties comprise subsidiaries.559) (5.933 8.720 1.800 1 6.400 960 240 200 3.367 12.433. The Group in the normal course of business carried out transactions with various related parties.903 26.517 49.371) 34 REMUNERATION OF CHIEF EXECUTIVE.681 166 178.404 172 2. 126 thousand (2010: four Directors .449 34. Relationship with the Company Associated companies and other related parties Nature of Transactions Purchase of goods Sale of goods Rent paid Fees paid Commission/bank charges rebate Deposit with bank (at year end) Borrowing from bank (at year end) Bank guarantee (at year end) Bills discounted Commission/bank charges paid Mark-up/interest charged Provident fund contribution 2011 2010 Rs.007 566 11. 34.326 53.061 278.773 5 167.250 33.3 Aggregate amount charged in the accounts for the year for meeting fee to seven Directors was Rs.667.317 132.4 Executive means an employee other than the Chief Executive and Director.135 127 132 34.113 101.1 The Chief Executive.

price and interest rate risk). meters (50 Picks converted) Kgs. 2011 are included in respective notes to the financial statements.436 48. Exposure to foreign currency risk The Group is exposed to foreign exchange risk arising from currency value fluctuations due to the following: 2011 Trade debts Cash and bank Borrowings from financial institutions Trade and other payables Net exposure 16. Foreign exchange risk management Foreign exchange risk represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.1 Financial risk management objectives The Group's activities expose it to a variety of financial risks: market risk ( including foreign exchange risk.611 1.988 Production is lower due to variation in production mix and various technical factors. All treasury related transactions are carried out within the parameters of these policies and principles. 37.716 Working 3 shifts 3 shifts 2010 (000s) Capacity 121.1 Market risk Market risk refers to fluctuation in value of financial instruments as a result of changes in market prices. Related parties status of outstanding receivables and payables as at June 30.485) (3. 37 FINANCIAL INSTRUMENTS 37.744) 124 . (20 Counts converted) Capacity 124. 36 CAPACITY AND PRODUCTION 2011 (000s) Cloth Yarn Unit Sq. Risk management is carried out under policies and principles approved by the management.227 Production 84.465) (28.542 116 (37.067 38. The Group's overall risk management programme focuses on the unpredictability of financial markets and seek to minimize potential adverse effects on the Group's financial performance.136 48.980 41. The Group manages market risk as follows: a.227 Production 85.1. Loan and remuneration of the key management personnel are disclosed in notes 15 and 34 respectively. credit risk and liquidity risk.262) (7.069) USD 000s 2010 16. Foreign exchange risk arises mainly from future economic transactions or receivables and payables that exist due to transaction in foreign exchange.045) (7.There are no transactions with directors of the Group and key management personnel other than under the terms of employment.175 (22.

4 million) which are subject to interest rate risk. remain constant. The Group is exposed to interest/markup rate risk on long and short term financing and these are covered by holding "Prepayment Option" and "Rollover Option".073 Rs. 2011 would have decreased equity and profit or loss by the amounts shown below. Applicable interest rates for financial assets and liabilities are given in respective notes.289 A 10 percent weakening of the PKR against the USD at June 30.503 812.369 6. in particular interest rates. 000s Profit and loss account 241. 2010. The Group has long term finance and short term borrowings at fixed and variable rates.240 2. or factors affecting all similar financial instruments traded in the market.46 85. whether those changes are caused by factors specified to the individual financial instrument or its issuer. 2011 would have had the equal but opposite effect on USD to the amounts shown above.622 377. 9.651 The following significant exchange rates were applied during the year.90 2010 84.This analysis assumes that all other variable. 7 million (2010: Rs. on the basis that all other variables remain constant. Price risk Price risk represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest or currency rate risk).523 3.Foreign currency commitments outstanding at year end are as follows: 2011 EURO USD JPY CHF 253.559 641.951 675.62 85. Interest rate risk on short term borrowings is covered by holding "Prepayment Option" which can be exercised upon any adverse movement in the underlying interest rates.70 / 85. c.224 million) which are subject to interest rate risk. 125 Annual Report 2011 .113 2010 66. 12.734 million (2010: Rs. The Group is not exposed to equity price risk since there are no investments in equity securities. 000s 2010 121. Financial assets include balances of Rs.60 A 10 percent strengthening of the PKR against the USD at June 30. Interest/markup rate risk management Interest rate risk is the risk that the value of financial instruments will fluctuate due to change in the interest/markup rates. 2011 Rupee per USD Average rate Reporting date rate Foreign currency sensitivity analysis 85. Financial liabilities include balances of Rs.957 12.40 / 85.The analysis is performed on the same basis for June 30. b. 2011 Rs.

402 2.586 3. 94 million (2010: Rs.173 405 212.057 56.824.082 1. 126 .147 920.007 2.830.092 1.355 85. Cash flow sensitivity analysis for variable rate instruments At June 30.306.813 10.110 Rs.402 2.061 1.569.198.763.306. 2011.152 216.007 2.092 1.484.057 32.513 At fair value through profit and loss account Shor t term borrowings Trade and other payables Accrued interest 9.524 3.110 7.682.375 Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss .146 2.247 216. post tax loss for the year would have been Rs.818.229 717 90.416.045 9.424 9.818. post tax loss for the year would have been Rs.589 2.883.FINANCIAL ASSETS AND LIABILITIES Interest/mark-up bearing Maturity upto one year Maturity after one year Sub total Non interest/mark-up bearing Maturity Maturity upto one after one year year Sub total 2011 Total 2010 Total Financial assets Loans and receivables Long term deposits Trade debts Loans and advances Other receivables Cash and bank balances 3.332 2.459 10. At June 30.546 86.524 7. a change in interest rate at the balance sheet would not effect profit or loss of the Group.854 2. 72 million) higher / lower.576.638 157.007 257.236.546 237.057 33.682.158.875 2.414 Off balance sheet items Financial commitments Guarantees Bills discounted Commitments 257.591 2.061 146.535.092 920. if interest rates on short term borrowings had been 1% higher / lower with all other variables held constant.355 5.433 212.479.445 Financial liabilities At amortised cost Long term loans 632.550.484.198.830. mainly as a result of higher / lower interest expense on floating rate borrowings.232 4.671 1.854 920.061 257.638 2.Therefore.188 2.247 2.236.823 2.556 1.180.484. 2011.045 15. mainly as a result of higher / lower interest expense on floating rate borrowings.897.635 2.734.798 2.355 85. 000s 2.854 856.762 33.122 8.465.638 86.465.044 2. if interest rates on long term financing had been 1% higher / lower with all other variables held constant.003 33.765 2. 11 million (2010: Rs.59112.156.465.586 3.306.559 2.798 156.424 2.899. 14 million) higher / lower.818.635 2.546 212.936 86.798 216.

497 37.332 2. The bank balances along with credit ratings are tabulated below: 2011 A1+ A1 A2 55.2. The maximum exposure to credit risk at the reporting date was: 2011 Rs.3 Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure.423 37. Given these high credit ratings.705 Rs.2.404.The Group manages credit risk interalia by setting out credit limits in relation to individual customers and / or by obtaining advance against sales and / or through letter of credits and / or by providing for doubtful debts.241 33.1. 000s 2010 149. The Group is exposed to credit risk from its operating and certain investing activities and the Group's credit risk exposures are categorised under the following headings: 37.698.518 2010 1. 37. Also the Group does not have significant exposure in relation to individual customer.2 Credit risk Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed to perform as contracted.37.1.736 27 152.423 2. Consequently.660 2.587 43.1 Trade debts Trade debts are essentially due from local and foreign companies and the Group does not expect that these companies will fail to meet their obligations.686 23.2. the Group believes that it is not exposed to any major concentration of credit risk. This allowance is based on the management assessment of a specific loss component that relates to individually significant exposures.753 152.2 Bank balances The Group limits its exposure to credit risk by investing in liquid securities and maintaining bank accounts only with counterparties that have stable credit rating.1. 000s Long term loans and advances Long term deposit Trade debts Loans and advances Other receivables Bank balances 4.122 79.1.057 2.236. The Group established an allowance for the doubtful trade debts that represent its estimate of incurred losses in respect of trade debts.986 33 79.846 32. 127 Annual Report 2011 .402 3.705 2. management does not expect that any counter party will fail to meet their obligations.2.4 Financial assets that are either past due or impaired The credit quality of financial assets that are either past due or impaired can be assessed by reference to historical information and external ratings or to historical information about counter party default rates.991 47.465.556 2.1.

Trade debts are essentially due from local and foreign companies. or a liability settled.556 Export debts are secured under irrevocable letter of credit. Unutilized borrowing facilities of Rs. the Group is actively pursuing for the recovery and the Group does not expect that the recovery will be made soon and can be assessed by reference to note no.503 26.a. Other receivables The Group believes that no impairment allowance is necessary in respect of receivables that are past due.348 69.670 56. 37. b. the Group is actively pursuing for the recovery of the debt and the Group does not expect these employees will fail to meet their obligations.236. 37.223 million (2010: Rs.2 Fair value of financial instruments Fair value is an amount for which an asset could be exchanged.3 Capital risk management The primary objectives of the Group when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure. 15. 12. 128 .3 Liquidity risk Liquidity risk represent the risk where the Group will encounter difficulty in meeting obligations associated with financial liabilities. The Group believes that no impairment allowance is necessary in respect of loans that are past due.1. Furthermore the guarantor will pay the outstanding amount if the counter party will not meet their obligation. In addition these loans are secured against outstanding balance of provident fund and end of service dues of the relevant employee. The Group is actively pursuing for the recovery of the debt and the Group does not expect these companies will fail to meet their obligations. The Group manages liquidity risk by maintaining sufficient cash and ensuring the fund availability through adequate credit facilities.465. differences may arise between the carrying values and the fair value estimates. management believes the liquidity risk is insignificant.153.229 2.402 2. between knowledgeable willing parties in an arm's length transaction. The carrying amount of guarantees are up to the extent of loans outstanding as at the date of default. Long term loans The Group obtains guarantees by two employees against each disbursement made on account of loans and these can be assessed by reference to note no.760 2. 2011.082 million) and also has Rs. At June 30.041 million (2010: Rs. 9. the Group has Rs.152 million) being balances at banks.367 million) available borrowing limit from financial institutions. The Group believes that no impairment allowance is necessary in respect of trade debts past due other than the amount provided. Ageing of trade debts is as follows: 2011 2010 Rs.308. document acceptance. 2. 37. 80 million (2010: Rs. cash against documents and other acceptable banking instruments.448 87. 20. c. The carrying values of all the financial assets and liabilities reflected in the financial statements approximate their fair values except those which are described in respective notes. Trade debts The movement in allowance for impairment in respect of trade debts during the year can be assessed by reference to note no.18. Consequently. 000s 1 to 6 months 6 months to 1 year 1 year to 3 years 2. Based on the above. 3.

the Board of Directors have approved transfer to revenue reserve from unappropriated profit of Rs. the Group may adjust the dividend payment to shareholders or issue new shares. The gearing ratios as at June 30.332 17.912 70 The Group finances its operations through equity. 2011 Percentage of holding 100% 100% Country of incorporation U.638) 12.276.408. 2011 and 2010 were as follows: 2011 Total borrowings Cash and bank Net debt Total equity Total equity and debt Gearing ratio (%) 12.208 42 GENERAL Figures have been rounded off to the nearest thousand rupees. 38 EVENTS AFTER THE BALANCE SHEET DATE The Board of Directors in their meeting held on October 01.562.A.990 (86. reclassification made in the financial statements is as follows: Reclassification from component Administrative expenses Depreciation Reclassification to component Distribution cost Depreciation Amount Rs. 2011.724.884 3. U.710.E.684 71 Rs.352 4.072 (157. 2011 have proposed to issue bonus shares in the ratio of one share for every one share held (2010: Nil) i.The Group manages its capital structure and makes adjustment to it. They have also decided to transfer from capital reserve Rs. During 2011 the Group's strategy was to maintain leveraged gearing. 184 million from un-appropriated profit to reserve for issue of bonus shares. 000s 2010 8. 2011 June 30. 40 DATE OF AUTHORIZATION These financial statements were authorized for issue on October 01.028 12. 450 million and Rs. borrowings and management of working capital with a view to maintain an appropriate mix amongst various sources of finance to minimize risk. 2011 by the Board of Directors of the Parent Company.K.846.e. in light of changes in economic conditions. BASHIR ALI MOHOMMAD Chairman and Chief Executive ZAIN BASHIR Director 129 Annual Report 2011 .566. 000s 15.000 million (2010: Rs.188) 8. 1. 100% bonus shares. 39 DETAIL OF SUBSIDIARIES Accounting year end Gul Ahmed International Limited (FZC) GTM (Europe) Limited June 30. 400 million) subject to the approval of members at Annual General Meeting to be held on October 31. In addition. To maintain or adjust the capital structure. 41 CORRESPONDING FIGURES For better presentation.648.

must be received at the Registered Office of the Company duly stamped and signed not later than 48 hours before the meeting.00 2) Witness Name Address CNIC No.5. Representatives of corporate members should bring the usual documents required for such purpose. Proxies granted by shareholders who have deposited their shares into Central Depository Company of Pakistan Limited must be accompanied with attested copies of the Computerized National Identity Card (CNIC) or the Passport of the beneficial owners. If the member is a corporate entity its common seal should be affixed to the proxy. 2. . A member entitled to vote at the meeting may appoint a proxy. Proxies in order to be effective. attested copies of CNIC or the Passport of the beneficial owners and the proxy shall be furnished with the proxy form. 2011 or at any adjournment thereof. 1) Witness Name Address CNIC No. A proxy must be a member of the Company. 5.FORM OF PROXY I/We of being a member of Gul Ahmed Textile Mills Limited and holder of Ordinary Shares hereby appoint of or failing him/her of another member of the Company. 3. as my/our proxy in my/our absence to attend and vote for me/us and on my/our behalf at the 59th ANNUAL GENERAL MEETING of the Company to be held on October 31./CDC Account No. Signed by me this day of 2011 Signed Affix Revenue Stamp Rs. Folio No. Notes: 1. 4. In case of CDC Account Holders.

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