Brief Profile

Nishat (Chunian) Limited was incorporated in 1990 as a public limited company with an equity investment of Rupees 100 million. A spinning mill having a capacity of 14,400 spindles was established at Bhai Pheru, Tehsil Chunian. It started commercial production on 10 March 1991. The capacity was enhanced to 19,200 spindles in 1998. In 1998, the Company diversified its business interest by venturing into a weaving project with the installation of 99 air jet looms. A new state of art spinning unit started production in November 2000, increasing the total spinning capacity to about 40,872 spindles. Subsequently weaving capacity was increased to 212 air jet looms while the spinning capacity was increased to 50,952 spindles. During the period ended 30 June 2005, the Company enhanced its spinning capacity substantially by acquiring the operating assets of Umer Fabrics Limited comprising of 38,544 spindles and by addition of a new spinning unit with 40,128 spindles. In 2006, the Company also diversified into Home Textile Business. The Company is currently operating with 149,744 spindles, 293 looms, a modern dyeing and finishing plant having capacity of 101,370 meters per day and captive power plants with a total capacity of 29MW.

Nishat Chunian Power Limited (NCPL) was incorporated in February 23, 2007, is a subsidiary of Nishat (Chunian) Limited. The gross capacity of the NCPL is 200MW and is operating as an independent power producer, selling its electricity to National Transmission & dispatch company. The Company successfully commenced commercial operations on 21 July 2010.

Nishat (Chunian) Limited

JUNE 2011 1

Contents

Company Information Notice of Annual General Meeting Directors’ Report Financial Highlights Statement of Compliance with the Code of Corporate Governance Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance Nishat (Chunian) Limited - Financial Statements Auditors’ Report Balance Sheet Profit and Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Notes to the Financial Statements Pattern of Shareholding Consolidated Financial Statements Directors’ Report Auditors’ Report Balance Sheet Profit and Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Notes to the Consolidated Financial Statements Proxy Form

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15 16-17 18 19 20 21 22-53 54-55

58 59 60-61 62 63 64 65 66-103 105

Nishat (Chunian) Limited

JUNE 2011 3

Manzoor Ahmed Mr. Muhammad Saleem Mrs. Aftab Ahmad Khan Mr. Gulberg-II. Raiwind. Manzar Mushtaq Mr. Lahore. Shahzad Saleem Mr. Farhat Saleem Mr.com Hameed Majeed Associates (Pvt) Limited 1st Floor. Spinning 2. Bhai Pheru. Pakistan Bank Islami Pakistan Limited Bank AlHabib Limited Burj Bank Limited Citibank N.Company Information Board of Directors: Mr.nishatchunian. 4 & 5 49th Kilometre. Deutsche Bank AG Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited HSBC Bank Middle East Limited Habib Metropolitan Bank Limited JS Bank Limited KASB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Pak Kuwait Investment Company (Private) Limited Standard Chartered Bank Pakistan Limited Saudi Pak Industrial and agriculture Investment Company Limited SAMBA Bank Limited Summit Bank Limited The Bank of Punjab United Bank Limited Riaz Ahmad & Company Chartered Accountants 31-Q. Aftab Ahmad Khan Mr. Manga Road.A. Phone: 5761730-39 Fax : 5878696-97 Web : http://nishat. 3 & Weaving 49th Kilometre. H.M. Multan Road. Lahore Ph: 042 37235081-2 Fax: 042 37358817 Spinning 1. Kamogal. House 7-Bank Square. Multan Road. District Kasur.net & www. Ahmad Subhani Allied Bank Limited Askari Bank Limited AlBarka Bank (Pakistan) Limited Bank Alfalah Limited Barclays Bank plc. Chairman Chief Executive Nominee NIT Audit Committee: Chairman Member Member Company Secretary and CFO: Bankers to the Company: Auditors: Registered & Head Office: JUNE 2011 Share Registrar: 4 Nishat (Chunian) Limited Mills: . District Kasur. Tehsil Pattoki. Dyeing & Printing 4th Kilometre. Shahzad Saleem Mr. Manzar Mushtaq Mr. Pakistan. Tehsil Chunian. Mushtaq Ahmed Mr.

H. Ahmad Subhani Company Secretary 2. 31-Q. the Board of Directors’ resolution/power of attorney with specimen signatures of the nominee shall be produced (unless it has been provided earlier) at the time of the Meeting For Appointing Proxies i) In case of individuals. For attending the meeting i) In case of individuals. b. Lahore. if any. The Members’ Register will remain closed from 29-10-2011 to 04-11-2011 (both days inclusive). shall submit the proxy form as per the above requirement. To approve 20% cash dividend for ordinary shares and 15% preferential dividend for preference shares as recommended by the Board of Directors. the Registrar and share transfer office of the Company by the close of business on 28-10-2011 will be considered in time for attending the AGM and also for 20% cash Dividend and 15% preferential dividend’s entitlements. To receive and adopt audited accounts of the Company for the year ended 30 June 2011 together with Directors’ and Auditors’ reports thereon. ii) In case of corporate entity.Notice of Annual General Meeting Notice is hereby given that the 22nd Annual General Meeting of the Shareholders of Nishat (Chunian) Limited will be held at the Registered Office of the Company. ii) The proxy form shall be witnessed by two persons whose names. Shareholders are requested to immediately notify the change in address. To confirm the minutes of the last General Meeting. The present auditors M/s Riaz Ahmad & Co. Chartered Accountants.Transfers received at Hameed Majeed Associate (Pvt) Limited.M to transact the following business:1. House. To transact any other business with the permission of the Chair. 2000 issued by the Securities and Exchange Commission of Pakistan: a. Lahore on 31st October 2011 at 11. 7-Bank Square.M. iii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. the Board of Directors’ resolution/power of attorney with specimen signatures shall be submitted (unless it has been provided earlier) along with proxy form to the company.30 A. Nishat (Chunian) Limited JUNE 2011 5 . iv) The proxy shall produce his original CNIC or original passport at the time of the Meeting. 3. Proxies in order to be effective must be received by the company at the Registered Office not later than 48 hours before the time for holding the meeting. shall authenticate his/her identity by showing his original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting. the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations. offer themselves for reappointment. 3. CDC account holders will further have to follow the guidelines as laid down in circular No. addresses and CNIC numbers shall be mentioned on the form. 5. v). A member eligible to attend and vote at this meeting may appoint another member as proxy to attend and vote in the meeting. Gulberg II.1 dated January 26. In case of corporate entity. the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations. retire and being eligible. 4. 2. By Order of the Board Lahore: 08 October 2011 Notes: 1. To appoint auditors for the year ending 30 June 2012 and to fix their remuneration. 4..

The provision to reduce the valuation of stocks to net realizable value has decreased the company's profitability by PKR 369. financial charges decreased to 7. Company's gross profit margin reduced to 16. 2011. However.58 million during the year compared to PKR 1. the company's average availment of bank borrowings during the year. in absolute terms.080 million compared to PKR 2. increased to .32 billion compared to PKR 13. Because of record high cotton prices. Because of prudent financial management.83 million last year.18% from 7. 2011 to the market value of PKR 6. because the higher input prices could not be completely passed on to the customers.001. Despite the increase in sales. During the year.48 billion from PKR 1.10 billion last year. As of June 30. approximately PKR 11 billion.34 billion last year.Directors’ Report Directors' Report We are pleased to present the Annual Report of Nishat (Chunian) Limited for the year ended June 30.6% due to the increase in working capital requirements arising from high cotton prices.500 per maund. the Company recorded one of the best financial performances in its history. company's leverage decreased (maintaining the trend of last 3 years as exhibited in graph) despite significant investments made by the company in textiles operations and NCPL.77% from 20.51% last year.10% last year. Average SBP Export Refinance Loans availment remained at approximately PKR 2. Company's net profit increased by 45. Keeping in view the drop in market prices of cotton.000 million last year. The company has always strived to maintain a conservative capital structure by raising capital from time to time to meet its funding requirements and to keep the leverage ratios at the desired level.60% to PKR 1.29% compared to 8.12:1.25% last year. Sales during the year were recorded at PKR 20. the company has reduced the valuation of cotton stock as of June 30. Company's net profit margin reduced slightly to 7. Financial Charges of the Company increased by 34.85:1.579 million. company's total leverage ratio was 1.458. Increase in sales was mainly due to higher product prices resulting from record hike in cotton prices.00 and current ratio was 1. registering an increase of 52%. 2011. as a percentage of sales.00 Nishat (Chunian) Limited JUNE 2011 6 Financial Cost and Capital Structure Company's financial charges increased to PKR 1. However.

Record high cotton prices negatively impacted the home textiles and weaving division margins. NCL's total investment in NCPL (at cost) stands at PKR 1. Consequently.744 spindles.89% shares of NCPL as of June 30. Dividends Directors of the company have proposed to pay 20% cash dividend on ordinary shares and 15% cash dividend on outstanding preference shares. An investment of PKR 220 million was made in spinning machinery on account of BMR. The company is presently operating with 149. 293 wider width air jet looms. total dividend payout would amount to approximately PKR 322. Drastic increase in sales and net profit led to a return on equity of 32% for the year. NCPL has declared a final dividend of PKR 1.Investments During the year the company made an investment of PKR 407 million in weaving division to replace 77 older looms with new state of the art Picanol air jet looms. and captive power plants with total capacity of 29 MW. Moreover. Nishat Chunian Power Limited During the year an interim dividend of PKR 197 million was received from the company's subsidiary. stitching and printing plant. a dyeing. NCPL has already paid off through its internal cash generation.943 million and NCL is holding 52. Business Segment Review Spinning It was yet another year of extreme volatility and record breaking cotton prices. NCPL.4 million. the subordinated loan of PKR 386 million received from NCL. Profitability and Return on Equity Major contributor to this year's profitability was the company's spinning division. Pakistani cotton prices opened Nishat (Chunian) Limited JUNE 2011 7 .00/share which will be received by NCL in November 2011. 2011.

67. China and Bangladesh which resulted in acquisition of new customers. Since the price of the home textile products is long term. with China being the key customer. The marketing strategy adopted to tackle the challenges Nishat (Chunian) Limited JUNE 2011 8 . The main reason was the increasing trend of yarn prices in first three quarters and unexpected decrease in yarn prices in last quarter. Major sales of Pakistani yarn were to a very strong & growing domestic market and the Far East. our output increased by 30% over the replaced looms. benefited from the increasing raw material and yarn prices and set new profitability records.15 cents and touched an all time high in March 2011 at 229. Turkey. Market penetration was achieved by participating in textile fairs in Europe. Focus has been on expanding the customer base by exploring new markets in Europe and South America through participation in various Home Textiles Exhibitions around the Globe. The gross profit for the home textile business decreased for the period ending June 2011 because of higher raw material costs. While sales went up. Weaving The period under review presented hard challenges for the weaving segment.641 Million to PKR 5. both in volume and dollar terms. Home Textiles This year saw continued price pressure on Home Textile products.500 per maund in July 2010 and rose to an all time high of PKR 14. thereby increasing our competitiveness in the market. This year the positive development was substantial increase in home textile orders due to which the sales of the home textile business increased from PKR 4. The massive increase in yarn prices was a result of ever increasing raw cotton prices in the International market. India and Bangladesh kept pressure. In the last quarter of the financial year we did see some drop in the raw material prices which is a good sign for future business. Focused efforts on R&D for variation in existing product lines enabled us to successfully develop and launch niche products for our customers. profit margins were difficult to maintain as increase in yarn prices was not completely absorbed at the customer end. Raw cotton kept on increasing due to much higher demand as compared to supply. Pakistani spinners who covered their cotton position at lower prices by Dec ~Jan 2011 (including NCL). Bad weather and floods in most cotton growing countries including Pakistan resulted in massive damages and hence lower supply of cotton. the sudden and unexpected drop in yarn prices in the last quarter brought quite an uncertainty in market and our customers were forced to hold their orders.759 million. Efforts were made to broaden the customer base by emphasizing on new market development as well as product development. The hike in raw material prices remained for the majority of the year. we were not able to pass on the increased cost to the end customer. Turkish market contributed majorly in our sales of last year but this year Turkish Government has imposed punitive duty on fabric imports which hit our fabric sales.000 per maund by the end of March 2011. a percentage increase of 24%. Due to these new looms. Furthermore.at PKR 5. was to take positions on raw material which helped us to sell without reducing our margins. Cotlook A index was at the season's low in July 2010 at 84. India put export restrictions on raw cotton and yarn resulting in further shortage of cotton and yarn in the international market and probably Pakistani growers and spinners benefited from it the most. Competition from regional players such as China. We have also replaced 77 of our old 1998 model airjet looms with new state of the art Picanol Air jet Looms. Moreover.

The financial statements prepared by the management of the Company present fairly its state of affairs. cash flows and changes in equity. Nishat (Chunian) Limited JUNE 2011 9 . In the coming year. b. There are no doubts upon the Company's ability to continue as a going concern. Directors are pleased to report that: a. However. domestic law and order and political situation is posing serious threat to business climate of Pakistan. d. Proper books of accounts have been maintained by the Company. e. The system of internal control is sound in design and has been effectively implemented and monitored. f. Corporate Governance As required by the Code of Corporate Governance. c. as applicable in Pakistan have been followed in preparation of financial statements. Higher interest rates have impaired the viability of textile businesses in Pakistan. Overall. cotton prices are expected to remain low on account of higher output. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. Gas and electricity load shedding is worsening day by day without any solution in sight.Future Outlook Pakistan's textile industry is facing number of challenges at the moment. The International Accounting Standards. the results of its operations. Further increases in gas and electricity prices will jeopardize the profitability margins. the next year is expected to be quite uncertain.

Manzar Mushtaq Mr. Muhammad Saleem (Chairman) Mr. Attendance by each director is as follows: Name of Director Attendance 3 4 3 4 3 1 2 1 Mr. Aftab Ahmad Khan Mr.43 million The pattern of shareholding as at June 30. During the year under review Five (5) meeting were held. h. Farhat Saleem Mr. Mehmood Akhtar (Resigned) Mr. i. 2011 amounts to Rupees 138. 2011 is annexed. Manzoor Ahmad (Nominee NIT) Mr.g. Shahzad Saleem (Chief Executive) Mrs. There has been no material departure from the best practices of Corporate Governance as detailed in the listing regulations of the stock exchanges. Mushtaq Ahmad (Appointed in place of Mehmood Akhtar) on behalf of the Board Shahzad Saleem Chief Executive JUNE 2011 Lahore: 08 October 2011 10 Nishat (Chunian) Limited . The value of investment of contributory provident fund as at June 30.

225.778.545 4.358.293 6.099 966.837.333.833 3.227 6.730.7% 1.086 16.026 4.35 1.471 4.277 1.146 2.780.823 2.384 10.030 4.861.745 781.001 705.788.521.295 9.834.259.669 1.550.418 635.186 1.107.023 5.200 742.4% 1.086 16.616 8.014 187.315 4.542 721.583 9.512 1.616 8.783 1.583 9.008 1.062.536 65.34 742.9% 327.807 426 386 1.863 7.348 4.822 58.491.77 3.835 1.78 2.1% 7.215.207 6.441 3.002 1.18% 1.626.062.88 2.880 782.544.539 773.408.96% 1.43 43:57 6.352 1.106 1.886.829 9.413.308.705 947.644 752.49 3.081.178 9.814 1.621 4.828 7.45 17.230.355.303 648.054.822 22.303 1.516.520 683.253 391.183.715 6.704.357.000 50.78 2.00 7.206 2.39% 0.156 6.8% 3.209 759.586 111.126 2.192 2.845 494.409 503.322.191 1.810 14.767 2.782 3.054 133.073.2% 0.298 1.008 752.101.262 834.465.231 6.116.344 14.418 (Restated) 1.240.2002 2003 2004 2005 2006 2007 * 2008 2009 2010 2011 (Rupees in thousand) 403.787 218.206 1.138.12 1.482.532 4.12 1.524 3.6% 14.654.838.004 796.512 4.808 1.191 2.343.444.299 443.729.984.030 3.209 1.488.04% 0.418 4.146 101.885 2.25 30:70 4.863 1.23 1.642 1.922 Capital Reserves Net Worth Long Term Liabilities Current Liabilities Financial Highlights Total Equity & Liabilities 10.538 5.888 1.001.970.880 1.08 51:49 9.843 2.964.000 250.949 5.226 5.099 60.829.85 37:63 9.358.800 17.467.263.194 3.178 9.008 752.832 20.000 10.102.335 6.13% 0.903.927.19 38:62 8.068.686.249.020 2.000 103.918 14.183 1.600.788 1.557.785.116 12.775 545 955.188 1.045 90.545 13.545 4.146.230.580 16.85 2.626 1.992.20% 0.077 48.247.168.654.646.127 2.036.110.520 443.954.9% 12.539 957.308.000 18.201.881 589.63 53:47 0.676.547 2.800 4.31 37:63 8.015 3.899 519.157 12.47% 0.242 968.657 2.145.236.81 2.458 1.8% 0.14 1.089.893 5.753.016.848. ** Restated as per IAS 33 (Earnings per share) 11 Nishat (Chunian) Limited JUNE 2011 .60 143.77% 7.490 2.932 7.454.088 865.753.050.790.429 919.362.578.7% 9.279 18.5% 13.934.385 8.591.785.07 Fixed Assets Long Term Deposits & Advances Current Assets Total Assets Sales Gross Profit Operating Profit plus Other Income Financial & Other charges Taxation Net Profit Gross Margin Net Margin Current Ratio Leverage (Total Liab./Net Worth) Long Term Debt : Equity EPS ** * Performance figures for 2005 are for the period of nine months.570 3.295 5.247.399 204.040.717 2.5% 0.17 50:50 0.682.39 55:45 3.084 5.87% 51:49 1.180 11.458.19 2.199 2.559 3.938 7.539 20.614 37.69 1.112 10.083.646.226.667 2.191.465.22 9.677.

being a member of a stock exchange. The Company has complied with all the corporate and financial reporting requirements of the Code. of whom two are non-executive directors. JUNE 2011 10. along with agenda and working papers. in his absence. 15. The meetings of the Board were presided over by the Chairman and. 6. 12 Nishat (Chunian) Limited 12. A casual vacancy of one of the directors occurred during the year which was duly filled. have been taken by the Board. including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors. The directors.Statement of Compliance with the Code of Corporate Governance for the year ended 30 June 2011 This statement is being presented to comply with the Code of Corporate Governance contained in Regulation No. 37 (Chapter XI) of listing regulations of Karachi Stock Exchange (Guarantee) Limited and Clause 35 (Chapter XI) of the listing regulations of Lahore Stock Exchange (Guarantee) Limited for the purpose of establishing a framework of good governance. The Board has developed a vision/mission statement. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. 4. All the powers of the Board have been duly exercised and decisions on material transactions. 13. 8. has been declared as a defaulter by that stock exchange. Written notices of the Board meetings. 3. by a director elected by the Board for this purpose and the Board met at least once in every quarter. were circulated at least seven days before the meetings. The directors have confirmed that none of them is serving as a director in more than ten listed companies. including this Company. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board. overall corporate strategy and significant policies of the Company. 14. The Board arranged orientation courses for its directors during the year to apprise them of their duties and responsibilities. The Company has prepared a 'Statement of Ethics and Business Practices'. 11. 16. which has been signed by all the directors and employees of the Company. Company Secretary and Head of Internal Audit including their remuneration and terms & conditions of their appointment have been duly approved by the Board. It comprises three members. The minutes of the meetings were appropriately recorded and circulated. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final 2. 9. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding. 5. 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 Company has applied the principles contained in the Code in the following manner: 1. whereby a listed company is managed in compliance with the best practices of corporate governance. The appointment of CFO. . At present the Board includes four independent non-executive director. The Board has formed an audit committee. All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company. a DFI or an NBFI or. 7.

Shahzad Saleem Chief Executive Lahore: 08 October 2011 Statement of Compliance with the Best Practices on Transfer Pricing JUNE 2011 13 Nishat (Chunian) Limited The Company has fully complied with the best practices on Transfer Pricing as contained in the related Listing Regulations of the Karachi and Lahore Stock Exchanges. We confirm that all other material principles contained in the Code have been complied with. 17. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP). 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 ICAP. Shahzad Saleem Chief Executive Lahore: 08 October 2011 . The terms of reference of the committee have been formed and advised to the committee for compliance. 19 20.results of the Company and as required by the Code. 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 Board has set-up an effective internal audit function with suitably qualified and experienced staff. that they or any of the partners of the firm. conversant with the policies and procedures of the Company and involved in the internal audit function on a full time basis. 18.

We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or 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. with the best practices contained in the Code of Corporate Governance as applicable to the Company for the year ended 30 June 2011. 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. RIAZ AHMAD & COMPANY Chartered Accountants Name of engagement partner: Syed Mustafa Ali JUNE 2011 Date: 08 October 2011 LAHORE 14 Nishat (Chunian) Limited . to comply with the Listing Regulations of the respective Stock Exchanges.Review Report to the members on Statement of Compliance with best practices of Code of Corporate Governance We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of NISHAT (CHUNIAN) LIMITED ("the Company") for the year ended 30 June 2011. As part of our audit of financial statements. to the extent where such compliance can be objectively verified. which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance. 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 are not required to consider whether the Board's statement on internal control covers all risks and controls. in all material respects. Our responsibility is to review. 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. where the Company is listed. Based on our review. or to form an opinion on the effectiveness of such internal controls. Listing Regulations of The Karachi & Lahore Stock Exchanges require 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. nothing has come to our attention. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. the Company's corporate governance procedures and risks.

Zakat deductible at source under the Zakat and Ushr Ordinance. Our responsibility is to express an opinion on these statements based on our audit. 1984. proper books of account have been kept by the company as required by the Companies Ordinance. we report that: (a) in our opinion. and the business conducted. as well as. 1984. the expenditure incurred during the year was for the purpose of the company’s business. profit and loss account.Auditors’ Report to the Members We have audited the annexed balance sheet of NISHAT (CHUNIAN) LIMITED as at 30 June 2011 and the related profit and loss account. give the information required by the Companies Ordinance. 1980 (XVIII of 1980). to the best of our knowledge and belief. after due verification. evaluating the overall presentation of the above said statements. its cash flows and changes in equity for the year then ended. cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan. and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. (b) ii) iii) (c) in our opinion and to the best of our information and according to the explanations given to us. statement of comprehensive income. statement of comprehensive income. 1984. on a test basis. were necessary for the purposes of our audit. and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for the change as stated in Note 2. and in our opinion.6 with which we concur. It is the responsibility of the company’s management to establish and maintain a system of internal control. 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. 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. was deducted by the company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance. for the year then ended and we state that we have obtained all the information and explanations which. (d) RIAZ AHMAD & COMPANY Chartered Accountants Name of engagement partner: Syed Mustafa Ali Date: 08 October 2011 LAHORE 15 Nishat (Chunian) Limited JUNE 2011 . the balance sheet. An audit includes examining. We believe that our audit provides a reasonable basis for our opinion and. its comprehensive income. in the manner so required and respectively give a true and fair view of the state of the company’s affairs as at 30 June 2011 and of the profit. investments made and the expenditure incurred during the year were in accordance with the objects of the company. An audit also includes assessing the accounting policies and significant estimates made by management. and. cash flow statement and statement of changes in equity together with the notes forming part thereof. 1984. evidence supporting the amounts and disclosures in the above said statements.

847.932.440 4.041 1.821 216.191.468 The annexed notes form an integral part of these financial statements.589 12.542.418.667.240.531 5.000 1.061.498 1.930 TOTAL LIABILITIES CONTINGENCIES AND COMMITMENTS 10 10.255.525.368.615.102 14.831.091 454.020 3.499.443.282 4.604.000.413.938.578.729.648 3.181.000 1.338.316 1.819.938.505.127 191.318.000.131 662.864 5.950.457.834.657.089.050 8.488.523.239 171.730.615 7.717.759 1.333.866.418.230.950.429.183.905.201 -)))))) 3.914.429 4.500.252 3.906 3.654.440 2.813.333.850 3.932.058 4.Balance Sheet as at Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorized share capital Issued.750.085.618 TOTAL EQUITY AND LIABILITIES JUNE 2011 16.971 1.321.552.921.672 1.088.729.201 2.440.854.704.654.000 1.648 -)))))) 2. subscribed and paid-up share capital Reserves Total equity NON-CURRENT LIABILITIES Long term financing Deferred income tax liability 6 3 4 5 30 June 2011 Rupees 1.443 9.608. 16 Nishat (Chunian) Limited CHIEF EXECUTIVE .568 CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current portion of long term financing 7 8 9 6 892.668 7.295.002.299.022.881.830 1.050.797.308.523.000.

220 3.469 CURRENT ASSETS Stores.518.666 1.508 234.987 372.254.809.215.632.045.178 135.774.499.390 390.30 June 2011 Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE ASSETS NON-CURRENT ASSETS Fixed assets Investment in subsidiary company Long term loans Long term security deposits 11 12 13 30 June 2011 Rupees 6.028 2.796.768 5.537.442 8.065.073.437.657.860.880 3.050 Non-current asset held for sale 21 -)))))) 8.160 1.891.052 5.927.860 248.234.347.284 8.144.095.970.082.085.655.658 -)))))) 29.308.289.724 1.728.442 8.373 3.023.999 -)))))) 4.445.975.589 12.796.058.768.369.929.305 1.704 341.513.999 TOTAL ASSETS 16.239.571.975 1.162.188 614.102 14.111.672 1.019 487.810 263.068.513.724.169 1.183.050 378.516.002.632.865 4.063 379.627.778 1.469.210.253.468 JUNE 2011 17 Nishat (Chunian) Limited DIRECTOR .230.112.013 209.850.665.112. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Accrued interest Cash and bank balances 14 15 16 17 18 19 20 448.718 1.660.155.950 6.387 194.916 2.891.218.942.779 5.068.095.029.103 4.824.644.873.724 211.295.439 90.942 7.521 5.

662.408.236.760 81.433 1.624 866.539.629.713 111.145.501 631.458.782.974 2.371.050.669.208.819 1.206.399.206 2.587 438.287.343.699 16. 18 Nishat (Chunian) Limited JUNE 2011 CHIEF EXECUTIVE DIRECTOR .638 204.713.913.360.482.579.332.322.477.914 1.808 8.416 3.563 10.541.091.717 9.460 OTHER OPERATING INCOME PROFIT FROM OPERATIONS FINANCE COST PROFIT BEFORE TAXATION TAXATION PROFIT AFTER TAXATION BASIC EARNINGS PER SHARE DILUTED EARNINGS PER SHARE 30 30 29 28 27 603.682.001.298.661.965.Profit and Loss Account for the year ended 30 June 2011 NOTE SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING EXPENSES 24 25 26 22 23 2011 Rupees 20.101.976 2.82 Restated 2010 Rupees 13.586.283 599.59 The annexed notes form an integral part of these financial statements.788.071 1.921 1.188.135.832.722 133.001.823 2.916 141.49 6.524.613 186.283 126.615.054.097 1.558.907.833.07 8.611 3.

579.552.753) 1.717 998.579.001.Statement of Comprehensive Income for the year ended 30 June 2011 2011 Rupees PROFIT AFTER TAXATION OTHER COMPREHENSIVE INCOME Reclassification adjustment for gain included in profit or loss Deferred income tax relating to other comprehensive income Net loss recognized in other comprehensive income -)))))) -)))))) -)))))) (4.950.055) The annexed notes form an integral part of these financial statements.005) 1.882.832.435.808) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1.458.252) (2.717 Restated 2010 Rupees 1.458. 19 Nishat (Chunian) Limited CHIEF EXECUTIVE DIRECTOR JUNE 2011 .

721) (142. plant and equipment Capital expenditure on intangible asset Proceeds from sale of property.763) 90.304) 44.413.691) 138.980.865) 90.000) 471.129.283) 255.439) 73.471) (349.521) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 20 Nishat (Chunian) Limited The annexed notes form an integral part of these financial statements.157) 629.542.000.434.003) 1.960) 196.966.445.866) (604.500) (2.199.181.263) (12. CHIEF EXECUTIVE DIRECTOR .298.000) (1.604.970.991.060.754.466.521) 135.047.384.284) 1.194.631) 413.775.771.774.321.290.822.123) 61.192) 279.963.134.000) (59.842.628. plant and equipment Proceeds from sale of shares of subsidiary company Investment in subsidiary company Long term loan made to subsidiary company Repayment of long term loan by subsidiary company Dividend received from subsidiary company Interest income received Net cash from / (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term financing Repayment of long term financing Short term borrowings .460) (386.094) -)))))) (685.623) -)))))) (85.219.620.577.913) -)))))) -)))))) (245.248.251) (5.056.257.023.638.804.167.943) 7.328.325.799) (561.419) (4.638.622.936.724) -)))))) (1.900.925.996) (1.340) 1.255.864) 1.974) 65.828.445.225) (855.610) (1.727) (291.485.500) (1.373) 56.960) -)))))) -)))))) 1.Cash Flow Statement for the year ended 30 June 2011 NOTE CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Net increase in long term security deposits Finance cost paid Income tax paid Net (increase) / decrease in long term loans Net cash (used in) / generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on property.net Proceeds from issue of right shares Share issuance cost Dividends paid Net cash from financing activities Net increase in cash and cash equivalents JUNE 2011 2011 Rupees Restated 2010 Rupees 31 1.733) (672.692) 2.774.656) 29.

.753 1.027......766) (10.....318.240.717 The annexed notes form an integral part of these financial statements...766) (10.882.376.152.055 998.829..903.770 1.221..830 2.834..579.243) (5.1.418..610 1.081) (14.822.458..829..813.209.070 1.820 (35.6) Balance as at 30 June 2009 ..610 (1....152....470.050.604.299.950.629.220 413..081) (14.861.027.376.001) 35.498 - - - - .400.220 413.882.333. Rupees .850 (1.251) (1.. Balance as at 30 June 2009 Effect of change in accounting policy (Note 2.808 998.001) (237.5 per ordinary share Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2011 827...055 1.(237..020 3.717.717 1.629.420..restated Ordinary shares issued Share issuance cost.102.712.629..514..780 2.418.505.278 - 215.278 229.. CHIEF EXECUTIVE DIRECTOR Nishat (Chunian) Limited 1.610 - 2.931 - - - - - (14.152.440..101 3.251) 413.801.579...243) .209.604.620.490 33..Statement of Changes in Equity for the year ended 30 June 2011 RESERVES SHARE CAPITAL Ordinary shares Preference shares CAPITAL RESERVE TOTAL Hedging reserve REVENUE RESERVES General reserve Unappropriated profit TOTAL TOTAL EQUITY .847.820) - - - - - - Total comprehensive income for the year ended 30 June 2011 Balance as at 30 June 2011 - - - - .022.205..1.058 4....832..604..488..526.458.950.822.440 .891.221..278 2.278 1..585.813.712.882..001.989 1.027.670 68.001) (237.440 .654.654..610 1.243) (5.088. net Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2010 Total comprehensive income for the year ended 30 June 2010 Balance as at 30 June 2010 .604.629..531 5.753) .restated Final dividend for the year ended 30 June 2010 @ Rupees 1...081) 827.253 4.657..333.753 1.971 21 JUNE 2011 - - - - - (5.704.553..610 - 413..1.829..717 1.579....221.840 (344..251) 344..840) - - - - - - - - - - - (10.240....458.333.1.822.950 1.766) - - - (2.221..077.604.830 413....

the management takes into account the current income tax law and the decisions of appellate authorities on certain issues in the past. accumulate. Estimates and judgments are continually evaluated and are based on historical experience and other factors. Gulberg II. Impairment of investment in subsidiary company In making an estimate of recoverable amount of the Company's investment in subsidiary company. Lahore. b) Accounting convention These financial statements have been prepared under the historical cost convention except for the certain financial instruments carried at fair value. the provisions or directives of the Companies Ordinance. weaving.1 Basis of preparation a) Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. The areas where various assumptions and estimates are significant to the Company's financial statements or where judgments were exercised in application of accounting policies are as follows: Useful lives. unless otherwise stated: 2. Any change in the estimates in the future might affect the carrying amount of respective item of property. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. The provision is made while taking into consideration expected recoveries. selling and otherwise dealing in yarn. In case requirements differ. doubling.Notes to the Financial Statements for the year ended 30 June 2011 1. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies. printing. Inventories Net realizable value of inventories is determined with reference to currently prevailing selling prices less estimated expenditure to make sales. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these financial statements are set out below. Accumulating compensated absences The provision for accumulating compensated absences is made on the basis of accumulated leave balance on account of employees. patterns of economic benefits and impairments Estimates with respect to residual values and useful lives and pattern of flow of economic benefits are based on the analysis of the management of the Company. These policies have been consistently applied to all years presented. with a corresponding effect on the depreciation charge and impairment. 1984 shall prevail. sizing. Further. synthetic fiber and cloth and to generate. stitching. 1984. d) Amendments to published approved standards that are effective in current year and are relevant to the Company The following amendments to published approved standards are mandatory for the Company's accounting periods beginning on or after 01 July 2010: c) 22 Nishat (Chunian) Limited JUNE 2011 . provisions of and directives issued under the Companies Ordinance. 2. the Company reviews the value of assets for possible impairment on an annual basis. supply and sell electricity. processing. buying. The Company is engaged in business of spinning. plant and equipment. including expectations of future events that are believed to be reasonable under the circumstances. Taxation In making the estimates for income tax currently payable by the Company. distribute. dyeing. Provisions for doubtful debts The Company reviews its receivables against any provision required for any doubtful balances on an ongoing basis. Critical accounting estimates and judgments The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. fabrics and made-ups made from raw cotton. THE COMPANY AND ITS OPERATIONS Nishat (Chunian) Limited is a public limited Company incorporated in Pakistan under the Companies Ordinance. 1984. if any. the management considers future cash flows. Its registered office is situated at 31-Q. 1984 and is listed on the Lahore and Karachi Stock Exchanges.

IAS 7 (Amendment). The application of the amendment does not affect the results or net assets of the Company as it is only concerned with presentation and disclosures. The application of the amendment does not affect the results or net assets of the Company as it is only concerned with presentation and disclosures. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current. This standard is the first step in the process to replace IAS 39 'Financial Instruments: Recognition and Measurement'. The objective of IFRS 10 is to have a single basis for consolidation for all entities. regardless of the nature of the investee.International Accounting Standard (IAS) 1 (Amendment). The amendments will promote transparency in the reporting of transfer transactions and improve users' understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity's financial position. These amendments are part of the IASBs comprehensive review of off balance sheet activities. The clarification results in an improvement in the alignment of the classification of cash flows from investing activities in the cash flow statement and the presentation of recognized assets in the balance sheet. The application of the amendment does not affect the results or net assets of the Company as it is only concerned with presentation and disclosures. An entity transfers a financial asset when it transfers the contractual rights to receive cash flows of the asset to another party. and that basis is control. . IFRS 10 replaces those parts of IAS 27 'Consolidated and Separate Financial Statements' that address when and how an investor should prepare consolidated financial statements and replaces Standing Interpretations Committee (SIC) 12 'Consolidation . IAS 27 (revised 2011) 'Consolidated and Separate Financial Statements' and IAS 28 (revised 2011) 'Investments in Associates'. e) Interpretations and amendments to published approved standards that are effective in current year but not relevant to the Company There are other new interpretations and amendments to the published approved standards that are mandatory for accounting periods beginning on or after 01 July 2010 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements. IFRS 12 'Disclosure of Interests in Other Entities'. f) Standards and amendments to published approved standards that are not yet effective but relevant to the Company Following standards and amendments to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after 01 July 2011 or later periods: IFRS 7 (Amendment).Special Purpose Entities' in its entirety. JUNE 2011 23 Nishat (Chunian) Limited IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after 01 January 2013). The management of the Company is in the process of evaluating the impacts of the aforesaid amendment on the Company's financial statements. The amendment provides clarification that only expenditure that results in a recognized asset in the balance sheet can be classified as a cash flow from investing activity. The amendment is part of the International Accounting Standards Board's (IASB) annual improvements project published in April 2009. Concurrent with the issuance of IFRS 10. 'Financial Instruments: Disclosures' (effective for annual periods beginning on or after 01 July 2011). By amending the definition of current liability. particularly those involving securitization of financial asset. The new disclosure requirements apply to transfer of financial assets. 'Statement of Cash Flows' (effective for annual periods beginning on or after 01 January 2010). the IASB has also issued IFRS 11 'Joint Arrangements'. The definition of control includes three elements: power over an investee. The management of the Company is in the process of evaluating the impacts of the aforesaid standard on the Company's financial statements. IFRS 8 (Amendment). the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. 'Operating Segments' (effective for annual periods beginning on or after 01 January 2010). exposure or rights to variable returns of the investee and the ability to use power over the investee to affect the investor's returns. The amendment provides clarification that the requirement for disclosing a measure of segment assets is only required when the Chief Operating Decision Maker (CODM) reviews that information. IFRS 10 'Consolidated Financial Statements' (effective for annual period beginning on or after 01 January 2013). 'Presentation of Financial Statements' (effective for annual periods beginning on or after 01 January 2010). IFRS 9 introduces new requirements for classifying and measuring financial assets and is likely to affect the Company's accounting for its financial assets.

The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. IFRS 13 applies to both financial and non-financial items measured at fair value. except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Under the rules.IFRS 12 'Disclosure of Interests in Other Entities' (effective for annual period beginning on or after 01 January 2013). The charge for current tax also includes adjustments. where considered necessary. Accumulating compensated absences The Company provides for accumulating compensated absences. when the employees render service that increase their entitlement to future compensated absences. The management of the Company is in the process of evaluating the impacts of the aforesaid standard on the Company's financial statements. The management of the Company is in the process of evaluating the impacts of the aforesaid standard on the Company's financial statements. There are other amendments resulting from annual improvements project initiated by International Accounting Standards Board in May 2010. IAS 1 (Amendments). 2. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets to the extent that it is probable that taxable profits will be available against which the deductible temporary differences. IFRS 12 establishes disclosure objectives and specifies minimum disclosures that an entity must provide to meet those objectives. Equal monthly contributions are made both by the employees and the Company to the fund in accordance with the fund rules. IFRS 13 establishes a single framework for measuring fair value where that is required by other standards. either in the statement of changes in equity or in the notes to the financial statements. In this case the tax is also recognised in other comprehensive income or directly in equity. IFRS 13 'Fair Value Measurement' (effective for annual period beginning on or after 01 January 2013). interpretations and amendments to published approved standards that are not yet effective and not considered relevant to the Company There are other standards. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date. associates or unconsolidated structured entities. specifically in IFRS 7 'Financial Instruments: Disclosures'. unused tax losses and tax credits can be utilized. It clarifies that an entity will present an analysis of other comprehensive income for each component of equity. respectively. 2. IFRS 12 applies to entities that have an interest in subsidiaries. IFRS 12 requires an entity to disclose information that helps users of its financial statements evaluate the nature of and risks associated with its interests in other entities and the effects of those interests on its financial statements. g) Standards. to provision for tax made in previous years arising from assessments framed during the year for such years. IAS 1 'Presentation of Financial Statements' and IAS 24 'Related Party Disclosures' that are considered relevant to the Company's financial statements. The Company's contributions to the fund are charged to income currently. amendments to published approved standards and new interpretations that are mandatory for accounting periods beginning on or after 01 July 2011 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements.3 Employee benefits The main features of the schemes operated by the Company for its employees are as follows: Provident fund There is an approved contributory provident fund for employees of the Company. Deferred tax is charged or credited in the profit and loss account. joint arrangements. 'Presentation of Financial Statements' (effective for annual periods beginning on or after 01 July 2012). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. head office employees and 24 Nishat (Chunian) Limited JUNE 2011 .2 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. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. These amendments are unlikely to have a significant impact on the Company's financial statements and have therefore not been analyzed in detail.

equipment and depreciation Property. which comprise purchase price. 40 days and 28 days in case of factory staff and workers respectively. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset. Investments intended to be held for an undefined period are not included in this classification. Intangible asset Intangible assets. an intangible asset is carried at cost less accumulated amortization and impairment losses. a) Investment at fair value through profit or loss Investment classified as held-for-trading and those designated as such are included in this category. when these assets are available for use. Depreciation on additions is charged from the month in which the assets are available for use upto the month prior to disposal. Derecognition An item of property.4 Fixed assets Property. which is tested for impairment in accordance with the provisions of IAS 36 'Impairment of Assets'. Any further un-utilized leaves will lapse. 40 days in case of factory staff and upto 28 days in case of factory workers.e. The useful life and amortization method is reviewed and adjusted. as appropriate. Gains or losses on investments held-for-trading are recognized in profit and loss account. subject to the Company's approval. borrowing cost pertaining to erection / construction period of qualifying assets and other directly attributable cost of bringing the asset to working condition. can be encashed by them at any time during their employment. Intangible assets are amortized form the month. if any. After initial recognition. plant and equipment except freehold land and capital work-in-progress are stated at cost less accumulated depreciation and any identified impairment loss. Investments are classified as held-for-trading if these are acquired for the purpose of selling in the short term. Cost in relation to certain property. Freehold land and capital work-in-progress are stated at cost less any identified impairment loss.factory staff are entitled to 20 days leave per year and factory workers are entitled to 14 days leave per year respectively. Any un-utilized leave balance i. which are non-monetary assets without physical substance. All other repair and maintenance costs are charged to income during the period in which they are incurred. This cost is computed as the amount initially recognized minus principal repayments. Unutilized leaves can be accumulated upto 10 days in case of head office employees. the Company applies the provisions of IAS 39 'Financial Instruments: Recognition and Measurement' to all investments. at each reporting date. plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. 2. Investments are initially measured at fair value plus transaction costs directly attributable to acquisition. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and carrying amount of the asset) is included in the profit and loss account in the year the asset is derecognized. plus or minus the cumulative 25 Nishat (Chunian) Limited b) JUNE 2011 . 2. Depreciation Depreciation on all operating fixed assets is charged to income on the reducing balance method so as to write off the cost / depreciable amount of the assets over their estimated useful lives at the rates given in Note 11. Other long-term investments that are intended to be held to maturity are subsequently measured at amortized cost.1. Unutilized leaves can be used at any time by all employees.5 Investments Classification of an investment is made on the basis of intended purpose for holding such investment. are recognized at cost. using the straight line method. The assets' residual values and useful lives are reviewed at each financial year end and adjusted if impact on depreciation is significant. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such designation on regular basis. except investment in subsidiary company. whereby the cost of the intangible asset is amortized over its estimated useful life over which economic benefits are expected to flow to the Company. plant and equipment signifies historical cost. If any such evidence exists. Provisions are made annually to cover the obligation for accumulating compensated absences and are charged to income. only when it is probable that future economic benefits associated with the item will flow to the Company and cost of the item can be measured reliably. plant. non-refundable purchase taxes and other directly attributable expenditures relating to their implementation and customization. The Company assess at the end of each reporting period whether there is any objective evidence that investments are impaired. if appropriate. except for 'investment at fair value through profit or loss' which is measured initially at fair value. Held-to-maturity Investments with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold to maturity.

amortization, using the effective interest method, of any difference between the initially recognized amount and the maturity amount. For investments carried at amortized cost, gains and losses are recognized in profit and loss account when the investments are de-recognized or impaired, as well as through the amortization process. c) Investment in subsidiary company Investment in subsidiary company is stated at cost less impairment loss, if any, in accordance with the provisions of IAS 27 'Consolidated and Separate Financial Statements'. Available-for-sale Investments intended to be held for an indefinite period of time, which may be sold in response to need for liquidity, or changes to interest rates or equity prices are classified as available-for-sale. After initial recognition, investments which are classified as available-for-sale are measured at fair value. Gains or losses on available-for-sale investments are recognized directly in statement of comprehensive income until the investment is sold, de-recognized or is determined to be impaired, at which time the cumulative gain or loss previously reported in statement of comprehensive income is included in profit and loss account. These are sub-categorized as under: Quoted For investments that are actively traded in organized capital markets, fair value is determined by reference to stock exchange quoted market bids at the close of business on the balance sheet date. Unquoted Fair value of unquoted investments is determined on the basis of appropriate valuation techniques as allowed by IAS 39 'Financial Instruments: Recognition and Measurement'. 2.6 Inventories Inventories, except for stock-in-transit and waste stock, are stated at lower of cost and net realizable value. Cost is determined as follows: Stores and spares Usable stores and spares are valued principally at moving average cost, while items considered obsolete are carried at nil value. Items-in-transit are valued at cost comprising invoice value plus other charges paid thereon. Stock in trade Cost of raw materials is measured using the monthly average cost formula. Cost of work-in-process and finished goods comprise cost of direct material, labour and appropriate manufacturing overheads. Cost of goods purchased for resale is based on first-in-first-out (FIFO) cost formula. Materials-in-transit are stated at cost comprising invoice values plus other charges paid thereon. Waste stock is valued at net realizable value. Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. During the year ended 30 June 2011, the Company has changed its accounting policy for measurement of cost of raw material of spinning segment. Previously, cost of raw material of spinning segment was measured using annual average cost formula. Now, it is measured using monthly moving average cost formula. This change in accounting policy has been accounted for retrospectively in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'. Had there been no change in this accounting policy, the figures recognized in these financial statements would have been different as follows: 2011 Rupees Unappropriated profit as at the beginning of the year would be (lower) / higher by Profit for the year ended 30 June would be lower by Stock-in-trade as at 30 June would be lower by Earnings per share - basic would be lower by Earnings per share - diluted would be lower by (56,206,852) (340,239,687) (396,446,539) (2.12) (2.06) 2010 Rupees 14,152,081 (70,358,933) (56,206,852) (0.60) (0.46)

d)

26
Nishat (Chunian) Limited

JUNE 2011

2.7

Foreign currencies These financial statements are presented in Pak Rupees, which is the Company's functional currency. All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date, while the transactions in foreign currencies during the year are initially recorded in functional currency at the rates of exchange prevailing at the transaction date. 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. Exchange gains and losses are included in the income currently. Borrowing cost Borrowing costs are recognized as expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs, if any, are capitalized as part of cost of that asset. Revenue recognition Revenue from sales is recognized on dispatch of goods to customers. Return on bank deposits is accrued on a time proportionate basis by reference to the principal outstanding and the applicable rate of return. Revenue from sale of electricity is recognized at the time of transmission. Dividend income on equity investment is recognized as and when the right to receive dividend is established.

2.8

2.9

2.10 Share capital Ordinary shares and irredeemable preference shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. 2.11 Financial instruments Financial instruments carried on the balance sheet include deposits, trade debts, loans and advances, other receivables, accrued interest, cash and bank balances, short term borrowings, long term financing, accrued mark-up and trade and other payables. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition, except for 'financial instrument at fair value through profit or loss' which is measured initially at fair value. Financial assets are de-recognized when the Company loses control of the contractual rights that comprise the financial asset. The Company loses such control if it realizes the rights to benefits specified in contract, the rights expire or the Company surrenders those rights. Financial liabilities are de-recognized when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on subsequent measurement (except available for sale investments) and de-recognition is charged to the profit or loss currently. The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy of investments. a) Trade debts and other receivables Trade debts and other receivables are carried at original invoice value less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified. Borrowings Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. Any difference between the proceeds and the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest rate method. Trade and other payables Liabilities for trade and other amounts payable are initially recognized at fair value which is normally the transaction cost.
JUNE 2011 27
Nishat (Chunian) Limited

b)

c)

2.12 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at book value which approximates their fair value. For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit accounts, other short term highly liquid instruments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 2.13 Non-current assets held for sale Non-current assets are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use.

2.14 Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as cash flow hedges. The Company documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in statement of other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the profit and loss account. Amounts accumulated in equity are recognized in profit and loss account in the periods when the hedged item will affect profit or loss. 2.15 Provisions Provisions are recognized when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and a reliable estimate of the amount can be made. 2.16 Impairment a) Financial assets A financial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on the estimated future cash flow of that asset. An impairment loss in respect of a financial asset measured at amortized cost is calculated as a difference between its carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of available for sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. b) Non-financial assets The carrying amounts of the Company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of such asset is estimated. An impairment loss is recognized wherever the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss account. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit and loss account.

JUNE 2011

28
Nishat (Chunian) Limited

2.17 Segment reporting Segment reporting is based on the operating (business) segments of the Company. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to the transactions with any of the Company's other components. An operating segment's operating results are reviewed regularly by the chief executive to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the chief executive include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Those incomes, expenses, assets, liabilities and other balances which cannot be allocated to a particular segment on a reasonable basis are reported as unallocated. The Company has four reportable business segments. Spinning (Producing different quality of yarn using natural and artificial fibers), Weaving (Producing different quality of greige fabric using yarn), Processing

000 200.620.242.000 175. 2.844 165. or to realize the assets and to settle the liabilities simultaneously.657 1.450 694.418.441.427 69.18 Dividend to ordinary shareholders and other appropriations Dividend distribution to the ordinary shareholders is recognized as a liability in the Company's financial statements in period in which the dividends are declared and other appropriations are recognized in the period in which these are approved by the Board of Directors.000 1.317.889.000 195.000.and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles) and Power Generation (Generating and distributing power).496.000.000.495 6.654.667 1.000.224.650 29 JUNE 2011 .966.270 694.770 1.000.000 20.441.750.000 200.349 Preference shares 158.496.440 165.694. 2. AUTHORIZED SHARE CAPITAL 2011 2010 (Number of shares) 175.654.490 1.670 3.844 Nishat (Chunian) Limited 12.552.000 4.418.950.000 1.000 1.000.242.090.570 2011 Rupees 2010 Rupees 162.000 195.745 69.000.514.000 Ordinary shares of Rupees 10 each 15% non-voting cumulative convertible preference shares of Rupees 10 each 2011 Rupees 2010 Rupees 1.750.831.657 1.585.351.000.000 20. ISSUED.19 Off setting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is a legal enforceable right to set off and the Company intends either to settle on a net basis.000.966.369. SUBSCRIBED AND PAID UP SHARE CAPITAL 2011 2010 (Number of shares) Ordinary Shares 91.000.265 Ordinary shares of Rupees 10 each fully paid in cash Ordinary shares of Rupees 10 each issued as fully paid bonus shares Ordinary shares of Rupees 10 each issued as fully paid for consideration other than cash to members of Umer Fabrics Limited as per the Scheme of arrangement as approved by the Honourable Lahore High Court.570 878.265 87. Inter segment sales and purchases are eliminated from the total. Lahore 913.224.650 12.903.440 68. 3.000.177 15% non-voting cumulative convertible preference shares of Rupees 10 each fully paid in cash 33.891.000.526.950 1. Transaction among the business segments are recorded at arm's length prices using admissible valuation methods.950.

526. These shares are listed on Lahore and Karachi Stock Exchanges of Pakistan. had offered to the shareholders of the Company 41.950 (344.682) 41.177 The Company. Khan Cement Company Limited 22.3 6.820 1.670 162.903.461 (34.720.585.360.490 344.840) 68.840 1.321 5.537.090.667 82.1 The preference shares are non-voting in nature and enjoy preference over ordinary shares in case of payment of dividend and liquidation.1 Ordinary shares of the Company held by related parties Nishat Mills Limited D.891.770 413.552.321 5.G.177 (3.523.349 Preference shares 158.670 827.523.010.604.209.526.2011 2010 (Number of Shares) 4. This preference shares right issue was made in the ratio of 50 preference shares (non-voting cumulative convertible) for every 100 ordinary shares held by the Company's shareholders as on 10 February 2009.620.585.889.495 4.471.461 preference shares of Rupees 10 each at par value.059 27.380 22.220 413.360. The salient terms of this issue are as follows: 4.2 Movement during the year 2011 2010 (Number of shares) 2011 Rupees 2010 Rupees Ordinary shares 158. No cash dividend on ordinary shares will be payable until all the dividends on preference shares have been paid.059 27.380 4.376.682 34.514.284 35.513.513.351.537.820) 33.360.610 (35.712.604.461 At 01 July Ordinary shares of Rupees 10 each issued as fully paid right shares Preference shares converted into ordinary shares of Rupees 10 each at par 1.770 3.471.712. during the financial year ended 30 June 2009.376.3.610 3.552.889.010. 30 Nishat (Chunian) Limited JUNE 2011 .922 41.667 6.891.284) At 01 July Preference shares converted into ordinary shares of Rupees 10 each at par 68.

Restated 2010 Rupees 2011 Rupees 5.272.816 3. The preferred dividend amount will be determined after applying the relevant dividend rate to the outstanding preference shares.866. The Company have one month after the two months conversion notice to issue ordinary shares to the preference shareholders at the conversion price.629. except on preference shares which have been converted into ordinary shares.316 587.780 2.305.648 .500.2 The preference shareholders are not entitled to bonus or right shares in the event the Company increases its share capital by the issue of further ordinary shares or otherwise.816 585.993.834.3 The preference shareholders have the option to serve the conversion notice after the end of the three months from the date of issue of preference shares and upto three years from the date of issue.278 1.366.262.000 93.420.secured (Note 6.615 142.500.000 1.050.000 4.000.747.499. Preference shareholders have the option to serve a notice to convert the preference shares along with the accumulated dividend into the ordinary shares of the Company within the conversion period by providing a two months written notice to the Company.3.205.542.2) Privately placed term finance certificates . 4.668 142.4.061.400.278 2. The preference shares along with the accumulated dividend will be convertible into ordinary shares at a price Rupees 10 per ordinary share. No put or call option is available. all outstanding preference shares will be converted into ordinary shares at the conversion price. At the expiry of three years from the date of issue.629.932.805.058 2011 Rupees 6.801.299.000 500.3) 2010 Rupees 3.333.022.729.668 2.221. The preferred dividend will be paid at the rate of 15%.secured Long term loans (Note 6.832.201 1.000.615 3.316 JUNE 2011 31 Nishat (Chunian) Limited Less: Current portion shown under current liabilities Long term loans Long term musharaka Privately placed term finance certificates 1.685.500. LONG TERM FINANCING From banking companies / financial institutions .811.3.750.077.000 4.221.4 Preferred dividend will be paid on an annual basis at the end of each accounting period subsequent to 30 June 2009 or proportionately for the period prior to 30 June 2009 from the date of issue and after the approval of the dividend payment in the Annual General Meeting.3.938.253 4. 4.531 1.993.000 1.1) Long term musharaka (Note 6. RESERVES Composition of reserves is as follows: Revenue reserves General reserve Unappropriated profit 1.

993.95% Eight equal half yearly instalments commenced on 31 6-month KIBOR + March 2010 and ending on 30 September 2013.000 27. SBP rate for LTF.000.30% SBP rate for LTFF.000 80.333. SBP rate for LTFSix equal half yearly instalments commenced on 31 EOP + 2% December 2007 and ended on 27 June 2011.500.5% Eight equal half yearly instalments commencing on 18 SBP rate for LTFFJuly 2011 and ending on 18 January 2015.500.111.000 150.000.000 250.000 88.40% SBP rate for LTFF.800.Sixteen equal quarterly instalments commencing on 15 January 2012 and ending on 15 October 2015.796 15.350.000 9.000 350. 1.1 Long term loans Lender 2011 Rupees - 2010 Rupees 500. EOP + 2.000 23.000 3.000 270.000.000 187.50% the Company made pre-payment of loan in full during the current year.Eight equal half yearly instalments commenced on 28 February 2007 and ending on 31 July 2011.333.5% However.000. 2.Eighteen equal quarterly instalments commencing on 31 May 2012 and ending on 31 August 2016. the 2.000 437.35% 6-month KIBOR + Eight equal half yearly instalments commencing on 23 June 2012 and ending on 23 December 2015. 1. However.777.666.000 94.000 1.600.500.000 35.Six equal half yearly instalments commenced on 30 March 2007 and ended on 30 September 2010.600.000.800.000. EOP + 3% United Bank Limited-1 United Bank Limited-2 United Bank Limited-3 United Bank Limited-4 United Bank Limited-5 United Bank Limited-6 United Bank Limited-7 United Bank Limited-8 United Bank Limited-9 United Bank Limited-10 Habib Bank Limited-1 Habib Bank Limited-2 Habib Bank Limited-3 Habib Bank Limited-4 Habib Bank Limited-5 62.000.000 312. 2.305.000 27.334 25. EOP + 3% Eight equal half yearly instalments commenced on 03 SBP rate for LTFAugust 2007 and ending on 03 February 2012.45% 6-month KIBOR + Twenty equal quarterly instalments commenced on 01 January 2008 and ending on 01 October 2012. EOP + 2% 6-month KIBOR + Ten equal half yearly instalments commenced on 27 December 2007 and ending on 27 June 2012. EOP + 2.000. 1.600.000 Rate of mark up per annum Number of installments Mark up repricing Half Yearly Mark up payable Half Yearly Standard Chartered Bank (Pakistan) Limited 6-month KIBOR + Five equal half yearly instalments commenced on 24 December 2010 and ending on 24 December 2012.467.000 210.500.000 200. the Company made pre-payment of loan in full during the current year.000.500.000. However. 2.000 250.Eight equal half yearly instalments commenced on 20 May 2011 and ending on 20 November 2014.333 Quarterly Citibank N.000.000 38.668 Half Yearly Half Yearly Half Yearly Half Yearly Quarterly Quarterly Quarterly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Allied Bank Limited-1 100.000 8. EOP + 2.75% Six equal half yearly instalments commenced on 31 6-month KIBOR + December 2010 and ending on 30 June 2013.000.408 - 187. EOP + 2. 1.238.963.747.50% Company made pre-payment of loan in full during the current year. EOP + 3% SBP rate for LTF.5% Eight equal half yearly instalments commencing on 28 SBP rate for LTFFJuly 2011 and ending on 28 January 2015.000.A - 74.Eight equal half yearly instalments commencing on 26 July 2011 and ending on 26 January 2015.000.Eight equal half yearly instalments commenced on 08 June 2011 and ending on 08 December 2014.000 33.000. 2.500. 2. 6-month KIBOR + Nine equal half yearly instalments commenced on 30 Half Yearly June 2010 and ending on 30 June 2014.111 Half Yearly Half Yearly Half Yearly Half Yearly - Quarterly Half Yearly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly 6-month KIBOR + Nine equal half yearly instalments commenced on 31 Half Yearly March 2010 and ending on 31 March 2014.000 8.5% SBP rate for LTFF.000 62. 0.5% SBP rate for LTFF.000. 1. Half Yearly Half Yearly Half Yearly Habib Bank Limited-6 - 213.85% 32 Nishat (Chunian) Limited 6-month KIBOR + Eighteen equal quarterly instalments commenced on Half Yearly 14 January 2011 and ending on 14 April 2015.000. EOP + 2. EOP + 3% Half Yearly Half Yearly Quarterly Half Yearly Quarterly - .000 40.05% Ten equal half yearly instalments commenced on 15 6-month KIBOR + June 2008 and ending on 15 December 2012.600. 2.316 JUNE 2011 Allied Bank Limited-2 Allied Bank Limited-3 Pak Kuwait Investment Company (Private) Limited-1 Pak Kuwait Investment Company (Private) Limited-2 Atlas Bank Limited National Bank of Pakistan The Bank of Punjab-1 The Bank of Punjab-2 Faysal Bank Limited SAMBA Bank Limited Saudi Pak Industrial and Agricultural Investment Company Limited 6-month KIBOR + Ten equal half yearly instalments commenced on 28 March 2008 and ending on 28 September 2012.000 125.05% Eight equal half yearly instalments commenced on 30 6-month KIBOR + September 2009 and ending on 31 March 2013.000.155.5% Twelve equal quarterly instalments commencing on 30 6-month KIBOR + September 2011 and ending on 30 June 2014.000 177.6.000 250.05% Six equal half yearly instalments commenced on 23 December 2009 and ending on 23 June 2012.000 150. 0.05% 6-month KIBOR + Ten equal half yearly instalments commenced on 24 June 2008 and ending on 24 December 2012. 2. EOP + 2.000 28.5% SBP rate for LTF.000.000.50% SBP rate for LTFF.Eight equal half yearly instalments commenced on 24 May 2007 and ending on 24 November 2011. 2.476.816 200.15% Eight equal quarterly instalments commencing on 31 3-month KIBOR + January 2012 and ending on 31 October 2013.000 26.400.500.500 3.025.000 88.685.000.388 30.50% Eighteen equal quarterly instalments commencing on Half Yearly 6-month KIBOR + 21 September 2011 and ending on 21 December 2015. EOP + 2% Eight equal half yearly instalments commenced on 25 SBP rate for LTFDecember 2006 and ended on 25 June 2011.500.778 250. 6-month KIBOR + 1.000 26.000 75.000 250.000 150.816 231.000.

000.333 million).500. 892.2 Long term musharika 2011 Rupees 125.000 6.2 Dubai Islamic Bank (Pakistan) Limited 2010 Rupees 187.337.569 2.905. Long term musharaka are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Company to the extent of Rupees 783.681.696 21.292 791.000.721 10.730 15.681.000.333 million (2010: Rupees 250 million) and ranking charge on all present and future fixed assets of the Company to the extent of Rupees 187 million (2010: Rupees 533.063 129.803 23.883.80% Number of installments Profit Repricing Profit payable Quarterly Sixteen equal quarterly instalments commenced on 30 Half Yearly September 2009 and ending on 30 June 2013.229 million (2010: Rupees 3.863.346 218.127 7.803 6.582 3.439.000 400.184.000.627.583 82.364.311.interest free and repayable on completion of contracts Retention money Income tax deducted at source Unclaimed dividend Preference dividend payable Workers' profit participation fund (Note 7.000.000 -))))))) Quarterly Half Yearly 320.275.25% 6-month KIBOR +1.722.999 million (2010: Rupees 266.4 Long term loans and privately placed term finance certificates are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Company to the extent of Rupees 7.616.1) Accrued liabilities Advances from customers Securities from contractors .3 Privately placed term finance certificates 500.495.3) 402. Quarterly Quarterly 6. 2011 Rupees 2010 Rupees 6.761 4.000 - 3-month KIBOR +2.6.694 million) due to related parties.797.112. Sixteen equal quarterly instalments commencing on 30 Half Yearly September 2012 and ending on 30 June 2016.151 171.821 33 Nishat (Chunian) Limited JUNE 2011 TRADE AND OTHER PAYABLES Creditors (Note 7.2) Workers' welfare fund Others (Note 7.637 6.831.657.680 2.718 13.000 Lender Burj Bank Limited (Formerly Dawood Islamic Bank Limited) -1 Burj Bank Limited (Formerly Dawood Islamic Bank Limited) . Half Yearly 140.004 5.258 62.222. 662.5 7.345 million) and ranking charge on all present and future fixed assets of the Company to the extent of Rupees 1.25% Sixteen equal quarterly instalments commencing on 30 December 2011 and ending on 30 September 2015.000.000 585.115.064.000 Rate of Profit per annum 6-month KIBOR +1.139 292.666 million).500.321.960 .000 587.1 It includes Rupees 0.547 21.345 million (2010: Rupees 7.50% 6-month KIBOR +1.905 57. Ten equal half yearly instalments commenced on 01 October 2010 and ending on 01 April 2015.

066.639 million (2010: Rupees 200.003.570.4) 1. The rates of mark-up range from 2.000 million) are given by banks of the Company to Director. The rates of mark-up range from 1.000 million (2010: Rupees 32.1 These finances are obtained from banking companies under mark-up arrangements and are secured by hypothecation of all present and future current assets of the Company and lien on export bills to the extent of Rupees 13.582.934.364.35% to 14.075 57. 1968 on funds utilized by the Company till the date of allocation to workers.848. which is in the ordinary course of business and is intererst free.112.1 and 9.781 191.608.2 Workers’ profit participation fund Balance as on 01 July Add: Interest for the year (Note 28) Add: Provision for the year (Note 26) Less : Payments during the year 2010 Rupees 57.678 million) have been issued by the banks of the Company to Sui Northern Gas Pipelines Limited against gas connections and Shell Pakistan Limited against purchase of furance oil.401.4 34 Nishat (Chunian) Limited 10.324.688.74% (2010: 12.2 9.225 million (2010: Rupees 5.1 The Company retains workers' profit participation fund for its business operations till the date of allocation to workers.419 57.1 and 9.696 67.259 million).797.759 1.696 2.105.15% to 16.26% to 16%) per annum on the balance outstanding.115 10. 2011 Rupees 8.364 1.057.2.547 141.672 9.667.1 and 9. 10.429 127.740 773.112.364. JUNE 2011 9.600 2.53% (2010: 1.230.841 2.22%) per annum on the balance outstanding.081. Karachi against disputed amount of infrastructure cess.2) Export finances .168 82.547 9.16% (2010: 1. Interest is paid at prescribed rate under the Companies Profit (Workers' Participation) Act.696 7. CONTINGENCIES AND COMMITMENTS Contingencies 10.715 59.961.1 Guarantees of Rupees 200.2011 Rupees 7.861.464 million (2010: Rupees Nil) due to Nishat Chunian Power Limited .231 88.117.419 4. The rates of mark-up range from 14.051. These form part of total credit facility of Rupees 9.648 50.413. .87% to 15.344 1.743 million).615.467 4.112.738 million (2010: Rupees 10. SHORT TERM BORROWINGS From banking companies-secured Short term running finances (Notes 9.355. Excise and Taxation.3 9.282 9.subsidiary company.443.472 82.57% to 17%) per annum on the balance outstanding. 7.432.9% to 14.805.Preshipment / SBP refinance (Notes 9.2 Guarantees of Rupees 48.262. ACCRUED MARK-UP Long term financing Short term borrowings 2010 Rupees 141.3 It includes Rupees 0.457.3) Other short term finances (Notes 9.051 216.

The Company also applied to Federal Board of Revenue (FBR) to constitute Alternate Dispute Resolution Committee (ADRC) in terms of section 195C of the Custom Act. a significant relief was extended to the Company.3 The Company preferred appeal against the Government of Punjab in the Honourable Lahore High Court. however. Hence. Lahore through writ petition. 10. the provision for taxation amounting to Rupees 17. Lahore against imposition of electricity duty on internal generation and the writ petition has been accepted.482 million) on blended grey fabrics exported under Duty and Tax Remission Rules for Export (DTRE) scheme. the Company has also impugned selection of its tax affairs for audit in terms of section 177 of the Income Tax Ordinance.604 million incurred in zero rated local supplies of textile and articles thereof on the grounds that the input tax claim is in contravention of SRO 992(I)/2005 which states that no registered person engaged in the export of specified goods (including textile and articles thereof) shall.120 million is payable on this account but the management of the Company is confident that payment of electricity duty will not be required. amounting to Rupees 1. Government of Punjab has moved to the Honourable Supreme Court of Pakistan against the order of Honourable Lahore High Court. Lahore through a writ petition. Lahore. for the month of June 2005. As at the reporting date.157 million) would be required. 2001. in respect of tax year 2006 on same issues. 10.482 million (2010: Rupees 9. The tax audit authorities have been restrained from proceeding with the audit. the Company has further assailed the matter before ATIR so as the issues decided by CIR(A) against the Company are further contested.7 As a result of withholding tax audit for the tax year 2006. 10. 2001 for tax year 2008 as a result of audit of the Company under section 177 of the Income Tax Ordinance. if not used for the purpose of exports made up to the 31 December 2005. the Deputy Commissioner Inland Revenue (DCIR) has raised a demand of Rupees 32.833 million has been raised against the Company on various grounds. 2008 and 2009. In the event the documents of exports are not provided on due dates.5 Order was issued by the Assistant Commissioner Inland Revenue (ACIR) under section 122(1) of the Income Tax Ordinance. it is entitled to full duty draw back and has filed appeal before Appellate Tribunal Inland Revenue (ATIR) Karachi Bench which is still pending. The matter is still pending at FBR end. The management of the Company believes that the expected favourable outcome of its appeal before ATIR.157 million (2010: Rupees 17. 2001 pertaining to tax years 2007. No provision against these disallowances and addition has been made in the financial statements as the management is confident that the matter would be settled in the Company's favour. be entitled to deduct or reclaim input tax paid in respect of stocks of such goods acquired up to 05 June 2005.933 million) on imported material availed on the basis of consumption and export plans. in the Honourable Lahore High Court. The appeal of the Company before Appellate Tribunal Inland Revenue (ATIR) was successful and input tax claim of the Company is expected to be processed after necessary verification in this regard. the Officer Inland Revenue disallowed certain expenses on pro-rata basis and disagreed on certain additions. ADRC vide its order dated 16 April 2008 has recommended the case in favour of the Company and forwarded the case to FBR. However. cheque issued as security shall be encashable. will dispose of the initiation of these proceedings. 35 Nishat (Chunian) Limited JUNE 2011 .8 The Deputy Collector (Refund – Gold) by order dated 16 May 2007 rejected the input tax claim of the Company.156 million under sections 161 and 205 of the Income Tax Ordinance. under section 161 and 205 of the Income Tax Ordinance.4 The Collectorate of Customs (Export) has issued show cause notices with the intention to reject the duty draw back claims aggregating to Rupees 9. 2001 for tax year 2009 in Honourable Lahore High Court. The department has filed an appeal before Honourable Lahore High Court.402 million (2010: Rupees 36. The Company considers that since it has taken benefit of remission of sales tax only. The Company has fully provided its liability in respect of electricity duty on internal generation.10. 2000-01.9 Post dated cheques have been issued to custom authorities in respect of duties amounting to Rupees 927. The Company's appeal has not yet been taken up for hearing by ATIR. 2001 whereby a demand of Rupees 42. Through such order. The Company being aggrieved filed appeals with the Commissioner Inland Revenue (Appeals) which was decided in Company's favour against which the department preferred an appeal to Appellate Tribunal Inland Revenue (ATIR). The Company has also challenged the initiation of proceedings. no provision has been recognized in these financial statements based on advice of the tax counsel. ATIR decided the case in favour of the Company. The Company expects a favourable outcome of the appeal based on advice of the tax counsel. The department is of the view that the Company has not submitted Appendix-1 as per Rule 297-A of the above referred scheme. Further. The Company considers that its stance is based on reasonable grounds and appeal is likely to succeed. The Company is in appeal before ATIR as its appeal before CIR(A) was unsuccessful. 10.6 While framing assessment orders of Umer Fabrics Limited (merged entity) for the assessment years 199899. 2001-02 and 2002-03. 1969 to settle the dispute. The Company's appeal against the order of ACIR was disposed off by the Commissioner Inland Revenue (Appeals) [CIR(A)] through order dated 23 April 2011. 10. The Department has been restrained from passing any adverse order till the date of next hearing. Pending the outcome of verification no provision for inadmissible input tax has been recognized in these financial statements. either through zero-rating or otherwise. an amount of Rupees 9. 10. If the decision of ATIR is not upheld.

016 38 2.265) 4.371) 80.652) (45.202.845.(643.314 211.776.955 (14.545.049.161) 77.087 (7.964.301.815.137 (24.050 (94.498) (3.184 13.979.184 56.269.536) (3.900 (8.343.101.786 168.021 6.316 (2.574.627.146.358.897 (3.631.000 (791.384 8.370.361.960) 56.222) 7.075.332 (46.356.245.851 (2.823.733.485 (41.776.786 5.868.118) (3.332 931.024.208.777.096) (4.220.291 7.454.048.655.386.440 153.427) (93.282) Freehold land Plant and machinery Electric installations Factory equipment 188.219.000) 400 (23.897) 188.272 (26.735.621) 7.800 6.466 4.374.034.106 33.603) 21.480 5.832) 65.467.621 68.326.250) (535.751) (17.207 24.776.148.755.115) 72.031.522 10.694) (38.066 (56.310) 20.computer software 3.773.281 181.659 (13.316 (3.335.965.947.148.980) (4.307 80.627.857.688) 65.010 10 84.366) 29.820 11.934 5.667 10 22.925.284) 30.796.542 5.158 (45.025 111.267.332 188.423.253 27.839.626 527.438.785.886 4.322.721.152.627.390) 40.096.384) (454.925.764.631.300 (395.418. Office Total fixture and Motor vehicles equipment equipment ------------------------------------------Rupees-----------------------------------------188.765.029.291.220.899.941.664.899.741.018.290) (108.905 129.140) (3. Outstanding foreign currency forward contracts of Rupees 1.983.032 24.634.248.443) 56.114.Commitments i) ii) iii) Contracts for capital expenditure amounting to Rupees 39.000) 27.311 (2.277.237.532.129.517.713.385 7.765 (5.020) (4.405.207 47.021 6. plant and equipment Operating fixed assets (Note 11. .770 9.207.556.000 (395.603.952.422 364.215.289 107.882 (65.067.793 .132.176.034.466 .133) 65.030 9.computer software at the beginning and at the end of the year are as follows: Operating Fixed Assets Description At 30 June 2009 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2010 Opening net book value Additions Disposals: Cost Accumulated depreciation Intangible Assets Computer software 1.046.354.169 Intangible asset: Computer software (Note 11.655.943 5.965.466 4.692 (9.970.207 10 * As part of the implementation of new Enterprise Resource Planning (ERP) system.798.105. 2011 Rupees 11.485 40.886 4.332 959.068 1.916 5 10 77.453) (18.818.854.776 927.163.389.776.452.854.207.907) .593.542 5.776.924) 21.901 145.337.429 63.106 56.196.514.211.667 138.418.905.835.226.800.776.724.(736.426 (54.796.348) 83.017) 188.520 5.916 188.074 931.025 58.(258.295 40.777.295 6.054.487) 11.471.605 (20.947.368 (25.323 168.700) 527.183) 30.776.386.207.300 923.232.643) 36 Nishat (Chunian) Limited JUNE 2011 .857) (35.337.514.074 43.410 million (2010: Rupees 3.517.679.722) Building on freehold land Depreciation / amortization charge Closing net book value At 30 June 2010 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2011 Opening net book value AdditionsReclassification adjustments:* Cost Accumulated depreciation Disposals: Cost Accumulated depreciation 188.265) (13.030.800) 959.207 10 56.474 (72.748.961 4.197 (8.965.396) (438.487.305 (6.794.722.961 4.370.778.222.776.902.1) Capital work-in-progress (Note 11.332 188.600 527.947. The reclassification adjustments represents the adjustments emanating from this exercise.807) 65. FIXED ASSETS Property.786 72.929.598) (5.400.483 2. the management of the Company carried out a comprehensive exercise during the year which is included of physical verification of all operating fixed assets and checking of classification of all operating fixed assets.323.255.056) 21.466 4.400) 527.377.800 6.494.332 (46.724 11.1 Reconciliations of carrying amounts of operating fixed assets and intangible asset .025 20 Depreciation / amortization charge Closing net book value At 30 June 2011 Cost Accumulated depreciation / amortization Net book value Annual rate of depreciation / amortization (%) 188.776 (10.593.222.444.703 5.722.085.480 83.715 million (2010: Rupees 68.(690.361.421) 72.573.617.770.818 (94.934 5.586) 5.291 84.854.963 (54.385.925.389.002 7.329 million (2010: Rupees 377.332 1. Letters of credit other than for capital expenditure amounting to Rupees 171.491 (16.063) 43.678 6.551.600 5.323.735.253.916.406.754.001 63.591.619.736 9.396.776.665.823.064.148.077.776.700 923.521 - 188.757 210.222.319.727 185.895) 3.256.497.307 198.101 7.712.593.267.905.619) 927.332 1.455 (95.262) 29.532.713.114.301.429 21.332 927.382 million).883.337.337.461.658) 20.429 6.991.870.600 1.398) (517.732.162.104 .550.085.352.034.514 (2.946) 83.370.954 million).556.593.032 (2.542 5.902.982.106 113.696.254.572.323.152.600 4.332 1.145.220.659.114.600) (8.480 137.354.152.161.776 78.901 (95.998) (50.253 22.295) 3.700 million).106 371.010 56.319.249) (87.593.021 30 Furniture.009.277 1.224.2) 2010 Rupees 6.1) Intangible asset under development .423.017) (293.365) (104.269.243.700 (2.295 20.922.

125 849.000 555.000 1. Asghar Rahim (Employee). Irfan Khan.120 642..000 602.000.822 (2010: 187.962 100. exceeding the book value Rupees 50.396.339. Lahore 915.768.705) (436.500 (673.70%) per annum.739) (8.963.090) (499.215) (584.929.948.985) 22.344.558 120.730 406.2 The depreciation charge for the year has been allocated as follows: Cost of sales (Note 23) Administrative expenses (Note 25) 2010 Rupees 523.290 1.950 626.948 60.226. Kasur Aggregate of other items of equipment with individual book values not exceeding Rupees 50..098) 675. Sialkot Mr.000 (271.. Lahore Negotiation Mr.396 million) has been allocated to administrative expenses.388) (901.839) (372.186. Lahore Mr.659) 108. Muhammad Shehryar Khan.81%)" 2009 Rupees 1.467.706 1. Lahore Mr.488) Mr. Rehana Hafeez.000 371.902 337.477.0000 2 93.056 555. disposed of during the year is as follow: Description Cost Accumulated Net Book Sale depreciation Value Proceeds .535.487.346..383 495.505 517.443 11.815) 6.1 Detail of operating fixed assets.942.013.950 1.066) 14.711.750LI LW-467 Hyundai Shehzore LZJ-6910 Toyota Hiace LZJ-5975 Hyundai Shehzore LZP-1429 Toyota 2.245 189. Muhammad Afzal Javed.200 603.390 .168) (204.137 35.2 CAPITAL WORK-IN-PROGRESS Plant and machinery (Note 13.208 614.1.832 507. Hamid Ullah Malik.510 615.027. Peshawar Mr.995 261. (Gain)/ Loss Mode of Disposal Particulars of Purchaser Plant and machinery Picanol Air Jet 280 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni plus Vehicles Toyota Corolla 2.882) 65.112) (15...924 (185.012.888 351.. 2011 Rupees 11.165 318. Karachi As per Company policy Mr.792 11..791) 18.169 250.469. Lahore Negotiation Mr.536) (476. Lahore Mr..000 (352.000 (280.1. Jantaz Khan.916.. Lahore Negotiation Mr.000 (337. 2011 Rupees 12.040 535.606 4.164 (7.005) 585.341) (364.833) (42.623 1. Bannu Negotiation Mr.763 5.755) 470.873. Lahore Negotiation Mr..238.746.366..528) (821.837..910 265. Lahore Negotiation Mr.520 4.471.118 25.1) Civil works on freehold land Mobilization advance Unallocated expenses Letters of credit Advance against purchase of assets 2010 Rupees JUNE 2011 37 Nishat (Chunian) Limited 4.721. Muhammad Asif. Faisalabad Mr.678 210.434 9.876) 14. Tajammal Javed.344) 525.820.1 and 21..000 755.746.302) 171. Lahore Mr.657.955) (323.1..238 (39.883 7..0D LEB-07-3572 Suzuki Cultus LZQ-8338 Suzuki Cultus LW-8555 Hyundai Shehzore LZJ-9082 Honda CD-70 LRE-9358 Honda CD-70 LRS-4673 Honda CD-70 LZD-4408 BMW . Asif Zaman Khan.343 million (2010: Rupees 7.495.120 2.285 611.336. Lahore Mr. Karachi Shan Associates.143.831) (199.317.000 1.178 14.759 (102.000 366.900 3. Muhammad Ali.422 496.70% to 15.038) 480.500.000.088 37.130 12.902) (457. Rana Khurram Sajjad.238) (502..243 478.000 (27.697 859.757) 1.AT COST Nishat Chunian Power Limited .316.772.027.000 (379.000 (4.835) (236.115 17.431 1.276. Mirza Abdul Ghafoor on behalf of Mr. Peshawar Mr.344) (429.746 (14.200 60.383 154.922 (343.82% (2010: 9.209 13.89% (2010: 57. INVESTMENT IN SUBSIDIARY COMPANY .000 (323.300 24.293.385 7. Muhammad Akram.608 529.159.quoted (Notes 12.656 172..265 2011 Rupees 11.000 56.409 18..118 51.509.991) (46.632) 18.170 9.240.2..188.000 765.293) (233. Lahore Mr.938 10.170 69..144 43.100 (5.705 million) using the capitalization rate ranging from 9.620.000 58.615.132 675.992) (55. Lahore Tricon Genera Trading.240) 1. Asif Shoukat.1) "194.380) (1.073 293. Equity held 52..213) (352.563) 161..000 (340.500 2. Naeem Iqbal.966. Lahore Mr.200 (4..437 173.11. Muhammad Tayyab.928.924 643.000 450..678.460.939) fully paid ordinary shares of Rupees 10 each.444 68. Faisalabad Mrs.119.285 12. Muhammad Safdar.016.520 11.161 382.822) 20. Sakhi. Karachi Tricon Genera Trading.220 1.201.758.900) (5. Abdul Qadir.569) (28.000 (1.535.3 Amortization on intangible asset amounting to Rupees 2.227 million (2010: Rupees 0.358. Rupees .454. Ilyas Ahmad (Employee).3 Borrowing cost capitalized amounted to Rupees 35.OD LZO-6839 Suzuki Mehran LWG-3284 Toyota Corolla LWB-4152 Honda City LEB-06-6823 Honda LZL-4035 Suzuki Cultus LEC-07-5322 Suzuki Cultus LEC-07-4092 Mercedes Benz C240 LXX-467 Suzuki Mehran LEB-09-6864 18 6 49 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 53.192 40.404 Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation As per Company policy Shan Associates.766 125.364.292 840.164..129.

046 8. However.513.685 3.907.125 1.557.464.853. Motor vehicle loans are secured against registration of cars in the name of the Company.496 709.542 1.541.499.346.898 2.177 million).541. whereas personal loan is secured against balance standing to the credit of employee in the provident fund trust account.960 390.244 3.269 147. the Company has pledged its 187. 13.12.783.34%) per annum.387.638.298 150.939) ordinary shares to lenders of NCPL for the purpose of securing finance. Moreover. This loan was unsecured and carried mark-up at the rate of 3-month KIBOR plus 2% payable on quarterly basis. the subsidiary company has repaid this loan to the Company. during the current year.910 890.136 1.1.850.50% per annum) while some loans are interest free.4) Less: Current portion shown under current assets (Note 17) Executives Other employees 2010 Rupees 1.50% per annum (2010: 9.4 This represented subordinated loan given to Nishat Chunian Power Limited .2) Other employees (Note 13.621 390.60 % to 14.318. 13. payable in 48-60 and 15 monthly instalments respectively.541. The effective mark-up rate charged during the year on balance receivable ranged from 14.692 203.52% (2010: 14.346.29% to 15. Interest on long term loans ranged from 13. SPARE PARTS AND LOOSE TOOLS Stores Spare parts Loose tools 2010 Rupees 38 Nishat (Chunian) Limited 293.1 Maximum aggregate balance due from executives at the end of any month during the year was Rupees 4.subsidiary company.666 1.3 The fair value adjustment in accordance with the requirements of IAS 39 'Financial Instruments: Recognition and Measurement' arising in respect of staff loans is not considered material and hence not recognized.700 1. JUNE 2011 2011 Rupees 14.1 The Company has to maintain at least 51% holding in the share capital of Nishat Chunian Power Limited (NCPL) during the period of first six years from the date of commercial operations of NCPL which is 21 July 2010.1 and 13.2 These represent motor vehicle loans and personal loans to executives and employees. The loan was subordinate to the prior payment in full by the subsidiary company of the secured obligations to its finance parties.289.058 378.907. 13.33% to 14.143 5.009.913 13.929 387.116.1 Stores and spare parts includes items which may result in fixed capital expenditure but are not distinguishable.399 183. 2011 Rupees 13.605 million (2010: Rupees 2.111. STORES.373 14.012 4.526 386.389. The bullet loan repayment date was five year after the last principal disbursement date.274.103 222.898 976.214.939 (2010: 187.913 3. .108 285.913 2.778 13.1 Reconciliation of carrying amount of loans to executives: Opening balance as at 01 July Disbursements Less: Repayments Closing balance as at 30 June 1. LONG TERM LOANS Considered good: Executives (Notes 13.00% to 13.2) Subsidiary company (Note 13.662 448.175.023.

related party.own produced (Notes 15.707 76. The aging of these trade debts was more than three years.946.175.200 4. The ageing analysis of these trade debts is as follows: 2011 Rupees Upto 1 month 1 to 6 months More than 6 months 1.371.803.2 Finished goods include stock-in-transit of Rupees Nil (2010: Rupees 8.230.608 22.072.153 12. TRADE DEBTS Considered good: Secured (against letters of credit) Unsecured (Note 16.3 The aggregate amount of write-down of inventories to net realizable value recognized during the year was Rupees 369.144.070.579 million (2010: Rupees Nil).916 Restated 2010 Rupees 2.627.709 million (2010: Rupees 37.981 37.802.058.387 Current portion of long term loans (Note 13) Advances to suppliers Advances to contractors Letters of credit 1.753.841.227 million) is being carried at net realizable value.2 As at 30 June 2011.567.799 387.040 681.3) 2010 Rupees 1.Other employees 2010 Rupees 566.076 40.621.338 629.172 million (2010: Rupees Nil) were impaired and written off. trade debts of Rupees 2.945.297.648 466. 2011 Rupees 16.132 1.063 . trade debts of Rupees 8.621 97.119 3.302 770.885 8.632. LOANS AND ADVANCES Considered good: Employees .046 16. These relate to a number of independent customers from whom there is no recent history of default.086.3 Trade debts include Rupees 0. 15.194 2.101. 2011 Rupees 17.trading stock Waste 3.630 6.378 120.989.149 1.264.interest free: .518.514 2010 Rupees 12.786 6.412 1.045. 15.416 1.508 16.725 million (2010: Rupees Nil) due from Nishat Mills Limited .2011 Rupees 15.665.133.153.088 209.086 million) were past due but not impaired.160 15.612 36.741 75. STOCK IN TRADE Raw materials Work-in-process Finished goods .376 1.356.561.027.927.065.612.177 234.Executives .959.708.018. JUNE 2011 39 Nishat (Chunian) Limited 16.336.013 491.600 million).916 23.151.629 7.078.816.2) Finished goods .244 178.646 13.644.513.1 Stock-in-trade of Rupees 1.368.724.893 million (2010: Rupees 55.819 879.254.1 As at 30 June 2011.

891.433 9.217.000 100.109.340 1. 20.3) Including US$ 25.581.929.699 9.626. The effective interest rate on term deposit receipts ranged from 6 % to 11% (2010: 11%) per annum. OTHER RECEIVABLES Considered good: Sales tax recoverable Advance income tax .288.740 128.571.954 2.677 3.028.999.485 million) from Nishat Chunian Power Limited .net Export rebate and claims Fair value of forward exchange contracts Mark-up rate support receivable against long term loans and export finance Receivable from employees' provident fund trust Others (Note 18.300.571 million) with MCB Bank Limited . 2011 Rupees 22.2) On current accounts (Note 20.008 89.839 1.876.343.995 ordinary shares of Nishat Chunian Power Limited .000 248.926.034.521 20.2011 Rupees 18.750.085 341.945 22.297 13. 2011 Rupees 21. 20.000.449.097 36.112 ordinary shares of Rupees 10 each were disposed of during the current year.944.075 6. Out of it. 18.500.941. This portion of the total investment in ordinary shares of the subsidiary company was non-strategic and over and above 51% stake in the subsidiary company.828 6.782) Cash in hand 2010 Rupees 5.825.091. SALES Export Local (Notes 22.associated company.1) Less: Loss on write-down of the investment to fair value less costs to sell - 249.812 29.322.809. 19.000.2 These represents deposits under lien with a bank against bank guarantees of the same amount issued by the bank to the Director.960 143.999.172 (2010: US$ 12.774.029 36. The remaining 6.571 million) on long term loan given to Nishat Chunian Power Limited .798 20.729 98.994.828.883 ordinary shares of Rupees 10 each of the subsidiary company have been reclassified to investment in subsidiary company and are being carried at cost.685 6.878.023.1 Rate of profit on saving accounts ranged from 5% to 5.772. the Company classified 24.1) Including US$ 55.5% (2010: 5% to 5.361.371.765. ACCRUED INTERST This includes interest receivable of Rupees Nil (2010: Rupees 5. CASH AND BANK BALANCES Cash with banks: On saving accounts (Note 20.3 Included in cash with banks on current accounts are Rupees 48.599 135.323.562.217.999. 2011 Rupees 20.305 199.995) fully paid ordinary shares of Rupees 10 each (Note 21.659.208 614.746.499.1 and 22.015 52.397.332 20.104 13.768 18.1 It includes interest free receivable of Rupees Nil (2010: Rupees 2.327 13.157 (2010: US$ 89.364 million (2010: Rupees 45.000 67.970 68.284 1.828 4.950 1.5%) per annum. Excise and Taxation against disputed amount of infrastructure cess.subsidiary company as non-current asset held for sale.070.quoted Nil (2010: 24.subsidiary company.144.950 40 Nishat (Chunian) Limited 21.181 90.774.413 39.107) Term deposit receipts (Note 20.subsidiary company in the ordinary course of the business.539.1 During the year ended 30 June 2010.563 .1) 2010 Rupees 307.001.093.2) Export rebate Duty draw back 2010 Rupees 13. JUNE 2011 2010 Rupees NON-CURRENT ASSET HELD FOR SALE Nishat Chunian Power Limited .188.857 126.

382.2 This includes sale of Rupees 2.825 65.020.302 million (2010: Rupees 298.394 . COST OF SALES Raw materials consumed (Note 23. Further.220 681.651 802.976 JUNE 2011 41 Nishat (Chunian) Limited Restated 2010 Rupees 12.2) Repair and maintenance Other factory overheads Work-in-process Opening stock Closing stock 466.168 23.102 11.818.561.816. wages and other benefits (Note 23.612 75.621.113.520.792 27.848.585.2) Fuel and power Insurance Postage and telephone Traveling and conveyance Vehicles' running and maintenance Entertainment Depreciation on operating fixed assets (Note 11. spare parts and loose tools consumed Salaries.092.361.800.835 147.083. 22.553 175.764.1 Local sales Sales Processing income Sale of electricity (Note 22.133.200) (811.076) (40.989.724.745.378.119) (717.040) (161.128 22.938 15.362 633.442.487 (75.811.592. local sales includes waste sales of Rupees 614.040 (629.961 (681.736.633.702 11.659.104.647.516 17.332.981.300.561.031 2.402 28.040.661.101 523.542 916.219 12.875 10.151.520.401.932 509.1) Packing materials consumed Stores.612) 13.577.842 14.143.628.closing stocks Finished goods Waste (770.462 507.632 368.214.750.812 22.139.1 Sale of electricity during the year ended 30 June 2010 was exclusive of sales tax amounting to Rupees 9.773.827 54.052.649.013 758.1.080 Finished goods and waste .140.316.448 61.482 7.063.1.168.101 13.297.276) Cost of sales .804 75.093.913.913.434.477.672.505 (466.963.781 million.860) 10.335.purchased finished goods 16.608.535) 10.996.241 1.169.097 3.006. 2011 Rupees 23.444 million (2010: Rupees 674.741 36.532 million).477 million) made to direct exporters against special purchase orders (SPOs).045 8.1) 2010 Rupees 6.133.365 348.754.736.612 16.567.128.811 3.302) (162.119 717.859 361.460 2.660.262) Cost of goods manufactured Finished goods and waste .860 17.203 1.974 383.2011 Rupees 22.opening stocks Finished goods Waste 17.249.1.082 11.262 6.542.012.749.741) (36.523 474.328.416 304.816.949.own manufactured goods Opening stock of purchased finished goods Finished goods purchased Closing stock of purchased finished goods Cost of sales .949.922.365.

1.393 110.765. 2011 Rupees 25.629.283 26.226.551.2) Depreciation on operating fixed assets (Note 11.849.338.500 11.301.846 201.821 2.103.656.916 46.882 million) and Rupees 1.621.235.161.471. wages and other benefits include Rupees 14.1 Raw material consumed Opening stock Add: Purchased during the year Less: Closing stock Restated 2010 Rupees 2.747.183.734.274 126.790 2.313 4.724.213 15.623.628.078.942 1.1) Ocean freight Freight and octroi Forwarding and other expenses Export marketing expenses Commission to selling agents 2010 Rupees 28.648 7.040 2.580 4.2) Amortization on intangible asset (Note 11.049 438.752 3.327 111.662 `134. ADMINISTRATIVE EXPENSES Salaries and other benefits (Note 25.862.1.748.091.316.2011 Rupees 23.360.801 1.602.648 13.049.466.901 2.976 90.495.275 21.3) Miscellaneous 2010 Rupees 42 Nishat (Chunian) Limited 52.860 17.212.728 million (2010: Rupees 0.653 3.639.480 107.639 69.113.494.235.166.421 million) and Rupees 20.1 Salaries and other benefits include Rupees 0.874. 2011 Rupees 24.1) Printing and stationery Vehicles' running and maintenance Traveling and conveyance Postage and telephone Fee and subscription Legal and professional Electricity and sui gas Insurance Repair and maintenance Entertainment Auditors' remuneration (Note 25.410.247.523 1.750 10.518 16.313.147.698.966.030.098 1.861 3.989.299 4.258 million) in respect of accumulating compensated absences and provident fund contribution by the Company respectively.834.945 20.338 12.630 million (2010: Rupees 5.228.232.713.013 2.569.2 Salaries.072.586. DISTRIBUTION COST Salaries and other benefits (Note 24.601 59.070.078.454.365 23.249.036 5.111 8.894 5.902 9.567.376 172.672 2.700 5.336 million) in respect of accumulating compensated absences and provident fund contribution by the Company respectively.423 1.804 4.169 599.537 4.505 395.520.176.763 million (2010: Rupees 17.972 3.261.895 1.201.505.422 million (2010: Rupees 1.168.063.713 24.544 3.070.760 JUNE 2011 .275.060 6.

1) Loss on sale of property.171.2) Expenses on sale of shares of subsidiary company 82.500 1.000 178. Gulberg II.000 4. plant and equipment (Note 11.000.1 Salaries and other benefits include Rupees 2.2) Workers' welfare fund (Note 26.112. 31-Q.632 million (2010: Rupees 1.833.128 million (2010: Rupees 0.335 million) in respect of accumulating compensated absences and provident fund contribution by the Company respectively.073 2.000.500.501 26.338. Lahore Mr. 2010 Rupees 4.000 110.509.000 157. Shahzad Saleem.25. 2011 Rupees 26.2 Name of donee in which a director or his spouse has an interest: Mian Muhammad Yahya Trust.300 50.093 million) and Rupees 1.450 1.1) Loss on write-down of the investment to fair value less costs to sell (Note 21) Bad debts written off Donations (Note 26.200.440 81.000 1.547 51.000 1. Chairman and Mr.1.042.365 1.1 Workers' welfare fund has not been provided for in these financial statements based on the advice of the Company's legal consultant.737 4.440 JUNE 2011 43 Nishat (Chunian) Limited . OTHER OPERATING EXPENSES Workers' profit participation fund (Note 7.833.000 4.267 141.387.287.500 50.316.696 18.200.750 26. Chief Executive are trustees.364.624 57.000 109.2 Auditors’ remuneration Audit fee Half yearly review Certification fees Reimbursable expenses 2010 Rupees 1. 2011 Rupees 25.387. Muhammad Saleem.

378.556.706.551 186.614.921 137.1 These are net of mark-up rate support against long term loans and export finance amounting to Rupees 26.782.296 181.741.536 million).734.1 The company falls under the ambit of presumptive tax regime under section 169 of the Income Tax Ordinance.1) .575 199.972 58. plant and equipment Others Sale of scrap Miscellaneous 2010 Rupees 2.397 - 34. 29.1) Prior year adjustment 2010 Rupees 44 Nishat (Chunian) Limited 208.502 2.206 2010 Rupees 28.438) 204.894.214 million (2010: Rupees 14.855 196. Provision for income tax is made accordingly.265.226.710 415.787.2 Provision for deferred tax is not required as the Company is chargeable to tax under section 169 of the Income Tax Ordinance. 2001.long term musharaka . 29.short term running finances .075 62.359 (4.097 28.890 477.299.554 913.208.371.short term finances Interest on workers' profit participation fund (Note 7.340.407 31.long term loans .051.527.845 277. JUNE 2011 2011 Rupees 29.export finances .572.304. OTHER OPERATING INCOME Income from financial assets Return on bank deposits Net exchange gain Income from investment in and loan to subsidiary company Interest income on loan to subsidiary company Dividend income Gain on sale of shares of subsidiary company Reversal of impairment loss on shares of subsidiary company Income from non-financial assets Gain on sale of property.611 2011 Rupees 2. FINANCE COST Mark-up on: .617 1.399.319.295) 133.061 1.294 6.439 100.457.209 (3.540.731 68.472 69.1) .372 30.101.Preshipment / SBP refinances (Note 28.397 65.497.751 301.2) Bank charges and commission 554.2011 Rupees 27.792.793 223.905.914 29.252 1.643.net (Note 28.592 376.986 76.054.019.256 603.513. 2001 and no temporary differences are expected to arise in the foreseeable future.509.038 145.980.482.667 1.3 Reconciliation of tax expense and product of accounting profit multiplied by the applicable tax rate is not required in view of presumptive taxation.privately placed term finance certificates .517. .794.629.433 522. TAXATION Current (Note 29.

49 1.499.844 8.372) 1.263 JUNE 2011 45 Nishat (Chunian) Limited .662.199.788.058.192.656 6.001.BASIC AND DILUTED Basic Profit after taxation (Rupees) Less: Preference dividend (Rupees) Profit after taxation attributable to ordinary shareholders (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Restated 2010 1.863.794.097 1. plant and equipment Gain on sale of shares of subsidiary company Dividend income Finance cost (Reversal) / recognition of impairment loss for write-down of non-current asset held for sale Interest income on long term loan to subsidiary company Interest on bank deposits Bad debts written off Working capital changes (Note 31.458.1) Restated 2010 Rupees 1.855) (2.717 160.073 (100.319.832.883.439) 1.019.575) 2.758.710) (196.482.054.135.579.399.976.192.038) (917.027.832.828.832 2.070 116.808 116.568 Basic earnings per share (Rupees) Diluted Profit after taxation (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Impact of dilutive potential preference shares (Number) 9.579.453.552.572.397) (223.59 Diluted earnings per share (Rupees) 8.042 160.895 51.458.615.700 (2. CASH GENERATED FROM OPERATIONS Profit before taxation Adjustment for non cash charges and other items: Depreciation on operating fixed assets Amortization on intangible asset Loss / (gain) on sale of property.226.433 (415.088 152.333.474 1.758.07 1.638 535.249.568 35.2011 30.929.101.892) 1.717 5.722 517.300.001.171.485.466.724 1.82 2011 Rupees 31.243 1.467.226.737 (1.793) (68.808 10.512) 1.509.443 395.070 5.980.774 165. EARNINGS PER SHARE .766 991.000 (6.441.500.

123.291 2.034.947 (184.960 1.069 1.1 Working capital changes (Increase) / decrease in current assets: Stores. directors and certain executives with free use of Company maintained cars and residential telephones.152.491 1 32 32.823.883.869 41.000 471.254 2.225.090.983.800.2 Aggregate amount charged in the financial statements for meeting fee to one director was Rupees 40.2. other than those which have been specifically disclosed elsewhere in these financial statements are as follows: 2011 Rupees Subsidiary company Investment made Subordinated loan made during the year Repayment of subordinated loan by the subsidiary company Common facilities cost charged Share of ERP system implementation cost Other related parties Purchase of goods Sales of goods Preference dividend paid Ordinary dividend paid Contribution to employees' provident fund 85.577. REMUNERATION OF CHIEF EXECUTIVE.840 15.355 .863.268 10.265.440 3.638.320 19.2011 Rupees 31.440 4.892) 32.632 293.138. associated companies.800.521) 138.756) (628.393.923) 205.882 41.816 184.092 735.092 445.928.768. JUNE 2011 33.020 (129.137 24 1.982 2010 Rupees 685. Details of transactions with related parties.000 2.510.857 .816.460 386.000).242) 25.730) (1.000 (2010: Rupees 40.355 445. 46 Nishat (Chunian) Limited TRANSACTIONS WITH RELATED PARTIES The related parties comprise subsidiary company. key management personnel and post employment benefit plan.951.662. The Company provides to chief executive.004.926 101.098 173.976.840.347.070 23.592) (2.000 186.484) (186.440 Number of persons 1 Executives 2011 2010 Rupees Rupees 25.117.960 1.368 60.091.015.512) (115.385.285.000.600.812.345 (1. DIRECTORS AND EXECUTIVES The aggregate amount charged in the financial statements for the year for remuneration including certain benefits to the chief executive.000 99.275.080 33.378.995.503.845.222.031 (917.904 639.276.345) (1.638.212. director and executives of the Company is as follows: Director 2011 2010 Rupees Rupees Managerial remuneration Contribution to provident fund House rent Utilities Others 1.290 160.931.640.587 2.205. 32.371. other related companies.442) (1.267) (1.455 2.857) 233.153. The Company in the normal course of business carried out transactions with various related parties.258.032.093.813.008 3. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Increase in current liabilities: Trade and other payables 2010 Rupees (69.1 No expenses was charged in the financial statements for the salary to chief executive of the Company.

226.715.643) (79.707.560.383.836) (23.809.458.539.361.699 1.343.376 27.665 33.583) (5.433) (21.432 (380.814) (272.540) (5.230.892 million (2010: Rupees 2.744.1 Reconciliation of reportable segment assets and liabilities Spinning 2011 Total assets for reportable segments Unallocated assets: Long term investments Other receivables Cash and bank balances Other corporate assets Total assets as per balance sheet Total liabilities for reportable segments Unallocated liabilities: Other corporate liabilities Total liabilities as per balance sheet 2010 2011 Weaving 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 Total .958 10.482.252 729.876.809.501) 603.886.372.539.189 (210.097 20.807) (5.020.699 13.208.583 5.961) (1.244 333.857) (1.681.054.703.660.118. Africa and Australia United States of America and Canada Pakistan 2.974) 1.360.380 Unallocated income and expenses Other operating expenses Other operating income Finance cost Provision for taxation Profit after taxation (141.963) (61.390 341.256.001. .370.476) (6.318 403.386.560.399) (193.916.077.913.455.579.338.665.012.34.067.049.308.532.091.893.604.853.284 23.317) (23.115 13. However.678.572.891.322.126.640.001.946.091 34.399.237 1.589 4.539 1.090 1.101.135.976) 2.469.611 186.682.181.351.551.760) (550.283) (126.458.661.199) 2.904) 2.572.135.540) (386.682.4 Revenue from major customers The Company's revenue is earned from a large mix of customers.563 JUNE 2011 47 Nishat (Chunian) Limited 34.123.297 3.782.854.433) (1.469.792) 150.563 (12.808 34.777) 1.003.743 5.665.979.206.318) (5.457.140.177 million).022 9.832.305) (69.699.988.833.106 6.904) (4.150 2.077 4.916) (725.052 161.210) 8.182.084 2.220 614.903 1.478) 20.Company 2011 2010 ------------------------------------------Rupees-----------------------------------------6.629.132.937.225.850.960) 254.853.858) 7.570.074.256 3.267 98.577.288.365.144) (3.295.901.777.093.300.768 90.627.023.337.085.767.412 483.094.356.829 3.969.659.264 (171.976 4.942.416) (10.166.076 4.717 1.886.366.673.606.525.370 (8.586.832 (92.846.969.693.234.132.114 (365.279) Profit / (loss) before taxation and unallocated income and expenses 2.766.408.673 16.774.038.3 All non-current assets of the Company as at reporting dates are located and operating in Pakistan.213.675 980.243.914) 1.264.759.580.947.221.102 14.085.812 13.225 1. 34.921) (133.014 389.371.729.962.283 (599.916.881.588.521 1.650) (239.032) (7.993.421.097.332.Company 2011 2010 2011 2010 ------------------------------------------Rupees-----------------------------------------Sales Cost of sales Gross profit / (loss) Distribution cost Administrative expenses 14.477.478 (16.083.001.2 Geographical information The Company's revenue from external customers by geographical location is detailed below: 2011 Rupees 2010 Rupees Europe Asia.097) (204.907 7.659.473) 2.287.305 2.832) 209.343.332.163.237.588) 367.731.768.295.226.606.845 3.322.203 10. revenue from transactions with a single external customer of the Processing and Home Textile business segment of the Company amounted to Rupees 2.883.954.587 (438.160 (4.414.551.467.875.476 -)))))) 385.589 22.873.656 84.713) (111.368.752) (115.110 (211.966) (4.707.624) (81.713.645.305 135.035.514.817.252.781 5.685.974 (55.993.467.069.634.665 6.242.660.750 101.685.322.506.659 (295.524.515.173 10.819.020.994.142) (27. SEGMENT INFORMATION Spinning 2011 2010 2011 Weaving 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 'Elimination of inter-segment transactions Total .145.069 9.206 (1.197.131 146.691 9.

900.732.000 1.square yards Under utilization of available capacity was due to the following reasons: .000 25.595 49.higher count and cover factor .698. .000 1 2 3 26.225.meters Under utilization of available capacity was due to normal maintenance and power outages.200.932.588. PLANT CAPACITY AND ACTUAL PRODUCTION 2011 Spinning Number of spindles installed Number of spindles worked Number of shifts per day Capacity after conversion into 20/1 count (Kgs.change of articles required .meters 2010 293 293 3 215.926 141.400.823 10 10 3 317.800. Dyeing Number of thermosol dyeing machines Number of stenters machines Number of shifts per day Capacity in meters Actual processing of fabrics .920 172.) Actual production of yarn after conversion into 20/1 count (Kgs.512.868 199.000.000 - Under utilization of available capacity was due to normal maintenance and low demand.868 214.) 2010 149.855 Under utilization of available capacity was due to normal maintenance and time lost in shifting of coarser counts to finer counts and vice versa.35. Stitching The plant capacity of this division is indeterminable due to multi product plant involving varying run length of order lots.094 48 Nishat (Chunian) Limited JUNE 2011 1 3 3 30.417.698.357.949 3 50.square yards Actual production after conversion into 50 picks .454 147.481.000 20.948.522.988 10 10 3 317.920 172.due to normal maintenance Power plant Number of engines installed Number of engines worked Number of shifts per day Generation capacity (KWh) Actual generation (KWh) Under utilization of available capacity was due to normal maintenance.592 293 293 3 215.512. 2011 Weaving Number of looms installed Number of looms worked Number of shifts per day Capacity after conversion into 50 picks .744 142.536 50.831 1 2 6. Printing Number of stenter machine Number of shifts per day Capacity in meters Actual processing of fabrics .324 3 51.

618 7. (a) (i) Market risk Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. interest rate risk.476.908 11. the Company's foreign exchange risk exposure is restricted to bank balances.36. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies.935. Risk management is carried out by the Company's finance department under policies approved by the Board of Directors.190 6.63 85. The Company is exposed to currency risk arising from various currency exposures.1 Financial risk factors The Company's activities expose it to a variety of financial risks: market risk (including currency risk.USD Net exposure .844. The Company uses derivative financial instruments to hedge certain risk exposures. primarily with respect to the United States Dollar (USD). The Company's finance department evaluates and hedges financial risks.296 2010 101. when considered appropriate.259 1.377. liquidity risk.95 84. other price risk and interest rate risk). The Company's exposure to currency risk was as follows: 2011 Cash at banks .USD 80.947. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance.329 18.535 73.USD Accrued mark-up on FE 25 import / export loans .889 13. the amounts receivable / payable from / to the foreign entities. FINANCIAL RISK MANAGEMENT 36. credit risk and liquidity risk. credit risk.128. as well as policies covering specific areas such as currency risk. use of derivative financial instruments and non derivative financial instruments and investment of excess liquidity.781 The following significant exchange rates were applied during the year: 2011 Rupees per US Dollar Average rate Reporting date rate 2010 49 Nishat (Chunian) Limited JUNE 2011 85. other price risk.27 85.60 . Currently.801 607. The Board provides principles for overall risk management.USD Trade debts .460 11.USD Short term borrowings as FE 25 import / export loans .028 344.USD Trade and other payable . The Company uses forward exchange contracts to hedge its foreign currency risk.

The carrying amount of financial assets represents the maximum credit exposure. whether those changes are caused by factors specific to the individual financial instrument or its issuer.112 2. (ii) Other price risk Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). In management's opinion.198.060 600. mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis.704 1.803. or factors affecting all similar financial instrument traded in the market. the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year.238. The Company has no significant long-term interest-bearing asset.000. profit after taxation for the year would have been Rupees 66.444 1. At the balance sheet date the interest rate profile of the Company’s interest bearing financial instruments was: 2011 Rupees Fixed rate instruments Financial liabilities Long term financing Short term borrowings Floating rate instruments Financial assets Loan to subsidiary company Bank balances .557 million) respectively higher / lower.484 JUNE 2011 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.saving accounts Term deposit receipts Financial liabilities Long term financing Short term borrowings 5.408.457.671.872 3.860. the impact on profit after taxation for the year would have been Rupees 45.699 386. This analysis is prepared assuming the amounts of liabilities outstanding at balance sheet dates were outstanding for the whole year.960 1. (b) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. at reporting date. The Company is not exposed to equity and commodity price risk.926.034.188 2010 Rupees (iii) 634. Borrowings obtained at variable rates expose the Company to cash flow interest rate risk. had weakened / strengthened by 5% against the USD with all other variables held constant.000. fluctuates by 1% higher / lower with all other variables held constant.000 4. mainly as a result of higher / lower interest expense on floating rate borrowings. The Company's interest rate risk arises from long term financing and short term borrowings.429.651 million) lower / higher.945 22.944.639 million (2010: Rupees 47.158. Cash flow sensitivity analysis for variable rate instruments If interest rates at the year end date. Borrowings obtained at fixed rate expose the Company to fair value interest rate risk.611.389. Therefore.382.332 20.638.000 3. The maximum exposure to credit risk at the reporting date was as follows: 50 Nishat (Chunian) Limited . Interest rate risk This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.805.271 million (2010: Rupees 43.Sensitivity analysis If the functional currency. a change in interest rate at the balance sheet date would not affect profit or loss of the Company.

571.571.961 2.037 2.644.326 1.340 Due to the Company's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing.095.490 1. Following are the contractual maturities of financial liabilities.397 2. The management believes liquidity risk to be low.442 1.685 20.631 1. The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities.340 2.178 417.198 1.318 14.518.607.041.028. management does not expect non-performance by these counter parties on their obligations to the Company.399 1.887 45.638.364.013 26.178 128.036 1.574.727 441.534.668 12.119.826 3 224.019.077.099 89.285 119.106 72.708 2.848 322.144. 51 JUNE 2011 .379 2.059.442 2.065.975.508 46. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The amount disclosed in the table are undiscounted cash flows: Nishat (Chunian) Limited The Company's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 16.685 2.439 89.236 23.918.095.612 90.521 4.028.851 The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate: Rating Short term Long term AA AAA AA AA A Aa3 AA1 Aa3 A AA AA+ AA+ A1 AA+ AAAA A+ AAA A AA AA+ Agency PACRA PACRA PACRA PACRA PACRA PACRA Moody’s JCR-VIS Moody’s Moody’s JCR-VIS PACRA JCR-VIS PACRA Moody’s PACRA JCR-VIS PACRA JCR-VIS PACRA JCR-VIS PACRA JCR-VIS 2011 Rupees 2010 Rupees Banks Askari Bank Limited Al-Baraka Bank (Pakistan) Limited Allied Bank Limited Bank Alfalah Limited Bank Al-Habib Limited BankIslami Pakistan Limited Barclays Bank Plc Burj Bank Limited (Formerly Dawood Islamic Bank Limited) Citibank N. the Company had Rupees 4.2011 Rupees Loans and advances Deposits Trade debts Other receivables Accrued interest Bank balances 11.144.067 616.007.680 2010 Rupees 404.496 171 7.433 691. Accordingly the credit risk is minimal.873 153.242 15.430 7.203 553.626.622 4.445.876 427.769 463.491. At 30 June 2011.313.831.023 million cash and bank balances.059.A.855.283.644 48.148.924 5.404 128.413.288.144.724. including interest payments.761 10.391 15.509 396.818 1. Deutsche Bank AG Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited HSBC Bank Middle East Limited MCB Bank Limited Meezan Bank Limited NIB Bank Limited Samba Bank Limited Standard Chartered Bank (Pakistan) Limited Summit Bank Limited The Bank of Punjab United Bank Limited A1+ A2 A1+ A1+ A1+ A1 P-1 A-2 P-1 P-1 A-1 A1+ A-1+ A1+ P-1 A1+ A-1+ A1+ A-1+ A1+ A-2 A1+ A-1+ 22.616 million available borrowing limits from financial institutions and Rupees 135.

913.993.144.429 191.052 1.114.005.788.677.443.832.724.832.563.482 11.062.429 Contractual cash flows 6 months or less 6-12 months 1-2 Year More than 2 Years -------------------------.059.315.077.915 1.677. Fair value is determined on the basis of objective evidence at each reporting date.413.712.534.672 4.478 191.667.013 26.619.442 1.957 1.289.282 Contractual cash flows 6 months or less 6-12 months 1-2 Year More than 2 Years -------------------------.280.443.619.619.036 1.194 .410 520.667.166.443.280. The rates of interest / mark up have been disclosed in note 6 and note 9 to these financial statements.619.095.284 2.198 1.672 520.472.413.3 Financial instruments by categories Loans and receivables Assets as per balance sheet Loans and advances Deposits Trade debts Other receivables Accrued interest Cash and bank balances 11.303.329 1.303.282 1.194 10.057.272.228 3.303.518.032 JUNE 2011 4.316 216.993.917.639.288 The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at 30 June.390.841 -))))))) -))))))) -))))))) 1.282 5.805.339.058 1.608.615.924 5.Rupees -------------------------6.2 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values.Contractual maturities of financial liabilities as at 30 June 2011: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued mark-up 4.797.646 -))))))) -))))))) -))))))) 1.694 4.057.316 4.816 191.797.805.666.816 4.862.971 2.608.924 216.515.095.280.445.478 191.442 2.278.672 520.413.881.137 656.644.522 1.508 46.067.572.280.701.472 1.759 656.429 4.062.443.841 9.807 979.515.666.759 656.282 4.945.114.178 135.924 216.521.303.248.413.163.320.626.775.774.615.863 4.701.521 2.147.863 Contractual maturities of financial liabilities as at 30 June 2010: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued mark-up 4.408 6.979.638.557 373.478 656.975.571.563.924 216.144.971 2.393.439 90.453. 36.Rupees -------------------------5.143.138.279 Financial liabilities at amortized cost Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables 4.038 520.750.329.283.429 - 10.228.289.608.272.238.797.112.482 2010 Rupees 52 Nishat (Chunian) Limited 404.646 1.326 1.478 10.023.924 9. 2011 Rupees 36.797.372 -))))))) -))))))) 2.

546 Percentage 62. which was unchanged from last year.429. CORRESPONDING FIGURES Corresponding figures have been rearranged / regrouped wherever necessary for the purpose of comparison.441. issue new shares or sell assets to reduce debt.37. GENERAL Figures have been rounded off to nearest of Rupee.050. 2011 Borrowings Total equity Total capital employed Gearing ratio Rupees Rupees 9.320.58 Rupees 15. However. EVENTS AFTER THE REPORTING PERIOD The Board of Directors of the Company has proposed a cash dividend for the year ended 30 June 2011 of Rupees 2 /per ordinary share (2010: Rupees 1. the Company monitors the capital structure on the basis of gearing ratio.440.34 38.498 13.488.078 million) remained unutilized at the end of the year.609. 15% (2010: 15%) preference dividend has been proposed by the Board of Directors for payment after approval in forthcoming Annual General Meeting.873 million has been reclassified from stores. In order to maintain or adjust the capital structure. Moreover.717.225 million (2010: Rupees 5. Consistent with others in the industry and the requirements of the lenders.971 2010 8. the Company may adjust the amount of dividends paid to shareholders. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on 08 October 2011 by the Board of Directors of the Company. The Company's Strategy. 41. CAPITAL RISK MANAGEMENT The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. spare parts and loose tools to stock-in-trade.575 5. 42. no significant rearrangements / regroupings have been made except lycra amounting to Rupees 31.602.940.616 million (2010: Rupees 1. 53 Nishat (Chunian) Limited CHIEF EXECUTIVE DIRECTOR JUNE 2011 .50 per ordinary share) at their meeting held on 08 October 2011.743 million) out of which Rupees 4. Borrowings represent long term financing and short term borrowings obtained by the Company as referred to in note 6 and 9 respectively. UNUTILIZED CREDIT FACILITIES The Company has total credit facilities amounting to Rupees 9. in accordance with the approved terms and conditions of preference share issue. 39.486 66.704.146.988 4. 40. was to maintain a gearing ratio of 75% debt and 25% equity. Total capital employed includes 'total equity' as shown in the balance sheet plus 'borrowings'. This ratio is calculated as borrowings divided by total capital employed.

Chairman Mr.321 31.00 4. 2011 Sale NIL Purchanse NIL 54 Nishat (Chunian) Limited . Shahzad Saleem .858.70 *13. Ayesha Shahzad w/o Mr.865.00 0.360 200.Director Spouse: Mrs.222 4. Muhammad Saleem .03 8. 2010 to June 30.47 0.278.31 100.89 INFORMATION UNDER CLAUSE XIX(j) OF THE CODE OF CORPORATE GOVERNANCE All trade in the Company's shares.464 6.349 0. Undertakings and related parties Public Sectors Companies & Corporations NIT and IDBP (ICP UNIT) Banks.238 *22. carried out by its Directors.10 TOTAL: B) Executives N/A 4 29.30 0.090.89 19.654 7.750 8.102.321 22. Farhat Saleem .927 162.12 33. Shahzad Saleem Number of Total Shares Shareholders Held Percentage 1 1 1 1 6.705.531.988. CEO.95 6 28 7 24 *1 99 23 6.926 53.513. CFO.513.89 13.00 Associated Companies.957. Development Financial Institutions & Non-Banking Financial Institutions H) Insurance Companies I) Modarabas & Mutual Funds J) *Shareholding 10% or more K) Joint Stock Companies L) Others M) General Public TOTAL: - C) D) E) F) * Shareholders having 10% or above shares exist in other categories therefore not included in total.044 28.00 0.513. Shareholding Detail of 10% or more Name of Shareholder Nishat Mills Limited TOTAL :JUNE 2011 Shares held 22.587 17.005.610 164.06 3.71 3.Chief Executive Mrs.85 17.321 % 13. Company Secretary and their spouses and minor childern during the year July 01.Categories of Shareholders as on 30 June 2011 Categories of Shareholders A) Directors/Chief Executive Officer and their spouse and minor Children Mr.227 13.569 4.46 5.698 6.698.

08 0.684 413.510.102 3.000 1.62 0.126 170.318 9.20 0.788 382.840 1.23 0.42 6.000 180.673.117.24 0.20 0.10 0.088.06 0.771 5.21 0.17 0.18 0.091.349 % of Capital 0.000 888.485 263.665 279.267 158.34 0.05 1.770.60 1.843 272.000 1.841 3.047.412 1.14 0.000 232.27 0.15 0.483 440.000 104.122 1.600.44 3.305 393.730 381.773.920 283.304 242.160 344.273 7.82 7.755.278 231.38 3.000 2.05 1.910 12.23 0.38 0.598 2.000 221.549 330.09 1.127 153.000 1.202 119.240 95.95 0.10 0.79 0.742.705 988.301 372.000 1.025.200 587.000 1.943 552.494 1.21 0.09 0.547.25 0.702.55 0.741 5.000 1.757 3.00 55 Nishat (Chunian) Limited JUNE 2011 .713 12.80 0.39 2.138 738.86 9.41 0.14 0.345 889.24 0.67 0.604 331.23 0.587.36 0.19 0.17 1.130 600.72 0.355.33 1.46 0.51 0.07 0.835 629.964.09 0.532 1.704.03 7.122.18 0.000.000 2.37 0.500.931 826.745 300.490 1.000 400.324 139.000 110.715 334.98 1.17 0.000 308.65 0.72 4.36 0.734.75 5.330.277 1.61 0.600 2.900.48 7.000 2.090.67 0.04 0.69 0.724 12.19 0.14 0.832 1.172.780.887.24 0.654 Shareholding From 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 135001 140001 145001 150001 155001 165001 180001 185001 230001 270001 275001 295001 305001 325001 365001 390001 410001 435001 505001 580001 585001 595001 665001 745001 885001 995001 1045001 1120001 1170001 1270001 1295001 1505001 1545001 1585001 1700001 1730001 1770001 1780001 1895001 2145001 2300001 2595001 2755001 3355001 3885001 5470001 5570001 6025001 7700001 8790001 9770001 12115001 12670001 12740001 15960001 To 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 140000 145000 150000 155000 160000 170000 185000 190000 235000 275000 280000 300000 310000 330000 370000 395000 415000 440000 510000 585000 590000 600000 670000 750000 890000 1000000 1050000 1125000 1175000 1275000 1300000 1510000 1550000 1590000 1705000 1735000 1775000 1785000 1900000 2150000 2305000 2600000 2760000 3360000 3890000 5475000 5575000 6030000 7705000 8795000 9775000 12120000 12675000 12745000 15965000 Total Shares Held 60.06 0.574.93 0.594 1.07 0.55 0.232.352 8.26 0.31 0.820 126.16 0.10 1.07 2.300.698 387.85 100.318 1.275.42 1.368 1.000 367.27 0.954 582.07 1.Pattern of Shareholding as at 30 June 2011 Number of Shareholders 2557 1205 864 1348 304 89 61 42 16 12 6 9 18 7 6 9 5 10 5 5 3 1 4 1 1 2 1 2 1 1 2 2 1 1 1 1 2 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 6.11 0.890 299.150.830 440.70 2.283 378.24 0.470.608 15.000 670.93 0.030 6.300.185 162.000 505.40 3.791.

.

NISHAT (CHUNIAN) LIMITED AND ITS SUBSIDIARY COMPANY CONSOLIDATED FINANCIAL STATEMENTS WITH ACCOMPANYING INFORMATION 30 JUNE 2011 .

Nishat (Chunian) Limited currently owns and controls 52. The group results comprise of financial statements of Nishat (Chunian) Limited and Nishat Chunian Power Limited. Nishat Chunian Power Limited (NCPL). 4. NCPL's turnover for the year was Rs. Power shortage also remains to be a serious challenge for the country. incorporated under the Companies Ordinance 1984 on 23 February. 2007.675 billion and EPS (Basic) for the year is Rs. The Company has commenced its commercial operation on July 21.40. 2010. is the subsidiary company of Nishat (Chunian) Limited. Group turnover for the year is Rs.NCPL is experiencing good capacity utilization. The Directors' Report giving a commentary on the performance of Nishat (Chunian) Limited for the year ended 30 June 2011 has been presented separately. 2011.353 billion with an after tax profit of Rs.389. The Operations and Maintenance contract is with Wartsila Pakistan (Private) Limited. Delay in payments from WAPDA and circular debt continues to be an issue as face by all other Independent Power Producers. In view of the overall situation. the management expects high capacity utilization and looks forward to a profitable operations year ahead.89% shares of Nishat Chunian Power Limited. The Company has been listed on Karachi and Lahore Stock Exchanges since October 2009. 1. On behalf of the Board Shahzad Saleem 08 October 2011 Lahore JUNE 2011 Chief Executive 58 Nishat (Chunian) Limited and its subsidiary .12.79 per ordinary share.Directors’ Report The directors are pleased to present their report together with the consolidated audited results of Nishat (Chunian) Limited and its subsidiary for the year ended 30 June.612 billion and earnings per share (EPS) of Rs. 20.

The financial statements of the Subsidiary Company. is based solely on the report of such other auditors. 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. RIAZ AHMAD & COMPANY Chartered Accountants Name of Engagement Partner: Syed Mustafa Ali Date: 08 October 2011 Lahore 59 Nishat (Chunian) Limited and its subsidiary JUNE 2011 . Our responsibility is to express an opinion on these financial statements based on our audit. for the year then ended. Nishat Chunian Power Limited were audited by other firm of auditors whose report has been furnished to us and our opinion. in so far as it relates to the amounts included for such Company. consolidated statement of comprehensive income.Auditors’ Report to the Members We have audited the annexed consolidated financial statements comprising consolidated balance sheet of Nishat (Chunian) Limited (the Holding Company) and its Subsidiary Company (together referred to as Group) as at 30 June 2011 and the related consolidated profit and loss account. We have also expressed separate opinion on the financial statements of Nishat (Chunian) Limited. In our opinion. 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. the consolidated financial statements present fairly the financial position of Nishat (Chunian) Limited and its Subsidiary Company as at 30 June 2011 and the results of their operations for the year then ended.

750.755.009.447 3. subscribed and paid-up share capital Reserves Equity attributable to equity holders of the Holding Company Non-controlling interest Total equity NON-CURRENT LIABILITIES Long term financing Deferred income tax liability 6 3 4 5 30 June 2011 Rupees 1.486.679.760 The annexed notes form an integral part of these consolidated financial statements.194 3.794.947.495 459.086.845.041 1.418.015.214.685 1.442.305.418.399 953.525 6.000.000 1.145.000.815 4.219.484.579 34.742.932.032 8.207.143.440 2.445.484 1.297.619.721.764 10 39. 60 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE .579.472.954 8.154 28.492.989 17.654.656 16.783 2.067.389.721.953.926 10.924 1.349.620 6.341 17.252 10.955.805 6.296.649 1.950.687.813.578.747 2.783.647.477.750.537.415.915.808.950.593 30.708.327.000 1.654.440 4.167 17.739.442.532.051.341 10.890 6.240.461.039 19.775 TOTAL LIABILITIES CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES JUNE 2011 1.675 13.500.896 412.Consolidated Balance Sheet as at Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorized share capital Issued.625.774 776.214.989 17.145.941.000 1.000.342.351.937 CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current portion of long term financing 7 8 9 6 1.270.990.533.283.063.795.343 1.011.597.552.720 359.563.658.292.468.544 3.814.171.540.866.830 1.

366 34.579 34.062.019 263.537.200.943.396 2.785.351.949 3.645.987 374.468 1.092.728.486.292.996.187.200.004 5.523 9.039 19.305.795.811 16.940 131. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Derivative financial instrument Accrued interest Short term investment Cash and bank balances 13 14 15 16 17 18 19 20 694.210.660.263 7.097.150.251.031.538.344 3.191 1.415 3.678.969.899.30 June 2011 Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE ASSETS NON-CURRENT ASSETS Fixed assets Long term loans Long term security deposits 11 12 30 June 2011 Rupees 22.718 1.324.425.145.399.987.149.516.704 488.926.094.429.203 284.178.063.651.500 487.708 4.807.338 194.942 15.784.053.637 24.031 TOTAL ASSETS 39.890.178.729 CURRENT ASSETS Stores.500.454.261.633.061.382.760 JUNE 2011 61 Nishat (Chunian) Limited and its subsidiary DIRECTOR .639 694.239.742.238 1.028 2.130 770.027.175.305.660.910 10.560.679.812 3.020 15.975 1.442 22.942 599.963.798 174.442 24.360 5.110 3.724 216.

568) (80.539.357.788.241 2.42 6.991 (3.808 2.002.989.661.331.921.642) 2.918.332.52 The annexed notes form an integral part of these consolidated financial statements.975) 8.79 8.123.41 DILUTED EARNINGS PER SHARE JUNE 2011 29 12.682.096.754 OTHER OPERATING INCOME PROFIT FROM OPERATIONS FINANCE COST PROFIT BEFORE TAXATION TAXATION PROFIT AFTER TAXATION PROFIT ATTRIBUTABLE TO: EQUITY HOLDERS OF THE HOLDING COMPANY NON-CONTROLLING INTEREST 28 27 26 250.224.587 (438.012.086.212) 7.516 (135.056.941 (32.466.951.781.097) 1.739.053.101.100 992.037.054.206.955.563 (10.861.680) (145.662.248.613 (1.805 178.549 2.343.283) (171.675.241 BASIC EARNINGS PER SHARE 29 12.Consolidated Profit and Loss Account for the year ended 30 June 2011 NOTE SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING EXPENSES 23 24 25 21 22 2011 Rupees 40.951.203.509.046.988.781.484.713) (117.126.249) (915.750) 988.501) (636.771.054.867.275) 988.100 Restated 2010 Rupees 13. 62 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR .333.976) 2.360.272.742 (217.782) 2.771.422 (4.346.081.974.680) 2.966 (599.586.668 7.551 717.

549 2.552.005) 1.781.488 2.054.488 The annexed notes form an integral part of these consolidated financial statements.466.750) 985.171.238 (3.882.771.771.551 717.100 (4.100 989.435.951.898.252 (2.771.100 Restated 2010 Rupees 988.898. 63 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR JUNE 2011 .241 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: EQUITY HOLDERS OF THE HOLDING COMPANY NON-CONTROLLING INTEREST 2.951.753) 985.Consolidated Statement of Comprehensive Income for the year ended 30 June 2011 2011 Rupees PROFIT AFTER TAXATION OTHER COMPREHENSIVE INCOME Reclassification adjustment for gain included in profit or loss Deferred income tax relating to other comprehensive income Net loss recognized in other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2.951.272.484.

099) 1.192 14.226.500 (2.921 (1.103) 1.238 (2.070 (15.575) (690.818.127) (12.426.003) 12.936.Consolidated Cash Flow Statement for the year ended 30 June 2011 NOTE CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from / (used in) operations Net increase in long term security deposits Finance cost paid Income tax paid Net (increase) / decrease in short term investment Net increase in long term loans Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on property.540) 2.808.527.347) (7.767.996. plant and equipment Profit on bank deposits received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term financing Repayment of long term financing Short term borrowings .321.098 279.817) (131.176.064.708 1.890.208) (206.255.620.943) 7.925.963.678) (672.610 1.864) 2.178.524.821.398.368.477.net Proceeds from issue of right shares Proceeds from disposal of interest to non-controlling interest Dividend paid to non-controlling interest Share issuance cost Dividends paid Net cash from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year JUNE 2011 2011 Rupees Restated 2010 Rupees 30 2.397.556.754.646) (2.094 1.066.342 (1.451.568) 1.811 9.152) (95.244.551.491) (296.327.564) 131.581) (9.408.604.367.486) (143.910 Cash and cash equivalents at the end of the year The annexed notes form an integral part of these consolidated financial statements.897.493) (1.992.750.910 174.025) (5.634.373) 56.623 (170.603 (4.672.020.651.002.601. 64 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR .274.608 413.317 1.996.651.727.039.492.152.278 (619.656 (9.202 34.190.585.804.259.860) (247.617.376.500) (736.270.503.093.324. plant and equipment Capital expenditure on intangible assets Proceeds from sale of property.161.

620.027.243) (5.071 279.001) - - - - - - - .220 413.220 413..624.206 2.027.243) - - - - - 61.333..951.882. Balance as at 30 June 2009 Effect of change in accounting policy (Note 2.514.001) .527.431.610 1.537..720 (9.009.654.316.367.8) Balance as at 30 June 2009 .882. net Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2010 827.604.376.171...771.065 4.706...766) - (10.(170.750) 985.011.278 - 213.766) - (10..167 (5.526.070 1.333.829.152...418.081) (14.840 (344.221.830 413.549 2..472..376.629.278 227.670 68.209..221.147) 413.327.654..447 3. CHIEF EXECUTIVE DIRECTOR JUNE 2011 ..940 1.1....813.610 - 2.440 .932.278 3.859..208) 35.. Rupees ..081) - (14..488 1...2.658.333...100.830 2.484.845.712.540.....551 2..032 8.5 per ordinary share Dividend paid to non-controlling interest Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2011 Disposal of interest to non-controlling interest Total comprehensive income for the year ended 30 June 2011 ..604..152..610 1..604.053.829.810.629.1.(237.604.243) (5.815 The annexed notes form an integral part of these consolidated financial statements.015.882.431.171.878) 359.610 (15.Consolidated Statement of Changes in Equity for the year ended 30 June 2011 ATTRIBUTABLE TO EQUITY HOLDERS OF THE HOLDING COMPANY RESERVES SHARE CAPITAL CAPITAL RESERVE Sub Total Hedging reserve REVENUE RESERVES General reserve Unappropriated profit Sub Total SHAREHOLDERS' EQUITY NONCONTROLLING INTEREST TOTAL EQUITY Ordinary shares Preference shares .054.376..551 2.(237.712.343 6.552 61.770 1.829.001) (237.208) (170.551 717.647.924 1..783 2..527.011.620 6.447 3...552 218.958..054.058.240.947.152.629..687.898.440 .1.restated Final dividend for the year ended 30 June 2010 @ Rupees 1.505.766) Increase in non-controlling interest Total comprehensive income for the year ended 30 June 2010 Balance as at 30 June 2010 .238 (3.054.081) 827.152.221.027.897.272.636...585...209.597.243) - (5..001) (237.753 1..278 1.333..610 - 413.490 33.190...100 65 Nishat (Chunian) Limited and its subsidiary Balance as at 30 June 2011 1.431..342.950 1....554.185.938..445.367.459..891.604.766) - (10..878) (9.753) - 992.484.025) 344...484.958.936.restated Ordinary shares issued Share issuance cost..991 989..753 1.971 3.544 - - - - ..859 1.190.840) - - - - - - - - - - - - - (10.283.240.484.086.814.955.604.418..813.027.248 - - - - - (14.081) (14.629..468.820) - - - - - - - - - - - - - (5.238 989.610 (9..903.958.820 (35.305.829.552 61.221.623 - - - - .070 - - - (2..878) 413.466.484 4.890 3..801 359.

Gulberg II. 1984 and is listed on the Lahore and Karachi Stock Exchanges. dyeing. The principal activity of the Subsidiary Company is to build.Notes to the Consolidated Financial Statements for the year ended 30 June 2011 1. c) 66 Nishat (Chunian) Limited and its subsidiary JUNE 2011 . Punjab. Its registered office is situated at 31-Q. Accumulating compensated absences The provision for accumulating compensated absences is made by the Holding Company on the basis of accumulated leave balance on account of employees. Any change in the estimates in the future might affect the carrying amount of respective item of property. 1984 and listed on the Lahore Stock Exchange (Guarantee) Limited and Karachi Stock Exchange (Guarantee) Limited. doubling.Nishat (Chunian) Limited . Pakistan. the provisions or directives of the Companies Ordinance. THE GROUP AND ITS OPERATIONS The Group consists of: Holding Company Subsidiary Company .1 Basis of preparation a) Statement of compliance These consolidated financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. supply and sell electricity. The Company is engaged in business of spinning. In case requirements differ. accumulate. Gulberg II.Nishat Chunian Power Limited Nishat (Chunian) Limited Nishat (Chunian) Limited ("the Holding Company") is a public limited Company incorporated in Pakistan under the Companies Ordinance. 1984 shall prevail. fabrics and madeups made from raw cotton. Lahore. These policies have been consistently applied to all years presented. the Group reviews the values of assets for possible impairments on an annual basis. weaving. b) Accounting convention These consolidated financial statements have been prepared under the historical cost convention except for the certain financial instruments carried at fair value. The areas where various assumptions and estimates are significant to the consolidated financial statements or where judgments were exercised in application of accounting policies are as follows: Useful lives. with a corresponding effect on the depreciation charge and impairment. processing. synthetic fibre and cloth and to generate. patterns of economic benefits and impairments Estimates with respect to residual values and depreciable lives and pattern of flow of economic benefits are based on the analysis of the management. provisions of and directives issued under the Companies Ordinance. 1984. Article accounting estimates and judgments The preparation of these consolidated financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. distribute. Tehsil Pattoki. Further.722 MW at Jamber Kalan. 1984. operate and maintain a fuel fired power station having gross capacity of 200 MW and net capacity of 195. It also requires the management to exercise its judgment in the process of applying the accounting policies. including expectation of future events that are believed to be reasonable under the circumstances. 2. District Kasur. Inventories Net realizable value of inventories is determined with reference to currently prevailing selling prices less estimated expenditure to make sales. selling and otherwise dealing in yarn. unless otherwise stated: 2. buying. stitching. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. The Subsidiary Company has commenced commercial operations from 21 July 2010 and the twenty five years term of the Power Purchase Agreement (PPA) with National Transmission and Despatch Company Limited starts from this date. Nishat Chunian Power Limited Nishat Chunian Power Limited ("the Subsidiary Company") is a public limited Company incorporated in Pakistan under the Companies Ordinance. Lahore. plant and equipment. sizing. own. Its registered office is situated at 31-Q. Estimates and judgments are continually evaluated and are based on historical experience. printing.

'Presentation of Financial Statements' (effective for annual periods beginning on or after 01 January 2010). IFRS 9 introduces new requirements for classifying and measuring financial assets and is likely to affect the Group's accounting for its financial assets. the IASB has also issued IFRS 11 'Joint Arrangements'. The objective of IFRS 10 is to have a single basis for consolidation for all entities. The management of the Group is in the process of evaluating the impact of the aforesaid amendment on the Group's consolidated financial statements. 'Statement of Cash Flows' (effective for annual periods beginning on or after 01 January 2010). These amendments are part of the IASBs comprehensive review of off balance sheet activities. IFRS 12 'Disclosure of Interests in Other Entities'. The new disclosure requirements apply to transfer of financial assets. if any. and that basis is control. The amendments will promote transparency in the reporting of transfer transactions and improve users' understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity's financial position. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current. IAS 27 (revised 2011) 'Consolidated and Separate Financial Statements' and IAS 28 (revised 2011) 'Investments in Associates'. The amendment provides clarification that only expenditure that results in a recognized asset in the balance sheet can be classified as a cash flow from investing activity. IAS 7 (Amendment). Provisions for doubtful debts The Group reviews its receivables against any provision required for any doubtful balances on an ongoing basis. regardless of the nature of the investee. 'Financial Instruments: Disclosures' (effective for annual periods beginning on or after 01 July 2011). IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after 01 January 2013). Concurrent with the issuance of IFRS 10. e) Interpretations and amendments to published approved standards that are effective in current year but are not relevant to the Group There are other new interpretations and amendments to the published approved standards that are mandatory for accounting periods beginning on or after 01 July 2010 but are considered not to be relevant or do not have any significant impact on the Group's consolidated financial statements and are therefore not detailed in these consolidated financial statements. An entity transfers a financial asset when it transfers the contractual rights to receive cash flows of the asset to another party. f) Standards and amendments to published approved standards that are not yet effective but relevant to the Group Following standards and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 01 July 2011 or later periods: IFRS 7 (Amendment). The clarification results in an improvement in the alignment of the classification of cash flows from investing activities in the consolidated cash flow statement and the presentation of recognized assets in the consolidated balance sheet.Taxation In making the estimates for income tax currently payable. By amending the definition of current liability. IFRS 10 'Consolidated Financial Statements' (effective for annual period beginning on or after 01 January 2013). The application of the amendment does not affect the results or net assets of the Group as it is only concerned with presentation and disclosures. 'Operating Segments' (effective for annual periods beginning on or after 01 January 2010). the management takes into account the current income tax law and the decisions of appellate authorities on certain issues in the past. The amendment provides clarification that the requirement for disclosing a measure of segment assets is only required when the Chief Operating Decision Maker (CODM) reviews that information. The amendment is part of the International Accounting Standards Board's (IASB) annual improvements project published in April 2009. The provision is made while taking into consideration expected recoveries. The definition of control includes three elements: power JUNE 2011 67 Nishat (Chunian) Limited and its subsidiary . The application of the amendment does not affect the results or net assets of the Group as it is only concerned with presentation and disclosures. This standard is the first step in the process to replace IAS 39 'Financial Instruments: Recognition and Measurement'. The application of the amendment does not affect the results or net assets of the Group as it is only concerned with presentation and disclosures. IFRS 8 (Amendment). the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. d) Amendments to published approved standards that are effective in current year and relevant to the Group The following amendments to published approved standards are mandatory for the accounting periods beginning on or after 01 July 2010: International Accounting Standard (IAS) 1 (Amendment). particularly those involving securitization of financial asset.

over an investee, exposure or rights to variable returns of the investee and the ability to use power over the investee to affect the investor's returns. IFRS 10 replaces those parts of IAS 27 'Consolidated and Separate Financial Statements' that address when and how an investor should prepare consolidated financial statements and replaces Standing Interpretations Committee (SIC) 12 'Consolidation - Special Purpose Entities' in its entirety. The management of the Group is in the process of evaluating the impacts of the aforesaid standard on the Group's consolidated financial statements. IFRS 12 'Disclosure of Interests in Other Entities' (effective for annual period beginning on or after 01 January 2013). IFRS 12 applies to entities that have an interest in subsidiaries, joint arrangements, associates or unconsolidated structured entities. IFRS 12 establishes disclosure objectives and specifies minimum disclosures that an entity must provide to meet those objectives. IFRS 12 requires an entity to disclose information that helps users of its financial statements evaluate the nature of and risks associated with its interests in other entities and the effects of those interests on its financial statements. The management of the Group is in the process of evaluating the impacts of the aforesaid standard on the Group's consolidated financial statements. IFRS 13 'Fair Value Measurement' (effective for annual period beginning on or after 01 January 2013). IFRS 13 establishes a single framework for measuring fair value where that is required by other standards. IFRS 13 applies to both financial and non-financial items measured at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The management of the Group is in the process of evaluating the impacts of the aforesaid standard on the Group's consolidated financial statements. IAS 1 (Amendments), 'Presentation of Financial Statements' (effective for annual periods beginning on or after 01 July 2012). It clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements. There are other amendments resulting from annual improvements project initiated by International Accounting Standards Board in May 2010, specifically in IFRS 7 'Financial Instruments: Disclosures', IAS 1 'Presentation of Financial Statements' and IAS 24 'Related Party Disclosures' that are considered relevant to the Group's consolidated financial statements. These amendments are unlikely to have a significant impact on the Group's consolidated financial statements and have therefore not been analyzed in detail. g) Standards, interpretations and amendments to published approved standards that are not yet effective and not considered relevant to the Group There are other standards, amendments to published approved standards and new interpretations that are mandatory for accounting periods beginning on or after 01 July 2011 but are considered not to be relevant or do not have any significant impact on the Group's consolidated financial statements and are therefore not detailed in these consolidated financial statements. h) Exemption from applicability of IFRIC - 4 'Determining whether an Arrangement contains a Lease' IFRIC 4 'Determining whether an Arrangement contains a Lease' is applicable for periods beginning on or after 01 January 2006, however, Independent Power Producer (IPPs), whose letter of intent has been signed on or before 30 June 2010, have been exempted from its application by the Securities and Exchange Commission of Pakistan (SECP).This interpretation provides guidance on determining whether arrangements that do not take legal form of lease should, nonetheless, be accounted for as lease in accordance with International Accounting Standard (IAS) 17 'Lease'.
JUNE 2011

Consequently, the Subsidiary Company is not required to account for a portion of its Power Purchase Agreement (PPA) with National Transmission and Despatch Company Limited (NTDCL) as lease under IAS 17 'Leases'. If the Subsidiary Company were to follow IFRIC 4 and IAS 17, the effect on these consolidated financial statements would be as follows: 2011 Rupees De-recognition of property, plant and equipment Recognition of lease debtor Recognition of inventory - work-in-process Increase / (decrease) in un-appropriated profit at the beginning of the year Increase in profit for the year Increase in un-appropriated profit at the end of the year (16,741,091,245) 17,473,512,141 732,420,894 732,420,894 2010 Rupees (17,984,649,259) (17,984,649,259) -

68
Nishat (Chunian) Limited and its subsidiary

2.2

Consolidation Subsidiary Subsidiary is that entity in which the Holding Company directly or indirectly controls, beneficially owns or holds more than 50% of the voting securities or otherwise has power to elect and appoint more than 50% of its directors. The financial statements of the Subsidiary Company are included in the consolidated financial statements from the date control commences until the date that control ceases. The assets and liabilities of the Subsidiary Company have been consolidated on a line by line basis and the carrying value of investments held by the Holding Company is eliminated against the Holding Company's share in paid up capital of the Subsidiary Company. Intra group balances and transactions have been eliminated. Non-controlling interest is that part of net results of the operations and of net assets of the Subsidiary Company attributable to interest which is not owned by the Holding Company. Non-controlling interest is presented as a separate item in the consolidated financial statements.

2.3

Taxation Current Holding Company 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 charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years. Subsidiary Company The Subsidiary Company's profits and gains from electric power generation are exempt from tax under clause (132), Part I of the Second Schedule to the Income Tax Ordinance, 2001, subject to the conditions and limitations provided therein. The Subsidiary Company is also exempt from minimum tax on turnover under clause (11A), Part IV of the Second Schedule to the Income Tax Ordinance, 2001. However, full provision is made in the profit and loss account on income from sources not covered under the above clause at current rates of taxation after taking into account, tax credits and rebates available, if any. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the profit and loss account, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case the tax is also recognized in other comprehensive income or directly in equity, respectively. Nishat Chunian Power Limited - Subsidiary Company has not made provision for deferred tax as the Subsidiary Company's management believes that the temporary differences will not reverse in the foreseeable future due to the fact that the profits and gains of the Subsidiary Company derived from electric power generation are exempt from tax subject to the conditions and limitations provided for in terms of clause (132), Part I of the Second Schedule to the Income Tax Ordinance, 2001.

2.4

Provident fund The Group operates funded provident fund schemes covering all permanent employees. Equal monthly contributions are made both by the employees and the employer to funds in accordance with the funds' rules. The employer's contributions to the funds are charged to income currently. Accumulating compensated absences The Holding Company provides for accumulating compensated absences, when the employees render service that increase their entitlement to future compensated absences. Under the rules, head office employees and factory staff are entitled to 20 days leave per year and factory workers are entitled to 14 days leave per year respectively. Unutilized leaves can be accumulated up to 10 days in case of head office employees, 40 days in case of factory staff and up to 28 days in case of factory workers. Any further unutilized leaves will lapse. Any un-utilized leave balance i.e. 40 days and 28 days in case of factory staff and workers respectively, can be encashed by them at any time during their employment. Unutilized leaves can be used at any time by all employees, subject to the Holding Company's approval. Provisions are made annually to cover the obligation for accumulating compensated absences and are charged to income.

Nishat (Chunian) Limited and its subsidiary

Employee benefits The main features of the schemes operated are as follows:

69

JUNE 2011

2.5

Fixed assets Property, plant, equipment and depreciation Property, plant and equipment except freehold land and capital work-in-progress are stated at cost less accumulated depreciation and any identified impairment loss. Cost in relation to certain property, plant and equipment signifies historical cost, borrowing cost pertaining to erection / construction period of qualifying assets and other directly attributable cost of bringing the asset to working condition. Freehold land and capital work-in-progress are stated at cost less any identified impairment loss. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and cost of the item can be measured reliably. All other repair and maintenance costs are charged to income during the period in which they are incurred. Depreciation Depreciation on all operating fixed assets is charged to income on the reducing balance method, except in case of the Subsidiary Company, where this accounting estimate is based on straight line method, so as to write off the cost / depreciable amount of the assets over their estimated useful lives at the rates given in Note 11.1. Depreciation on additions is charged from the month in which the assets are available for use upto the month prior to disposal. The assets' residual values and useful lives are reviewed at each financial year end and adjusted if impact on depreciation is significant. Previously, depreciation on operating fixed assets of the Subsidiary Company was charged on reducing balance method. However, during the year, the Subsidiary Company's management carried out a comprehensive review of the pattern of consumption of economic benefits of the operating fixed assets. Now the Subsidiary Company charges depreciation on operating fixed assets on straight line method. Such a change has been accounted for as a change in an accounting estimate in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'. Had there been no change in the accounting estimate, the profit after tax for the year ended 30 June 2011, would be higher by Rupees 656,125 and carrying value of operating fixed assets as at that date would have been higher by the same amount. Derecognition An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and carrying amount of the asset) is included in the consolidated profit and loss account in the year the asset is derecognized. Intangible asset Intangible assets, which are non-monetary assets without physical substance, are recognized at cost, which comprise purchase price, non-refundable purchase taxes and other directly attributable expenditures relating to their implementation and customization. After initial recognition, an intangible asset is carried at cost less accumulated amortization and impairment losses, if any. Intangible assets are amortized from the month when these assets are available for use, using the straight line method, whereby the cost of the intangible asset is amortized over its estimated useful life over which economic benefits are expected to flow to the Group. The useful life and amortization method is reviewed and adjusted, if appropriate, at each reporting date.

70
Nishat (Chunian) Limited and its subsidiary

JUNE 2011

2.6

Goodwill Goodwill represents the excess of the cost of an acquisition over the Group's share of the identifiable net assets acquired. Goodwill is tested annually for the impairment and carried at cost less accumulated impairment losses. Any impairment is recognized immediately through the consolidated profit and loss account and is not subsequently reversed. Negative goodwill is recognized directly in consolidated profit and loss account in the year of acquisition.

2.7

Investments Classification of an investment is made on the basis of intended purpose for holding such investment. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such designation on regular basis. Investments are initially measured at fair value plus transaction costs directly attributable to acquisition, except for 'investment at fair value through profit or loss' which is measured initially at fair value. The Group assess at the end of each reporting period whether there is any objective evidence that investments are impaired. If any such evidence exists, the Group applies the provisions of IAS 39 'Financial Instruments: Recognition and Measurement' to its investments.

JUNE 2011 71 Nishat (Chunian) Limited and its subsidiary Cost of work-in-process and finished goods comprise cost of direct material. Previously. are stated at lower of cost and net realizable value. cost of raw material of spinning segment was measured using annual average cost formula. plus or minus the cumulative amortization. at which time the cumulative gain or loss previously reported in consolidated statement of comprehensive income is included in consolidated profit and loss account. Changes in Accounting Estimates and Errors'. gains and losses are recognized in consolidated profit and loss account when the investments are de-recognized or impaired. the Holding Company has changed its accounting policy for measurement of cost of raw material of spinning segment. Available-for-sale Investments intended to be held for an indefinite period of time. the figures recognized in these consolidated financial statements would have been different as follows: . as well as through the amortization process. de-recognized or is determined to be impaired. Held-to-maturity Investments with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. fair value is determined by reference to stock exchange quoted market bids at the close of business on the reporting date. of any difference between the initially recognized amount and the maturity amount. Gains or losses on investments held-for-trading are recognized in consolidated profit and loss account. b) c) 2. After initial recognition. using the effective interest method. Now. Cost is determined as follows: Stores and spares Usable stores and spares are valued principally at moving average cost. Cost of goods purchased for resale is based on first-in-first-out (FIFO) cost formula. This cost is computed as the amount initially recognized minus principal repayments. labour and appropriate manufacturing overheads. Gains or losses on available-for-sale investments are recognized directly in consolidated statement of comprehensive income until the investment is sold. Stock-in-trade Cost of raw materials is measured using the monthly average cost formula. except for stock-in-transit and waste stock. Had there been no change in this accounting policy. Items-in-transit are valued at cost comprising invoice value plus other charges paid thereon.8 Inventories Inventories. Investments are classified as held-for-trading if these are acquired for the purpose of selling in the short term. During the year. For investments carried at amortized cost. investments which are classified as available-for-sale are measured at fair value. This change in accounting policy has been accounted for retrospectively in accordance with the requirements of IAS 8 'Accounting Policies.a) Investment at fair value through profit or loss Investment classified as held-for-trading and those designated as such are included in this category. Other long-term investments that are intended to be held to maturity are subsequently measured at amortized cost. Investments intended to be held for an undefined period are not included in this classification. which may be sold in response to need for liquidity. These are subcategorized as under: Quoted For investments that are actively traded in organized capital markets. Unquoted Fair value of unquoted investments is determined on the basis of appropriate valuation techniques as allowed by IAS 39 'Financial Instruments: Recognition and Measurement'. Net realizable value signifies the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Materials in transit are stated at cost comprising invoice values plus other charges paid thereon. or changes to interest rates or equity prices are classified as available-for-sale. it is measured using monthly moving average cost formula. while items considered obsolete are carried at nil value. Waste stock is valued at net realizable value.

while the transactions in foreign currencies during the year are initially recorded in functional currency at the rates of exchange prevailing at the transaction date.10 Borrowing cost Borrowing costs are recognized as expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition. accrued interest. which is the Group's functional currency.358.46) Foreign currencies These consolidated financial statements are presented in Pak Rupees.852) (340. Borrowings Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. accrued mark-up and trade and other payables. cancelled or expired. loans and advances.2011 Rupees Unappropriated profit as at the beginning of the year would be (lower) / higher by Profit for the year ended 30 June would be lower by Stock-in-trade as at 30 June would be lower by Earnings per share .basic would be lower by Earnings per share . except for 'financial instrument at fair value through profit or loss' which is measured initially at fair value. if any. Dividend income on equity investments is recognized as and when the right to receive dividend is established. Revenue on account of energy is recognized on transmission of electricity to National Transmission and Despatch Company Limited.852) (0. All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the reporting date.11 Revenue recognition Revenue from different sources is recognized as under: Revenue from sales is recognized on dispatch of goods to customers.206.06) 14. the rights expire or the Group surrenders those rights.239.206. are capitalized as part of cost of that asset. short term borrowings. long term financing. 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. Financial assets and liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. 72 Nishat (Chunian) Limited and its subsidiary JUNE 2011 b) .60) (0.13 Financial instruments Financial instruments carried on the balance sheet include deposits.12) (2. Bad debts are written off when identified.687) (396. 2. trade debts. from the proceeds.12 Share capital Ordinary shares and irredeemable preference shares are classified as equity.933) (56.9 2010 Rupees (56. The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy of investments.446. 2. cash and bank balances. a) Trade debts and other receivables Trade debts and other receivables are carried at original invoice value less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Financial assets are de-recognized when the Group loses control of the contractual rights that comprise the financial asset. 2. Exchange gains and losses are included in the income currently. construction or production of a qualifying asset. net of tax. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition.539) (2. Any gain or loss on subsequent measurement (except available for sale investments) and de-recognition is charged to the profit or loss currently. Return on bank deposits is accrued on a time proportionate basis by reference to the principal outstanding and the applicable rate of return.152. The Group loses such control if it realizes the rights to benefits specified in contract.diluted would be lower by 2. Such borrowing costs. any difference between the proceeds and the redemption value is recognized in the consolidated profit and loss account over the period of the borrowings using the effective interest rate method. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction. Financial liabilities are de-recognized when the obligation specified in the contract is discharged. whereas on account of capacity is recognized when due.081 (70. derivative financial instrument. 2. other receivables.

Those incomes.c) Trade and other payables Liabilities for trade and other amounts payable are initially recognized at fair value which is normally the transaction cost. saving and deposit accounts. and for which discrete financial information is available. Impairment losses are recognized in consolidated profit and loss account. An operating segment's operating results are reviewed regularly by the Group's chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance. 2. Such reversal is recognized in consolidated profit and loss account. of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items. the carrying amount of the asset is increased to its recoverable amount. For the purpose of cash flow statement. 2. cash and cash equivalents comprise cash in hand. b) Non-financial assets The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists. Amounts accumulated in equity are recognized in consolidated profit and loss account in the periods when the hedged item will affect profit or loss.14 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at book value which approximates their fair value. The Group documents at the inception of the transaction the relationship between the hedging instruments and hedged items. other short term highly liquid instruments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The Group designates certain derivatives as cash flow hedges. the nature of the item being hedged. The Group also documents its assessment. JUNE 2011 73 Nishat (Chunian) Limited and its subsidiary 2. net of depreciation. 2. Segment results that are reported to the chief operating decision makers include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument.17 Impairment a) Financial assets A financial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on the estimated future cash flow of that asset.18 Segment reporting Segment reporting is based on the operating (business) segments of the Group. An impairment loss is recognized wherever the carrying amount of the asset exceeds its recoverable amount. If that is the case. expenses. Individually significant financial assets are tested for impairment on an individual basis. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.16 Provisions Provisions are recognized when the Group has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and a reliable estimate of the amount can be made. That increased amount cannot exceed the carrying amount that would have been determined. the recoverable amount of such asset is estimated. liabilities and other balances which cannot be allocated to a particular segment on a reasonable basis are reported as unallocated. and if so. cash at banks on current. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses.15 Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. 2. as well as its risk management objective and strategy for undertaking various hedge transactions. had no impairment loss been recognized for the asset in prior years. assets. both at hedge inception and on an ongoing basis. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated profit and loss account. . including revenues and expenses that relate to the transactions with any of the Group's other components. An impairment loss in respect of a financial asset measured at amortized cost is calculated as a difference between its carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in equity. An impairment loss in respect of available for sale financial asset is calculated by reference to its current fair value.

000.000 195.418.000.20 Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are set off and the net amount is reported in the consolidated financial statements when there is a legal enforceable right to set off and the management intends either to settle on a net basis.000 20.351.770 1.654.844 .000.891.552.570 2011 Rupees 2010 Rupees 74 Nishat (Chunian) Limited and its subsidiary JUNE 2011 1.000 175.090.496.441. AUTHORIZED SHARE CAPITAL 2011 2010 (Number of Shares) 175.000 200.000 4.000.745 69.514.265 1. Processing and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles) and Power Generation (Generating.657 87.441.000 Ordinary shares of Rupees 10 each 15% non-voting cumulative convertible preference shares of Rupees 10 each 2011 Rupees 2010 Rupees 1.224.496.750. or to realize the assets and to settle the liabilities simultaneously.966.670 162.349 Preference shares 3.242.000.317. transmitting and distributing power).903.000.000. 3. SUBSCRIBED AND PAID UP SHARE CAPITAL 2011 2010 (Number of shares) Ordinary shares 91.000 1.000.369. 2.495 158.490 12.177 15% non-voting cumulative convertible preference shares of Rupees 10 each fully paid in cash 33.242.000.000.000.844 165.19 Dividend to ordinary shareholders and other appropriations Dividend distribution to the ordinary shareholders is recognized as a liability in the Group financial statements in period in which the dividends are declared and other appropriations are recognized in the period in which these are approved by the Board of Directors.440 165.889.657 Ordinary shares of Rupees 10 each fully paid in cash Ordinary shares of Rupees 10 each issued as fully paid bonus shares Ordinary shares of Rupees 10 each issued as fully paid for consideration other than cash to members of Umer Fabrics Limited as per the Scheme of arrangement as approved by the Honourable Lahore High Court.440 68. 2.000.418.750.667 6.620. Lahore 913.000 1.265 12.831.650 1. Transaction among the business segments are recorded at arm's length prices using admissible valuation methods.966. Inter segment sales and purchases are eliminated from the total.526.000 20.570 878.650 1.000 ISSUED. Weaving (Producing different quality of greige fabric using yarn). 195. Spinning (Producing different quality of yarn using natural and artificial fibers).654.The Group has four reportable business segments.950 1.000 200.694.950.000 1.585.450 694.224.270 694.427 69.950.

Khan Cement Company Limited 22.349 Preference shares 6.360.682 34.526.670 41. except on preference shares which have been converted into ordinary shares.552. The Holding Company will have one month after the two months conversion notice to issue ordinary shares to the preference shareholders at the conversion price.4.G.891. Preference shareholders have the option to serve a notice to convert the preference shares along with the accumulated dividend into the ordinary shares of the Holding Company within the conversion period by providing a two months written notice to the Holding Company.321 5.720.010. 4.209.537. .523.682) 158. 4.471.537.376.585.059 27.604.461 At 01 July Ordinary shares of Rupees 10 each issued as fully paid right shares Preference shares converted into ordinary shares of Rupees 10 each at par 1.840 3.360. The salient terms of this issue are as follows: JUNE 2011 75 Nishat (Chunian) Limited and its subsidiary 4.513. These shares are listed on Lahore and Karachi Stock Exchanges of Pakistan.1 Ordinary shares of the Holding Company held by related parties 2011 2010 (Number of shares) Nishat Mills Limited D.523. had offered to the shareholders of the Company 41.513.360.903. all outstanding preference shares will be converted into ordinary shares at the conversion price.604.610 (344.059 27.620.889.380 4.3.770 The Holding Company.3.3 6.670 827.820) 413.514.177 (3.667 - 82.495 4.380 22.461 preference shares of Rupees 10 each at par value.490 1.2 Movement during the year 2011 Rupees 2010 Rupees 2011 2010 (Number of shares) Ordinary shares 158.177 33. during the financial year ended 30 June 2009.667 1.284) At 01 July Preference shares converted into ordinary shares of Rupees 10 each at par 68.3 The preference shareholders have the option to serve the conversion notice after the end of the three months from the date of issue of preference shares and upto three years from the date of issue.220 35.840) 3.2 The preference shareholders are not entitled to bonus or right shares in the event the Holding Company increases its share capital by the issue of further ordinary shares or otherwise.376.712.284 162. This preference shares right issue was made in the ratio of 50 preference shares (non-voting cumulative convertible) for every 100 ordinary shares held by the Holding Company's shareholders as on 10 February 2009.889.1 The preference shares are non-voting in nature and enjoy preference over ordinary shares in case of payment of dividend and liquidation.090.526. No put or call option is available.610 344.950 68.010.922 41.585. The preference shares along with the accumulated dividend will be convertible into ordinary shares at a price Rupees 10 per ordinary share.321 5. At the expiry of three years from the date of issue.820 413.712. No cash dividend on ordinary shares will be payable until all the dividends on preference shares have been paid.891.552.351.471.461 (34.3.770 (35.

145.926 142.3.341 Less: Current portion shown under current liabilities Long term loans Long term musharaka Privately placed term finance certificates 2.000 1.533.206 2.065 4.500.721. The preferred dividend amount will be determined after applying the relevant dividend rate to the outstanding preference shares.143. RESERVES Composition of reserves is as follows: Revenue reserves General reserve Unappropriated profit 2010 Rupees 1.500.000 93.629.185.087.643.267 587.2) Privately placed term finance certificates .687.675 142.678.297.953.484 2011 Rupees 6.214.343 1.278 3.597.058.593.664 19.998.500.221.278 1.783.267 1.376.4 Preferred dividend will be paid on an annual basis at the end of each accounting period subsequent to 30 June 2009 or proportionately for the period prior to 30 June 2009 from the date of issue and after the approval of the dividend payment in the Annual General Meeting.000 2.secured Long term loans (Note 6.664 585. The preferred dividend will be paid at the rate of 15%. LONG TERM FINANCING From banking companies / financial institutions .1) Long term musharaka (Note 6.926 17.675 17.674.000.750.000 500.998.814.086.989 76 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .000.810.533.secured (Note 6. 2011 Rupees 5.586.221.3) 2010 Rupees 18.4.442.000 19.000 19.316.537.629.

05% 6-month KIBOR + 0.30% SBP rate for LTFF.000 8.000.50% the Holding Company made pre-payment of loan in full during the current year.000 80. Ten equal half yearly instalments commenced on 28 March 2008 and ending on 28 September 2012.796 15.50% Holding Company made pre-payment of loan in full during the current year.000.000 270.000. EOP + 2.238.85% Six equal half yearly instalments commenced on 23 December 2009 and ending on 23 June 2012. Ten equal half yearly instalments commenced on 24 June 2008 and ending on 24 December 2012. EOP + 2. Half Yearly Half Yearly United Bank Limited-1 United Bank Limited-2 United Bank Limited-3 United Bank Limited-4 United Bank Limited-5 United Bank Limited-6 United Bank Limited-7 United Bank Limited-8 United Bank Limited-9 United Bank Limited-10 Habib Bank Limited-1 Habib Bank Limited-2 Habib Bank Limited-3 Habib Bank Limited-4 Habib Bank Limited-5 62.000 150.000 35. 1.000 210. 6-month KIBOR + Nine equal half yearly instalments commenced on 31 March 2010 and ending on 31 March 2014.800.000 26.40% Eight equal half yearly instalments commenced on 20 SBP rate for LTFFMay 2011 and ending on 20 November 2014.000 250.000.000 312. SBP rate for LTFSix equal half yearly instalments commenced on 31 EOP + 2% December 2007 and ended on 27 June 2011.000. 1. Habib Bank Limited-6 - 213. EOP + 2.05% 6-month KIBOR + Eight equal half yearly instalments commenced on 30 September 2009 and ending on 31 March 2013.600.408 - 187.500 3.A - 74.000 38.Sixteen equal quarterly instalments commencing on 15 January 2012 and ending on 15 October 2015.993.816 200.000 9.000 177.5% However. EOP + 3% Half Yearly Half Yearly Quarterly Half Yearly Quarterly - 77 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .5% SBP rate for LTFF.467.000 23.5% SBP rate for LTFF.963. the Company made pre-payment of loan in full during the current year. 2.Eight equal half yearly instalments commenced on 08 June 2011 and ending on 08 December 2014. Ten equal half yearly instalments commenced on 15 June 2008 and ending on 15 December 2012.476.Eight equal half yearly instalments commencing on 28 July 2011 and ending on 28 January 2015. EOP + 2.75% 6-month KIBOR + Six equal half yearly instalments commenced on 31 December 2010 and ending on 30 June 2013.000 3.334 25.600.000 62.5% 6-month KIBOR + Twelve equal quarterly instalments commencing on 30 September 2011 and ending on 30 June 2014.000 250.000 350.6.000.333. EOP + 2.350.000. the 2. However.816 231.000 250. Ten equal half yearly instalments commenced on 27 December 2007 and ending on 27 June 2012.000 6-month KIBOR + Five equal half yearly instalments commenced on 24 December 2010 and ending on 24 December 2012.500.05% 6-month KIBOR + 0.5% SBP rate for LTFF. 2.000.600.000.35% 6-month KIBOR + Eight equal half yearly instalments commencing on 23 June 2012 and ending on 23 December 2015. 2.000.500.000 8.000.668 Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Quarterly Quarterly Quarterly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Allied Bank Limited-1 Allied Bank Limited-2 Allied Bank Limited-3 Pak Kuwait Investment Company (Private) Limited-1 Pak Kuwait Investment Company (Private) Limited-2 Atlas Bank Limited National Bank of Pakistan The Bank of Punjab-1 The Bank of Punjab-2 Faysal Bank Limited SAMBA Bank Limited Saudi Pak Industrial and Agricultural Investment Company Limited 100.Eight equal half yearly instalments commencing on 18 July 2011 and ending on 18 January 2015. EOP + 2.111.Eighteen equal quarterly instalments commencing on 31 May 2012 and ending on 31 August 2016.000 33.000 125.000. 2.111 Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Quarterly Half Yearly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly 6-month KIBOR + Eight equal half yearly instalments commenced on 31 March 2010 and ending on 30 September 2013.000. Eight equal half yearly instalments commenced on 24 May 2007 and ending on 24 November 2011.500. Eight equal half yearly instalments commenced on 25 December 2006 and ended on 25 June 2011.155.000.777.1 Long term loans Lender 2011 Rupees 2010 Rupees Rate of mark-up per annum Number of installments Mark-up repricing Mark-up payable Nishat (Chunian) Limited Holding Company Standard Chartered Bank (Pakistan) Limited 500.000 40. 2. Eight equal half yearly instalments commenced on 03 August 2007 and ending on 03 February 2012.000 27. 2.15% 3-month KIBOR + Eight equal quarterly instalments commencing on 31 January 2012 and ending on 31 October 2013. 1.500.000 28.000 150.685.666.025.000 26.000 150.000 250.000 27.000.05% 6-month KIBOR + 1.45% 6-month KIBOR + Twenty equal quarterly instalments commenced on 01 January 2008 and ending on 01 October 2012.5% SBP rate for LTFEOP + 2% SBP rate for LTFEOP + 3% SBP rate for LTFEOP + 3% SBP rate for LTFEOP + 3% Six equal half yearly instalments commenced on 30 March 2007 and ended on 30 September 2010.000 437.600. However.333 Half Yearly Quarterly Citibank N.500.000 94.747.000 1.800.000 88.Eight equal half yearly instalments commencing on 26 July 2011 and ending on 26 January 2015.305.000.778 250.50% 6-month KIBOR + Eighteen equal quarterly instalments commencing on Half Yearly 21 September 2011 and ending on 21 December 2015.000.400.000.333.95% Eight equal half yearly instalments commenced on 28 February 2007 and ending on 31 July 2011. 2.000.500.000.388 30.000 187. 6-month KIBOR + Nine equal half yearly instalments commenced on 30 June 2010 and ending on 30 June 2014. 2.316 6-month KIBOR + Eighteen equal quarterly instalments commenced on Half Yearly 14 January 2011 and ending on 14 April 2015.50% SBP rate for LTFF.000 200.5% SBP rate for LTFF. SBP rate for LTFEOP + 2% 6-month KIBOR + 1. 6-month KIBOR + 1.000 75.000.000.500.500.000 88.

180 2.000 585. Long term musharaka are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Holding Company to the extent of Rupees 783. hypothecation of all present and future assets and all properties of the Subsidiary Company (excluding working capital hypothecated property). the Subsidiary Company obtained a term finance facility of Rupees 3.6 78 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .000.780.6) Term finance facility (Note 6.278.2 Dubai Islamic Bank (Pakistan) Limited 2011 Rupees 125.Lender Nishat Chunian Power Limited .333 million).267 3-month KIBOR + Thirty seven quarterly instalments ending on 01 July 2020.278.333 million (2010: Rupees 250 million) and ranking charge on all present and future fixed assets of the Holding Company to the extent of Rupees 187 million (2010: Rupees 533. Quarterly Quarterly Quarterly Quarterly 6.998.876. This represents long term financing obtained by the Subsidiary Company from a consortium of banks led by United Bank Limited (Agent Bank).346.846.1 The overall financing is secured against registered first joint pari passu charge on immovable property. During the previous year.969.605 to cover the additional cost of the power project from the lenders of the original project finance facility.5 6. lien over project bank accounts and pledge of shares held by the Holding Company in the Subsidiary Company. The portion of long term financing from Faysal Bank Limited is on murabaha basis.000.000 - 3-month KIBOR + Sixteen equal quarterly instalments commencing on 30 Quarterly December 2011 and ending on 30 September 2015.401. 6.3 Privately placed term finance certificates 500. 1.000.346 3.25% 6-month KIBOR + Sixteen equal quarterly instalments commencing on 30 September 2012 and ending on 30 June 2016.999 million (2010: Rupees 266.29% to 16. The effective mark-up rate charged during the year on the outstanding balance ranges from 15.593.2 Long term musharaka .4 Long term loans and privately placed term finance certificates of Holding Company are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Holding Company to the extent of Rupees 7. mortgage of project receivables (excluding energy payment receivables).668 14.Holding Company Rate of profit per annum Lender Burj Bank Limited (Formerly Dawood Islamic Bank Limited) -1 Burj Bank Limited (Formerly Dawood Islamic Bank Limited) .50% Half Yearly Ten equal half yearly instalments commenced on 01 6-month KIBOR + October 2010 and ending on 01 April 2015.502.605 15.000 2010 Rupees 187.087.80% Half Yearly Quarterly Half Yearly 6. on the same terms and conditions.6. 1.34% to 15.000 400.500.6) 2011 Rupees 2010 Rupees Rate of mark-up per annum Number of installments Mark-up repricing Mark-up payable 11.Nishat (Chunian) Limited .644.345 million) and ranking charge on all present and future fixed assets of the Holding Company to the extent of Rupees 1. The original project financing facility was Rupees 12.62%) per annum. 6.25% Quarterly 6.2 In accordance with the terms of agreement with the lenders of long term finances there are certain restrictions on the distribution of dividends by the Subsidiary Company.000 587.664 12.004.345 million (2010: Rupees 7. 6.52% (2010: 15.000 140.000.848 18.502.6.951 19.000.Subsidiary Company Senior facility (Note 6.047.354.360.500.086. 3% 3-month KIBOR + 3% Thirty seven quarterly instalments ending on 01 July 2020.000 320. excluding one bank.047.000 Number of installments Profit Profit repricing payable Quarterly 6-month KIBOR + Sixteen equal quarterly instalments commenced on 30 Half Yearly September 2009 and ending on 30 June 2013.354. 2. 1.666 million).000.

258 62.681.1 It includes Rupees 0.674.439.051.563.419 57.230.2011 Rupees 7.508.821 197.750.372 9.694 million) due to related parties.696 Less : Payments during the year 59.570.954 662.637 9.901 24.010 1.529.919.115 10.112.583 163.665.345.066.221 32.719 5.074 794.902 171.298 308.451 129.665.204 2011 Rupees 8.803 7. 2011 Rupees 2010 Rupees 7.235.029.472 163.344 789.990.991. TRADE AND OTHER PAYABLES Creditors (Note 7.828 114.674.344 1.112. 1968 on funds utilized by the Holding Company till the date of allocation to workers.916 1.311.805 JUNE 2011 7.457.315.532.361.115.979.803 468.948.774 7.168 163.interest free and repayable on completion of contracts Retention money Income tax deducted at source Sales tax payable Unclaimed dividend Preference dividend payable Workers' profit participation fund (Note 7.204 21.171.222.075 57.117.714.2.977 776.708.204 223.696 67.680 2.1) Payable to equipment suppliers Accrued liabilities Advances from customers Securities from contractors .937 13.1 The Holding Company retains workers' profit participation fund for its business operations till the date of allocation to workers.246 54.761 5.2) Workers' welfare fund Commitment fee Others 2010 Rupees 775.337.721 10. .536.696 2.569 2.133 953.399 368.2 Workers' profit participation fund Balance as on 01 July Add: Interest for the year (Note 27) Add: Provision for the year 57.696 21.229 million (2010: Rupees 3.905 57.112.681. Interest is paid at prescribed rate under the Companies Profit (Workers' Participation) Act.994.585.112.534 56.665.184. ACCRUED MARK-UP Long term financing Short term borrowings 2010 Rupees 79 Nishat (Chunian) Limited and its subsidiary 755.495.

848. first parri passu hypothecation charge on the fuel stock and inventory.988 1.015 million) for opening letters of credit and guarantees.649 9.419 2. Mark-up is payable at the maturity of the respective murabaha transaction.14% (2010: 14.215.262. to finance the procurement of multiple oils from the fuel suppliers.Subsidiary Company Short term running finances (Note 9.Holding Company Short term running finances (Notes 9.3 9.22%) per annum on the balance outstanding. 9.257.324.1 and 9.4) Nishat Chunian Power Limited .1 These finances are obtained from banking companies under mark-up arrangements and are secured by hypothecation of all present and future current assets of the Holding Company and lien on export bills to the extent of Rupees 13.292 million equivalent to Rupees 623. The rates of mark-up range from 14.259 million). The aggregate facilities for opening letters of credit and guarantees are secured by lien on import documents and a first pari passu charge on current assets comprising of fuel stocks and inventories of the Subsidiary Company.30%) per annum.06 million (2010: Rupees 2.5) Short term finance (Note 9. The effective mark-up rate charged during the year on the outstanding balance ranges from 14.6) 2010 Rupees 1.000.5 9.299.841 2.3) Other short term finances (Notes 9.34% to 14.000 million under mark-up arrangements from a commercial bank at mark-up rates ranging from three to nine month KIBOR plus 2% per annum.738 million (2010: Rupees 10.000 8. This represents murabaha finance facility obtained by the Subsidiary Company of Rupees 1.33 million) at mark-up rate of three month KIBOR plus 2% per annum.26% to 16%) per annum on the balance outstanding.432. ranking charge over all present and future project assets (including moveable/immoveable assets) of the Subsidiary Company.747 1. The rates of mark-up range from 1.364 1.219.57% to 17%) per annum on the balance outstanding.Preshipment / SBP refinance (Notes 9.1 and 9. The aggregate facility is secured against first pari passu charge on current assets comprising of fuel stocks. The effective mark-up rate charged during the year on the outstanding balance ranges from 14.328.74% (2010: 12. Short term running finance facilities available from commercial banks to the Subsidiary Company under mark-up arrangements amount to Rupees 4.015 million).105.4 9. the amount utilised at 30 June 2011 was Rupees 336.9% to 14. on the balance outstanding.915. payable quarterly.29% to 15. SHORT TERM BORROWINGS From banking companies-secured Nishat (Chunian) Limited .740 773.87% to 15.2011 Rupees 9.081.003. The rates of mark-up range from 2.977 496.2 9.026.492.805.000 6.2) Export finances .15% to 16.16% (2010: 1.29% to 16.53% (2010: 1.1 and 9. inventories and assignment of energy payment receivables from National Transmission and Despatch Company Limited (NTDCL).961.611. Of the aggregate facilities of Rupees 902.401.52% (2010: 14.225 million (2010: Rupees 5.688.200 million (2010: Rupees 623.28%) per annum. The aggregate running finances are secured against first parri passu assignment of the present or future energy payment price of the tariff.6 JUNE 2011 80 Nishat (Chunian) Limited and its subsidiary .739.467 1. These form part of total credit facility of Rupees 9.000.600 2.743 million).35% to 14.726 million (2010: USD 7.684.

a significant relief was extended to the Holding Company. The Holding Company's appeal has not yet been taken up for hearing by ATIR.833 million has been raised against the Holding Company on various grounds. 2008 and 2009. The tax audit authorities have been restrained from proceeding with the audit. The Holding Company considers that since it has taken benefit of remission of sales tax only.6 While framing assessment orders of Umer Fabrics Limited (merged entity) for the assessment years 199899.156 million under sections 161 and 205 of the Income Tax Ordinance. the Officer Inland Revenue disallowed certain expenses on pro-rata basis and disagreed on certain additions. 2001 pertaining to tax years 2007. under section 161 and 205 of the Income Tax Ordinance. in the Honourable Lahore High Court. Excise and Taxation. 2001-02 and 2002-03. ADRC vide its order dated 16 April 2008 has recommended the case in favour of the Holding Company and forwarded the case to FBR. however.5 Order was issued by the Assistant Commissioner Inland Revenue (ACIR) under section 122(1) of the Income Tax Ordinance. The Department has been restrained from passing any adverse order till the date of next hearing.1 Guarantees of Rupees 200. 2000-01.000 million (2010: Rupees 32. Further. ATIR decided the case in favour of the Holding Company. The management of the Holding Company believes that the expected favourable JUNE 2011 81 Nishat (Chunian) Limited and its subsidiary . CONTINGENCIES AND COMMITMENTS Contingencies 10. The Holding Company being aggrieved filed appeals with the Commissioner Inland Revenue (Appeals) which was decided in Holding Company's favour against which the department preferred an appeal to ATIR. The Holding Company's appeal against the order of ACIR was disposed off by the Commissioner Inland Revenue (Appeals) [CIR(A)] through order dated 23 April 2011.639 million (2010: Rupees 200. Lahore through a writ petition.4 The Collectorate of Customs (Export) has issued show cause notices with the intention to reject the duty draw back claims aggregating to Rupees 9. no provision has been recognized in these financial statements based on advice of the tax counsel. Karachi against disputed amount of infrastructure cess. No provision against these disallowances and addition has been made in the financial statements as the management is confident that the matter would be settled in the Holding Company's favour.000 million) are given by banks of the Holding Company to Director. Lahore through writ petition. the Holding Company has also impugned selection of its tax affairs for audit in terms of section 177 of the Income Tax Ordinance. the Company has further assailed the matter before ATIR so as the issues decided by CIR(A) against the Company are further contested. it is entitled to full duty draw back and has filed appeal before Appellate Tribunal Inland Revenue (ATIR) Karachi Bench which is still pending. The Holding Company expects a favourable outcome of the appeal based on advice of the tax counsel.482 million) on blended grey fabrics exported under Duty and Tax Remission Rules for Export (DTRE) scheme.10.120 million is payable on this account but the management of the Holding Company is confident that payment of electricity duty will not be required. 2001 for tax year 2008 as a result of audit of the Holding Company under section 177 of the Income Tax Ordinance.678 million) have been issued by the banks of the Holding Company to Sui Northern Gas Pipelines Limited against gas connections and Shell Pakistan Limited against purchase of furnace oil. Through such order. The department has filed an appeal before Honourable Lahore High Court. the provision for taxation amounting to Rupees 17. 10.157 million) would be required. As at the reporting date. 10. the Deputy Commissioner Inland Revenue (DCIR) has raised a demand of Rupees 32. The Holding Company is in appeal before ATIR as its appeal before CIR(A) was unsuccessful. 10. 2001 for tax year 2009 in Honourable Lahore High Court. The Holding Company also applied to Federal Board of Revenue (FBR) to constitute Alternate Dispute Resolution Committee (ADRC) in terms of section 195C of the Custom Act. The Holding Company has fully provided its liability in respect of electricity duty on internal generation. 10. Lahore. The Holding Company has also challenged the initiation of proceedings. 10. The Holding Company considers that its stance is based on reasonable grounds and appeal is likely to succeed. 2001 whereby a demand of Rupees 42. The matter is still pending at FBR end. However. Lahore.3 The Holding Company preferred appeal against the Government of Punjab in the Honourable Lahore High Court.7 As a result of withholding tax audit for the tax year 2006.157 million (2010: Rupees 17. 10. The department is of the view that the Holding Company has not submitted Appendix-1 as per Rule 297-A of the above referred scheme. Government of Punjab has moved to the Honourable Supreme Court of Pakistan against the order of Honourable Lahore High Court.482 million (2010: Rupees 9. 1969 to settle the dispute. Hence. 2001. an amount of Rupees 9. Lahore against imposition of electricity duty on internal generation and the writ petition has been accepted.2 Guarantees of Rupees 48. If the decision of ATIR is not upheld.

309 million (2010: Rupees 68. 10. the Subsidiary Company is required to pay a monthly fixed O&M fee and a variable O&M fee depending on the net electrical output.e. The Subsidiary Company has entered into a contract for purchase of fuel oil from Shell Pakistan Limited ('SPL') for a period of ten years starting from the Commercial Operations Date of the power station i.132 million (2010: Rupees Nil) in favour of Director. Commitments i) Contracts for capital expenditure amounting to Rupees 40. Letter of guarantee of Rupees 1. if not used for the purpose of exports made up to the 31 December 2005. in respect of tax year 2006 on same issues. cheque issued as security shall be encashable. 10.700 million). The Subsidiary Company has also entered into an agreement with Wartsila Pakistan (Private) Limited for the operations and maintenance ('O&M') of the power station for a five years period starting from the Commercial Operations Date of the power station i.410 million (2010: Rupees 3. 21 July 2010. the Subsidiary Company is not required to buy any minimum quantity of oil from SPL. Under the terms of the O&M agreement. Excise and Taxation. either through zero-rating or otherwise.8 The Deputy Collector (Refund – Gold) by order dated 16 May 2007 rejected the input tax claim of the Holding Company.402 million (2010: Rupees 36. Under the terms of the Fuel Supply Agreement.933 million) on imported material availed on the basis of consumption and export plans. 10.954 million).e. 82 Nishat (Chunian) Limited and its subsidiary JUNE 2011 v) . Karachi under direction of Sindh High Court in respect of suit filed for levy of infrastructure cess.461. both of which are adjustable according to the Wholesale Price Index. ii) iii) iv) Letters of credit other than for capital expenditure of the Group amounting to Rupees 462.10 The following have been issued by the bank on behalf of the Subsidiary Company: i) ii) Irrevocable standby letter of credit of Rupees 45. In the event the documents of exports are not provided on due dates. for the month of June 2005.031. Outstanding foreign currency forward contracts of Holding Company amounting to Rupees 1. Pending the outcome of verification no provision for inadmissible input tax has been recognized in these financial statements. amounting to Rupees 1.604 million incurred in zero rated local supplies of textile and articles thereof on the grounds that the input tax claim is in contravention of SRO 992(I)/2005 which states that no registered person engaged in the export of specified goods (including textile and articles thereof) shall.9 Post dated cheques have been issued by the Holding Company to custom authorities in respect of duties amounting to Rupees 927. 21 July 2010.159 million).000 million (2010: Rupees Nil) in favour of Wartsila Pakistan (Private) Limited as required under the terms of the Operations and Maintenance Agreement. will dispose of the initiation of these proceedings.329 million (2010: Rupees 389.outcome of its appeal before ATIR. be entitled to deduct or reclaim input tax paid in respect of stocks of such goods acquired up to 05 June 2005. The appeal of the Holding Company before ATIR was successful and input tax claim of the Holding Company is expected to be processed after necessary verification in this regard.

178.895) 5.767.835.806.725 10.736 9.036.400 (2.873.957) 72.809.642.574.589.391 5.047 1.862 (51.627.001.047 931.619) 927.092.122.307 80.019.057.390) 40.577.818 84.093 184.793.274 (7.712.000 (395.963 (54.851 (2.873.340.751.573 410.000) 27.898.118) (3.024 (26.429 63.947.222.799) 84.122.983 5.493) 259.370.705 (18.923.047.090.936.265) 4.568.643 .077.182.249.305 58.447.074 931.845.727 185.936.517.487.600 527.987.101 7.839.356.611.203 60.022 9.154.669.340.762) 72.901 (95.114.211.265) (16.466 4.514 (2.290) (108.035) 29.791.961 4.793.542) (104.593.600 7.370.466 4.386.586) 5.729 10 112.087 138.374.474 (72.368.322.991.692 (9.342 38 2.047 1.047 1.551 259.001 (87.159.307.063) 43.659 83 JUNE 2011 .936.1) Capital work-in-progress (Note 11.617.427) (93.793.300 (395.865.352.713) (1.050 (35.445. Nishat (Chunian) Limited and its subsidiary .668 (24.551 4-5 4 .883.096.442.464) 61.070.929 56.011.034.567 527.323 .2011 Rupees 11.002 7.651.785.326.900 (8.287 21.(643.627.249) 259.947.524.916.220.028.572.276.305 122.857) (13.150 10 As part of the implementation of new Enterprise Resource Planning (ERP) system.438.898.252.251.514.793.961 4.669.791.185 61.056) 21.868.786 72.929 10 130.600 8.793.287 21.936.047 1.307 198.000 (791.223.429 21.349.295) 5.017) 259.656.545.187.222.009.291.839.163.358.793.178.466 4.316 (3.947.924) 21.114.432.368 (18.856.105 (20.269.computer software at the beginning and at the end of the year are as follows: Operating Fixed assets Description Freehold land Buildings on freehold land Plant and machinery Electric installations Factory equipment Furniture.103.185 39.400.699.815.532.027.957.497.110 Intangible assets: Computer software (Note 11.873.300 923.633.721.703.901 145.229.898.386.943 24.757) 79.722) 1.021 9.649 (58.453) 24.598) (5.603.987.615 (95.087 84.319.722.359) (1.925.143 (54.765 (5.233.768.790.127.473) (5.305 (6.770.185 18.475 (45.907) .786 7.536) (3.314 211.514.185 119.793.606.565. FIXED ASSETS Property.963 5.897 (3.658 29.777.385.000) 400 (23.494.001.354.004 11.017) (293.631 20.406.049.311 (2.697.087 9.334) (4.755.570) 61.696.532.777.485 (38.493. the management of the Holding Company carried out a comprehensive exercise during the year which is included of physical verification of all operating fixed assets and checking of classification of all operating fixed assets.793. fixture and equipment Office Motor vehicles equipment Total Intangible assets Computer software -RupeesAt 30 June 2009 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2010 Opening net book value Additions Disposals: Cost Accumulated depreciation 259.030.823.573 22.316 (2.643) - (94.047 Depreciation / amortization charge Closing net book value At 30 June 2010 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2011 Opening net book value Additions Reclassification adjustments:* Cost Accumulated depreciation Disposals: Cost Accumulated depreciation 259.556.428) 34.818.783.001.776 248.371) 168.521 - 259.495.203 14. plant and equipment Operating fixed assets (Note 11.776 927.154.305 20 Depreciation / amortization charge Closing net book value At 30 June 2011 Cost Accumulated depreciation / amortization Net book value Annual rate of depreciation / amortization (%) - (53.667 10 40.594.computer software 5.573.688) 65.021 22.307.095) 29.32 79.925.1 Reconciliations of carrying amounts of operating fixed assets and intangible assets .713) (6.391 5.669.818 8.631 41.659) 60.222) 7.342) 20.460.150 63.032 24.945 22.981.979.2) 2010 Rupees 22.368 (25.621 68.396) (438.647.800.210) (4.055.343.600 1.950.024.639) 34.713 212.047 927.(258.553.105.382 24.657) 84.400.936.823.839.056) 84.(690.233.269.101.793 .370.255.464 19.751) (17.679.678 22.390) (518.669.732.748.606.421) 72.223.30 (46.941.925.196.021 20 .376.252 153.197 (8.047 259.694) 80.319.064.047 259.232.175.818 (94.642.700) 527.786 168. The reclassification adjustments represents the adjustments emanating from this exercise.070.047 1.798.143.074 43.963 5.756.621) 7.631 6.422 364.038.376.945 22.277.173 10.532.307.981.936.483 2.760 26.445.067.224.067 (49.882 (65.070.700) 923.857.162.(743.807) 65.963 5.924 7.950.577.132.220.474) 20.955 (14.444 18.129.485 (41.600) (8.400) 527.097.1) Intangible asset under development .667 138.277.220.222.977) 259.487) 11.963.776 (11.429 6.729 52.605.354.606.517.140) (3.398.132) 22.902.115) 72.793.032 (2.603) 21.793.

928.883 7..456 (17.694.000 2 93.000 (280.382 18.000 (352.714 17.656 172..659) 108. Kasur 915.079 2.864.772. Lahore Mr.000 450.922 (343.528) (821.251.3) Transferred to operating fixed assets 15.822) 20.2 Captial Work-In-Progress Plant and machinery Electric installations Buildings Mobilization advance Letters of credit Advance for purchase of assets Unallocated expenses (Note 11.357 13.746. Peshawar Mr.164 (7. Lahore Mr.292 840.605.396 million) has been allocated to administrative expenses.000 (4. Karachi Shan Associates..815) 6.608 6. Lahore Mr.192 40.. Lahore Tricon Genera Trading.169 250.962 100.837.245 189.565.855 296.950 1.118 51.924 643.569) (28.510 615.243 478.027.056 555.957 507...012.238. Faisalabad Mr.251. exceeding the book value Rupees 50..094.621.349.536) (476..000 555.888 351. Rupees .038) 480.1. Muhammad Tayyab.839) (372.763 5.000.730 406..165 318.759 (102..364 2. Karachi Mr.444 68.757) 1.129.745 1.831) (199.1 Detail of operating fixed assets.437 173..317.120 2.471.000 (337.349.422 496.125 849.495. Muhammad Safdar.535.226. Lahore Mr.750LI LW-467 Hyundai Shehzore LZJ-6910 Toyota Hiace LZJ-5975 Hyundai Shehzore LZP-1429 Toyota 2.606 4.130.615.509..620.900 3.290 1.. Muhammad Ali.924 (185.706 1.200 603. Lahore Mr.721.265 2011 Rupees 11.186.000.385 7.535.876) 14. 2011 Rupees 2010 Rupees 84 Nishat (Chunian) Limited and its subsidiary 11.344) 525.213) (352.948 60.992) (55.574...3 JUNE 2011 Amortization on intangible asset amounting to Rupees 2. Lahore Mr.697 859.000 755.316.791) 18.404 Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation As per holding Company policy Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation As per holding Company policy Shan Associates.013. Sakhi.539 191.000 (27.364. Naeem Iqbal.539 166.238) (502.000 1.240) 1.339.11..200 60. Muhammad Asif.332.066) 14.623 1..632) 18.945..291 2. (Gain)/ Loss Mode of Disposal Particulars of Purchaser Description Plant and machinery Picanol Air Jet 280 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni plus Vehicles Toyota Corolla 2. Lahore Mr. Abdul Qadir..985) 22. Karachi Tricon Genera Trading.000 366.115 17. Muhammad Akram. Jantaz Khan.. Lahore Mr. Lahore Mr.902) (457.535. Ilyas Ahmad (Employee of the holding company).746 (14.991) (46.488) Aggregate of other items of equipment with individual book values not exceeding Rupees 50.739) (8.161 382.200 (4.293.657.835) (236.955) (323..344.434 9.882) 65.044 18.170 9. Rehana Hafeez.487. Bannu Mr. Asghar Rahim (Employee)..0D LEB-07-3572 Suzuki Cultus LZQ-8338 Suzuki Cultus LW-8555 Hyundai Shehzore LZJ-9082 Honda CD-70 LRE-9358 Honda CD-70 LRS-4673 Honda CD-70 LZD-4408 BMW . Faisalabad Mrs.112) (15.678 15.098) 675.535.778) 58..027. Lahore Mr.OD LZO-6839 Suzuki Mehran LWG-3284 Toyota Corolla LWB-4152 Honda City LEB-06-6823 Honda LZL-4035 Suzuki Cultus LEC-07-5322 Suzuki Cultus LEC-07-4092 Mercedes Benz C240 LXX-467 Suzuki Mehran LEB-09-6864 18 6 49 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 53.000 602.130 12.670.1.366.948. Muhammad Afzal Javed.000 56.285 12.820.388) (901.2 The depreciation charge for the year has been allocated as follows: Cost of sales (Note 22) Administrative expenses (Note 24) Unallocated expenses 2010 Rupees 1.766 120.416 35.300 24. Tajammal Javed.938 10.815.005) 585.846 2.995 261.188. disposed of during the year is as follows: Cost Accumulated Net Book Sale depreciation Value Proceeds .208 614.431 1.383 495. Lahore Mr.209 13.777.755) 470.324.159.073 293.000 (323.704 million (2010: Rupees 0. Lahore Mr.341) (364.746. Irfan Khan.. Sialkot Mr.520 4.321 947.170 69.118 25.201.563) 161.477.910 265. Asif Zaman Khan. Asif Shoukat.751.694.358.570 11.900) (5.000 765.240. Peshawar Mr. Muhammad Shehryar Khan.500.916.016.215) (584.950 626.090) (499.777.734.790.383 154. Lahore Mr.132 5.144 43. Rana Khurram Sajjad.178 14.902 337.120 642.143.302) 171..434.977.000 (1.000 (340.833) (42..500 2.678.000 (271. Mirza Abdul Ghafoor on behalf of Mr.918.238 (39.285 611.000 (379.1.100 (5.705) (436.380) (1.711.293) (233.000 1.344) (429.168) (204.500 (673.382 .311 518. Hamid Ullah Malik.403.336.

103) (617.991.040.759.951 1.618.349.337.3 Unallocated expenses Unallocated expenditure incurred upto commercial operations date: Raw material consumed Stores and spares consumed Salaries.793.586.670.70%) per annum.499 159.692 (1.494.034.567 50.945.103) (782. wages and other benefits Electricity consumed in house Insurance Travelling and conveyance Entertainment Vehicle running and maintenance Printing and stationery Postage and telephone Fuel and power Advertisement Legal and professional charges Consultancy charges Fee and subscription Mark up on: .009 26.744 26.Long term financing .622 7.947.922 172.858 9.000 1.757.626.674.793.608 16.274) 2.998 16.362 1.561.968) 2.128 4.661 571.secured Bank charges and financing fee Bank guarantee commission Payment under O&M Agreement Depreciation Miscellaneous Sale of trial production Scrap sales Delay liquidated damages recovered 2010 Rupees 1.448 1.713 1.848 2.940 29.193 9.545 421.086 7.739 9.712.070.673 1.246 2.226 8.747.044.712 44.2011 Rupees 11.570.500.330 218.545.453.972.830 156.4 The Holding Company has capitalized borrowing cost amounting to Rupees 35.577) (3.804 33.686 734.Short term borrowings .700.077 211.500.773.608 14.253.70% to 15.712.867.408.000 1.053.441 9.secured . 85 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .153.411 2.343 million (2010: Rupees 7.409.658.520.146.480 589.530.958.618) (3.618 364.941.492.178.044 11.391 16.403.611 2.254.802.853.878.047 771.629.480.022 153.709 (2.048 47.235 5.332.714 1.189.610.82% (2010: 9.705 million) using the capitalization rate ranging from 9.263.464 33.

879 203.579.399.1.929 917.551. LONG TERM LOANS Considered good: Executives (Notes 12. Motor vehicle loans are secured against registration of cars in the name of respective Company.910 2.783.276 713.214.633.943.662 694.365 2.50% per annum) while some loans are interest free.750 5.382.017 8. payable in 48-60 and 15-30 monthly instalments respectively.232.599 3.2) 4.232.2 These represent motor vehicle loans and personal loans to executives and employees.505 million (2010: Rupees 3.012 7.00% to 13. Interest on long term loans ranged from 13.750 12.360 222.750 2.754. SPARE PARTS AND LOOSE TOOLS Stores Spare parts Loose tools 296.439 4.1 Stores and spare parts includes items which may result in fixed capital expenditure but are not distinguishable.009.922 2.573 1.777 393.50% per annum (2010: 9.101.388.526 4.468 Less: Current portion shown under current assets (Note 16) Executives Other employees 1.808 3.469.191 2011 Rupees 12.058 million).557.344 13.2) Other employees (Note 12. 2011 Rupees 2010 Rupees JUNE 2011 12.731 5. The fair value adjustment in accordance with the requirements of IAS 39 'Financial Instruments: Recognition and Measurement' arising in respect of staff loans is not considered material and hence not recognized. STORES.232.269 368.595 285.058 599.994.542 2.318.910 976.50 % to 14.136.579.132.3 86 Nishat (Chunian) Limited and its subsidiary 13.831.921 5. .136 1.1 and 12.1 Maximum aggregate balance due from executives at the end of any month during the year was Rupees 7.2011 Rupees 2010 Rupees 12.1 Reconciliation of carrying amount of loans to executives: Opening balance as at 01 July Disbursements Less: Repayments Closing balance as at 30 June 2010 Rupees 2.647. 12. whereas personal loan is secured against balance standing to the credit of employee in the provident fund trust account.402.

STOCK-IN-TRADE Raw materials (Note 14.305.086 million) were past due but not impaired.32%) per annum.302 770.4) Unsecured (Note 15.668.251.561.404 7.22% (2010: 16.1 Stock-in-trade of Rupees 1.own produced (Notes 14.173.371.027.223.172 million (2010: Rupees Nil) were impaired and written off.151.785.718. The ageing of these trade debts was more than three years.415 3. 15.737.945 629.3 Trade debts include Rupees 0.998 1. These relate to a number of independent customers from whom there is no recent history of default. a delayed payment mark-up at the rate of three month KIBOR plus 4.424. .086. 2011 Rupees 15.424. TRADE DEBTS Considered good: Secured (Note 15.600 million).3) 8.903 466.725 million (2010: Rupees Nil) due from Nishat Mills Limited . 14.612 36.200 5. The effective rate of delayed payment mark-up charged during the year on outstanding amounts ranges from 16.3 The aggregate amount of write-down of inventories to net realizable value recognized during the year was Rupees 369.101.203 2.2) Finished goods .885 2.046 JUNE 2011 87 Nishat (Chunian) Limited and its subsidiary 15.816.119 3.668 million (2010: Rupees 37.2011 Rupees 14.053. trade debts of Rupees 2.related party.818.076 40. however.579 million (2010: Rupees Nil).5% is charged in case the amounts are not paid within due dates.417.523 14.009 879.989.1) Work-in-process Finished goods . These are secured by a guarantee from the Government of Pakistan under the Implementation Agreement and are in the normal course of business of the Subsidiary Company and interest free.230. 14.356. The ageing analysis of these trade debts is as follows: 2011 Rupees Upto 1 month 1 to 6 months More than 6 months 2.trading stock Waste Restated 2010 Rupees 2.149 1.753.133.916 23.567.4 These include trade receivables from NTDCL and are considered good.893 million (2010: Rupees 55.991.130 2010 Rupees 15. 15.75% to 18.178.741 75.1 As at 30 June 2011.175.296.802. trade debts of Rupees 2.227 million) is being carried at net realizable value.2 Finished goods include stock-in-transit of Rupees Nil (2010: Rupees 8.132 3.981 37.375.560.297.194 9.983.2 As at 30 June 2011.68% to 17.289 2010 Rupees 12.429.040 681.

754.127 52.657 19.784.005 Current portion of long term loans (Note 12) Advances to suppliers Advances to contractors Letters of credit Advance against expenses 1.954 2. and receives KIBOR from the arranging bank.828 6. The derivative cross currency swap outstanding as at 30 June 2011 has been marked to market and the resulting gain of Rupees 3. only the nature of the interest payment has changed.610.1 Under section 9. There has been no transfer of liability under the arrangement.058.828 4.808 633.857 118.338 2011 Rupees 17.397. Under the terms of the cross currency swap arrangement.327 1.678.297 81.217.927.300.327 13.604.375 6.3(a) of the Power Purchase Agreement (PPA) with NTDCL.509 284.260 488. the Subsidiary Company pays London InterBank Offered Rate (LIBOR) plus bank spread to the arranging bank on the notional USD amount for the purposes of the cross currency swap.106 694. OTHER RECEIVABLES Considered good: Sales tax recoverable Advance income tax .839 1.061 4.2011 Rupees 16.418.500 9.772.731 253. . 18. LOANS AND ADVANCES Considered good: Employees .018.Executives .630 6.288.010.737 39. the Subsidiary Company has entered into derivative cross currency swap with a commercial bank.153 12.433 106.646 13.362.1) Others 2010 Rupees 307. DERIVATIVE FINANCIAL INSTRUMENT During the year.049 143.410 76.177 849 770.235.949 239.632.765.750. payments to Workers' Profit Participation Fund by the Subsidiary Company are recoverable from NTDCL.Other employees 566.263 2010 Rupees 1.340.807.029 36.799 917.net Export rebate and claims Fair value of forward exchange contracts Mark-up rate support receivable against long term loans and export finance Receivable from employees' provident fund trust Delay liquidated damages Insurance claim receivable Claim recoverable from NTDCL for pass through item Workers' Profit Participation Fund (Note 17.940 JUNE 2011 88 Nishat (Chunian) Limited and its subsidiary 17.188.interest free: .626.378 120.782.625.608 23.754.091.946.061 million has been recognised in the consolidated profit and loss account.945.150.

SALES Export Local (Notes 21.941 9. local sales includes waste sales of Rupees 614. .077 147.659.878.996.539. 20.associated company.1 and 21.1 Rate of profit on saving accounts ranged from 5% to 5.677 3.3) Including US$ 25.563 2011 Rupees 21.324. 20.148.042. Excise and Taxation against disputed amount of infrastructure cess.659.000 139.5% (2010: 5% to 5.172 (2010: US$ 12.812 29.828. 2011 Rupees 21.108.2 This includes sale of Rupees 2.302 million (2010: Rupees 298.339 36.250.300.540.729 1.3 Included in cash with banks on current accounts are Rupees 48. 2011 Rupees 2010 Rupees 20.714.181 1.650. Further.364 175.812 21.157 (2010: US$ 89.746.674 167.562.403.040.383 20.774.5%) per annum.737.212 1.109.444 million (2010: Rupees 674.075 26.148.19.000 68. CASH AND BANK BALANCES Cash with banks: On saving accounts (Note 20.056.599 174.1 Local sales Sales (Note 21.1) Including US$ 55.922.675.561.446.2) Export rebate Duty draw back 2010 Rupees 13.782) 6. SHORT TERM INVESTMENT Investment in the units of UBL Liquidity Plus Fund has been redeemed during the year and the resulting gain has been recognised as part of other operating income.104 JUNE 2011 89 Nishat (Chunian) Limited and its subsidiary 13.798 40.000.448 3.477 million) made to direct exporters by the Holding Company against special purchase orders (SPOs).2 These represents deposits under lien with a bank against bank guarantees of the same amount issued by the bank to the Director.710.944.343.000.910 Cash in hand 6.811 20.3) Processing income 2010 Rupees 26.538 22.124.941.262 26.107) Term deposit receipts (Note 20.346 1.571.532 million).970 68.466 million (2010: Rupees 46.081 million) with MCB Bank Limited . The effective interest rate on term deposit receipts ranged from 6 % to 11% (2010: 11%) per annum.339 3.729 98.2) On current accounts (Note 20.714.300.825.567.651.

012.460 2.045 8.474. wages and other benefits (Note 22.442.779 681.949. 2011 Rupees 22.818.647.662.899.826.661. COST OF SALES Raw materials consumed (Note 22.394 304.764.365.749.031 2.875 10.1) Packing materials consumed Operations and maintenance Stores.333 14.961 (681.612) 13.974.859 361.561.860) 10.585.101 13.872 13.628.297.363 75.039.860 33.opening stocks Finished goods Waste 32.825 65.702 11.749.481.505 (466.119 717.262) Cost of goods manufactured Finished goods and waste .816.21.050 32.362 633.200) (811.335.140.089.436.630.974 383.816.040 (629.119) (717.076) (40.754.276) 90 Nishat (Chunian) Limited and its subsidiary Cost of sales .013 758.577.627.139.2) Repair and maintenance Other factory overheads Restated 2010 Rupees 26.462 507.143.750.593.083.848.102 11.633.615.736. spare parts and loose tools consumed Salaries.133.128.976 Work-in-process Opening stock Closing stock 466.639 JUNE 2011 Finished goods and waste .133.1.2) Fuel and power Fee and subscription Insurance Postage and telephone Traveling and conveyance Vehicles' running and maintenance Entertainment Depreciation on operating fixed assets (Note 11.3 Local sales is exclusive of sales tax amounting to Rupees 2.929.168 23.403.741 36.020.662.781 million).918.777.009 474.520.633.938 15.535) 10.469 3.487 (75.764.302) (162.194.129.811.651 262.989.660.466 852.621.151.632 368.128 22.981.975 .closing stocks Finished goods Waste (770.382.219 12.672.520.378.612 75.773.356 2.302 56.203 1.294 million (2010: Rupees 9.own manufactured goods Opening stock of purchased finished goods Finished goods purchased Closing stock of purchased finished goods Cost of sales .535 158.332.612 32.041 7.561.949.040) (161.324.741) (36.224 928.756.046.736.113 1.168.365 348.273 1.purchased finished goods 32.357 29.

803 3.972 3.950 10.724.222 1.013 2.532.2) Amortization on intangible asset (Note 11.648 7.680 117.698.321 395.049.2 Salaries.601 59.638 16.628.313.169 599.662 134.1 Raw material consumed Opening stock Add: Purchased during the year Less: Closing stock Restated 2010 Rupees 1.1.1) Printing and stationery Vehicles' running and maintenance Traveling and conveyance Postage and telephone Fee and subscription Legal and professional Electricity and sui gas Insurance Repair and maintenance Entertainment Auditors' remuneration (Note 24.485.283 26.451 3.009 22.860 17.360.586.421 million) and Rupees 21.421 million) in respect of accumulating compensated absences and provident fund contribution by the Group respectively.942 1.602.037.393 110.1.011.130. 2011 Rupees 24.976 90.800 4.310.517 5.301.491 2.070.2011 Rupees 22.509.176.713 23.3) Miscellaneous 2010 Rupees 171.217 5.630 million (2010: Rupees 5.554.331.700 7.051 30.103.315.903 27.703.496 28.432.131 million (2010: Rupees 17.128 million (2010: Rupees 0.728 million (2010: Rupees 0.991.394.244 7.1 Salaries and other benefits include Rupees 0. 2011 Rupees 23.1 Salaries and other benefits include Rupees 2.111 8.433.258 million) in respect of accumulating compensated absences and provident fund contribution by the Group respectively.945 26.801 1.862.375.078.821 2.249.327 91 JUNE 2011 .376 172. DISTRIBUTION COST Salaries and other benefits (Note 23.672 2.718.744 6.623.480 107.049 438.895 5.705 4.551.471.765.275.943 49.846 201.852.235.422 million (2010: Rupees 1.494.790 2.429. wages and other benefits include Rupees 14.228.365 2.717.834.185.299 4.737.705.510.379 4.955. Nishat (Chunian) Limited and its subsidiary 75.313.247.882 million) and Rupees 1.307.1) Ocean freight Freight and octroi Forwarding and other expenses Export marketing expenses Commission to selling agents 2010 Rupees 28.639 69.337.168.593.078 13.410.2) Depreciation on operating fixed assets (Note 11.894 5.336 million) in respect of accumulating compensated absences and provident fund contribution by the Group respectively.855 2.902 9.063.495.945 20.605.403.747.281 6.954 3.676. ADMINISTRATIVE EXPENSES Salaries and other benefits (Note 24.568 24.253.183.093 million) and Rupees 2.147.38 million (2010: Rupees 1.

2011 Rupees 25.1.510.509. Chairman and Mr.000 1.000 81.668 .000 550.2 This includes following donation in which directors of the Holding Company have interest: Mian Muhammad Yahya Trust.650 1.000 178. Lahore Mr.808 Income from non-financial assets Gain on sale of property.554 913.936 622.364. Chief Executive are trustees. Gulberg II.725.2 Auditors' remuneration Riaz Ahmad & Company Audit fee Half yearly review Certification fee and other services Reimbursable expenses 2010 Rupees 1.256 250.2011 Rupees 24.000 2011 Rupees 4.696 18.717. plant and equipment Others Sale of scrap Miscellaneous 54.300 115.042.965 6.200.656 141.950 1. Statutory audit Half yearly review Tax services Other assurance services Re-imbursement of expenses 1.076 167.810 57. OTHER OPERATING INCOME Income from financial assets Return on bank deposits Net exchange gain Unrealized fair value gain on revaluation of financial asset at fair value through profit or loss Gain on redemption of financial asset at fair value through profit or loss Mark up on loan to executives Gain on derivative financial instrument: Realized Un-realized 16.000 120.000 40.333.737 6.171.000 232.717.171. plant and equipment (Note 11.578 3.527.500 50.390.000 500.551 178.000 2.011.112.365 4.598 62. JUNE 2011 2010 Rupees 4.578 2.061.1) Bad debts written off Donations (Note 25.249 57.2) Workers' welfare fund (Note 25.950 2010 Rupees A.684.988 2.787.638 3. F.500 1.1 Workers' welfare fund has not been provided for in these financial statements based on the advice of the Company's legal consultant.396 3.2) Interest on delayed payment Expenses on sale of shares of subsidiary company 82.632. Muhammad Saleem.000.073 2.000 110.387.803 1.751.1) Loss on sale of property.250.440 2010 Rupees 92 Nishat (Chunian) Limited and its subsidiary 26. Shahzad Saleem.372 30.791 664.387.861.043.066.547 51.000. OTHER OPERATING EXPENSES Workers' profit participation fund (Note 7.572.338. 31-Q.440 80.833.331.625 1.078 2011 Rupees 25.918.200. Ferguson & Co.931.086 1.267 145.501 25.034 1.

093. However. Provision for deferred tax is not required as the Holding Company is chargeable to tax under section 169 of the Income Tax Ordinance.378.991 10.407 31.863.long term musharaka .509.short term finances Interest on workers' profit participation fund (Note 7.027.053.1 and 28.short term running finances .export finances . 2011 Rupees 28.441.243 2. EARNINGS PER SHARE .788.333.net (Note 27.101.758.049.225 116. Restated 2011 2010 29.457.051.053.991 116.758.284.061 1. provision is made in consolidated profit and loss account on income from sources not covered under the aforesaid clause.070 5.568 8.1 These are net of mark-up rate support against long term loans and export finance amounting to Rupees 26.438) 217.643. Reconciliation of tax expense and product of accounting profit multiplied by the applicable tax rate is not required in view of presumptive taxation.948 4.304.296 181.BASIC AND DILUTED Basic Profit after taxation (Rupees) Less: Preference dividend (Rupees) Profit after taxation attributable to ordinary shareholders (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Basic earnings per share (Rupees) Diluted Profit after taxation (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Impact of dilutive potential preference shares (Number) 2.058.070 12.192.720.41 992.890 477.249.308 160.536 million).680 522.844 992. Part I of the Second Schedule to the Income Tax Ordinance. TAXATION Current (Note 28.940.357. Provision for income tax is made accordingly.617 1.710) 135.551.472 82.privately placed term finance certificates .300.556.706.010 2.080 (4.214 million (2010: Rupees 14.2) Prior year adjustment 2010 Rupees 222.741.1 The Nishat (Chunian) Limited .52 93 Nishat (Chunian) Limited and its subsidiary Diluted earnings per share (Rupees) 12.845 277.1) .568 35. 2001.42 JUNE 2011 .1) .751 301.299.986 76.551 5.192.656 6.2011 Rupees 27.Holding Company falls under the ambit of presumptive tax regime under section 169 of the Income Tax Ordinance.2 The income of Nishat Chunian Power Limited .774 165.long term loans . FINANCE COST Mark-up on: .086.054.397 581.275 28.075 62. 2001.642 138.088 152.766 981.900.497.097 27.484.894.248.592 376.430 58.484.054.457. 2001 and no temporary differences are expected to arise in the foreseeable future. 28.551 160.2) Bank charges and commission 2010 Rupees 2.79 2.Preshipment / SBP refinances (Note 27.054.465.Subsidiary Company is exempt from tax subject to conditions and limitations provided in clause (132).985 (3.

491 32 Executives 2010 Rupees 25.396) 2.904 15.020.009) 2. CASH GENERATED FROM / (USED IN) OPERATIONS Profit before taxation Adjustment for non cash charges and other items: Depreciation on operating fixed assets Amortization on intangible asset Loss / (gain) on sale of property.254 2.355 2.171.093.061.879.587 60.320.845.205.097 (1.1) Restated 2010 Rupees 1.378.790.087) (7.751.004) 1.054.570 395.073 4.222.166. JUNE 2011 REMUNERATION OF CHIEF EXECUTIVE. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Increase in current liabilities: Trade and other payables 2010 Rupees (95.812.189.618.957 2.987.998 (7.707.232.579.656) (664.440 Number of persons 1 2010 Rupees 1.316) (1.603 2011 Rupees 30.080 639.137 24 94 Nishat (Chunian) Limited and its subsidiary .127) 2.989.372) 1.446.440 2.600.734.896) 31.781.112. DIRECTOR AND EXECUTIVES The aggregate amount charged in the financial statements for the year for remuneration including certain benefits to the chief executive.810) 486.101.503.951.008 445.051) (7.455 2.108) (5.016) (1.931.680 (16.066.840 160.440 3.739.838) 293.644.987.700 (2.124.813.509.002.2011 Rupees 30.703.248.030) (4.867.076) (3.123.005.020 (270.357.935) (126.958) (5.112.704.090.895 51.108 (2.172.804.700.268 10.516 518.368 1 2011 Rupees 33.086) (2.426.009) (336.768.092 445.544.816 184.143) (396. plant and equipment Finance cost Interest on bank deposits Unrealized fair value gain on revaluation of financial asset at fair value through profit or loss Unrealized gain on derivative financial instrument Bad debts written off Working capital changes (Note 30.706.290 3.742 1.565.005.869 41.355 4.291 2.034.896) (247.840. director and executives of the Holding Company is as follows: Director 2011 Rupees Managerial remuneration Contribution to provident fund House rent Utilities Others 1.737 (7.510.092 735.697) (1.172.572.786.1 Working capital changes (Increase) / decrease in current assets: Stores.276.139.070.057.

651.225.094.383.169.703.051.283.457.Group ------------------------------------------Rupees-----------------------------------------6.333.836) (23.789.275) 2.660.281) (272.478) 40.888.853.781.Group 2011 2010 2011 2010 ------------------------------------------Rupees-----------------------------------------9.974.135.166.551.976) 7.318 209.587 (599.816.077.297 3.054.477.712) (10.100 988.583 5.110 (211.691 (12.875.975) (10.781 (3.279) Profit / (loss) before taxation and unallocated income and expenses 2010 2011 Weaving 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 'Elimination of inter-segment transactions Total .143.032) 2.144) 1.699.918.221 33.295.252.012.886.283) (171.097) (217.966 2.126.923.941 13.285.707.399) (193.604.301 38.380 1.145.682.685.926 101.668 178.979.063.061 (3.213.210) 8.586.744.053.237. Details of transactions with related parties.627.662.685.659 (295.037.476) (6.588.634.172.150 2.551.360.784.440.729 694.579 22.811 23.788.432 4.949 174.306 (145.331.264 (171.665.415.637.416) 333.996.961) (17.792) 403.698.277.623.983.855 19.580.901.777) (115.951.781 5.681.135.101.226.910 1.675.881.808 (4.076 4.729. other than those which have been specifically disclosed elsewhere in these financial statements are as follows: 2011 Rupees Other related parties Purchase of goods Sales of goods Preference dividend paid Ordinary dividend paid Contribution to employees' provident fund 99.412 367.1 No expenses were charged in the financial statements for the salary to chief executive of the Holding Company.455.954.665 6.197.123.433) (21.320 20.248.000 (2010: Rupees 40.012.807) (5.322.832) 4.642) (135.759.752) 4.288.081.039 19.570.645.742.1 Reconciliation of reportable segment assets and liabilities Spinning 2011 Total assets for reportable segments Unallocated assets: Other receivables Cash and bank balances Other corporate assets Total assets as per consolidated balance sheet Total liabilities for reportable segments Unallocated liabilities: Other corporate liabilities Total liabilities as per consolidated balance sheet Weaving 2010 2011 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 Total .423 488.086.233 9.317) (23.267 19.085.049.150. SEGMENT INFORMATION Spinning 2011 Sales Cost of sales Gross profit Distribution cost Administrative expenses 14.916.343.966) (4.067.020.376 27.304) (50.707.365 (50.715.383.903 1.262 28.800.743 5.098 173.142) (27.861.870.577.588) 2.478 (32.694.332.067.038.356.640.336.645.495 95 Nishat (Chunian) Limited and its subsidiary JUNE 2011 2011 2010 .572.876.794.587.882 41.003 2.994.241.539.370 (8.243.563 (1.189 (210.660.947.486.069 1.937.814) 483.750 101.31.560.225 21.665.035.357.661.069.2 Aggregate amount charged in the financial statements for meeting fee to one director of the Holding Company was Rupees 40.982 2010 Rupees 186.131.249) (80.680) (770.976 (7.552.458.675 25.960) 389.789.509.206.305 2.264.304) 1.680) (1.904.994.164 20. TRANSACTIONS WITH RELATED PARTIES The related parties comprise.366. 31.643) (79.778 21.370.886.172.997.764 30. other related companies.305) (69.265.931.332.701.212 30.777.501) 250.552. key management personnel and post employment benefit plan.962.000).974) (365.090 39.713) (117.244 254.568) (555.591.656 84.766 34.552) - - 7.351. associated companies.056.853.083.767.256.963) (61.693.199.850.181.712) 8.226.457.467.823.893.212.052 161.014 150.940 1.832 (92. The Group in the normal course of business carried out transactions with various related parties. 32.324.974 (55.221.771.479.988.163.160 (10.963) (438.241 Unallocated income and expenses Other operating expenses Other operating income Finance cost Provision for taxation Profit after taxation 33.070 23.552 10. The Holding Company provides to chief executive.223.731. directors and certain executives with free use of Company maintained cars and residential telephones.444.883.097.583) (5.665 33.256.650) (239.

926 141.907 7.339 40.458. Africa and Australia United States of America and Canada Pakistan 2010 Rupees 2. 34. However.Holding Company Spinning Number of spindles installed Number of spindles worked Number of shifts per day Capacity after conversion into 20/1 count (Kgs.due to normal maintenance . 2010 Weaving Number of looms installed Number of looms worked Number of shifts per day Capacity after conversion into 50 picks .932.714.948.343.988 96 Nishat (Chunian) Limited and its subsidiary Under utilization of available capacity was due to the following reasons: .572.539.536 50.324 3 51.588.941 1.812 13. PLANT CAPACITY AND ACTUAL PRODUCTION 2011 34.242.) Actual production of yarn after conversion into 20/1 count (Kgs.469.148.845 3.056.589 4.change of articles required .077 4.366.809.949 3 50.868 199. revenue from transactions with a single external customer of the Processing and Home Textile business segment of the Group amounted to Rupees 2.square yards Actual production after conversion into 50 picks .106 26.592 293 293 3 215.177 million).892 million (2010: Rupees 2.square yards 2009 JUNE 2011 293 293 3 215.675.744 142.969.595 49.512.) 2010 149.3 All non-current assets of the Group as at reporting dates are located and operating in Pakistan.855 Under utilization of available capacity was due to normal maintenance and time lost in shifting of coarser counts to finer counts and vice versa.417.766.1 Nishat (Chunian) Limited . 33.560.868 214.2 Geographical information The Group's revenue from external customers by geographical location is detailed below: Europe Asia.Subsidiary Company sells electricity only to NTDCL.300.454 147.512.182.829 3.563 33.2011 Rupees 33.916.4 Revenue from major customers Nishat Chunian Power Limited .481.higher count and cover factor .817.225.659.337.351.

interest rate risk. use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity.000 1 2 3 26. The Group uses derivative financial instruments to hedge certain risk exposures. 2011 Dyeing Number of thermosol dyeing machines Number of stenters machines Number of shifts per day Capacity in meters Actual processing of fabrics . other price risk and interest rate risk).meters 2010 1 2 6.823 10 10 3 317.1 Financial risk factors The Group's activities expose it to a variety of financial risks: market risk (including currency risk. (a) (i) Market risk Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.698.357.meters 2010 1 3 3 30. Stitching The plant capacity of this division is indeterminable due to multi product plant involving varying run length of order lots.578 1.000 25. other price risk. The Board of each Group Company provides principles for overall risk management.522.751 JUNE 2011 97 Nishat (Chunian) Limited and its subsidiary The under utilisation of available capacity is due to less demand by NTDCL. The finance departments evaluate and hedge financial risks.620. liquidity risk. Nishat Chunian Power Limited .200. 2011 Printing Number of stenter machine Number of shifts per day Capacity in meters Actual processing of fabrics .280 hours (2010: Nil)] Actual energy delivered 1.920 172.405.000 - Under utilization of available capacity was due to normal maintenance and low demand. FINANCIAL RISK MANAGEMENT 35. .000 1. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies.094 Under utilization of available capacity was due to normal maintenance. 35.000 20. credit risk and liquidity risk.000.400. Risk management is carried out by finance departments of the Group Companies under policies approved by their respective Board of Directors.831 Under utilization of available capacity was due to normal maintenance and power outages. credit risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. as well as policies covering specific areas such as currency risk.698.920 172.732.800.Subsidiary Company Installed capacity [based on 8.2011 Power Plant Number of engines installed Number of engines worked Number of shifts per day Generation capacity (KWh) Actual generation (KWh) 2010 10 10 3 317.900.

USD Net exposure . Currently. mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments. In management's opinion.377.190 6. The Group uses forward exchange contracts to hedge its foreign currency risk.535 73.970 (4. primarily with respect to the United States Dollar (USD) and Euro. The Group has no significant long-term interest-bearing assets.24 104.Euro Short term borrowings as FE 25 import / export loans-USD Accrued mark-up on FE 25 import / export loans .229 million and Rupees (25.844.128.USD Trade and other payable .908 11. (ii) Other price risk Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk).96 124.Euro The following significant exchange rates were applied during the year: Rupees per US Dollar Average rate Reporting date rate Rupees per Euro Average rate Reporting date rate 80.460 10. Borrowings obtained at fixed rate expose the Group to fair value interest rate risk. Borrowings obtained at variable rates expose the Group to cash flow interest rate risk. had weakened / strengthened by 5% against the USD and Euro with all other variables held constant.Euro Trade and other payable .296 2010 101. at reporting date.553.60 116. Interest rate risk This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was: (iii) JUNE 2011 98 Nishat (Chunian) Limited and its subsidiary .070 5. The Group's interest rate risk arises from long term financing and short term borrowings.USD Other receivable .801 993.618 7. The Group's exposure to currency risk was as follows: 2011 Cash at banks .USD Net exposure .889 13.95 117. when considered appropriate. or factors affecting all similar financial instrument traded in the market.935.330) 85.872. The Group is not exposed to equity and commodity price risks.879. whether those changes are caused by factors specific to the individual financial instrument or its issuer. the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year.639 million and Rupees Nil [2010: Rupees 39. the Group's foreign exchange risk exposure is restricted to bank balances and the amounts receivable / payable from / to the foreign entities. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis.27 85.329 18.63 85.The Group is exposed to currency risk arising from various currency exposures.900 1.570 2.476.001.USD Trade debts .028 344.58 Sensitivity analysis If the functional currency.514) million] respectively higher / lower. the impact on profit after taxation for the year would have been Rupees 45.89 84.

221.073.615.756.305.860.803.000 19. (b) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The maximum exposure to credit risk at the reporting date was as follows: 2011 Rupees Loans and advances Deposits Trade debts Other receivables Short term investment Derivative financial instrument Accrued interest Bank balances 13.165 The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss.362. This analysis is prepared assuming the amounts of liabilities outstanding at balance sheet dates were outstanding for the whole year.000.729 5.396 2.614 131.075 1.798 167.200.042.446.960 6.383 20. profit after taxation for the year would have been Rupees 241.442 9.890.742.254.497.561.207.442 3. mainly as a result of higher / lower interest expense on floating rate borrowings.710.397 2010 Rupees 18.382.250.044. The carrying amount of financial assets represents the maximum credit exposure.872 3.175.060 6.130 154.saving accounts Term deposit receipts Financial liabilities Long term financing Short term borrowings Fair value sensitivity analysis for fixed rate instruments 2010 Rupees 634.785.704 1.000 19.615 million (2010: Rupees 47.212 9.350.053.457.484 1.200. Cash flow sensitivity analysis for variable rate instruments If interest rates at the year end date.660. Therefore.251.061.416.395 3.761.2011 Rupees Fixed rate instruments Financial liabilities Long term financing Short term borrowings Floating rate instruments Financial assets Bank balances .458.203 120.725. fluctuates by 1% higher / lower with all other variables held constant.238 1.238.389.000. a change in interest rate at the balance sheet date would not affect profit or loss of the Group.927 1.246 million) lower / higher.687 600.228 JUNE 2011 99 Nishat (Chunian) Limited and its subsidiary .650.419 3.538 22.

607.112 JCR-VIS 3 Moody’s 2. Deutsche Bank AG Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited HSBC Bank Middle East Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Samba Bank Limited Standard Chartered Bank (Pakistan) Limited Summit Bank Limited The Bank of Punjab United Bank Limited A1+ A2 A1+ A1+ A1+ A1 P-1 A-2 P-1 P-1 A-1 A1+ A-1+ A1+ P-1 A1+ A-1+ A-1+ A1+ A-1+ A1+ A-2 A1+ A-1+ AA AAA AA AA A Aa3 AA1 Aa3 A AA AA+ AA+ A1 AA+ AAAAA AA A+ AAA A AA AA+ PACRA 22.634 4.815.644 7.379 20. the Group had Rupees 6.818 417.642.937.918.769 JCR-VIS 90.954 953.212 1.391 553.744 JCR-VIS 2.712.416.318 JCR-VIS 12.012.000 30. including interest payments.747 8.899 PACRA 2.826.A.771.826.178 JCR-VIS 4.379.612 7. Following are the contractual maturities of financial liabilities.664 34.570.760 million available borrowing limits from financial institutions and Rupees 174.413.856.043 1.433 171 Moody’s 691.915.944.096.668 463.560.610 1.947 PACRA 2.007.937.308 1-2 Year More than 2 Years 100 Nishat (Chunian) Limited and its subsidiary JUNE 2011 19.465.048.066. management does not expect non-performance by these counter parties on their obligations to the Group.873 PACRA 153.678.250.029 8.496 PACRA 1.285 224.650.470.070 1.064.954 4.159.093 4.570.430 JCR-VIS 4.832.737 12.041.446.The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate: Rating Short term Long term Agency 2011 Rupees 2010 Rupees Banks Askari Bank Limited Al-Baraka Bank (Pakistan) Limited Allied Bank Limited Bank Alfalah Limited Bank Al-Habib Limited BankIslami Pakistan Limited Barclays Bank Plc Burj Bank Limited (Formerly Dawood Islamic Bank Limited) Citibank N.238 46.670 8.230.708.283.029. The Group manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. The amount disclosed in the table are undiscounted cash flows: Contractual maturities of financial liabilities as at 30 June 2011: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued markup Contractual cash flows 6 months or less 2.288.662 239.058 625.954 6-12 months 2.119.761 PACRA 10.030.450 .325 million cash and bank balances.362.509 1.106 JCR-VIS 518.043 953.811.826 Moody’s 41.727 23.961 1.490 14.887 PACRA 48. At 30 June 2011.855.148.225. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.826.998.792 PACRA 441. Due to the Group's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing.080.808 167.043 953.242 PACRA 15.449.729 The Group's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 15.159.467.631 PACRA 1. The management believes liquidity risk to be low.020.646 3.000 4.979 24.203 Moody’s 119.708.762.712.159.826.362.831.979 24.408 45.876 JCR-VIS 427.424 1.521 PACRA 15.219.708.798 PACRA 325. Accordingly the credit risk is minimal.600.

379 46.236 10.048 27.708.318.396 3.012.372 3.438 The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at 30 June.852.739.061.305.990.122.660.048 27.990.990.998.026.523 5.658 776.798 174.061.798 174.200.240.442 9.747 1.267 37.452 1.203 120.138.053.805 4.674.240.335.949 6.915.824 1.333 1-2 Year More than 2 Years 19.324.061.038.391.108.Contractual maturities of financial liabilities as at 30 June 2010: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued mark-up Contractual cash flows 6 months or less 2.419 2.963.658 776.714.586.396 13.328.144.391.510.362.371.305.396 2.391.805 776.953.658 1. The rates of interest / mark up have been disclosed in note 6 and note 9 to these financial statements.352.324.927 1.200.600 13.417 28.927 1.417 4.045.442 9.861.811 9.826.494.761.099.163.811 9.961 1. Fair value is determined on the basis of objective evidence at each reporting date.492. 35.649 6.794.053.761.369.419 3.494.664 953.805 6-12 months 2.408 101 Nishat (Chunian) Limited and its subsidiary JUNE 2011 Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables Financial liabilities at amortized cost Rupees 19.436.159.045.3 Financial instruments by categories At fair value through profit or loss As at 30 June 2011 Assets as per balance sheet Loans and advances Deposits Trade debts Other receivables Derivative financial instrument Accrued interest Cash and bank balances Loans and receivables Total -------------------------Rupees-----------------------3.449.026.366.2 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values. 35.043 .785.954 8.184.996 30.045.219.938.678.861.660.785.203 120.

742.130 154.009.34 2010 26.238 1.497.379 36.546.947.739.209.130 154.200. Total capital employed includes 'total equity' as shown in the balance sheet plus 'borrowings'.890.460 81. The Group's Strategy. the Group monitors the capital structure on the basis of gearing ratio.32 JUNE 2011 Gearing ratio 102 Nishat (Chunian) Limited and its subsidiary .674.077.171 18.442 3.411 8.990.442 3.805 6.362.612.996.609.075 1. Capital risk management The Group's objectives 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 to reduce the cost of capital.226 76.176.200.658 28.742.910 5.283.267 776.815 36. This ratio is calculated as borrowings divided by total capital employed.497.649 1.890.586. the Group may adjust the amount of dividends paid to shareholders.238 18.492.175.916 6. was to maintain a gearing ratio of 75% debt and 25% equity.651.647. 2011 Borrowings Total equity Total capital employed Rupees Rupees Rupees Percentage 27. issue new shares or sell assets to reduce debt.238 131.502. Consistent with others in the industry and the requirements of the lenders.544 32.898.335.409 Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables Financial liabilities at amortized cost Rupees 19.391.At fair value through profit or loss As at 30 June 2010 Assets as per balance sheet Loans and advances Deposits Trade debts Other receivables Short term investment Cash and bank balances Loans and receivables Total -------------------------Rupees-----------------------131.651.614 131.910 5.325. which was unchanged from last year.045.167.914.614 1.251. In order to maintain or adjust the capital structure.996.251.075 1.175.890. Borrowings represent long term financing and short term borrowings obtained by the Group as referred to in note 6 and 9 respectively.862.

39.251. However. 2011. 40.160 million) out of which Rupees 6. UNUTILIZED CREDIT FACILITIES The Group has total credit facilities amounting to Rupees 14. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on 08 October.882 million) remained unutilized at the end of the year. 41.50 per ordinary share) at their meeting held on 08 October. 38. no significant rearrangements / regroupings have been made except lycra amounting to Rupees 31.06 million (2010: Rupees 25. GENERAL Figures have been rounded off to nearest of Rupee.37. 15% (2010: 15%) preference dividend has been proposed by the Board of Directors of Holding Company for payment after approval in forthcoming Annual General Meeting.per ordinary share (2010: Rupees 1.760 million (2010: Rupees 2. 2011 by the Board of Directors of the Company. in accordance with the approved terms and conditions of preference share issue.873 million has been reclassified from stores. Moreover. EVENTS AFTER THE REPORTING PERIOD The Board of Directors of the Holding Company has proposed a cash dividend for the year ended 30 June 2011 of Rupees 2/. CORRESPONDING FIGURES Corresponding figures have been rearranged / regrouped wherever necessary for the purpose of comparison. 103 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR JUNE 2011 .030. spare parts and loose tools to stock-in-trade.

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Proxy Form The Company Secretary. Lahore) and at any adjournment thereof. Participant I.D. must be received at the Company’s Registered Office / Head Office not less than 48 hours before the meeting duly stamped. No. I / We of Nishat (Chunian) Limited. Lahore. 2. to be held on 31 October 2011 (Monday) at 11:30 a. signed and witnessed. of Share Register Folio No. Signature must agree with the specimen signature registered with the Company. As witness my hand this signed by the said of day of 2011 in presence Witness Signature Affix Rs.m at the Registered Office of the Company (31-Q. in order to be effective. ) hereby appoint another member of the Company as per (or failing him / her being a member(s) of Ordinary shares of another member of the Company) as my / our Proxy to attend and vote for me / us and on my / our behalf at Annual General Meeting of the Company. and a holder of as per Share Register Folio No. Gulberg II. (in case of Central Depository System Account Holder A/c No. Proxies. . 5/Revenue Signature Stamp Notes: 1. Gulberg-II. Nishat (Chunian) Limited 31-Q.