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Annual Report

2011

Table

of

Contents

KOHINOOR TEXTILE MILLS LIMITED CompanyCompanyVisionMissionStatementStatementNoticeOrganizationalDirectors'BriefCalendarBoardKeyDistributionHorizontalVertical CONSOLIDATED FINANCIAL STATEMENT Directors'Auditors'BalanceProfitStatementCashStatementNotesFORMFlowandtoOFSheet.............................................................................. 01

eyDistributionHorizontalVerticalStatementReviewAuditors'BalanceProfitStatementCashStatementNotesPatternCodeComplianceCorporateOperatingPro

...........................................................................94theReport..................................................................................................93PROXYReportlossStatemento

deComplianceCorporateOperatingProfileFlowandoftoCommitteesStatement...................................................................................................4ofReportofA

...........93PROXYReportlossStatementofofConsolidatedComprehensiveChangesAccounton Consolidated..............................................................................

.......................................4ofReportofAnalysisStatementSheet......................................................................................................40CorporatetheofReport.....

.........................................................................98in.......................................................................................96EquityFinancialincome.....................................

................40CorporatetheofReport..................................................................................................39AnnualProfile................................................................

nancialincome..........................................................................99FinancialStatements..............................................100..........................................................

.................................................................................................2InformationReport.................................................................................................12LossState

00................................................................97Statements ...................................92

...........................................12LossStatementHoldingAnalysisofofofofofGovernance......................................................................................36Notableofofw

...................................36NotableofofwithFinancialEthicsStrate

Summary........................................30.......................................................32ofof

Company
Sales Trend
14,000 12,000 10,000 2005-06 8,0006,0004,0002,0002006-07 2007-08

Profile
Tangible Fixed Assets
8,000 7,000 6,000 2008-09 2009-10 2010-11 5,0003,0002,0001,0004,000-2005-06 2006-07

THENThecompanyfabricwereGujarCompanyacquiredprocessingKhan,ANDinNOW1968.bycommencedwayonfacilitiesThetheofinitialmerge TheofofdyeingofadvantageoptimizationhomecountsweavingCompany'sandtextilesusingofprintingwidehavegreatercottonproductionforran ThepreparingCompanyits managementhas been investingto meetheavilythe challengesin Informationof marketTechnology,integration.tra Kohinoorwellmanufacturing.as supportingTextile MillstheLimitedongoingcontinuesimprovementto ensureprocessthatinitsourcurrentend

02

edwayonfacilitiesThetheofinitialmerger.Raiwind-MangawereoperationcapacityaddedofandinRoadits1953spinningRawalpindinearas aLahorecapacitypriv widehavegreatercottonproductionforrangebeenthefabricsmarketandexportofupMan-madegreigeforatfacilitiesallaccess.themarket.threefabrics.homenow ionof marketTechnology,integration.training of its human resources and o ensureprocessthatinitsourcurrentendeavorcompetitiveto maintainpositionworldis maintainedbest practiceas
Tangible Fixed Assets

2007-08

2008-09

2009-10

2010-11

awalpindinearas aLahorecapacityprivateunit comprisedinwaslimitedDistrictaugmented.companyKasur25,000andAdditionalspindlesandonbecametheand ess.themarket.threefabrics.homenowFullyfibers.sites.BothtextilecompriseTheequippedtheTheprocessingmarket.dyeingweaving151,902laboratoryandTh

dditionalspindlesandonbecametheandGulyanaproduction600a publiclooms.RoadfacilitieslimitedLater,near yeingweaving151,902laboratoryandThefacilitiesfacilitiesstitchingringstitchingspindlesfacilitiesatatfacilitiesRaiwindfacilitiesthecapableforRawalpindiareco

acilitiesthecapableforRawalpindiarecomprisequalityproducebeingof spinningcontrolunitaugmented204a diversifiedareloomsaandwidecapableprocessc

edareloomsaandwidecapableprocesscapabletorangerangetakeof

Annual

Report

2011

Company

Information

BoardMr.Mr.Mr.Mr.Mr.Mr.Mr.SyedTariqTaufiqueSayeedWaleedKamilZamiruddinArifMohsinofIjazDirectorsSayeedTaufiqueTariqTariqRazaSayeedAzarSai ChairmanC.E.O ShareVision3-C,LawrenceTel:Fax:E-mail:Website:(92-042)LDA(92-042)RegistrarConsultingvcl.shares@gmail AuditMr.Mr.Mr.Mr.Mr. ZamiruddinSayeedWaleedKamilArifCommitteeIjazTaufiqueTariqTariqAzarSaigolSaigolSaigol ChairmanMemberMemberMemberMember BankersAlAlliedAskariBankBarakaAlfalahBankBankBankLimitedLimitedLimited(Pakistan) Limited ChiefSyed MohsinFinancialRazaOfficerNaqvi BankBurjCitibank,BankAl-HabibN.A.LimitedLimited CompanyMr. MuhammadSecretaryAshraf FaysalHSBCMCB BankBankBankLimitedMiddleLimitedEast Limited ChiefMr.AuditorsM/s.CharteredBilalRiazInternalHussainAhmadAccountantsAuditor& Company MeezanNationalNIBSaudiInvestmentSilk BankBankPakBankBankLimitedLimitedIndustrialCo.LimitedofLtd.Pa Registered42-LawrenceTel:Fax: (92-042)(92-042)Office36302261-62Road,36368721Lahore. StandardTheUnitedBankBankCharteredof PunjabLimitedBank (Pakistan) Limited

MillsNote:Website:PeshawarTel:8ThTel:GulyanaTel:KTMLs(92-051)(92-042)(92-0513)K.M.,Road,Financialwww.kmlg.comMangaRoad, 03

42)RegistrarConsultingvcl.shares@gmail.comFlats,www.vcl.com.pkRoad,36375531-3637533936374839Lahore.Ltd itedLimited(Pakistan) Limited

mitedLimitedIndustrialCo.LimitedofLtd.Pakistan& Agricultural

Financialwww.kmlg.comMangaRoad,5473940-335394133-35564472-74GujarRawalpindiRaiwindStatementsKhan,Fax:Fax:Road,Fax:District(92-051)(92-05

ax:Fax:Road,Fax:District(92-051)(92-0513)are(92-042)DistrictalsoRawalpindi5471795availableKasur35394132564337at the above website.

37at the above website.

Vision
04

TheStatedThenTheProfitableTermsStakeholdersKohi

keholdersKohinoorMostRemainOfVisionIndustryProgressiveCom

yProgressiveCompanyInterest.IsAsTextileTo StandardsAchieveIn

ndardsAchieveInMillsAndPakistanLimitedAndAndIn

Annual Report

2011

Mission
05

AndTechnology,ContinuousImplementedTheInnovativeToCompanyIts Indust

CompanyIts IndustryCustomers,ProcessProductsAndShallManagedBestOfAchieveAnd

gedBestOfAchieveAndHavingSuppliersPractice,ServicesTheItsSourced,MissionAndBes

urced,MissionAndBestHumanAndStakeholders.LeadingDeveloped,SoldThroughReso

ped,SoldThroughResourceTheseEdgeA

Statement Business

of Ethics 2011 - 2012 Practices

and

The following principles constitute the code of conduct which all Directors and employees of Kohinoor Textile Mills Limited are required to apply in their daily work and observe in the conduct of Company's business. While the Company will ensure that all employees are fully aware of these principles, it is the responsibility of each employee to implement the Company's policies. Contravention is viewed as misconduct. The code emphasizes the need for a high standard of honesty and integrity which are vital for the success of any business. PRINCIPLES 1. Directors and employees are expected not to engage in any activity which can cause conflict between their personal interest and the interest of the Company such as interest in an organization supplying goods/services to the Company or purchasing its products. In case a relationship with such an organization exists, the same must be disclosed to the Management. 2. Dealings with third parties which include Government officials, suppliers, buyers, agents and consultants must always ensure that the integrity and reputation of the Company is not in any way compromised. 3. Directors and employees are not allowed to accept any favors, gifts or kickbacks from any organization dealing with the Company. 4. Directors and employees are not permitted to divulge any confidential information relating to the Company to any unauthorized person. Nor should they issue any misleading statements pertaining to the affairs of the Company. 5. The Company has strong commitment to the health and safety of its employees and preservation of environment and the Company will persevere towards achieving continuous improvement of its HSE performance by reducing potential hazards preventing pollution and improving awareness. Employees are required to operate the Company's facilities and processes keeping this commitment in view. 6. Commitment and team work are key elements to ensure that the Company's work is carried out effectively and efficiently. Also all employees will be equally respected and actions such as sexual 06 harassment and disparaging remarks based on gender, religion, race or ethnicity will be avoided.

ty will be avoided.

Annual Report

2011

Statement of Strategic Objectives 2011 - 2012

Following are the main principles constitute the strategic objectives of Kohinoor Textile Mills Limited: 1.0 facilities;Effective use of available resources and improved capacity utilization of the Company's production 2.0 Modernization of production facilities in order to ensure the most effective production; 3.0 Effective marketing and innovative concepts; 4.0 Implementation of effective technical and human resource solutions; 5.0 includingStrengtheningenergyindependencesupply, transportationin terms ofandsecurelogisticssupplyservices;of low-cost services a 6.0 Explore alternative energy resources; 7.0 optimizationFurther improvementsof managementin corporateprocesses;code governance through restructuring of assets and 8.0 professionals,benefitsPersonnelin development,accordanceensuringwithsafecreatingscopelabourproperandenvironment,qualityenv 9.0 implementationemissions;Complianceandwithoflocaltechnologiesand internationalallowingenvironmentalto comply withandthequa #### Implementation of projects in social and economic development of communities. 07

pplyservices;of low-cost services and resources,

h restructuring of assets and roperandenvironment,qualityenvironmentof theircompetitivework;for professionalstaff remunerationgrowth of highlyand socialskilled mentalto comply withandthequalitylimitationsmanagementimposed onstandards,pollutant

ighlyand socialskilled

Notice

of

Annual

General

Meeting ####

NoticeLIMITEDLawrenceis(theherebyRoad,Company)Lahore,given thattowilltransactthebe43rdheldtheAnnualonfollowingMonday,Gen Ordinary Business:1.0 2011To receive,togetherconsiderwith theandDirectors'adopt theandauditedAuditors'accountsreportsofthereon.the Comp 2.0 TheAccountants,To appointBoard ofAuditorsDirectorsthe ofretiringthehasCompanyapprovedauditors,forthetheonappoint Special Business:3.0 modification,To consider andadditionif deemedor deletionfit, to passinthetermsfollowingof Sectionresolution208 ofas th accordedadvancesancommencingonemeetingResolvedof similaraggregatepercentheldfromnatureunderbyabovewayfromo SecretaryallsuchResolvedactionsdocumentsoffurthernecessarythe CompanyforthatintheMr.relationpurposebeTaufiquean BY ORDER OF THE BOARD 08 Lahore: October 10, 2011 (MuhammadCompany SecretaryAshraf)

AnnualonfollowingMonday,Generalbusiness:-OctoberMeeting31,of2011the membersat 3:00 PMofatKOHINOORits RegisteredTEXTILEOffice,MILLS42-

untsreportsofthereon.the Company for the year ended June 30, vedauditors,forthetheonappointmentyeartheendingrecommendationofonM/s.June Riaz30, 2012Ahmadofandthe&fixCompany,Audittheir remuneration

of Sectionresolution208 ofas thea specialCompaniesresolutionOrdinance,with or without1984:mnatureunderbyabovewayfromonsumtimeSectionOctobertooftheofNovemberthetospecialRs.averagetimeextent20830029,toresolutionof2009Million01, r.relationpurposebeTaufiqueandtoisofthe/SayeedgivingareinvestmentherebyeffectSaigol,singlyintoChiefthetheauthorizedsubsidiaryspiritExecutiveando

ts RegisteredTEXTILEOffice,MILLS42-

&fixCompany,Audittheir remuneration.Committee.Chartered

0830029,toresolutionof2009Million01,ofborrowingMapletheRs.2011byCompanies200(RupeesLeafthetothatMillioncostshareholders,OctoberCementcon thorizedsubsidiaryspiritExecutiveandoncompanyintentand/orbehalfofMr.andofthistheMuhammadtospecialCompanysign andresolution.executeAshraf,t

ncostshareholders,OctoberCementconsentofThreeOrdinance,thewhichFactory31,Company.Hundredand2013isthevalidapprovalLimited,1984Company(bo anysign andresolution.executeAshraf,to take

validapprovalLimited,1984Company(bothtillVideMillionOctoberfordaysspecialofainvestmentsubsidiaryistheonly)inclusive)authorized31,Companyresolut

clusive)authorized31,Companyresolutionfor2011.aofinatperiodthetotheabepassedmark-upextendCompany,formandof twoinisofageneralherebyratefac

ndof twoinisofageneralherebyratefacilityloanyearsuptoof/

Annual Report 2011 NOTES: 1.0 daysthecloseShareCompanyinclusive).oftransferbusinessi.e.booksPhysicalonM/s.OctoberofVisionthetransfers/CDSCompany23,Cons 2.0 his/hermusttheA membermeetingreachproxyeligibletheandtoCompany'smustattend,to attend,bespeakdulyRegisteredspeakstampe 3.0 theirNumbersencloseshouldCDC Shareholders,ComputerizedbringanandattestedthetheirusualentitledAccountcopyNationaldocume 4.0 Company'sShareholdersShareare requestedRegistrar. to immediately notify the change in their addresses, if any, to the 5.0 CardsMembers,to thewhoCompany'shave not yetSharesubmittedRegistrar,photocopiesare requestedof theirto Computerizedsen STATEMENT UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984 (THE ORDINANCE). Thistransactedstatementat thesetsAnnualout theGeneralmaterialMeetingfacts pertainingof the Companyto the tospecialbe heldbusin (i) Name of the investee company Maple Leaf Cement Factory Limited (MLCFL) (ii) Amount of loan / advances Rs. 300 Million (Rupees Three Hundred Million only). (iii) Purpose of loan / advances Toprovidedearn incometo the subsidiaryon the loancompany.and / or advances to be (iv) In case any loan had already beenwrittencompany,of theprovidedsaidofftheloan;to thecompleteor loansaidhasinvesteedetailsbeen AsoutstandingtheshareholdersCompanycompany.ofauthorityJunehas30,againstnotas2011,ofon 09

nthetransfers/CDSCompany23,Consulting2011willwillTransactionLtd,remainbe considered3-C,closedLDAIDs Flats,receivedfromin timeLawrence24-10-20 bespeakdulyRegisteredspeakstamped,and andvoteOfficevotesignedinsteadnotatandthislessofwitnessed.meetinghim/her.than 48 hoursmayProxiesappo ntitledAccountcopyNationaldocumentsof tohis/herNumbersIdentityattend,requiredCNICCardsspeaktoorproveforPassport./andPassportssuchhis/hervot addresses, if any, to the questedof theirto Computerizedsend the sameNationalat the earliest.Identity

mpanyto the tospecialbe heldbusinesson Octoberproposed31, 2011.to be

ny.and / or advances to be yJunehas30,againstnotas2011,ofonwrittenspecialMLCFLOctobera sumoffresolutionwhichofany29,Rs.wasloan2009.42.995advancedpassedtoFurther,the

receivedfromin timeLawrence24-10-2011infororderattendingRoad,attoShare31-10-2011Lahoreof theRegistrarmeeting.upto(boththeof m/her.than 48 hoursmayProxiesappointbeforein orderanotherthe timeto bememberforeffectiveholdingas Passport./andPassportssuchhis/hervotepurpose.Representativesatinidentity,thisoriginalmeeting,andalonginofmustwithcasecorporatebringParticipants'o

9.42.995advancedpassedtoFurther,themillioninvesteebyunderwasthethe

eting.upto(boththeof

twithcasecorporatebringParticipants'of Proxy,withmembersthemmustID

(v)

positioncompanypublishedA brief BasedfinancialpositiononofyeartheMLCFLauditedendedis as30financialunder:-June 2 aboutfinancialonofthethethebasisstatements;investeefinancialof last Particulars Amount


Rupees(000)

PaidGeneralAccumulatedSponsorsSurplusofLongandLongNetTurnoverProfitCurrentE (5,976,651)(4,953,975)(1,769,036)12,520,70013 (vi) Rate of mark-up to be charged; Mark-upaverage willborrowingbe chargedcostat oneofpercentthe Company.above (vii) Particulars of collateral security toand;thereof;beifobtainednot needed,fromjustificationborrower Noa subsidiarycollateralofistheconsideredCompany.necessary since MLCFL is (viii) Source of fundsor advance will be given; loan from where Loanof theandCompany./ or advance will be given out of the funds (ix) Repayment schedule; Theyears(bothtimestipulatedloantodaysfromtime/period.inclusive).Novemberadvanc (x) CompanyfromBenefitsloanlikelyandandtheto accrueshareholdersadvances;to the Byofbeneficialandsubsidiaryprovidingits Shareholders.forloanthecompanyCompany/ 10 relativescompany. in the investee (xi) Interest of Directors and their Thehaveproposedshareholdingsofcompany.theDirectorsnoDirectorsvestedinvestmen

edis as30financialunder:-June 2011,statementsthe financialfor the

53,975)(1,769,036)12,520,70013,073,2185,803,4583,306,4805,548,120Rs.Rs.(3.72)14.965,5690.52Nil ofpercentthe Company.above the necessary since MLCFL is ut of the funds riod.inclusive).Novemberadvancessubject toMLCFLwould01,availability2011willbe tomakeforofOctoberafundsperiodpaymentwithin31,of2013fromtwot s.forloanthecompanyCompany/ advances,will(theimprovethemajorfinancialwhichshareholder)positionwill be orsnoDirectorsvestedinvestmentinandinterest,theareChiefinvesteealsoexceptdirectlyExecutiveDirectorscompanyto ortheofindirectly,ofextentandthethe

odpaymentwithin31,of2013fromtwothe

o ortheofindirectly,ofextentandthethethatCompanyinvesteeofinsometheirthe

Annual Report

2011

Organization
11

Chart

of

KTML

KTML

12

Directorsto

orsto

the

Shareholders

Report

Annual Report

2011

Review Of Operations Financial Review Information Technology Social Compliance and Human Resource Quality Management Systems Safety, Health and Environment Business Process Re-engineering Liquidity Management Future Outlook Compliance of Code of Corporate Governance Directors and Board Meetings Criteria to Evaluate Board Performance
13

TheannualstatementsDirectorsreportforarethealongpleasedyearwithendedtoauditedpresentJune 30,financialthe2

REVIEW OF OPERATIONS
14

DuringCompanygrossvolatilityandperiod,supplyretailers.inwereprojected.thehasshiftmerchandiseconstraintsadver

GoinghigherunitswhichManufacturingtextilesoperatio

esentJune 30,financialthe2011.43rd

erchandiseconstraintsadversely.thehighledgreigeitsprocessedprofitcostgoodsthethefocustheincostDuewitnessedInabilitythefa

Manufacturingtextilesoperationsfocusin theontospinning,threadforward,havemaximizingmarketfocusofhistoricallythecounthasontheforweaving

costDuewitnessedInabilitythefabric.CompanyofashaveCompanyfinishedperiodandtotoarawawaymarketsresultatunprecedente

oricallythecounthasontheforweaving,fabricsalesmanufacturingproductsalreadytheCompanydivision.valueyieldedhigherandbegunofallowingfinish

aymarketsresultatunprecedentedseveralalsovolatilityaofmaterials,Atmuchafromgoods.thetoimpactedundertheofsignificantfor

ldedhigherandbegunofallowingfinishingeveryplansendThehighertoCompanyunitfineroftobenefititsthedivisions.margins.focusproducedspinningy

mpactedundertheofsignificantforhadreviewmassverybusinessbeginningrawlowhigherofWorkingcommittedhighreview,theseme

ns.margins.focusproducedspinningyarns,homewilltheon

gcommittedhighreview,thesemerchandiserawcotton,value,itssuddenoperationsdeclinecosttopricesmaterialcostabsorbordersca

ricesmaterialcostabsorborderscapitalofmassyarn,thanandtherisethetotoin

Annual Report 2011 FINANCIAL REVIEW Duringmillion),theof rawgrossmaterial.thewhileprofityearcosttounderRs.of sales1,824review,increasedmillionCompany's(2010:by 17.50% OperatingmadedueinvestmentsRs. 1.91toanincreasedforafterprofittheoftaxthesameforprofitrawCompany.theperiodmaterialyearof Rs.un 1009080706050403020100 4951 4456 4258 3466 2476 5644 Debt: Equity Ratio ThedividendoutCompanyandmoremanagementtodeliver
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

G.P% to Sale
2005-06 25.00%20.00%15.00%10.00%0.00%5.00% 2006-07 2007-08 2008-09 2009-10 2010-11

Share Holders Equity


2005-06 2006-07 5,0004,5004,0003,5003,0002,5002,0001,5001,000500-

The Directors recommend as under:

ProfitProvisionProfitAccumulatedAccumulatedbeforeafterfortaxationtaxationtaxationlossprofitbroughtcarriedforwardforward

Annual Report

2011

dmillionCompany's(2010:by 17.50%salesRs.2,001toincreasedRs.million)10,214bymainlymillion12.57%due(2010:to toRs.substantialRs.8,69212,037 millio pany.theperiodmaterialyearof Rs.underlastEarning488costsyear.millionreviewperas whilestoodexplainedsharegrossatforRs.theabove.profit1,726yearde panyandmoremanagementtodeliverensureofDirectorsgeneralenhancedmoneyvalueduedueefficientrisktotohaveoftotocashallworkingtheaversenessthei


Share Holders Equity
2007-08 2008-09 2009-10 2010-11

RupeesThousandin profitbroughtcarriedforwardforward (151,887)200,939688,790487,851335,964 15

toRs.substantialRs.8,69212,037 millionmillion).increases(2010:ThisindecreasedRs.10,693the price ssatforRs.theabove.profit1,726yeardecreasedmillionendedNet profit(2010:Junefromincreased30,Rs.1,449the2011previouswasduemillion).Rs.toperiod2. totocashallworkingtheaversenesstheincreasedtheshownoperationsCompanyflowvolatilestakeholders.capitalconstraintstheircostofremainstextileofinabil

previouswasduemillion).Rs.toperiod2.20saleTheasofCompanyprimarilyagainstequity aintstheircostofremainstextileofinabilityrequirementtheoftherawbanksmainlyCompanysector.committedtomaterialspaytoarisingoflendTheanytheto

alspaytoarisingoflendTheanytheto

INFORMATION TECHNOLOGY Inofmonitoring.orderits inventoryto furtherandreduceorderinventorymanagementcostssystemsand overheads,with thethegoalCompany SOCIAL COMPLIANCE AND HUMAN RESOURCE HUMAN RESOURCE Theimprovereduceproductivity.CompanyCompanytotalproductivityhopeslabourhasThistoembarkedbuildcostis andanathroughmostongoi CORPORATE SOCIAL RESPONSIBILITY TheforcontributionscommunitiesGroupResponsibilityofyear.projectthein LahoreitsartPhilanthropyCompanyYourperformanceCardiachasa QUALITY MANAGEMENT SYSTEMS ThereputationandlargeQualitypointsstartingmaterialqualitycustomerconductingbeforeauditCompanyowesteamsduringpart,theyassurance is worth noting that the Company's quality management systems are so highly regarded that several 16 customers no longer require the presence of external auditors before delivery of finished goods.

heads,with thethegoalCompanyof automationhas begunandareal-timecompleteinventoryoverhaul

costis andanathroughmostongoinghasonproductiveaalreadymassiveimprovementsexercisemanagedcampaignandthrougheffectiveintotoefficiencysignifi

nyYourperformanceCardiachasandbyCompanyconsecutivelybuildingininandfacilityNationalhasthiswhichstrivesbeenregardasofhasSayeedtoitvariousaExc

esteamsduringpart,theyassurancecontrolfromtoasitsauditsrepresentativearetheforatothecurrentcontinuesthehigh-qualityhandedchecksfinalfactories,thi

hrougheffectiveintotoefficiencysignificantlysubstantiallywhichworkforce.andthe

nregardasofhasSayeedtoitvariousaExcellencethehascontributedrecognizedtoleaderCompanyreceivedGulabbeaSaigolpresence.asocialconstructiveinDevi

-qualityhandedchecksfinalfactories,thisproductionofteamdeliveryfinishedinspection.reputation.business,tooccuracttocustomerandsupplierenjoyofasgoo

golpresence.asocialconstructiveinDeviCardiacAwardinsocialby5thhasobligationsmedicalChestKohinoorthedonatedComplex2010CorporateandPakistan

cttocustomerandsupplierenjoyofasgoodschain,whenatrawthetheallinIta

dComplex2010CorporateandPakistanHospitalmembersocialoncharitableMapleduringaataccountstateservices(GDCH)CentreGDCH.SocialofLeafthetheof

DCH)CentreGDCH.SocialofLeafthetheof

Annual Report 2011 SAFETY, HEALTH AND ENVIRONMENT TheorderFrequentCompanyto auditsensurecontinuesarecomplianceconductedto meet andbywithcustomers,exceedthesethestandardsre SECURITY ThecontinuesAgainstofinternationalCTPATAsThethepartCompanyCompanyCompanystandard.Terrorism).of theto customers,behasrequir BUSINESS PROCESS RE-ENGINEERING Theallandreapedmajorwithchemical,quality,hopesreductionsofcut-and-sew.Companyitsthethatmultinationalgreatproductionenvironment LIQUIDITY MANAGEMENT Thestock.near-termthe market.CompanyTheallowedCompany'shas imposedit topolicyavoidstrictofthepurchasingsignificantcontrols andon Inreducedorder toitimprovethroughits long-termthe sale liquidityof Companyposition,assetsthe Companywith thehasproceedspriorit 17

mers,exceedthesethestandardsregulatoryhealth andandagencies,safetythosestandardsandsetthebyrequiredCompany'sthe Company'sfor SAown8000aud

of theto customers,behasrequirementsispremisescompliantalsocompletelyAuditscompliantarearemanyofwithmonitoredconductedupdatedtheofwithCT

nalgreatproductionenvironmental,productionandfurtherin thebenefithasenergycostsprogressTheembarkeddepartments,chemicalinteamsusageCompan

chasingsignificantcontrols andoninventoryinventory,storing onlylossesincludingthatrecentlyrawandmaterialexperiencedespeciallywhichcottonwillby oth anywith thehasproceedsprioritizedgoingreductionto thein debtcreditors.and has

ny'sthe Company'sfor SAown8000auditcertification.customers.teams in

nitoredconductedupdatedtheofwithCTPATwhichCTPATtheitsusingfrequentlyare(Customscertification,securitystandardsvideoin additionandsystemssurve

tments,chemicalinteamsusageCompany'sofandthisenergy,intechnicalregardthesewhiletoonsupplierswithsubstantiallyroutelabour,processingprojectsma

iencedespeciallywhichcottonwillby otherbeandconsumedparticipantsgreige fabricin thein

dardsvideoin additionandsystemssurveillance.Tradesetregularly.alltobyareasPactandtheits

allyroutelabour,processingprojectsmaintainingduestandards.a specialshorteningwhotoandwillcollaborationhaveresourcesdepartmentfocusyieldreduceT

esourcesdepartmentfocusyieldreduceTheorcooperatedprojectssubstantialinimprovingCompanyfinishingwater,suchwithhasinas water.

hwithhasinas water.

FUTURE OUTLOOK We foresee textile sector facing tough challenges in the next financial year due to unprecedented rains and floods in certain cotton growing areas of the country resulting in perceived cotton shortfall and volatile raw material prices, increased competition from the neighbouring countries, continued trend of global economic slowdown, prevailing energy shortages, high rate of inflation and anticipated rupee devaluation. Your Company has devised a detailed strategy to overcome the upcoming challenges in the next financial year, major areas covered under this strategy are: a. Actively monitor the market situation post flood period and buy cotton at the dip when cotton arrival picks to ensure ample supply of cotton at minimum possible costs. b. Focus on producing high thread counts where your Company possesses competitive advantage realizing optimal profits in our spinning divisions. c. Focus on diverse but high contributing customers as opposed to mass merchandise customers thus realizing better results in our home textile division. d. In order to mitigate the effects of high inflation and financial costs, continue to pursue the policy of cost reductions in every business process of the company and reduce debt by selling certain equity investments of the Company and applying proceeds to repay bank borrowings. Based on above, we are confident that your Company is equipped to meet the emerging challenge of the 18 future.

COMPLIANCE OF CODE OF CORPORATE GOVERNANCE ThearestandardconfirmssetBoardbythat:ofofthecorporateDirectorsChief Executiveperiodicallygovernance.andreviewsreviewedThe Board a)b)c)d)e)f)g)h)i) ProperKeyTheaffairs,AppropriateandInternationalofThemonitored.ThereThereinOutstandingthefinancialoperatingfinancialsystemac Valueunder:Providentof investmentfund (Rs.217,644in thousand) of provident fund trust, based on their unaudited accounts of June 30, 2011 is as 19

nance.andreviewsreviewedThe BoardthebyCompany'shasthe reviewedBoard.strategicThetheBoardCodedirection.isofcommittedCorporateBusinesstopla hefinancialoperatingfinancialsystemaccountinghaslistingarebooksthebeennoresultaccountingtaxesofregulationsstatements,statementsAccountingofand

isofcommittedCorporateBusinesstoplansGovernancemaintainand targetsa highand atements,statementsAccountingofandsignificantinternalnoaccountofandfinancialmaterialitsestimatesotheroperations,policiescontrolofofStandards,prep

ons,policiescontrolofofStandards,prepareddoubtsandthedeparturethedatagovernmentstockhaveCompanyanyofisuponarecashsoundlastbybeendepartu

uponarecashsoundlastbybeendepartureexchanges.asfromthesixapplicablebasedflowsthelevieshaveconsistentlyinmanagementyearstheCompany'sdesign

managementyearstheCompany'sdesignandbeenarebestisontherechangesannexed.ingivenpracticesmaintained.andPakistan,reasonableappliedfrom,ofina

Pakistan,reasonableappliedfrom,ofinabilityhastherelatedin inequity.ofbeenhasCompany,havepreparationcorporateto note(s)continuebeeneffectivelyb

ateto note(s)continuebeeneffectivelybeenand presentfollowedadequatelytogovernance,prudentoftheasfinancialimplementedaauditedfairlygoingin jud

mplementedaauditedfairlygoingin judgment.preparationstatementsasdisclosed.itsaccounts.concern.detailedstateandof

DIRECTORS AND BOARD MEETINGS DuringDirectorsthewasyearasunderunder:-review, four meetings of the Board of Directors were held and the attendance of Name of Directors Meetings Attended Mr.Mr.Mr.Mr.Mr.Mr.Mr.Mr.SyedTariqTaufiqueSayeedWaleedKamilZamiruddinAbdulArifMohsinIjazSayeedTau 431244311 Leaveelectionnext termofofabsenceDirectorsof threewasyearswasgrantedheldcommencingtounderDirectorsthe provisionsAprilwho23,co Sr. No. Name of Elected Directors Designation 45678123 Mr.Mr.Mr.Mr.SyedMr.Mr.Mr. WaleedKamilZamiruddinArifTariqTaufiqueSayeedMohsinIjazSayeedTaufiqueTar ChiefChairmanExecutive&/ DirectorDirectorDirector-do--do--do--do--d CRITERIA TO EVALUATE BOARD PERFORMANCE Following are main criteria: 20 1.2.3.4.5.6.7.8.9. FinancialCapitalBoardProcedureBoardBoardAvailabilityRegularAssessmentreceivesapprovesfocusesandfollowpoliciesforof

nd the attendance of

ctorsthe provisionsAprilwho23,could2011.ofnotSectionattendThe 178followingtheofmeetings.the EightCompaniesHowever,DirectorsOrdinance,duringw

irectorDirector-do--do--do--do--do-

vesfocusesandfollowpoliciesforofoperatingboard'stoannualonupregularannualreviewedgoalsensureto measureaudit;budgetsguidelinefinancialandbusin

sHowever,DirectorsOrdinance,duringwere elected:-the1984year,for

dit;budgetsguidelinefinancialandbusinesscomplianceandresults;theapprovedupdated;toreports;plan;impactmanagement;withannually;of board'scoded

gement;withannually;of board'scodedecisions;of ethics and corporate governance.

Annual Report 2011 AUDIT COMMITTEE By virtue of election of Directors, the Board has reconstituted the composition of Audit Committee as under:Name Designation Mr. Zamiruddin Azar Chairman (Independent Non Executive Director) Mr. Sayeed Tariq Saigol Member (Non Executive Director) Mr. Waleed Tariq Saigol Member (Executive Director) Mr. Kamil Taufique Saigol Member (Executive Director) Mr. Arif Ijaz Member (Independent Non Executive Director) The Main terms of reference of the Audit Committee of the Company include the following: a. Determination of appropriate measures to safeguard the Company's assets; b. Review of preliminary announcements of results prior to publication; c. Review of quarterly, half-yearly and annual financial statements of the Company, prior to their approval by the Board of Directors, focusing on: Major judgemental areas; Significant adjustments resulting from the audit; The going-concern assumption; Any changes in accounting policies and practices; Compliance with applicable accounting standards; and Compliance with listing regulations and other statutory and regulatory requirements. d. Ensuring coordination between the internal and external auditors of the Company; e. Review of the scope and extent of internal audit and ensuring that the internal audit function has adequate resources and is appropriately placed within the Company; f. Ascertaining that the internal control system including financial and operational controls, accounting system and reporting structure are adequate and effective; g. Instituting special projects, value for money studies or other investigations on any matter specified by the Board of Directors; h. Monitoring compliance with the best practices of corporate governance and identification of significant violations thereof; and i. Consideration of any other issue or matter as may be assigned by the Board of Directors. 21

Trade of Company's Shares Duringwhereastheir spousesthenonefinancialandof theminoryear,otherchildren)Mr.Directors,WaleedtradedTariqCompanyinSaigol,the Se Pattern of Shareholding TheCompaniesstatementOrdinance,of shareholding1984 as atofJunethe Company30, 2011 isinannexed.accordance with Code of Corpor Auditors Thefinancialtheappointment.conclusionpresentstatementsauditorsof theofofAnnualthetheCompanyCompanyGeneralandM/s.Meeting.ha Theasin theauditorsBoardforthcominghasfor therecommendedensuingAnnual yearGeneraltheasappointmentsuggestedMeeting. by ofthe Acknowledgement Thecooperationat variousDirectorsdivisions.andaresupport.gratefulTheyto thealsoCompany'sappreciatemembers,hard workfinancialand For and on behalf of the Board 22 LahoreSeptember 28, 2011 aufiqueChiefSayeedExecutiveSaigol T

edtradedTariqCompanyinSaigol,the Secretary,sharesDirectorof thepurchasedCFOCompany.and Executives50,000 sharesof thefromCompanythe stock(in

exed.accordance with Code of Corporate Governance and

nyCompanyGeneralandM/s.Meeting.haveRiazissuedAhmadBeingreport&eligible,Company,to thetheymembers.Charteredhave offeredTheAccountantsau pointmentsuggestedMeeting. by oftheM/s.AuditRiazCommitteeAhmad &subjectCompany,to approvalCharteredof theAccountants,members

ciatemembers,hard workfinancialand dedicationinstitutionsof allandthe customersemployeesforworkingtheir

sharesof thefromCompanythe stock(includingmarket

arteredhave offeredTheAccountantsauditorsthemselveswillauditedretireforthere-at theAccountants,members

Annual Report

2011

Brief

Profile

of

Directors

MR. TARIQ SAYEED SAIGOL (CHAIRMAN / DIRECTOR) OTHERCHAIRMANKohinoorZimpexENGAGEMENTS(Private)Maple/ CHIEFLeafLimitedEXECUTIVEIndustries/LimitedDIRECTOR CHAIRMANMaple Leaf Cement/ DIRECTORFactory Limited Mr.reputedfinancialand Tariqenergy.Saigolsector,SayeedFamilychemicals,SaigolwhoissyntheticthepioneeredChairmanfibres,in textileofsu Mr.followingSaigolwhich,was schooledhe studiedat AitchisonLaw at UniversityCollege,LawLahoreCollege,and graduatedLahore. from HeGrouphasmanufacturing.startedbeenin 1976,Chairmanhis careerhe becameofinKohinoor1968Chiefat Kohinoor'sExecutiveMaple LeafC HeCommerce2003-2006.has beenandChairmanIndustryAllforPakistan1995-97Textileand Chairman,Mills AssociationAll Pakistanin 1992-94 Mr.ofsubjects,CorporationsPakistan.SaigolincludinghasHeandbeenhasResourceExportalsoa memberservedPromotion,Mobilization.ofonth the Government in 2000 and its critique prepared in 2006. He joined the Central Board of State Bank of Pakistan for a second term in 2007 and was a member of the Prime Ministers Economic Advisory Council established in 2008. HeofofUniversityStateGovernorsChandbaghtakesBankkeenofofofHealthinterestSchool,LahorePakistan.SciencesinUniversityFoundertheHe He is a keen golfer and has represented Pakistan at Golf in Sri Lanka and Pakistan in 1967. 23

/LimitedDIRECTOR

redChairmanfibres,in textileofsugar,KohinoormanufacturingedibleMapleoil refining,LeafafterGroupcivilpartitionengineering,(KMLG).and laterHeconstru ,and graduatedLahore. from Government College, Lahore Kohinoor'sExecutiveMaple LeafChemicalofGroupKohinoorwhichComplexTextilehasatMillsinterestsKalaLimited,ShahinKaku.textiles,Rawalpindi.Uponener AssociationAll Pakistanin 1992-94,Cement ManufacturersPresident of LahoreAssociationChamberfromof dPromotion,Mobilization.ofontheseveralFederalreorganizationHeGovernmentisExportthe authorPromotionofCommissionsWAPDAof TextileBoardandVi

encesinUniversityFoundertheHedevelopmentandisTrusteeofconferredpresentlyManagementofofTextileserveseducationwithSciences,Sitara-e-IsaarUnive

gineering,(KMLG).and laterHeconstruction,isventureda memberintocementof thethe

hinKaku.textiles,Rawalpindi.UponenergytrifurcationSinceand1984,cementof thehe

mmissionsWAPDAof TextileBoardandVisionEPB,andandCommittees2005RightCentralwhichSizingBoardwasonofofStateaadoptedStatenumberownedBank

cationwithSciences,Sitara-e-IsaarUniversityon thein Pakistan.BoardFoundingof Pakistan,ofbyHeGovernorsChairmanPresidenthas memberbeenofofathe

ateaadoptedStatenumberownedBankbyof

anPresidenthas memberbeenofofatheofAitchisonmemberofPakistanBoardthe ofSyndicateofCollegeGovernorsthein 2006.Boardandof

in 2006.Boardandof

MR. TAUFIQUE SAYEED SAIGOL (CHIEF EXECUTIVE / DIRECTOR) OTHERDIRECTORMapleKohinoorZimpexLeafENGAGEMENTS(PrivateMapleCementLimited)LeafFactoryIndustriesLimitedLimited Mr.companies.fromTaufiqueCornellHeUniversity,Sayeedis a leadingSaigolUSAandisinChiefexperienced1974.ExecutiveHe is industrialistwid Hedifferentis a businessenvironments.man of impeccable credibility and vision and has substantial experience of working in MR. SAYEED TARIQ SAIGOL (DIRECTOR ) OTHERCHIEFMapleDIRECTORKohinoorEXECUTIVELeafENGAGEMENTSMapleCementLeaf/ DIRECTORFactoryIndustriesLimitedLimited 24 Mr.withindustry.company.Sayeeda degreePriorHeTariqisintoamanagement.joiningSaigolmemberisMapletheof theChiefLeaf

ustriesLimitedLimited 74.ExecutiveHe is industrialistwidelyof Kohinoortraveledof Pakistan.Textileand hisMillsHespecialgraduatedLimitedforte isandasinanthedirectorIndustrial erience of working in

ryIndustriesLimitedLimited mberisMapletheof theChiefLeafMr.BoardExecutiveSayeedCementof GovernorsSaigolheofwasMaplealsoinvolvedofhasLeaftheseveralCement.inLahorese

forte isandasinanthedirectorIndustrialexportin business.allEngineerKMLG

fhasLeaftheseveralCement.inLahoresettingyearsUniversityHeupgraduatedofandworkmanagingofexperienceManagementfromanMcGillapparelin theUni

gementfromanMcGillapparelin theUniversitySciences.dyeingtextile

Annual Report 2011 MR. WALEED TARIQ SAIGOL (DIRECTOR ) OTHERDIRECTORMaple LeafENGAGEMENTSCement Factory Limited Mr.holdsApartbusinessWaleedafromBachelorsforhisTariqKMLG.responsibilitiesSaigolDegreeHe isisa thekeenin PoliticalManagingingolfert MR. KAMIL TAUFIQUE SIAGOL (DIRECTOR) OTHERDIRECTORMaple LeafENGAGEMENTSCement Factory Limited Mr.careerConcordiabusinessKamilwithatTaufiqueUniversityKTMLKMLGPindi.Saigolin inNovemberMontreal.is the elder2008Hesonhasasof MR. ZAMIRUDDIN AZAR (DIRECTOR ) OTHERDIRECTORMaple LeafENGAGEMENTSCement Factory Limited Mr.Group.35humanyearsZamiruddinAsresourceofa experiencenon-executiveAzardevelopmenthasatbeenGlaxodirector,activelyandPakista 25

eenin PoliticalManagingingolfertextilesScienceandDirectorhehasisfromwonalsooftheinvolvedseveralKohinoorLondontournamentsinTextileidentifyingSch

al.is the elder2008HesonhasasofDirector.beenMr. TaufiqueintensivelyHe holdsSayeedinvolveda Bachelor'sSaigol,in CEOtheDegreedevelopmentKTML.

Glaxodirector,activelyandPakistan,administration.he headsinvolvedMr.theAzarinInternalvariousprovidesAuditcorporateinvaluableCommitteesactivitiesi

ontournamentsinTextileidentifyingSchoolMillsofinEconomicsLimitedandPakistan.developing(Raiwind& PoliticalnewDivision).Science.areasHeof

in CEOtheDegreedevelopmentKTML. inMr.AccountingKamilof thebegantextilefromhis

porateinvaluableCommitteesactivitiesinsightofoftheintotheKMLGprojectKohinoorcompanies.management,MapleWithLeaf

ewDivision).Science.areasHeof

MR. ARIF IJAZ (DIRECTOR) Mr.(UET)experienceInsurance,HUBCO,ArifLahore,IjazandCEOinhasLahorethePakistanofdonedevelopmentKSBUniversityhisPumps,andBach He is serving as MBA Faculty member at UET Lahore and former visiting faculty member of LUMS. SYED MOHSIN RAZA NAQVI (GROUP DIRECTOR FINANCE / CHIEF FINANCIAL OFFICER) OTHERDIRECTORMaple LeafENGAGEMENTS/CementCHIEF ACCOUNTANT/Factory LimitedCFO DIRECTORTrust Investment Bank limited Mr.yearsMohsinof FinancialNaqvi,ManagementFellow memberexperience.of Institute of Chartered Accountants of Pakistan (FCA), with o Areasstrategystructure,and treasuryof expertisedevelopment,implementingfunctionsinclude:ofacquisitionsbudgetarythefinancialCompan HeandisservingformerboardboardmembermemberofofTrustKohinoorInvestmentMills Limited,Bank limited.Saic Velcorex, France and Al-W 26 HeMorocco,has experienceJordan andof workingPakistan.in several countries which include Saudi Arabia, Kuwait, France, P

KSBUniversityhisPumps,andBachelorMBADirectorofandManagementinfromgrowthElectricalofIranPakistanofCenterbusinessEngineeringSciencesSteelfor

untants of Pakistan (FCA), with over 22 nsbudgetarythefinancialCompany.controlprojections,and evaluationsprocedures,forecasting-ofimplementingbusinessshort units,termfinancialandestab d.Saic Velcorex, France and Al-Wazan Group, Kuwait Saudi Arabia, Kuwait, France, Philippines,

erbusinessEngineeringSciencesSteelforstrategy.ManagementMills,(LUMS).fromNationalHeUniversityhas alsoStudies.Refinery,ofservedEngineeringHeLah

nessshort units,termfinancialandestablishinglong-termsoftware,company'scashorganizingflows,reportingbusinessfinance

es.Refinery,ofservedEngineeringHeLahoreashastheoverStockCEOand20TechnologyofExchange,Adamjeeyears of

Annual Report

2011

Calendar
JULY 2010 - JUNE 2011

Of

Notable

Events

#
JULY JULY AUGUST SEPTEMBER OCTOBER OCTOBER OCTOBER DECEMBER

1st edition of company magazine "Hum Kohinoor" launched Achieved ISO 14001:2004 Certification Companyemployeesorganizedand all residentsa celebrationof companyof PakistancolonyIndependence Day by inv Issuance of Annual Report 2010 Companymade by managementarranged CricketstaffSuper& workers8 Tournamentof all departmentsin which full Issuance of Accounts for 1st QTR Ended 30th September 2010 42nd(Company)AnnualheldGeneralat 3:00Meetingp.m. atofitstheRegisteredmembersOffice,of KOHINOORlocate Companysenior managersarrangedand2ndexecutivesCricket Tournamentof all departmentsin which full participat

#
JANUARY FEBRUARY APRIL APRIL APRIL

29

Company arranged Badminton Tournament for the employees Issuance of Accounts for Half Year Ended 31st December 2010 Volleyball Tournament arranged by company for the employees Hajjwereballotingselectedceremonyto performheld,Hajj where 2 lucky winners and one reserved person Issuance of Accounts for 3rd QTR Ended 31st March 2011

27

colonyIndependence Day by inviting

tof all departmentsin which full participation was

mbersOffice,of KOHINOORlocatedat 42-LawrenceTEXTILE MILLSRoad,LIMITEDLahore artmentsin which full participation was made by

d one reserved person

Board

Committees

PROJECT MANAGEMENT COMMITTEE ProjectapproveManagementchange expendituresCommitteeaboveof seniora certainrepresentativeslevel. is formed to direct the MEMBERSManagingHeadHeadHeadHeadHeadHeadHead ofofofofofofof DepartmentDepartmentDepartmentDepartmentDepartmentDep ------- InformationProductionMarketingHumanCommercialFinanceEngineeringResourceTechnology PossibleDevelopingToolsHandlingDevelopforreviewstandardsachievingfinanciala frameworkeachissues,&sustainableoffollow NO. MEETINGS HELD: 10 BUSINESS PROCESS REENGINEERING COMMITTEE Businesshelps youProcessrethinkReengineeringthe process byteamstartingsee whatwithtechnologythe capabilitiesallows ofyoumodern MEMBERSManagingHeadHeadHeadHeadHeadHeadDeputyofofofofofofManagerDepartmentDepartmentDepartmentDepartmentDepartm ------ InformationProductionMarketingHumanEngineeringFinanceResourceTechnology DesignWeUnderstandOurinvolvementaqualitybaselineBPRfocusimprovement.andteamforandbuildonandfutureimpliesmeas 28 NO. MEETINGS HELD: 11

. is formed to direct the organization and also neeringResourceTechnology keachissues,&sustainableoffollow-uptheforbudgetprojectintegratingcoastalprojectmonitoringareaseconomiesprogressplanning- activitiesand modificat

capabilitiesallows ofyoumodernto do, andinformationthen determinetechnology.if this rceTechnology andbuildonandfutureimpliesmeasurethesatisfactiontheimprovements.specificmostprototypetheofimportantexistingbusinesscustomers.of newprocesso

gressplanning- activitiesand modificationsandor environmentssub projects

ngbusinesscustomers.of newprocessobjectivesprocessesprocessesto avoidsuchandasrepeatingthatcostensurereflectreduction,ofquickold ourmistakesde

ectreduction,ofquickold ourmistakesdeliverytimebusinessreduction,andof resultsto providevision.outputand

Annual Report 2011 ENERGY MANAGEMENT COMMITTEE EnergyperformanceMEMBERSManagingHeadHeadHead ofofofManagementDepartmentDepartmentDepartmentDirectorthroughCommitt --- EngineeringProductionFinance wastephasesofreportingEMCOurDevelopedTheResponsibleenergyappointmentteamdesignminimization,of asavingtoisbuilding'splan NO. MEETINGS HELD: 12 29

nimization,of asavingtoisbuilding'splanforminimizecommittedenergymeasures,thatofpollutionlife.helpaenvironmentalprocurement,fullforusraisingtimem

ntalprocurement,fullforusraisingtimemeetannualprevention,energyourenergymonitoringimpacts.energyclimatemanagementresourceawarenesscostItpr

anagementresourceawarenesscostItprotectionincorporatesandreductionsefficienttargetingandcoordinatorcommitments.corporatematerialsenergyener

ments.corporatematerialsenergyenergyfromefficiency,savings,wideensurescontinuousandenergyindoormaintainingthewaterimprovements.monitoringa

ngthewaterimprovements.monitoringairplanconservation,qualityproceeds.programinandall

Key
Six Years
Net sale (Rs. 000) Profitability(Rs.000)

Operating
Summary
2010-2011 12,037,253 2009-2010

And
2008-2009 8,458,899 10,693,338

Financial
2007-2008 7,558,322 2006-2007 7,140,167 2005-2006 6,903,625

Data

ProvisionProfitGrossOperatingProfit //Profit(Loss)(Loss)forprofitincomeafterbeforetaxtaxtax 1,823,5481,726,084200,939487,851688,790 1,162,7001,013,140134,325130,805(3,520) 2,000,8091,449,216277,861376,44898,587 1,045,526575,658(39,822)(28,293)11,529 1,259,906(439,811)(536,676)723,554(96,865) 1,021,807298,204354,984803,05656,780 Financial Position (Rs.000) TangibleIntangibleInvestmentfixedassets& Otherassets-netassets 10,501,1916,496,2994,004,89211,763,6066,747,6915,006,3529,563 8,143,6554,140,2334,003,4227,971,1693,972,5403,998,6297,632,7033,971,0213,661,6823,561,2591,800,0125,361,271CurrentCurrentNetCapitalLess:workingRedeemableemployedassetsliabilitiescapitalCapital, long term loan (2,267,779)4,539,0596,806,8389,495,827 (1,613,030)6,556,1088,169,1388,888,161 4,547,0654,231,0497,948,719316,016 (1,630,643)5,131,8846,762,5276,513,012 3,939,4173,855,5965,445,09283,821 5,757,2215,477,5728,250,818279,649 &Less:ShareRepresentedotherSurplusholdersliabilitiesBy:onEquityrevaluation of property 1,423,6944,386,6363,685,497 2,190,0793,059,3411,263,5922,959,0933,726,0341,263,592 1,853,0683,361,2683,673,8253,052,1283,935,0981,263,5922,776,9852,668,107ShareReservescapital& un-app. Profit 2,455,2621,931,374 1,455,2621,906,006 1,455,2621,604,079 1,455,2622,479,836 1,455,2622,270,772 1,058,3741,609,733 4,386,636 AverageInventoryAverageBonusCash 3,361,268 3,059,341 3,935,098 3,726,034 2,668,107

CurrentAcidBreakupEarningDividendNetProfitDebtRatios:GrossProfittest:marginProfitequityperratiovalueratiotosharetosalesratiopersales(%age)share(%age)of Rs.10 each 2417.8715.150.670.372.204.050.06: 76 3423.1018.710.800.471.912.600.03: 66 4221.0214.89(3.02)(5.20)(0.05)0.760.45: 58 5125.2114.801.020.472.824.320.04: 49 4427.0415.38(0.02)(0.05)(0.00)1.050.69: 56 4425.6014.64(0.32)(0.56)(0.01)1.070.59: 56 collectionageturnofoverinventoryperiod 51.5887.534.17-30.8872.425.04-- 0.6087.534.17-4 58.1898.093.73-100.7049.833.62-10.0040.3984.414.32SummaryNetNetNetNet cashcashcashchangeflowflowflowofinCashfromfromfromcashflowsandoperatinginvestingfinancingcash equivalentsactivitiesactivitiesactivities (1,455,770)1,727,143342,14570,772 (310,582)(403,780)712,916(1,446) (644,726)106,116543,5204,910 (776,196)787,90311,656(51) 1,151,994(636,823)(226,700)288,471 (1,155,933)(215,658)(373,079)998,512 QuantitativeYarnProduction(KgsKTMKGM"000")DivisionDivisionData(cont.: into 20s) 23,54725,98949,536 35,21131,29566,506 35,29826,31861,616 36,60528,89965,504 33,38826,02859,416 31,22323,68054,903 ClothProcessingSales/Tran.for(LinearKTMKGMDivisionDivisionmeters(Rawalpindiwvg.(actual"000"):Division)count) 11,0497,6003,449 11,3067,2024,104 9,0296,0422,987 11,0556,7904,265 10,6506,7883,862 11,2347,5953,639 ProductionSales 34,65334,065 34,65334,065 30,62628,783 22,98823,581 27,35826,768 30,85521,860 21,48921,691 22,72723,316 21,98622,220 20,80621,094 20,09020,942

30

20,66719,717 WeavingProductionSales (Raiwind Division)

Data

98,204354,984803,05656,780

,800,0125,361,271-

,855,5965,445,09283,821

801.020.472.824.320.04: 49

636,823)(226,700)288,471

Annual Report
Employees remuneration: 8.11% Financial Charges: 9.96%

2011

Marketing, selling and administration expenses: 4.62%

Government taxes (includes income tax): 0.92% Profit / (Loss) for the period: 2.58% Cost of salesremuneration):(excluding employees73.82%

2010
Marketing, selling and administration expenses: 4.33% Employees remuneration: 6.70% Financial charges: 8.21% Government taxes (includes income tax): 1.59% Profit / (Loss) for the period: 3.86% Cost of salesremuneration):(excluding employees75.31%

2011
31

32

Annual Report

2011 33

Statement Code of

of Compliance with Corporate Governance

the

For The Year Ended June 30, 2011 Thisingovernance,governance.ListingstatementRegulationswherebyis beingofpresenteda StocklistedExchangescompanyto complyisinman The Company has applied the principles contained in the Code in the following manner:1.0 TheofindependentDirectors.Companynon-executiveAtencouragespresent, thethedirectors.Boardrepresentationof Director 2.0 Thecompanies,Directorsincludinghave confirmedthis Company.that none of them is serving as a Director in more than 3.0 Alldefaulteda stockthe residentinexchange,paymentDirectorsofhasanyofbeenloanthe toCompanydeclareda bankingarec 4.0 NoforBoard.casualthe nextvacancyterm occurredcommencingin theAprilBoard.23, However,2011 andduringeight Directo 5.0 Theby allCompanythe Directorshas preparedand employeesa 'Statementof theofCompany.Ethics and Business Practices', 6.0 ThepoliciesdatesBoardonofwhichhasthe Company.developedthey wereAapproveda completevision/missionorrecordamen 7.0 Allincludingof thethepowersappointmentCEO ofandtheotherandBoarddeterminationhaveExecutivebeen ofdulyDirectors 8.0 Theinwereappropriatelyeverymeetingscirculatedquarter.recordedof theatWrittenleastBoardandsevennoticeswerecirculate 34 9.Thethemtheyand Boardtheareawarelistingawarehadofregulationstheirarrangedof theirdutiesduties,Orientationofandthepo

the

escompanyto complyisinmanagedwithPakistanthe Codeforin compliancetheof CorporatepurposewithofGovernanceestablishingthe best practices(thea

ardrepresentationof Directorsof independentincludes twonon-executivenon-executivedirectorsdirectorson itsandBoardtwo as a Director in more than ten listed mpanydeclareda bankingarecompany,asregistereda defaultera DFIas taxpayersor anbyNBFIthatandor, stockbeingnone aofexchange.memberthem ha 2011 andduringeight Directorsthe year, electionwere electedof Directorsas fixedwasbyheldthe hics and Business Practices', which has been signed vision/missionorrecordamendedstatement,of particularshas beenoverallmaintained.of corporatesignificantstrategypolicies alongand significantwith th ecutivebeen ofdulyDirectors,remunerationexercised andhaveand decisionstermsbeenandontakenconditionsmaterialbyoftransactions,theemploymentB ndsevennoticeswerecirculated.dayspresidedof thebeforeBoardoverthemeetings,bymeetings.the ChairmanalongThewithandminutesagendathe Boardofa duties,Orientationofandthepowersresponsibilities.StockCourseandExchanges.responsibilitiesforTheits DirectorsDirectorsunderhaveduringthealsotheCom

ceestablishingthe best practices(thea frameworkCode)of corporatecontainedof good

ngnone aofexchange.memberthem hasof

gypolicies alongand significantwith the rialbyoftransactions,theemploymentBoard. hewithandminutesagendathe Boardofandthemetworkingmeetingsat leastpapers,wereonce ectorsunderhaveduringthealsotheCompaniesprovidedprecedingdeclarationsOrdinance,years to make1984that

Annual Report 2011 underGovernance.Moreover,theinBoardcomplianceDevelopmentwith clauseSeries(xiv)programof the offeredCode, oneby theDir #### includingThe Boardtheirhasremunerationapproved appointmentand terms andof CFO,conditionsCompanyof employment,Secretary #### CodeThe Directors'and fully Reportdescribesforthethissalientyear hasmattersbeen preparedrequired toin becompliancedisclosed.w #### theTheBoard.financial statements of the Company were duly endorsed by CEO and CFO before approval of #### thanThe Directors,that disclosedCEO inandtheexecutivespattern ofdoshareholding.not hold any interest in the shares of the Comp #### The Company has complied with all the corporate and financial reporting requirements of the Code. #### TheexecutiveBoardDirectorshas formedincludingan AudittheCommittee.Chairman ofItthecomprisesCommittee.five members. Three #### TheinterimCommitteemeetingsand finalofhavetheresultsAuditbeenofCommitteetheformedCompanyandwereas advisedrequiredhel #### The Board has set-up an effective internal audit function. #### TheratingPakistan,sharesFederationAccountantsStatutoryunderof thattheoftheofCompanyAccountantstheyAuditorsPakistan.Qualit #### TheotherthatStatutorytheyserviceshaveAuditorsexceptobservedinoraccordanceIFACthe guidelinespersonswithassociatedinthethisLi #### We confirm that all other material principles contained in the Code have been complied with. For and on behalf of the Board Lahore: September 28, 2011 (TaufiqueChief SayeedExecutiveSaigol) 35

the offeredCode, oneby theDirectorPakistanhas InstituteobtainedofcertificationCorporate mpanyof employment,Secretary andas Headdeterminedof Internalby theAudit,CEO. d toin becompliancedisclosed.with the requirements of the

erest in the shares of the Company other

Committee.five members. Three of them are nonyandwereas advisedrequiredheld at leastbytotheoncetheCode.everyCommitteeThequartertermspriorofforreferencetocompliance.approvalof theof

antstheyAuditorsPakistan.Qualityor anyofandControlofthe(IFAC)thattheCompanypartnerstheReviewguidelinesfirmhaveprogrammeofandtheonallconfirm ersonswithassociatedinthethisListingregard.withRegulationsthem haveandnotthebeenAuditorsappointedhave toconfirmedprovide

ncetocompliance.approvalof theof

mhaveprogrammeofandtheonallconfirmedcodefirm,its partnersoftheirofethicsthethatspousesInstituteareastheyadoptedinandhavecomplianceofminorCh onfirmedprovide

optedinandhavecomplianceofminorCharteredbeenby InstitutechildrengivenwithAccountantsaInternationalofsatisfactorydoCharterednot holdof

factorydoCharterednot holdof

Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance

WeGovernanceforwherethehavetheyearreviewedCompanyendedpreparedthe30isJuneStatementbylisted.the2011,Boardtoof complyCom Theofverified,provisionsinquirieswiththeresponsibilitytheCompany.whetherCode.ofofthetheCompanyOurCodethefor complianceresponsi Asandnotorprocedurestopartrequiredinternalformof ouranandcontroltoopinionauditconsiderrisks.ofsystemsonfinancialthewhethereffect Further,todistinguishingtransactionsforplacedtotransactionsthetheplaceusingrelatedextentbeforeListingbeforesuchpartybeforeandofalter BasedofbestendedCompliancepracticeson30ourJunereview,containeddoes2011.notnothingappropriatelyin thehasCodecomeofreflectCorp RIAZCharteredAHMADAccountants& COMPANY 36 NameAtifIslamabad:BinofArshadengagementSeptemberpartner:28, 2011

mbers on th Best orate

.the2011,Boardtoof complyComplianceof Directorswithwiththeof KOHINOORListingthe bestRegulationspracticesTEXTILEcontainedofMILLSthe respective Codethefor complianceresponsibilitystatementofpersonnelCorporateofwithcomplianceandisGovernancetothereviewreview,Codeofreflectsoftoandvario emsonfinancialthewhethereffectivenesssufficientstatements,the Board'sto planofwesuchstatementtheareinternalauditrequiredandoncontrols,todevelop eforesuchpartybeforeandofalternatebetweentheRegulationstheapprovaltransactionstransactionsaudittheBoardpricingtransactionsauditcommittee.ofof n thehasCodecomeofreflectCorporateto ourtheattention,Company'sGovernancewhichcompliance,ascausesapplicableusintoalltobelievematerialthe Com

EXTILEcontainedofMILLSthe respectiveLIMITEDin the Code(theStockofCompany)Exchanges,Corporate iewreview,CodeofreflectsoftoandvariousCorporatethereportextentthedocumentsstatusifGovernanceitwheredoesof preparedthesuchnot.Company'sisAc auditrequiredandoncontrols,todevelopinternalobtainthecontrolananCompany'seffectiveunderstandingcoversauditcorporateall risksapproach.of theand ricingtransactionsauditcommittee.ofofofrelatedcommittee.Directorswhichweremechanism.the Karachi,undertakenWepartyarecarriedfornotareWetrans ableusintoalltobelievematerialthe Companythatrespects,theforStatementwiththe yearthe

of preparedthesuchnot.Company'sisAcompliancethatreviewbyofthetheiscomplianceCompanylimitedcanBoardbeprimarilyofobjectivelytoDirectorswithco tcorporateall risksapproach.of theandgovernanceaccountingcontrols,We are nWepartyarecarriedfornotareWetransactionsFurther,Lahoretheiroutonlyexecutedhaveonatconsiderationrequiredarm'sandnottermsall atsuchcarriedIsla

rimarilyofobjectivelytoDirectorswithcomplytheto

arm'sandnottermsall atsuchcarriedIslamabadbyarm'slengthequivalenttheandtransactionsBoardoutlengthhavepriceandStockanyensuredapprovaltoofor

ceandStockanyensuredapprovaltooforpriceproceduresthoseareDirectorsnot.Exchangesrecordingalsocompliancethatrelatedrequiredandprevailtorequired

atrelatedrequiredandprevailtorequiredetermineproperplacementpartytoofintheberequirementtransactionsarm'sjustificationseparatelyCompanywhethe

ustificationseparatelyCompanywhetheroflengthsuch

Annual Report

2011

Financial
for the Year Ended June
37

Statments
30, 2011

38

Auditors

Report

to

the

Members

We have audited the annexed balance sheet of KOHINOOR TEXTILE MILLS LIMITED as at 30 June 2011 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the companys management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. Weconducted ouraudit inaccordancewiththe auditingstandardsas applicablein Pakistan.These standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that: (a) in our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984; (b) in our opinion: i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; ii) the expenditure incurred during the year was for the purpose of the companys business; and iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company; (c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the companys affairs as at 30 June 2011 and of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended; and (d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980). RIAZ AHMAD & COMPANY Chartered Accountants Name of engagement partner: ATIF BIN ARSHAD Date: September 28, 2011 ISLAMABAD 39

BalanceAs

at June 30,

Sheet2011
2011 (Rupees in thousand) 2010

Note EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorized share capital 370,000,000 (2010: 370,000,000) ordinary shares of Rupees 10 each 30,000,000 (2010: 30,000,000) preference shares of Rupees 10 each

3,700,000

3,700,000

300,000 300,000 4,000,000 4,000,000 Issued, subscribed and paid up share capital 3 2,455,262 1,455,262 Reserves 4 1,931,374 1,906,006 Total equity 4,386,636 3,361,268 Surplus on revaluation of land and investment properties 3,685,497 5 3,673,825 NON-CURRENT LIABILITIES Long term financing 6 1,318,710 1,628,067 Liabilities against assets subject to finance lease 7 42,843 67,005 Deferred income tax 8 62,141 157,996 CURRENT LIABILITIES 1,423,694 1,853,068 Trade and other payables 9 834,691 1,040,257 Accrued mark-up 10 230,138 289,987 Short term borrowings 11 5,130,265 6,070,435 Current portion of non-current liabilities 12 611,744 768,459 6,806,838 8,169,138 TOTAL LIABILITIES 8,230,532 10,022,206 TOTAL EQUITY AND LIABILITIES 16,302,665 17,057,299 CONTINGENCIES AND COMMITMENTS 13 The annexed notes form an integral part of these financial statements. 40 CHIEF EXECUTIVE OFFICER

ASSETS Note NON - CURRENT ASSETS Property, plant and equipment Intangible asset Investment properties Long term investments Long term deposits CURRENT ASSETS Stores, spare parts and loose tools Stock-in-trade Trade debts Advances Security deposits and short term prepayments Accrued Interest Due from subsidiary companies Other receivables Short term investments Taxation recoverable Cash and bank balances Non-current assets classified as held for sale TOTAL ASSETS

2011 (Rupees in thousand) 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6,747,691 9,563 1,721,714 3,248,880 35,758 11,763,606 328,393 1,657,252 707,400 241,331 19,045 46 601,144 432,943 600 129,909 420,996 4,539,059

2010

6,496,299

1,720,835 2,249,170 34,887 10,501,191 345,798 2,393,113 1,329,065 596,795 15,578 141 14,987 386,941 642,111 99,805 78,851 5,903,185 652,923 4,539,059 6,556,108 16,302,665 17,057,299 DIRECTOR 41

ProfitFor

the

year

andendedLossJune
Note

30,

Account2011

2011 2010 (Rupees in thousand) SALES 29 12,037,253 10,693,338 COST OF SALES 30 (10,213,705) (8,692,529) GROSS PROFIT 1,823,548 2,000,809 DISTRIBUTION COST 31 (425,063) (397,818) ADMINISTRATIVE EXPENSES 32 (218,739) (195,103) OTHER OPERATING EXPENSES 33 (49,432) (37,323) (693,234) (630,244) 1,130,314 1,370,565 OTHER OPERATING INCOME 34 595,770 78,651 PROFIT FROM OPERATIONS 1,726,084 1,449,216 FINANCE COST 35 (1,037,294) (1,072,768) PROFIT BEFORE TAXATION 688,790 376,448 TAXATION 36 (200,939) (98,587) PROFIT AFTER TAXATION 487,851 277,861 EARNINGS PER SHARE - BASIC AND DILUTED (Rupees) 40 2.20 1.91 The annexed notes form an integral part of these financial statements. 42 CHIEF EXECUTIVE OFFICER DIRECTOR

StatementFor

the

year ended

ofJuneComprehensive30,

2011

2011 2010 (Rupees in thousand) PROFIT AFTER TAXATION 487,851 277,861 OTHER COMPREHENSIVE INCOME / (LOSS) Surplus arising on remeasurement of available for sale investment to fair value 32,632 Reclassification adjustment for gain included in profit (462,483) and loss Deferred income tax relating to surplus -on available for sale investment (8,566) Other comprehensive income / (loss) for the year - net of tax (462,483) 24,066 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 25,368 301,927 The annexed notes form an integral part of these financial statements. CHIEF EXECUTIVE OFFICER DIRECTOR 43

0, 2011

Income

Income

CashFor

the

year

FlowendedStatementJune
Note 2011 (Rupees in thousand) 2010

30, 2011

CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 37 2,998,394 674,317 Finance cost paid (1,094,698) (968,040) Workers profit participation fund paid (13,397) Income tax paid (162,285) (108,787) Net increase in long term deposits (871) (1,270) Net cash generated from / (used in) operating activities 1,727,143 (403,780) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on property, plant and equipment (177,891) (281,042) Capital expenditure on intangible asset (9,836) Payment for non-current assets classified as held for sale (51,261) Investments made (174) (200) Return on bank deposits received 1,363 934 Proceeds from sale of property, plant and equipment 13,132 7,765 Proceeds from sale of investments 8,715 Proceeds from sale of non current-assets classified as held for sale 119,200 Advance against purcahse of land received back 100,000 Dividend received 16,263 13,222 Net cash from / (used in) investing activities 70,772 (310,582) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term financing 150,000 Repayment of long term financing (595,077) (420,840) Short term borrowings - net (940,170) 1,259,964 Repayment of liabilities against assets subject to finance lease (70,523) (90,286) Repayment of lease finance advance (35,922) Net cash (used in) / from financing activities (1,455,770) 712,916 Net increase / (decrease) in cash and cash equivalents 342,145 (1,446) Cash and cash equivalents at the beginning of the year 78,851 80,297 Cash and cash equivalents at the end of the year 420,996 78,851 The annexed notes form an integral part of these financial statements. 44 CHIEF EXECUTIVE OFFICER DIRECTOR

45

NotesFor

the

yearto endedthe

FinancialJune

30, 2011

Statements

1.0 THE COMPANY AND ITS OPERATIONS Kohinoor Textile Mills Limited is a public limited company incorporated in Pakistan under the Companies Act,1913 (now Companies Ordinance, 1984) and listed on all Stock Exchanges in Pakistan. The registered office of the Company is situated at 42-Lawrence Road, Lahore. The principal activity of the Company is manufacturing of yarn and cloth, processing and stitching the cloth and trade of textile products. 2.0 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Thesignificant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated: 2.1 Basis of Preparation a) Statement of Compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the CompaniesOrdinance, 1984 shall prevail. b) Accounting Convention These financial statements have been prepared under the historical cost convention, except for the certain financial instruments, investment properties and freehold land which are carried at their fair values. These financial statements represent separate financial statements of the Company. The consolidated financial statements of the Group are being issued separately. c) 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. It also requires the management to exercise its judgment in the process of applying the Companys accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Companys financial statements or where judgments were exercised in application of accounting policies are as follows: Financial instruments The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques based on assumptions that are dependent on conditions existing at balance sheet date. Useful lives, patterns of economic benefits and impairments Estimates with respect to residual values, useful lives and pattern of flow of economic benefits are based on the analysis of the management of the Company. Further, the Company reviews the value of assets for possible impairment on an annual basis. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with a corresponding 46 effect on the depreciation charge and impairment.

Statements

the Companies The registered he Company is

set out below.

ounting standards ernational Financial oard as are notified der the Companies ompaniesOrdinance,

on, except for the are carried at their the Company. The

counting standards agement to exercise tes and judgments er factors, including mstances. The areas ncial statements or

etermined by using existing at balance

onomic benefits are y reviews the value in the future might with a corresponding

d)

Inventories Net realizable value of inventories is determined with reference to currently prevailing selling prices less estimated expenditure to make sales. Taxation In making the estimates for income tax currently payable by the Company, the management takes into account the current income tax law and the decisions of appellate authorities on certain issues in the past. Provisions for doubtful debts The Company reviews its receivable against any provision required for any doubtful balances on an ongoing basis. The provision is made while taking into consideration expected recoveries, if any. Impairment of investments in subsidiary companies In making an estimate of recoverable amount of the companys investments in subsidiary companies, the management considers future cash flows. 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 Companys accounting periods beginning on or after 01 July 2010: International Accounting Standard (IAS) 1 (Amendment), Presentation of Financial Statements (effective for annual periods beginning on or after 01 January 2010). 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. By amending the definition of current liability, 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. 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. IAS 7 (Amendment), Statement of Cash Flows (effective for annual periods beginning on or after 01 January2010). Theamendment provides clarificationthat onlyexpenditure that results in a recognized asset in the balance sheet can be classified as a cash flow from investing activity. 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. IFRS 8 (Amendment), Operating Segments (effective for annual periods beginning on or after 01 January 2010). The amendment is part of the International Accounting Standards Boards (IASB) annual improvements project published in April 2009. 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 application of the amendment does not affect the results or net assets of the Company as it is only concerned with presentation and disclosures. 47

e)

f)

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 Companys financial statements and are therefore not detailed in these financial statements. Standards and amendments to published approved standards that are not yeteffective but relevant to the Company Following standards and amendments to existing standards have been published and are mandatory for the Companys accounting periods beginning on or after 01 July 2011 or later periods: IFRS 9 Financial Instruments (effective for annual periods beginning on or after 01 January 2013). This standard is the first step in the process to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets and is likely to affect the Companys accounting for its financial assets. IFRS 7 (Amendment), Financial Instruments: Disclosures (effective for annual periods beginning on or after 01 July 2011). The new disclosure requirements apply to transfer of financial assets. An entity transfers a financial asset when it transfers the contractual rights to receive cash flows of the asset to another party. These amendments are part of the IASBs comprehensive review of off balance sheet activities. 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 entitys financial position, particularly those involving securitization of financial asset. The management of the Company is in the process of evaluating the impacts of the aforesaid amendment on the Companys financial statements. IFRS10Consolidated FinancialStatements (effective for annualperiod beginning on or after01January 2013). Concurrent with the issuance of IFRS 10, the IASB has also issued IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (revised 2011) Consolidated and Separate Financial Statements and IAS 28 (revised 2011) Investments in Associates. The objective of IFRS 10 is to have a single basis for consolidation for all entities, regardless of the nature of the investee, and that basis is control. The definition of control includes three elements: power over an investee, exposure or rights to variable returns of the investee and the ability to use power over the investee to affect the investors 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 statementsand replaces StandingInterpretations Committee(SIC) 12Consolidation Special Purpose Entities in its entirety. The management of the Company is in the process of evaluating the impacts of the aforesaid standard on the Companys 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 Company is in the process of evaluating the impacts of the aforesaid standard on the Companys 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 48 other standards. IFRS 13 applies to both financial and non-financial items measured at fair value. Fair

e effective in current

oved standards that e considered not to al statements and are

fective but relevant

and are mandatory

er 01 January 2013). ts: Recognition and financial assets and

riods beginning on cial assets. An entity lows of the asset to f off balance sheet er transactions and ncial assets and the ving securitization of the impacts of the

n or after01January oint Arrangements, ated and Separate he objective of IFRS re of the investee, r over an investee, r over the investee lidated and Separate solidated financial Special Purpose uating the impacts of

nning on or after 01 oint arrangements, ure objectives and es. IFRS 12 requires aluate the nature of erests on its financial ng the impacts of the

or after 01 January e that is required by ed 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 Company is in the process of evaluating the impacts of the aforesaid standard on the Companys 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 24Related Party Disclosures that are considered relevant to the Companys financial statements. These amendments are unlikely to have a significant impact on the Companys 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 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 Companys financial statements and are therefore not detailed in these financial statements. 2.2 Employee benefit The Company operates an approved funded provident fund scheme covering all permanent employees. Equal monthly contributions are made both by the Company and employees at the rate of 8.33 percent of basic salary and cost of living allowance to the fund. The Companys contributions to the fund are charged to profit and loss account. 2.3 Taxation Current Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The 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. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets 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 balance sheet 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. 49

2.4 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. 2.5 Property, plant and equipment Owned Property, plant and equipment except freehold land and capital work in progress are stated at cost less accumulated depreciation and accumulated impairment losses (if any). Cost of property, plant and equipment consists of 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 is stated at revalued amount less any identified impairment loss. Capital work in progress is 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 the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit and loss account during the period in which they are incurred. Depreciation Depreciation on property, plant and equipment is charged to profit and loss account applying the reducing balance method so as to write off the cost / depreciable amount of the asset over their estimated useful lives at the rates given in Note 14.1. Depreciation on additions is charged from the month the assets are available for use while no depreciation is charged in the month in which the assets are disposedoff. The residualvalues and useful lives of assets are reviewed by the management, at each financial year end and adjusted if impact on depreciation is significant. 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 is included in the profit and loss account in the year the asset is derecognized. Leased Finance lease Leases where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Assets subject to finance lease are capitalized at the commencement of the lease term at the lower of present value of minimum lease payments under the lease agreements and the fair value of the leased assets, each determined at the inception of the lease. The related rental obligation net of finance cost, is included in liabilities against assets subject to finance lease. The liabilities are classified as current and long term depending upon the timing of payments. Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on the balance outstanding. The finance cost is charged to profit and loss account over the lease term. Depreciation of assets subject to finance lease is recognized in the same manner as for owned assets. 50 Depreciation of the leased assets is charged to profit and loss account.

n as a result of past its will be required

ss are stated at cost of property, plant onstruction period o working condition. oss. Capital work in

a separate asset, as th the item will flow r and maintenance

ccount applying the the asset over their s charged from the month in which the by the management,

no future economic nition of the asset is

ip are classified as nt of the lease term ements and the fair

inst assets subject to g upon the timing of

hieve a constant rate over the lease term. as for owned assets.

2.6 Investment properties Land and buildings held for capital appreciation or to earn rental income are classified as investment properties. Investment properties are carried at fair value which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. The valuation of the properties is carried out with sufficient regularity. Gain or loss arising from a change in the fair value of investment properties is included in the profit and loss account currently. 2.7 Intangible assets 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 expenditurerelating 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 Company. The useful life and amortization method is reviewed and adjusted, if appropriate, at each balance sheet date. 2.8 Investments Classification of 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 purchaseand re-evaluates 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 and loss which is initially measured at fair value. The Company assesses at the end of each reporting period whether there is any objective evidence that investments are impaired. If any such evidence exists, the Company applies the provisions of IAS 39 Financial Instruments: Recognition and Measurement to all investments, except investments in subsidiary companies, which are tested for impairment in accordance with the provisions of IAS 36 Impairment of Assets. 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. Investmentsare classified as held-for-trading if these areacquired for the purpose ofselling inthe short term. Gains or losses on investments held-for-trading are recognised in profit and loss account. b) Held-to-maturity Investments withfixed or determinable payments and fixed maturity areclassified as held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long term investments that are intended to be held to maturity are subsequently measured at amortized cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative 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 derecognized or impaired, as well as through the amortization process. 51

c)

d)

Available-for-sale InvestmentsneedAftervalue.comprehensiveatincomewhichinitialforGainsistimeliquidity,includedrecognition,orintend Quoted Forreferenceinvestmentsto stockthatexchangeare activelyquotedtradedmarketinbidsorganizedat the closecapitalof Unquoted FairallowedvaluebyofIASunquoted39 FinancialinvestmentsInstruments:is determinedRecognitionon theandbasisMe Investment in Subsidiary companies Investmentsthe provisionsinofsubsidiaryIAS 27 Consolidatedcompanies areandstatedSeparateat costFinancialless im 2.9 Inventories Inventories,realizable value.exceptCostforis determinedstock in transitas follows:and waste stock / rags are state Stores, spare parts and loose tools Useableconsideredvalue plusstores,otherobsoletesparechargesarepartspaidcarriedandthereon.looseat niltoolsvalue Stock-in-trade Cost of raw material, work-in-process and finished goods is determined as follows:. (i)(ii) ForFor rawwork-in-processmaterials: and finished goods: AnnualAverageproductionaveragemanufacturingoverheads.basis. cost in Materialsstock / ragsinaretransitvaluedare valuedat net realizableat cost comprisingvalue. invoice value plus othe Netestimatedrealizablecostsvalueof completionsignifies theandestimatedthe estimatedsellingcostspricenecessaryin 2.10 Derivative financial instruments Derivativeisrecognizingentered financialintothe resultingandinstrumentsare remeasuredgain orarelossinitiallydepe instrument,and if so, the nature of the item being hedged. The Companydesignates certain derivatives 52 as cash flow hedges.

ncludedrecognition,orintendedthelossesincomecumulativeorin profitonchangestountilinvestmentsavailable-for-salebeandheldthegaintolossinvestment

ganizedat the closecapitalofmarkets,business fairon thevaluebalanceis determinedsheet date.by valuation techniques as

ecognitionon theandbasisMeasurementof appropriate.

eparateat costFinancialless impairmentStatements.loss, if any, in accordance with

waste stock / rags are stated at lower of cost and net

hereon.looseat niltoolsvalue.areItemsvaluedinprincipallytransit areatvaluedmovingataveragecost comprisingcost, whileinvoiceitems

goverheads.basis. cost including a portion of ue. invoice value plus other charges paid thereon. Waste sellingcostspricenecessaryin the ordinaryto makecoursea sale.of business less the

edgain orarelossinitiallydependsto fairrecognizedvalueon whetherat subsequentat fairthevaluederivativereportingon theisdatedesignateddates.a deriv tain derivatives

alebeandheldthegaintolossinvestmentforinterestoraccount.anlosswhichindefinitepreviouslyratesinvestmentsareisThesesold,orclassifiedperiodequityared

whileinvoiceitems

gon theisdatedesignateddates.a derivativeTheasmethoda contracthedgingof

Thesesold,orclassifiedperiodequityarede-recognizedreportedaresub-categorizedofaspricesrecognizedtime,available-for-salein statementarewhichor cla

e-for-salein statementarewhichor classifiedisdirectlyasdeterminedmayunder:ofbeotherinareassoldstatementavailable-for-sale.measuredtocomprehens

lable-for-sale.measuredtocomprehensiveinberesponseimpaired,ofatotherfairto

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 is 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 statement of other comprehensive income are recognized in profit and loss account in the periods when the hedged item will affect profit or loss. #### Cash and cash equivalents Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values. #### Non current assets classified as held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than continuous use. These are measured at lower of carrying amount and fair value less costs to sell. #### Borrowing cost Interest, mark-up and other charges on long-term finances are capitalized up to the date of commissioning of respective qualifying assets acquired out of the proceeds of such long-term finances. All other interest, mark-up and other charges are recognized in profit and loss account. #### Revenue recognition Revenue from different sources is recognized as under: a) Revenue from local sales is recognized on dispatch of goods to customers while in case of export sales it is recognized on the date of bill of lading. b) Dividend on equity investments is recognized when right to receive the dividend is established. c) Profit on deposits with banks is recognized on time proportion basis taking into account the amounts outstanding and rates applicable thereon. #### Foreign currencies These financial statements are presented in Pak Rupees, which is the Companys 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 currency 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 recorded in the profit and loss account. 53

a)

b)

c)

a)

2.16 Financial instruments Financial instruments carried on the balance sheet include investments, deposits, trade debts, advances, interest accrued, other receivables, cash and bank balances, long-term financing, liabilities against assets subject to finance lease, short-term borrowings, accrued mark-up and trade and other payables etc. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of 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 are initially measured 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. Trade 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 proceedsand the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest method. Trade and other payables Liabilities for trade and other amounts payable are initially recognized at fair value, which is normally the transaction cost. 2.17 Impairment 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 with reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining 54 financial assets are assessed collectively in groups that share similar credit risk characteristics.

posits, trade debts, financing, liabilities and trade and other becomes a party to alue plus transaction value through profit

ontractual rights that he rights to benefits nancial liabilities are ed or expired. Any and de-recognition opted are disclosed accounting policy

n estimate made for debts are written

mortized cost. Any ofit and loss account

e, which is normally

one or more events

ost is calculated as ed future cash flows f available for sale

basis. The remaining

b)

Non financial assets The carrying amount of assets are reviewed at each balance sheet date for impairment whenever events are changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amounts. Recoverable amount is the higher of an assets fair value less costs to sell and value in use. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. #### 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 Companys other components. An operating segments operating results are reviewed regularly by the chief executive officer 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 officer include items directly attributable to a segmentas well as those that can be allocated on a reasonable basis. Those income, expenses, assets, liabilities and other balances which can not be allocated to a particular segment on a reasonable basis are reported as unallocated. The Company has three reportable business segments. Spinning (Producing different quality of yarn using natural and artificial fibers), Weaving (Producing different quality of greige fabric using yarn) and Processing and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles). Transaction among the business segments are recorded at arms length prices using admissible valuation methods. Inter segment sales and purchases are eliminated from the total. #### Dividend and other appropriations Dividend distribution to the Companys shareholders is recognized as a liability in the Companys financial statements in the 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. #### 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, or to realize the assets and to settle the liabilities simultaneously. 55

2011 2010 (Rupees in thousand) 3.0 ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL 2011 2010 (Number of Shares)
1,596,672 Ordinary shares of Rupees 10 each allotted on reorganisation of Kohinoor Industries Limited 26,156,000 26,156,000 Ordinary shares allotted under scheme of arrangement of merger of Part II of Maple Leaf Electric Company Limited 26,858,897 26,858,897 Ordinary shares allotted under scheme of arrangement of merger of Kohinoor Raiwind Mills Limited and Kohinoor Gujar Khan Mills Limited. 38,673,628 38,673,628 Ordinary shares of Rupees 10 each issued as fully paid bonus shares 152,241,019 52,241,019 Ordinary shares of Rupees 10 each issued as fully paid in cash 245,526,216 145,526,216 3.1 Movement during the year 145,526,216 145,526,216 At 01 July 100,000,000 Ordinary shares of Rupees 10 each issued during the year as fully paid 245,526,216 145,526,216 At 30 June 1,596,672 15,967 15,967

261,560 268,589

261,560 268,589

386,736 1,522,410 2,455,262 1,455,262 1,000,000 2,455,262

386,736 522,410 1,455,262 1,455,262

1,455,262

3.2 During the period, the Company has issued 100,000,000 ordinary shares of Rupees 10 each at face value of Rupees 10 per share otherwise than right issue to Mercury Management Incorporated (25 million shares), Hutton Properties Limited (52 million shares) and Zimpex (Private) Limited (23 million shares) in accordance with the agreement dated 10 March 2010 among the three allottees, the Company and Maple Leaf Cement Factory Limited subsidiary company after the approval of Securities and Exchange Commission of Pakistan. 3.3 Zimpex (Private) Limited which is an associated company held 45,496,057 (2010: 22,510,635) ordinary 56 shares of Rupees 10 each as at 30 June 2011.

0 each at face value rporated (25 million d (23 million shares) s, the Company and urities and Exchange

510,635) ordinary

Note 4.0 RESERVES Composition of reserves is as follows: Capital Share premium Fair value reserve - net of deferred tax Revenue General reserve Unappropriated profit / (accumulated loss)

2011 (Rupees in thousand)

2010

4.1 4.2 -

144,919 144,919

144,919 462,483 607,402

1,450,491 1,450,491 335,964 (151,887) 1,786,455 1,298,604 1,931,374 1,906,006 4.1 This reserve can be utilized by the Company only for the purposes specified in section 83(2) of the Companies Ordinance, 1984. 2011 2010 Note (Rupees in thousand) 4.2 Fair value reserve - net of deferred tax Balance as at 01 July 462,483 438,417 Add: Fair value adjustment on investment in Security General Insurance Company Limited during the year 32,632 Less: Reclassification adjustment for gain included in profit and loss (462,483) Less: Related deferred tax on investment in Security General Insurance Company Limited (8,566) Balance as at 30 June 462,483 5.0 SURPLUS ON REVALUATION OF LAND AND INVESTMENT PROPERTIES Investment properties 1,263,592 1,263,592 Freehold land 5.1 2,421,905 2,410,233 3,685,497 3,673,825 5.1 Freehold land was revalued by an independent valuer Messers ARCH-e-decon (Evaluator, Surveyors, Archeitets and Engineers) as at 30 March 2010. The value of land increased by Rupees 2,410.233 million due to revaluation. During the current year, fair value of land situated at Raiwind Road, which was previously classified as held for sale, has been determined by Messers ARCH-e-decon as at 28 June 2011. The value of this land has increased by Rupees 11.672 million due to revaluation. 57

on 83(2) of the

tor, Surveyors, upees 2,410.233 nd Road, which -decon as at 28

Note

2011 (Rupees in thousand)

2010

6.0 LONG TERM FINANCING From banking companies and other financial institutions - secured NIB Bank Limited (NIB - 1) 6.1 NIB Bank Limited (NIB - 2) 6.2 NIB Bank Limited (NIB - 3) 6.3 NIB Bank Limited (NIB - 4) 6.4 Allied Bank Limited (ABL -1 ) 6.5 Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-3) 6.6 Standard Chartered Bank (Pakistan) Limited - syndicated term finance 6.7 Allied Bank Limited - syndicated term finance 6.7 The Bank of Khyber - syndicated term finance 6.7 Pak Libya Holding Company Limited - syndicated term finance 6.7 Bank Al falah Limited - syndicated term finance 6.7 Faysal Bank Limited - syndicated term finance 6.7 The Bank of Punjab (BOP - 1) Albaraka Bank (Pakistan) Limited Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-1) Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-2) Standard Chartered Bank (Pakistan) Limited (SCB-2) Less: Current portion shown under current liabilities Other loans - unsecured Kohinoor Sugar Mills Limited (KSML) Kohinoor Industries Limited (KIL) 12

31,836 150,006 100,000 50,000 7,232 125,000 167,085 456,413 80,250 40,125 417,500 250,500

107,716 198,803

65,094 156,250 186,500 543,150 95,500 47,750 477,500 279,750 26,623 8,333 18,055 10,000 100,000 2,321,024 700,434 1,620,590 4,794 2,683 7,477 1,628,067

1,875,947 564,714 1,311,233 4,794 2,683 7,477 1,318,710

6.11 6.12

58

6.1 NIB Bank Limited (NIB - 1) This represents Long Term Financing for Export Oriented Projects (LTF-EOP) facility of Rupees 157 million obtained for import of textile machinery for a period of three years including a grace period of six months. It is repayable in ten equal quarterly installments. It is secured by first exclusive hypothecation charge on the imported machinery and allied equipment, including installation and local component costs. It carries mark up at fixed rate of 6 % per annum.

acility of Rupees 157 ding a grace period red by first exclusive ding installation and

6.2 NIB Bank Limited (NIB - 2) This represents LTF-EOP term finance facility of Rupees 300 million for a period of five years with a grace period of one year. The financing is for import of 72 Picanol Omni Plus wide width Air Jet Looms and Tying & Knotting machine plus five (5) Gen Set gas generators being part of BMR. It is repayable in equal quarterly installments after expiry of grace period. The facility is secured against first pari passu charge over fixed assets of Raiwind Division and personal guarantees of the sponsor directors. It carries fixed mark up at the rate of 7% per annum. 6.3 NIB Bank Limited (NIB - 3) This represents a term finance facility of Rupees 100 million for a period of three years. This facility is availed to partially term out existing exposure under finance against packing credit own source facility. It is repayable in thirty two equal monthly installments, commencing from July 2011. The facility is secured against exclusive charge on the plant and machinery imported under LTF facility and personal guarantees of the sponsor directors. It carries mark up at the rate of 3 months KIBOR plus 2.00% per annum. 6.4 NIB Bank Limited (NIB - 4) This represents pre -shipment loan being converted into long term loan during the year. It is repayable in thirty two monthly installments commencing from July 2011.This facility issecured against collateral covering the exposureincluding charges on bothcurrent and fixed assets of the Company and personal guarantees of the sponsor directors. It carries mark up at the rate of 3 months KIBOR plus 2.00% per annum. 6.5 Allied Bank Limited (ABL-1) Thisrepresents term finance facility of Rupees 300 million obtained for import of state of art machinery for a period of five years with a grace period of one year. The facility is repayable in sixteen equal quarterly installments commenced after conclusion of grace period. It is secured by first exclusive charge on machinery imported. Facility amounting to Rupees 100 million carries mark up at the rate of 6 months KIBOR plus 1.25% per annum, facility of Rupees 125 million carries mark up at the rate of 6 months KIBOR plus 1.75% per annum and facility of Rupees 75 million carries mark up at the rate of 6 months KIBOR plus 2.50% per annum with no floor and cap. On December 28, 2006 loans amounting to Rupees 124.732 million were converted to LTF-EOP at 7% per annum fixed rate of mark up. 6.6 Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL - 3) This represents term finance facility of Rupees 250 million obtained for debt reprofiling for a period of five years including grace period of one year. Thefacility is repayable in 8 equal six monthly installments commenced from June 2007. It is secured by first pari passu charge by way of hypothecation on all present and future plant and machinery of the Company and by way of mortgage on land measuring 121 acres, 2 kanals and 1 marla, situated at main Peshawar Road, Rawalpindi with 25% margin. The facility carries mark up at the rate of 3 months KIBOR plus 1.70% per annum with quarterly repricing. 6.7 Syndicated Term Finance Syndicated term finance of Rupees 1.750 billion was arranged through Standard Chartered Bank (Pakistan) Limited (SCBL) to swap high priced loans. Long term facility was arranged and availed in Islamic and conventional mode of financing. Standard Chartered Bank (Pakistan) Limited (Arranger), Allied Bank Limited and Bank of Khyber disbursed Rupees 868.750 million under Islamic mode of financing whereas Bank Alfalah Limited, Faysal Bank Limited and Pak Libya Holding Company Limited disbursed Rupees 850 million under conventional means of financing. Tenor of the loan was 5 years 59

including one year grace period and was repayable in 16 equal quarterly installments. During the year ended 30 June 2010, the Company entered into supplimental to its syndicated term finance facility agreement where by the repayment schedule of the purchase price was modified. The loan is repayble in twenty four installments within a tenor of six years . It is secured by first pari passu charge over the fixed assets of the Company including surplus land and buildings at Peshawar Road, Rawalpindi. It carries mark-up at 3 months average KIBOR plus 1.50% pere anum to be repriced at the end of each quarter. 6.8 Kohinoor Sugar Mills Limited (KSML) A civil suit has been filed by KSML for recovery of disputed liability which is being contested by the Company. 6.9 Kohinoor Industries Limited (KIL) The balance is an old one, un-reconciled, unconfirmed and disputed. 6.10 Current portion of long term financing include overdue installments amounting to Rupees 32.678 million (2010 : Rupees 134.816 million). 2011 Note (Rupees in thousand) 7.0 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Future minimum lease payments 101,238 Less: Un-amortized finance charges 11,365 Present value of future minimum lease payments 89,873 Less: Current portion shown under current liabilities 12 47,030 42,843 7.1 The future minimum lease payments have been discounted at implicit interest rates which range from 6.00 % to 18.85% (2010: from 6.00% to 18.00%) per annum to arrive at their present values. The lease rentals are payable in monthly and quarterly installments. In case of any default, an additional charge at the rate of 0.1 percent per day shall be payable. Taxes, repairs, replacements and insurance costs are to be borne by the Company. The lease agreements carry renewal and purchase option at the end of the lease term. There are no financial restrictions in lease agreements. These are secured by deposit of Rupees 22.098 million (2010: Rupees 21.065 million) included in long term deposits, demand promissory notes, personal guarantees and pledge of sponsors shares in public limited companies. 7.2 Future minimum lease payments and their present values are regrouped as under: 30 June 2011 30 June 2010 thanNotyearlaterone thanbutLateronenotfiveyearthanlateryears thanNotyearlaterone ------------------(Rupees in thousand)--------------Future minimum lease payments 55,574 45,664 85,937 Less: Unamortized finance charge 8,544 2,821 17,912 Present value of future minimum 60 lease payments 47,030 42,843 68,025

y installments. During the ts syndicated term finance was modified. The loan secured by first pari passu dings at Peshawar Road, anum to be repriced at the

is being contested by the

ng to Rupees 32.678 2010 (Rupees in thousand)

155,263 20,233 135,030 68,025 67,005 nterest rates which range t their present values. The ny default, an additional placements and insurance l and purchase option at ments. These are secured ded in long term deposits, s shares in public limited

30 June 2010 thanbutLateronenotfiveyearthanlateryears ousand)--------------69,326 2,321 67,005

Note 8.0 DEFERRED INCOME TAX This comprises of following : Deferred tax liability on taxable temporary differences in respect of: - Accelerated tax depreciation - Surplus on revaluation of investment Deferred tax asset on deductible temporary differences in respect of: Unused tax losses 9.0 TRADE AND OTHER PAYABLES Creditors Accrued liabilities Advances from customers Workers profit participation fund Workers welfare fund Unclaimed dividend Withholding tax payable Payable to employees provident fund trust Others 9.1 Workers profit participation fund Balance as on 01 July Add: Interest for the year Provision for the year Less: Payments during the year

2011 (Rupees in thousand)

2010

394,104 394,104

329,260 164,613 493,873

331,963 62,141 615,087 128,401 11,089 20,905 7,686 2,681 4,629 36,287 7,926 834,691 21,669 2,445 10,188 (13,397)

335,877 157,996 788,562 151,067 18,593 21,669 7,686 2,681 2,715 42,096 5,188 1,040,257 1,254 188 20,227

9.1

35 33

20,905 21,669 9.1.1 The Company retains workers profit participation fund for its business operations till the date of allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers Participation) Act, 1968 on funds utilized by the Company till the date of allocation to workers. 2011 2010 (Rupees in thousand) #### ACCRUED MARK-UP Long term financing 88,006 119,580 Short term borrowings 140,535 167,594 Liabilities against assets subject to finance lease 1,597 2,813 230,138 289,987 61

ns till the date of Profit (Workers

Note 11. SHORT TERM BORROWINGS From banking companies - secured Short term running finances Other short term finances State Bank of Pakistan (SBP) refinances Temporary bank overdraft

2011 (Rupees in thousand)

2010

2,285,452 2,200,553 1,555,000 29,430 5,130,265 6,070,435 11.1 The running finance facilities sanctioned by various banks aggregate to Rupees 2,184 million (2010: Rupees 2,390 million). The rates of mark-up range from 3.49% to 21.90% (2010: from 3.23% to 25%) per annum. These arrangements are secured by pledge of raw material, charge on current assets of the Company including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors. 11.2 The other short term finance facilities sanctioned by various banks aggregate to Rupees 2,426 million (2010: Rupees 3,638 million). The rates of mark-up range from 13.45% to 25.00% (2010: from 6.63% to 18.00%) per annum. These arrangements are secured by pledge of raw material, charge on current assets of the Company including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors. 11.3 The export refinance facilities sanctioned by various banks aggregate to Rupees 1,435 million (2010: Rupees 1,665 million). The rates of mark-up range from 8.50% to 11.00% (2010: 6.50% to 8.50%) per annum. These arrangements are secured by way of charge on current assets of the Company and personal guarantees of the sponsor directors. 2011 2010 Note (Rupees in thousand) 12. CURRENT PORTION OF NON-CURRENT LIABILITIES Long term financing - secured 6 564,714 700,434 Liabilities against assets subject to finance lease 7 47,030 68,025 611,744 768,459 13. CONTINGENCIES AND COMMITMENTS 13.1 Contingencies a) The Company has filed an appeal before AppellateTribunal Inland Revenue, Lahore for tax year 2003 under section 129/132 of Income Tax Ordinance, 2001, which is pending adjudication. The tax loss was restricted to Rupees 27.540 million against declared loss of Rupees 122.933 million. In addition to the above, another appeal for tax year 2003 against order under section 221 dated 24 January 2009, on the disallowance of depreciation expense of Rupees 62.665 million has been filed before Appellate Tribunal Inland Revenue which is pending adjudication. This is a cross appeal. Although the learned Commissioner Inland Revenue (Appeals) has already annulled the order under section 221 of the Income Tax Ordinance, 2001, vide order dated 30 July 2009, the Taxation Officer has illegally repeated the original assessment. Therefore, an appeal has also been filed before Commissioner Inland Revenue under section 187 of Income Tax Ordinance, 2001 for tax year 2003, the appellate order of which is pending. The revenue involved on account of penalty was Rupees 17.484 million. 62 The Company has strong grounds and is expecting favourable outcome.

11.1 11.2 11.3

1,879,564 1,815,701 1,435,000

2,184 million (2010: rom 3.23% to 25%) on current assets of tters of credit, firm

upees 2,426 million (2010: from 6.63% l, charge on current spares, letters of

,435 million (2010: 6.50% to 8.50%) per of the Company and

e for tax year 2003 ation. The tax loss million. In addition 21 dated 24 January as been filed before ppeal. Although the r under section 221 Officer has illegally before Commissioner 2003, the appellate es 17.484 million.

b)

TheCompany has filed an appeal before the Appellate Tribunal Inland Revenue under section 122(5A) / 122(1) / 129 of Income Tax Ordinance, 2001 for tax year 2004 which is pending adjudication. The loss for the year has been assessed atRupees 255.886 million against declared loss of Rupees 255.886 million creating refund of Rupees 7.498 million.Department has also filed cross appeal mainlyon issue of chargeability of 3.5% tax on local purchases amounting to Rupees 955.547 million. The Company has strong grounds and is expecting favourable outcome. c) TheCompany has filed an appeal before the Appellate Tribunal Inland Revenue under section 122(5A) / 122(1) / 129 of Income Tax Ordinance, 2001 for tax year 2005, which is pending adjudication. The Income for the year has been assessed at Rupees 113.440 million against declared loss of Rupees 205.576 million creating payable of Rupees 74.576 million. Department has also filed cross appeal mainly on issue of chargeability of 3.5% tax on local purchases amounting to Rupees 828.839 million. The Company has strong grounds and is expecting favourable outcome. d) TheCompany andthe tax authoritieshave filed appealsbefore different appellate authoritiesregarding sales tax matters. Pending the outcome of appeals filed by the Company and tax authorities, no provision has been made in these financial statements which on the basis adopted by the authorities would amount to Rupees 35.555 million (2010: Rupees 33.473 million), since the Company has strong grounds against the assessments framed by the tax authorities. e) The Company has filed recovery suits in civil courts of Rupees 8.390 million (2010: Rupees 4.589 million) against various suppliers and customers for goods supplied by/ to them. Pending the outcome of the cases, no provision there against has been made in these financial statements since the Company is confident about favourable outcome of the cases. f) Three cases are pending before the Punjab Labour Appellate Tribunal, Shadman 1, Lahore regarding the reinstatement into service of three employees dismissed from their jobs. No provision has been made in these financial statements, since the Company is confident about favourable outcome of the cases. g) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Company, to various institutions and corporate bodies aggregate Rupees 249.620 million as at 30 June 2011 (2010: Rupees 248.962 million) 13.2 Commitments in respect of: a) Letters of credit for capital expenditure amount to Rupees Nil (2010: Rupees 38.865 million). b) Letters of credit other than for capital expenditure amount to Rupees 42.070 million (2010: Rupees 325.393 million). 2011 2010 (Rupees in thousand) 14. PROPERTY, PLANT AND EQUIPMENT Operating fixed assets (Note 14.1) 6,745,943 6,409,975 Capital work in progress (Note 14.4) 1,748 86,324 6,747,691 6,496,299 63

oss of Rupees

authorities, no

Rupees 4.589

64

65

Note 14.3 Depreciation charged during the year has been allocated as follows: Cost of sales Administrative expenses 14.4 Capital work in progress Civil works and buildings Plant and machinery

2011 (Rupees in thousand)

2010

30 32

338,107 350,778 19,638 20,840V 357,745 371,618 105 1,643 1,748 67,593 18,731 86,324

15. INTANGIBLE ASSET Computer software Year ended 30 June 2011 Opening net book vlaue Addition 9,836 Amortization (273) Closing net book value 9,563 Cost as at 30 June 2011 9,836 Accumulated amortization (273) Net book value 9,563 Amortization rate (per annum) 33.33% 16. INVESTMENT PROPERTIES Year ended 30 June Opening net book amount 1,720,835 1,720,835 Fair value gain 879 Closing net book amount 1,721,714 1,720,835 16.1 Thehaveprofessionaltheexpensescurrentfairbeenvaluedirectlydeterminedpricesqualifications.of investmentrelatedin 2011 2010 17.0 LONG TERM INVESTMENTS ote N (Rupees in thousand) 2011 2010 (Number of shares)
Maple Leaf Cement Factory Limited - quoted 186,608,808 Ordinary shares of Rupees 10 each fully paid 17.1 Equity held 64.63% (2010: 50.13%) Concept Trading (Private) Limited - unquoted 19,998 Ordinary shares of Rupees 10 each fully paid Equity held 99.99% (2010: 99.99%)

340,410,425

3,248,680

2,248,970

19,998

200 3,248,880

200 2,249,170

66

cations.of investmentrelatedin anatactiveto30propertiesTheinvetrmentJunemarketfair2011valuecomprisingforpropertiesandwassimilar30determinedJ

opertiesandwassimilar30determinedJunelandpropertieswere2010andincurredonbybuildinginanthetheindependentduringbasissituatedsameoftheprofes

ntduringbasissituatedsameoftheprofessionallocationatyear.Lahorevaluerandhavingandassessmentcondition.RawalpindirelevantNoof

lpindirelevantNoof

17.1 During the period, the Company has made an investment of Rupees 999.710 million by subscribing 153,801,617 ordinary shares of Rupees 10 each of Maple Leaf Cement Factory Limited - subsidiary companyvide agreement dated 10 March 2010 between Mercury Management Incorporated, Hutton Properties Limited, Zimpex (Private) Limited, Maple Leaf Cement Factory Limited and Kohinoor Textile Mills Limited, after approval of Securities and Exchange Commission of Pakistan. 17.2 Based on value in use calculations as at 30 June 2011, there was no impairment loss on investments in subsidiary companies (tested for impairment under IAS 36 (Impairment of Assets). The recoverable amount of investment in Maple Leaf Cement Factory Limited - subsidiary company was determined by an independent valuer. 2011 2010 Note (Rupees in thousand) 18. LONG TERM DEPOSITS Security deposits 43,380 41,124 Less: current portion shown under current assets 23 (7,622) (6,237) 35,758 34,887 19. STORES, SPARE PARTS AND LOOSE TOOLS Stores 19.1 270,494 250,003 Spare parts 58,643 95,795 329,137 345,798 Less: Provision against slow moving items (744) 328,393 345,798 19.1 This includes stores in transit of Rupees 3.081 million (2010: Rupees 14.333 million). 20. STOCK-IN-TRADE Raw material 530,846 764,549 Work-in-process 391,129 891,595 Finished goods 735,277 736,969 1,657,252 2,393,113 20.1 Raw material include stock in transit of Rupees 210.034 million (2010: Rupees 55.351 million). 20.2 Stock in trade of Rupees 303.684 million (2010: Rupees Nil) is being carried at net realizable value. 20.3 Theaggregate amount of write-down of inventories to net realizable value recognized during the year was Rupees 47.216 million (2010: Rupees Nil). 67

hinoor Textile

nvestments in

Note 21. TRADE DEBTS Considered good: Secured (against letters of credit) Unsecured Considered doubtful: Others - unsecured Less: Provision for doubtful debts As at 01 July Add: Provision for the year As at 30 June

2011 (Rupees in thousand)

2010

166,654 540,746 707,400 2,274 -

747,285 581,780 1,329,065

2,274 2,274 21.1 As at 30 June 2011, trade debts of Rupees 493.844 million (2010 : Rupees 568.309 million) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default. The ageing analysis of these trade debts is as follows: 2011 2010 (Rupees in thousand) Upto 1 month 293,516 433,697 1 to 6 months 167,262 116,664 More than 6 months 33,066 17,948 493,844 568,309 21.2 As at 30 June 2011, trade debts of Rupees 2.274 million (2010 : Rupees Nil) were impaired and provided for. The ageing of these trade debts was more than three years. 2011 2010 (Rupees in thousand) 22. ADVANCES Considered good: Employees - interest free - Executives 1,390 621 - Other employees 224 1,040 1,614 1,661 Advances to suppliers 222,985 593,555 Letters of credit 16,732 1,579 68 241,331 596,795 33

9 million) were past m whom there is no

il) were impaired and

2011 (Rupees in thousand) 23. SECURITY DEPOSITS AND SHORT TERM PREPAYMENTS Current portion of long tern deposits 18 Short term prepayments 24. DUE FROM SUBSIDIARY COMPANIES Maple Leaf Cement Factory Limited Concept Trading (Private) Limited 7,622 11,423 19,045

2010

6,237 9,341 15,578

63,636 14,987 537,508 601,144 14,987 24.1 This includes adjustment of sales tax refunds of the company against sales tax liability of subsidiary company including mark up thereon amounting to Rupees 45.512 million (2010 : Rupees Nil) and receivable against allocation of pool expenses. 24.2 This represents the receivable from Concept Trading (Private) Limited - a wholly owned subsidiary company on account of disposal of available for sale investment in Security General Insurance Company Limited. 2011 2010 (Rupees in thousand) 25. OTHER RECEIVABLES Considered good: Sales tax refundable 242,402 260,161 Custom duty receivable 3,642 3,642 Mark up subsidy 11,689 Export rebate 42,664 47,561 Insurance claims 281 175 Research and development support 472 473 Duty draw back 119,555 25,808 Cotton claim 28,745 Others 12,238 20,376 432,943 386,941 69

24.1 24.2

upees Nil) and

ned subsidiary ral Insurance

2011 (Rupees in thousand) 26. SHORT TERM INVESTMENTS Investments at fair value through profit or loss Quoted companies Loss on remeasurement of fair value during the year Available for sale Unquoted Security General Insurance Company Limited Nil (2010 : 6,398,541) ordinary shares of Rupees 10 each fully paid. Equity held Nil (2010 : 9.40%) Surplus on revaluation of investment

2010

702 (102)

13,611 (5,595) 600 8,016

26.1 -

7,000

627,095 634,095 600 642,111 26.1 During the current year, the Company has disposed of its available for sale investment in Security General Insurance Company Limited to Concept Trading (Private) Limited - a wholly owned subsidiary company at a price of Rupees 84 per share by considering the valuation report, prepared by Messers Anjum Asim Shahid Rahman, chartered Accountants (Member of Grant Thornton International) based on generally accepted valuation method. 26.2 Security General Insurance Company Limited ceased to be an associated company from 22 June 2011.0 2011 2010 (Rupees in thousand) 27. CASH AND BANK BALANCES Cash in hand 1,301 961 Cash at bank: - On current accounts 98,651 65,217 - On saving accounts 321,044 12,673 419,695 77,890 420,996 78,851 27.1 The balances in saving accounts carry interest ranging from 0.20% to 12% (2010: from 0.40% to 13%) per annum. 70 27.2 balances in current and deposit accounts include US $ 217,802 (2010: US $ 37,000) The

estment in Security owned subsidiary pared by Messers ternational) based

pany from 22 June

m 0.40% to 13%)

2011 2010 (Rupees in thousand) 28. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE Land 552,923 Advance against land 100,000 652,923 28.1 During the current year, the Company has disposed off its land at M.M. Alam Road, Lahore at an amount of Rupees 119.200 million. Advance of Rupees 100 million for purchase of land has been received back. Further, the Company has ceased to classify the other land at Raiwind Road as held for sale after managements assessment that the criteria prescribed by IFRS 5 Non-current Assets Held for Sale and Discontinued Operations is no longer being met. Now, this land at Raiwind Road has been classified as a non-current asset under the head Property, Plant and Equipment in these financial statements and is being carried at fair value in accordance with IAS 16 Property, Plant and Equipment. 2011 2010 Note (Rupees in thousand) 29. SALES Export 6,661,344 6,406,061 Local 29.1 5,213,062 4,189,295 Duty drawback 116,458 54,845 Export rebate 46,389 43,137 ######### 10,693,338 29.1 Local sales 5,213,384 4,189,295 Less: Sales tax 322 5,213,062 4,189,295 29.2 Exchange gain due to currency rate fluctuations relating to export sales amounting to Rupees 15.966 million (2010: Rupees 35.245 million) has been included in export sales. 71

Note 30. COST OF SALES Raw materials consumed Cloth and yarn procured and consumed Salaries, wages and other benefits Dyes and chemicals consumed Processing charges Stores, spare parts and loose tools consumed Packing materials consumed Fuel and power Repair and maintenance Insurance Other factory overheads Depreciation Work-in-process Opening stock Closing stock Cost of goods manufactured Finished goods Opening stock Closing stock Cost of sales 30.1 Raw material consumed Opening stock Add: Purchased during the year 30.1 30.2

2011 (Rupees in thousand) 5,349,247 1,443,577 699,683 341,963 13,508 513,192 325,142 575,707 55,592 21,969 33,860 338,107 9,711,547

2010

14.3

3,347,817 2,464,620 740,125 518,965 12,267 608,508 374,847 619,450 59,445 22,915 39,795 350,778 9,159,532

891,618 546,792 (391,129) (891,618) 500,489 (344,826) 10,212,036 8,814,706 736,946 614,769 (735,277) (736,946) 1,669 (122,177) 10,213,705 8,692,529

709,197 558,033 4,997,799 3,498,981 5,706,996 4,057,014 Less: Closing stock (357,749) (709,197) 5,349,247 3,347,817 30.2 Salaries, wages and other benefits include provident fund contribution of Rupees 16.631 million 72 (2010: Rupees 16.813 million) by the Company.

pees 16.631 million

Note 31. DISTRIBUTION COST Salaries and other benefits Outward freight and handling Clearing and forwarding Travelling and conveyance Insurance Vehicles running expenses Electricity, gas and water Postage, telephone and fax Legal and professional Sales promotion and advertisement Commission to selling agents Miscellaneous expenses 31.1

2011 (Rupees in thousand)

2010

39,374 39,011 30,995 30,549 232,933 227,943 13,732 17,911 505 348 3,389 3,252 910 808 2,247 2,832 80 13,804 16,726 83,955 54,501 3,139 3,937 425,063 397,818 31.1 Salariesand other benefits include provident fund contribution of Rupees 1.399 million (2010: Rupees 1.284 million) by the Company. 2011 2010 Note (Rupees in thousand) 32. ADMINISTRATIVE EXPENSES Salaries and other benefits 32.1 107,214 93,990 Travelling and conveyance 6,744 5,587 Repairs and maintenance 9,123 8,280 Rent, rates and taxes 7,061 9,001 Insurance 4,481 4,600 Vehicles running expenses 9,574 7,296 Printing, stationery and periodicals 4,115 4,359 Electricity, gas and water 2,506 2,589 Postage, telephone and fax 5,607 4,878 Legal and professional 5,895 4,433 Security, gardening and sanitation 20,424 19,813 Amortization 15 273 Depreciation 14.3 19,638 20,840 Miscellaneous expenses 16,084 9,437 218,739 195,103 32.1 Salariesand other benefits include provident fund contribution of Rupees 3.008 million (2010: Rupees 2.800 million) by the Company. 73

2011 33. OTHER OPERATING EXPENSES Note (Rupees in thousand) Auditors remuneration 33.1 1,608 Donations 33.2 451 Loss on disposal of land classified as held for sale 34,050 Loss on remeasurement of fair value of investments at fair value through profit or loss 102 Provision for doubtful debts 2,274 Provision for slow moving stores and spares 744 Workers profit participation fund 9.1 10,188 Workers welfare fund Miscellaneous 15 33.1 Auditors remuneration 49,432 Statutory audit fee 1,200 Certifications 408 33.2 None of the directors and their spouses have 1,608 any interest in the donees fund. 34. OTHER OPERATING INCOME Income from financial assets: Exchange gain 5,570 Gain on disposal of investments at fair value through profit or loss 1,227 Gain on disposal of investment - Security General Insurance Company Limited 34.1 530,477 Gain on remeasurement of fair value of investments at fair value through profit or loss Return on bank deposits 1,268 Dividend income 266 Income from related parties: 538,808 Dividend income - Security General Insurance Company Limited 15,997 Mark up on loan to Maple Leaf Cement Factory Limited 2,517 Income from non-financial assets: 18,514 Scrap sales 29,898 Gain on disposal of property, plant and equipment 14.2 7,668 Gain on remeasurement of fair value of investment property 879 Miscellaneous 3 38,448 74 595,770

2010 1,265 8,100

20,227 7,686 45 37,323 1,000 265 1,265

19,261

1,869 953 425 22,508 12,797 12,797 29,175 6,049 8,122 43,346 78,651

34.1 This represents gain on disposal ofavailable for sale investment in Security General Insurance Company Limited to Concept Trading (Private) Limited - a wholly owned subsidiary company. 2011 2010 Note (Rupees in thousand) 35. FINANCE COST Mark-up/finance charges/ interest on: Long term financing 263,350 329,679 Short term borrowings 721,918 683,516 Liabilities against assets subject to finance lease 14,211 21,169 Workers profit participation fund (WPPF) 9.1 2,445 188 Employees provident fund trust 6,407 2,968 1,008,331 1,037,520 Bank charges and commission 28,963 35,248 1,037,294 1,072,768 36. TAXATION For the year Current tax 36.1 132,181 83,824 Deferred tax 68,758 14,763 200,939 98,587 36.1 Provision for current tax represents final tax on export sales, minimum tax on local sales and tax on income from other sources under the relevant provisions of the Income Tax Ordinance, 2001. Numeric tax reconciliation has not been presented, being impracticable. 2011 2010 Note (Rupees in thousand) 37. CASH GENERATED FROM OPERATIONS Profit before taxation 688,790 376,448 Adjustment for non-cash charges and other items: Depreciation 357,745 371,618 Amortization 273 Finance cost 1,034,849 1,072,768 Gain on sale of property, plant and equipment (7,668) (6,049) Gainon disposal of investments at fair value through profit or loss (1,227) Gain on disposal of investment - Security General Insurance Company Limited (530,477) Gain on remeasurement of investment property (879) Dividend income (16,263) (13,222) Return on bank deposits (1,268) (953) Provision for doubtful debts 2,274 Provision for slow moving stores and spares 744 Loss on disposal of non-current assets classified as held for sale 34,050 Gain / (loss) on remeasurement of investments at fair value through profit or loss 102 (1,869) Working capital changes 37.1 1,437,349 (1,124,424) 2,998,394 674,317

cal sales and tax dinance, 2001.

75

2011 2010 (Rupees in thousand) 37.1 Working capital changes (Increase) / decrease in current assets: Stores, spare parts and loose tools Stock-in-trade Trade debts Advances Security deposits and short term prepayments Due from subsidiary companies Other receivables Increase / (decrease) in trade and other payables

(1,124,424) 38. REMUNERATION OF CHIEF EXECUTIVE OFFICER, DIRECTORS AND EXECUTIVES The aggregate amounts charged in these financial statements in respect of remuneration including certain benefits to the chief executive officer, directors and executives of the Company are given below: Chief Executive Officer Directors Executives 2011 2010 2011 2010 2011 2010 -----------------------( Rupees in Thousand )--------------------Managerial remuneration 4,920 4,800 5,300 5,157 58,529 44,856 Contribution to provident fund 315 308 158 154 3,546 3,005 Housing and utilities 133 87 11,388 9,021 Medical 84 1,229 1,246 9,953 2,586 Group insurance 95 92 324 252 Club subscription 67 64 Others 189 185 2,893 6,096 5,491 5,441 6,915 6,736 86,633 65,816 Number of persons 1 1 3 3 49 31 TheChief Executive Officer and directors are provided withthe Companys maintained vehicles, free medical facilities and residential telephone facilities for both business and personal use. Chief Executive Officer is also provided with free furnished accommodation alongwith utilities. Executives are provided with the Companys maintained vehicles in accordance with the Company policy. The aggregate amount charged in these financial statements in respect of directors meeting fee paid to 2 76 (2010: 2) directors was Rupees 90,000 (2010: Rupees 70,000).

16,661 735,861 619,391 355,464 (3,467) (585,867) 491,475 1,629,518 (192,169) 1,437,349

(41,851) (613,287) (278,964) (293,433) 12,805 (4,330) (95,866) (1,314,926) 190,502

39. TRANSACTIONS WITH RELATED PARTIES The related parties comprise of subsidiaries, associated undertakings, directors of the company and their close relatives, key management personnel and staff retirement fund. Detail of transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements are as follows: 2011 2010 (Rupees in thousand) Subsidiary companies Purchase of goods and services 479 484 Sale of goods and services 147 Purchase of property, plant and equipment 1,770 Sale of property, plant and equipment 204 419 Purchase of shares 200 Associated Company Dividend income 15,997 12,797 Post employment benefit plan Contribution to provident fund 21,038 20,897 Other related parties Sale of vehicles 2,477 2011 2010 40. EARNINGS PER SHARE - BASIC AND DILUTED There is no dilutive effect on the basic earning per share which is based on: Profit attributable to ordinary shares Rupees in thousand 487,851 277,861 Weighted average number of ordinary shares Numbers 221,964,572 145,526,216 Earnings per share Rupees 2.20 1.91 41. PLANT CAPACITY AND ACTUAL PRODUCTION SPINNING: - Rawalpindi Division (Numbers) Spindles (average) installed / worked 85,680 85,680 (Kilograms in thousand) 100% Plant capacity converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 33,620 37,950 Actual production converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 23,547 35,211 77

- Gujar Khan Division Spindles (average) installed / worked

(Numbers) 70,848 2011 #### (Kilograms in thousand) 32,042 25,989 (Numbers) 204 (Square meters in thousand)

70,848

100% Plant capacity converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts ) Actual production converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) WEAVING: - Raiwind Division Looms installed / worked

33,313 31,295

204

100% Plant capacity at 60 picks based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 72,568 72,568 Actual production converted to 60 picks based on 3 shifts per day for 1,072 shifts (2010: 1,072 shifts) 66,580 68,605 PROCESSING OF CLOTH: - Rawalpindi Division (Meters in thousand) Capacity at 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 41,975 41,975 Actual at 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 21,367 34,653 POWER PLANT: - Rawalpindi Division (Mega Watts) Annual rated capacity (based on 365 days) 207,787 #### Actual generation Main engines 884 2,198 Gas engines 60,935 78,080 - Raiwind Division Annual rated capacity (based on 365 days) 54,460 54,460 Actual generation Gas engines 22,432 26,212 Stitching The plant capacity of this division is indeterminable due to multi product involving varying plants processes of manufacturing and run length of order lots. REASONS FOR LOW PRODUCTION Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality, interruption in gas and electricity supply. Cloth processing units working capacity was limited to actual export / local orders in hand. 78 The generation of power was limited to actual demand. -

nterruption in

79

All segment liabilities are allocated to reportable segments other than trade and other payables, corporate borrowings and current and deferred tax liabilities. 42.3 Geographical Information 42.3.1 The Companys revenue from external customers by geographical location is detailed below: 2011 2010 (Rupees in thousand) Europe 2,025,774 1,664,667 America 4,342,122 4,040,326 Asia, Africa, Australia 456,295 799,050 Pakistan 5,213,062 4,189,295 12,037,253 10,693,338 42.3.2 All non current assets as at reporting date are located and operated in Pakistan. 42.4 Revenue from major customers The Companys revenue is earned from a large mix of customers. 43. FINANCIAL RISK MANAGEMENT 43.1 Financial risk factors The Companys activities expose it to a variety of financial risks: market risk (including currency risk,managementpotentialfinancialotherinstrumentsadversepriceprogrammeriskeffectsandto hedgeinterestfocuseso RisktheBoardasinstrumentscurrencyBoardmanagementprovidesofrisk,andDirectors.principlesothernonis carriedderiv (a) Market risk (i) Currency risk Currencybecausetransactionsofriskchangesorisreceivablesthe riskin foreignthatandtheexchangepayablesfair valueth TherespectexposureThe CompanyCompanytoistherestrictedusesisUnitedexposedforwardtoStatesbanktoexchangeba appropriate. The Companys exposure to currency risk was as follows: 2011 2010 Cash at banks - USD 218,000 37,000 Trade debts - USD 4,485,184 11,864,000 Trade debts - Euro 832,000 Trade and other payable - USD 57,000 30,000 Net exposure - USD 4,646,184 11,871,000 80 Net exposure - Euro 832,000

e and other payables,

sk (including currency effectsandto hedgeinterestfocuseson thecertainrateCompanyon theriskrisk),unpredictabilityexposures.screditfinancialrisk andperformance.ofliquidity ors.principlesothernonis carriedderivativepriceTheforCompanyrisk,outoverallfinancialinterestby therisks financeCompanymanagement,instrumentsrat

ndtheexchangepayablesfair valuethatrates.or futureexistCurrencyduecashtoflowsrisktransactionsarisesof a financialmainlyin foreigninstrumentfrom cu dforwardtoStatesbanktoexchangebalances,Dollarcurrency(USD)contractstheriskandamountsarisingEuro.to fromhedgereceivableCurrently,variousits for

ancialrisk andperformance.ofliquidityfinancialrisk.marketsTheTheCompanyCompanyand seeksusesstooverallderivativeminimiserisk Companymanagement,instrumentsrate risk,departmentscreditfinanceandasrisk,wellinvestmentevaluatesdepartmentliquidityas policiesofandrisk,excess

ialmainlyin foreigninstrumentfrom currencies.futurewillcommercialfluctuate edgereceivableCurrently,variousits foreign/thepayablecurrencyCompanycurrencyfromexposures,s/risk,toforeignthewhenforeignprimarilyexchangecons

vativeminimiserisk entliquidityas policiesofandrisk,excessundercoveringhedgesuse ofliquidity.policiesderivativespecificfinancialapprovedareasrisks.financialsuchTheby

hewhenforeignprimarilyexchangeconsideredentities.withrisk

vedareasrisks.financialsuchTheby

2011 2010 The following significant exchange rates were applied during the year: Rupees per US Dollar Average rate 85.25 83.55 Reporting date rate 86.05 85.40 Rupees per Euro Average rate 114.54 107.92 Reporting date rate 124.89 104.33 Sensitivity analysis IfEurowould3.993ofmovementsanalysisexposuretheforeignandfunctionalmillion)haveisGBPduringexchangeunrepresentativebeenha (ii) Other price risk OtherwillorinstrumentCompanycurrencyfluctuatepriceisornotriskrisk),becauseitsexposedrepresentsissuer,whetherofortochangesfac Sensitivity analysis TheIndexanalysisall othertableonisvariablesthebelowbasedCompanysummarisesonheldthesconstantassumptionprofittheafterandim historical correlation with the index: Index Impactafter taxationon profit Impactcomprehensiveon statementincomeof other 2011 2010 2011 2010 --------------- (RUPEES IN THOUSAND) ----------------KSE 100 (5% increase) 28 401 KSE 100 (5% decrease) 28 (401) (iii) 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. The Company has no significant long-term interest-bearing assets. The Companys interest rate risk arises from long term financing, liabilities against assets subject to finance lease and short term borrowings. Financial instruments obtained at variable ratesexpose the Company to cashflow interest rate risk. Financial instruments obtained at fixed rate expose the Company to fair value interest rate risk. 81

xchangeunrepresentativebeenhasrespectivelywiththecurrency,beenRupeesalldenominatedyear.othercalculated18.798higheratofvariablesreportinginhe

sissuer,whetherofortochangesfactorsthosecommoditythe riskchangesaffectinginthatmarketpricetheareallfairpricesrisk.similarcausedvalue(otherfinancia

ntassumptionprofittheafterandimpactalltaxationthattheoftheincreaseCompanyforequitythe/ sindexdecreaseyearequityandhadinstrumentsinonincrease

ntincomeof other

.798higheratofvariablesreportinginherent/financialmilliononlower,ahelddate,symmetriccurrencyandmainlyinstruments.constant,hadRupeesasriskweak

srisk.similarcausedvalue(otherfinancialorby futurefactorsthaninstrumentthosecashspecificflowsarisingtotradedofthefroma financialindividualininterest

equityandhadinstrumentsinonincreasedtheequityKarachi(fair/moveddecreasedStockvalueaccordingExchangereserve).by 5%to(KSE)withThethe

ments.constant,hadRupeesasriskweakenedbasis.atheresultasNilCurrencytheimpact(2010Inofyear/managementstrengthenedexchange:onRupeesendrisk

hefroma financialindividualininterestthe market.instrumentfinancialrate Therisk

rve).by 5%to(KSE)withThethe

engthenedexchange:onRupeesendriskprofitsensitivityexposuregains46.633afters byopinion,/ taxationlosses5%doestomillionforeignagainstnottheonfo

oestomillionforeignagainstnottheonforandtranslationreflectsensitivityexchangethetheRupeesUSD,yearthe

(b)

At the balance sheet date the interest rate profile of the Companys interest bearing financial instruments was: 2011 2010 (Rupees in thousand) Fixed rate instruments Financial liabilities Long term financing 196,551 407,742 Short term borrowings 1,435,000 1,555,000 Floating rate instruments Financial assets Bank balances- saving accounts 321,044 12,673 Financial liabilities Long term financing 1,686,873 1,920,759 Short term borrowings 3,695,265 4,515,435 Liabilities against assets subject to finance lease 89,873 135,030 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. Therefore, a change in interest rate at the balance sheet date would not affect profit or loss of the Company. Cash flow sensitivity analysis for variable rate instruments If interest rate at the year end date, fluctuates by 1% higher / lower with all other variables held constant, profit after taxation for the year would have been Rupees 48.934 million (2010 : Rupees 65.712 million) lower / higher, mainly as a result of higher / lower interest expense on floating rate borrowings. This analysis is prepared assuming the amounts of liabilities outstanding at balance sheet dates were outstanding for the whole year. 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 carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows: 2011 2010 (Rupees in thousand) Investments 600 642,111 Deposits 43,380 41,124 Trade debts 707,400 1,329,065 Advances 1,614 1,661 Accrued interest 46 141 Due from subsidiary companies 601,144 14,987 Other receivables 24,208 49,296 Bank balances 419,695 77,890 82 1,798,087 2,156,275

st bearing financial

fair value through d not affect profit or

other variables held llion (2010 : Rupees nse on floating rate ng at balance sheet

financial loss for the al assets represents porting date was as

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:
Short term Banks National Bank of Pakistan Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Faysal Bank Limited Habib Bank Limited MCB Bank Limited NIB Bank Limited The Royal Bank of Scotland Limited My Bank Limited The Bank of Punjab Meezan Bank Limited Silk bank Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited Al-Baraka Islamic Bank Limited Bank Al Habib Limited Burj Bank Limited Citi Bank N.A. A-1+ A1+ A1+ A1+ A1+ A-1+ A1+ A1+ A1+ A2 A1+ A-1 A-2 A1+ A-1+ A2 A-1+ A-2 P-1 Rating Long term AAA AA AA AA AA AA+ AA+ AA AA AAAAA AAAA AA+ A AA+ AA1 Agency JCR-VIS PACRA PACRA PACRA PACRA JCR-VIS PACRA PACRA PACRA PACRA PACRA JCR-VIS JCR-VIS PACRA JCR-VIS PACRA PACRA JCR-VIS Moody s 2011 (Rupees in thousand) 4,666 6,507 46,473 32,275 774 50 26,419 1,657 32 11,765 618 7 10 224 6,410 1,604 279,710 494 419,695 419,695 2010

754 32,531 7,822 1,421 4,108 67 9,907 12,313 88 30 540 319 2,945 2,309 133 2,565 38

77,890 634,095 711,985

Investments Security General Insurance Company LimitedA

JCR-VIS

(c)

The Companys exposure to credit risk and impairment losses related to trade debts is disclosed in Note 21. Due to the Companys long standing business relationships with these counterparties and after giving due consideration to their strong financial standing, management does not expect non-performance by these counter parties on their obligations to the Company. Accordingly the credit risk is minimal. Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. At 30 June 2011, the Company had Rupees 6,045 million available borrowing limits from financial institutions and Rupees 420.996 million cash and bank balances. The management believes the liquidity risk to be low. Following are the contractual maturities of financial liabilities, including interest payments. The amount disclosed in the table are undiscounted cash flows: 83

Contractual maturities of financial liabilities as at 30 June 2011


Carrying amount Non-derivative financial liabilities: Long term financing Liabilities against assets subject to finance lease Trade and other payables Accrued mark-up Short term borrowings 89,873 754,095 230,138 5,130,265 8,087,795 Carrying amount Non-derivative financial liabilities: Long term financing Liabilities against assets subject to finance lease Trade and other payables Accrued mark-up Short term borrowings 135,030 947,498 289,987 6,070,435 9,771,451 155,263 947,498 185,259 6,268,109 10,506,563 53,450 947,498 185,259 5,796,162 7,524,730 902,944 32,487 471,947 744,274 45,157 1,334,615 24,169 2,328,501 2,950,434 542,361 398,510 699,117 1,310,446 101,238 754,095 230,138 5,335,524 8,685,492 16,607 754,095 230,138 5,301,394 6,774,722 372,101 6-12 month 1-2 Year 24,888 34,130 764,973 43,675 773,696 More than 2 Years 16,068 1,883,424 2,264,497 472,488 313,083 721,298 757,628 Contractual 6 month cash flows or less 6-12 month 1-2 Year More than 2 Years

------------------- (Rupees in thousand) --------------------

Contractual maturities of financial liabilities as at 30 June 2010


Contractual 6 month cash flows or less

------------------- (Rupees in thousand) --------------------

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. The rates of interest / mark up have been disclosed in note 6, note 7, and note 11 to these financial statements. 43.2 Financial instruments by categories receivablesLoans and Throughor lossprofit Total -------------(Rupees in thousand)------------As at 30 June 2011 Assets as per balance sheet Investments 600 600 Deposits 43,380 43,380 Trade debts 707,400 707,400 Advances 1,614 1,614 Accrued interest 46 46 Due from subsidiary companies 601,144 601,144 Other receivables 24,208 24,208 Cash and bank balances 420,996 420,996 84 1,798,788 600 1,799,388

Liabilities as per balance sheet Long term financing Liabilities against assets subject to finance lease Trade and other payables Accrued mark-up Short term borrowings Loans and receivables As at 30 June 2010 Assets as per balance sheet Investments Deposits Trade debts Advances Interest accrued Due from subsidiary companies Other receivables Cash and bank balances

Financial liabilities at amortized cost (Rupees in thousand) 1,883,424 89,873 754,095 230,138 5,130,265 8,087,795 Through profit Available for Total or loss sale -------------(Rupees in thousand)------------8,016 634,095 642,111 41,124 1,329,065 1,661 141 14,987 49,296 78,851 2,157,236

41,124 1,329,065 1,661 141 14,987 49,296 78,851 1,515,125 -

8,016

634,095 Financial liabilities at amortized cost (Rupees in thousand)

Liabilities as per balance sheet Long term financing Liabilities against assets subject to finance lease Trade and other payables Accrued mark-up Short term borrowings

2,328,501 135,030 947,498 289,987 6,070,435 9,771,451 85

43.3 a) Capital risk management The Companys objectives when managing capital are to safeguard the Companys ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholdersand to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders through repurchase of shares, issue new shares or sell assets to reduce debt. Consistent with others in the industry and the requirements of the lenders, the Company monitors the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings by total capital employed. Borrowings represent long-term financing, liabilities against assets subject to finance lease and short-term borrowings obtained by the Company as referred to in note 6, note 7and note 11 respectively. Total capital employed includes total equity as shown in the balance sheet plus borrowings. The gearing ratio as at year ended 30 June 2011 and 30 June 2010 is as follows: 2011 2010 (Rupees in thousand) Borrowings 7,103,562 8,533,966 Total equity 4,386,636 3,361,268 Total capital employed 11,490,198 ######## Gearing Ratio 62% 44. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorised for issue on September 28, 2011 by the Board of Directors of the Company. 45. CORRESPONDING FIGURES No significant reclassification / rearrangement of corresponding figures has been made. 46. GENERAL Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise. 86 CHIEF EXECUTIVE OFFICER DIRECTOR

ys ability to continue other stakeholdersand o maintain or adjust the shareholders, return ssets to reduce debt. e Company monitors divided lities against assets as referred to in note equity as shown in the 11 and 30 June 2010 is

72%

Pattern

of

Shareholding
0002805 KOHINOOR TEXTILE MILLS LIMITED 30.06.2011 o f H o l d i n g To 1 101 501 1,001 5,001 10,001 15,001 20,001 25,001 30,001 35,001 40,001 45,001 50,001 55,001 60,001 65,001 70,001 75,001 85,001 90,001 95,001 105,001 115,001 120,001 145,001 150,001 160,001 165,001 170,001 180,001 200,001 205,001 210,001 215,001 235,001 250,001 275,001 295,001 300,001 100 500 1,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000 90,000 95,000 100,000 110,000 120,000 125,000 150,000 155,000 165,000 170,000 175,000 185,000 205,000 210,000 215,000 220,000 240,000 255,000 280,000 300,000 305,000 Total Shares Held 72,426 297,212 288,723 1,657,868 893,760 559,950 495,236 276,807 247,750 252,476 157,817 299,846 342,073 367,213 290,604 374,734 67,000 145,937 75,600 88,214 92,350 399,010 430,524 232,119 121,000 300,000 150,223 321,085 169,838 171,793 180,004 201,156 208,272 215,000 218,000 236,000 251,293 553,549 300,000 605,291

1.0 CUIN (Incorporation Number) 2.0 Name of the Company 3.0 Pattern of holding of the shares held by the shareholders as at 4.0 S i z e No. of Shareholders From 2618 1028 385 625 121 45 26 12 9 8 4 7 7 7 5 6 1 2 1 1 1 4 4 2 1 2 1 2 1 1 1 1 1 1 1 1 1 2 1 2

315,001

320,000

315,847

87

S i z e No. of Shareholders

o f H o l d i n g To 410,000 445,000 450,000 455,000 475,000 495,000 500,000 625,000 630,000 650,000 695,000 785,000 845,000 860,000 910,000 #### #### #### #### #### #### #### #### #### #### #### #### #### #### Total Shares Held 406,936 440,500 447,218 450,216 474,988 988,483 500,000 622,811 627,849 645,500 691,753 784,047 841,200 858,917 905,062 1,116,000 1,560,500 1,621,517 2,362,066 3,326,368 3,936,190 5,077,500 8,261,366 9,045,940 10,040,331 10,827,332 45,496,057 60,040,081 60,205,888 245,526,216 Percentage of Capital

From 1 405,001 1 440,001 1 445,001 1 450,001 1 470,001 2 490,001 1 495,001 1 620,001 1 625,001 1 645,001 1 690,001 1 780,001 1 840,001 1 855,001 1 905,001 1 1,115,001 1 1,560,001 1 1,620,001 1 2,360,001 1 3,325,001 1 3,935,001 1 5,075,001 1 8,260,001 1 9,045,001 1 10,040,001 1 10,825,001 1 45,495,001 1 60,040,001 1 60,205,001 4,980 TOTAL Note : The Slabs not applicable above have not been shown. 5.0 Categories of No. of Shareholders Shareholders 5.1 Directors, CEO and their spouses & minor children Mr. Tariq Sayeed Saigol, Chairman/Director Mr. Taufique Sayeed Saigol, Chief Executive/Director Mr. Sayeed Tariq Saigol, Director Mr. Waleed Tariq Saigol, Director Mr. Kamil Taufique Saigol, Director Mr. Zamiruddin Azar, Director Mr. Arif Ijaz, Director Mrs. Shehla Tariq Saigol, spouse of Mr. Tariq Sayeed Saigol 88 8

Shares Held

10,040,331 10,827,332 315,847 70,937 2,500 5,930 2,500 450,216 21,715,593

4.0893 4.4099 0.1286 0.0289 0.0010 0.0024 0.0010 0.1834 8.8445

Categories of No. of Shares Percentage Shareholders Shareholders Held of Capital 5.2 Associatedand relatedCompanies,parties undertakings Zimpex (Private) Limited 1 45,496,057 18.5300 5.3 NIT and ICP NationalIDBP (ICPBankUNIT)of Pakistan, Trustee Deptt. 3,326,36818,247 1.35480.0074 5.4 Banks, Development Financial Institutions, 2 3,344,615 1.3622 Non-Banking Financial Institutions 20 4,014,452 1.6350 5.5 Insurance Companies 4 848,734 0.3457 5.6 Modarabas , Leasing and Mutual Funds 7 213,851 0.0871 5.7 Shareholdersmore voting interestholdinginTenthePercentCompanyor refer 5.2 & 5.8 b 5.8 General Public a. Individuals 4,842 31,798,092 12.9510 b. Foreign Investor (s) 9 120,479,119 49.0698 5.9 Joint Stock Companies 73 17,231,248 7.0181 #### Public Sector Companies and Corporations 1 300,405 0.1224 #### Executives #### Others ArtalFikreeHussainSecuritiesTheTheTheTheTrusteesTrusteesTrusteesUnitedUniversityDeputyIdaKarachiOkhaiRestaurantDevelopme 61,4251,8152,7943,0459,0753,75126035476017359611 13 84,050 0.0342 Grand Total : 4,980 245,526,216 100.0000 89

26035476017359611

90

Annual Report

2011

Consolidated Financialfor the YearStatmentsEnded


91

June

30,

2011

ded

June

30,

2011

Auditors

Report

to

the

Members

Wehaveauditedthe annexedconsolidated financialstatementscomprising consolidated balancesheetof Kohinoor Textile Mills Limited (the Holding Company) and its Subsidiary Companies (together referred to as Group) as at 30 June 2011 and the related consolidated profit and loss account, consolidated statement of comprehensive income, consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof, for the year then ended. We have also expressed separate opinion on the financial statements of Kohinoor Textile Mills Limited. The financial statements of the Subsidiary Companies were audited by other firms of auditors, whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included for such Companies, is based solely on the reports of such other auditors. These financial statements are the responsibility of the Holding Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 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. In our opinion, the consolidated financial statements present fairly the financial position of Kohinoor TextileMills Limited and its Subsidiary Companies as at 30 June 2011 and the results of their operations for the year then ended. RIAZ AHMAAHMADD & COMPACOMPANCOMPANYN Chartered Accountants Name of engagement partner: ATIF BIN ARSHAD DATE: September 28, 2011 ISLAMABAD 93

ConsolidatedAs

at June
Note

30,

2011
2010

Balance

Sheet

2011 (Rupees in thousand)

EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorized share capital 370,000,000 (2010: 370,000,000) ordinary shares of Rupees 10 each 30,000,000 (2010: 30,000,000) preference shares of Rupees 10 each

3,700,000

3,700,000

300,000 300,000 4,000,000 4,000,000 Issued, subscribed and paid up share capital 3 2,455,262 1,455,262 Reserves 4 659,690 1,462,928 Equity attributable to equity holders of the Holding Company 3,114,952 2,918,190 Non controlling interest 5 1,046,234 2,405,263 Total equity 4,161,186 5,323,453 Share deposit money 1,000,000 Surplus on revaluation of property, plant and equipment and investment properties 6 9,233,617 3,673,825 NON-CURRENT LIABILITIES Long term financing 7 5,372,895 4,227,075 Redeemable capital 8 7,983,000 8,289,800 Liabilities against assets subject to finance lease 9 507,209 767,748 Long term deposits 10 5,569 2,739 Employees compensated absences 11 19,149 19,629 Deferred income tax 12 2,414,958 157,996 16,302,780 13,464,987 CURRENT LIABILITIES Trade and other payables 13 4,757,981 4,446,843 Accrued mark-up 14 1,021,299 1,211,799 Short term borrowings 15 9,214,931 10,131,273 Current portion of non-current liabilities 16 1,988,378 1,635,888 16,982,589 17,425,803 TOTAL LIABILITIES 33,285,369 30,890,790 TOTAL EQUITY AND LIABILITIES 46,680,172 40,888,068 CONTINGENCIES AND COMMITMENTS 17 The annexed notes form an integral part of these consolidated financial statements. 94 CHIEF EXECUTIVE OFFICER

nce

Sheet

ASSETS Note NON - CURRENT ASSETS Property, plant and equipment Intangible assets Investment properties Long term loans to employees Long term deposits and prepayments CURRENT ASSETS Stores, spare parts and loose tools Stock-in-trade Trade debts Loans and advances Security deposits and short term prepayments Accrued Interest Other receivables Short term investments Taxation recoverable Cash and bank balances Non-current assets classified as held for sale TOTAL ASSETS

2011 (Rupees in thousand) 18 19 20 21 22 23 24 25 26 27 28 29 30 31 34,950,932 27,154 1,721,714 2,531 87,794 36,790,125 3,361,339 2,196,336 1,267,503 386,392 140,941 936 547,892 942,941 336,291 709,476 9,890,047

2010

27,531,515 1,774 1,720,835 3,293 86,460 29,343,877 2,753,208 2,897,831 2,080,465 863,437 137,402 797 494,916 1,114,449 396,310 152,453 10,891,268 652,923 9,890,047 11,544,191 46,680,172 40,888,068 DDIRECTORIRECTOR 95

ConsolidatedFOR
SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING EXPENSES

THE
Note

YEAR ENDED

ProfitJUNE

30,

2011

and

Los

32 33 34 35 36

OTHER OPERATING INCOME PROFIT FROM OPERATIONS FINANCE COST LOSS BEFORE TAXATION TAXATION LOSS AFTER TAXATION SHARE OF LOSS ATTRIBUTABLE TO: EQUITY HOLDERS OF HOLDING COMPANY NON CONTROLLING INTEREST Dividend on preference shares Share in loss for the year

37 38 39

2011 2010 (Rupees in thousand) 25,109,992 24,440,066 (21,111,285) (19,383,928) 3,998,707 5,056,138 (2,071,695) (3,667,408) (425,467) (356,733) (235,965) (228,618) (2,733,127) (4,252,759) 1,265,580 803,379 134,016 135,682 1,399,596 939,061 (3,201,186) (3,132,244) (1,801,590) (2,193,183) (389,064) (113,034) (2,190,654) (2,306,217) (1,374,209) (1,043,987)

52,678 52,794 (869,123) (1,315,024) (816,445) (1,262,230) (2,190,654) (2,306,217) LOSS PER SHARE - BASIC AND DILUTED (Rupees) 43 (6.19) (7.17) The annexed notes form an integral part of these consolidated financial statements. 96 CHIEF EXECUTIVE OFFICER DIRECTOR

11

and

Loss

Account

ConsolidatedFOR

THE

YEAR ENDEDStatementJUNE

30,

20110f

Comp

2011 2010 (Rupees in thousand) LOSS AFTER TAXATION (2,190,654) (2,306,217) OTHER COMPREHENSIVE INCOME / (LOSS) Surplus / (deficit) arising on remeasurement of available for sale investment to fair value (165,630) 104,708 Deferred income tax relating to surplus on available for sale investment 43,478 (27,486) Other comprehensive income / (loss) for the year - net of tax (122,152) 77,222 TOTAL COMPREHENSIVE LOSS FOR THE(2,312,806) YEAR (2,228,995) SHARE OF TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: EQUITY HOLDERS OF HOLDING COMPANY (1,478,359) (993,274) NON CONTROLLING INTEREST (834,447) (1,235,721) (2,312,806) (2,228,995) The annexed notes form an integral part of these consolidated financial statements. CHIEF EXECUTIVE OFFICER DIRECTOR 97

20110f

Comprehensive

Income

CONSOLIDATEDFOR

THE

YEAR ENDED

JUNE

CASH30,

2011

FLOW

2011 2010 Note (Rupees in thousand) CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 40 4,663,795 2,659,303 Finance cost paid (1,786,882) (2,546,898) Workers profit participation fund paid (13,397) Compensated absences paid (6,904) (10,021) Income tax paid (204,057) (346,357) Net increase in long term deposits (1,667) (1,358) Net cash generated from / (used in) operating activities 2,650,888 (245,331) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on property, plant and equipment (854,850) (1,980,444) Capital expenditure on intangible asset (9,836) Payment for non-current assets classified as held for sale (51,261) Long term loan to employees 762 2,373 Investments made (174) Return on bank deposits received 5,787 1,261 Proceeds from sale of property, plant and equipment 121,335 13,644 Proceeds from sale of investments 8,715 9,965 Proceeds from sale of non current-assets classified as held for sale 119,200 Advance against purchase of land received back 100,000 Dividend received 27,980 22,653 Net cash used in investing activities (481,081) (1,981,809) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term financing 150,000 625,536 Proceed from redeemable capital 300,000 Repayment of long term financing (771,948) (420,840) Short term borrowings - net (916,342) 938,480 Repayment of liabilities against assets subject to finance lease (70,523) (175,168) Proceeds from share deposit money 1,000,000 Repayment of redeemable capital (6,800) (3,400) Repayment of term finance certificates (599) Long term deposits 2,830 159 Repayment of lease finance advance (35,922) Dividend paid (1) (28,882) Net cash (used in) / from financing activities (1,612,784) 2,199,364 Net increase / (decrease) in cash and cash equivalents 557,023 (27,776) Cash and cash equivalents at the beginning of the year 152,453 180,229 Cash and cash equivalents at the end of the year 709,476 152,453 The annexed notes form an integral part of these consolidated financial statements.

98

CHIEF EXECUTIVE OFFICER

DIRECTOR

0,

2011

FLOW

STATEMENT

99

NOTESFOR

THE

YEARTO

THEENDEDCONSOLIDATEDJUNE

30,

2011

1.0 THE GROUP AND ITS OPERATIONS 1.1 Holding Company KohinoorPakistanExchangesLahore.Limited,64.62%Companyproducts.(2010:The99.99%underTextileisinmanufa 1.2 Subsidiary Companies a) MapleunderbysituatedsharestheLeafatCompaniesand42-LawrenceCementlistedFactoryonAct,Road,all1913Lim b) Conceptas a tradingTradingconcern.(Private)The registeredLimited (theofficeSubsidiaryof the Company) was c) VitaltradingTradingconcern.(Private)The registeredLimited (theofficeSubsidiaryof the Company) was incorpor 1.3 Basis of consolidation Thefromfinancialthe datestatementscontrol commencesof the Subsidiariesuntil the datearethatincludedcont Thecarryingshareassetsin paidvalueandupofliabilitiescapitalinvestmentofofthetheheldSubsidiaries.Subsidiaries Material intra-group balances and transactions have been eliminated. Nonattributablepresentedcontrollingastoa separateinterestsinterest isitemwhichthatinpartaretheofnotconsoli 2.0 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Thearestated:setsignificantout below.accountingThese policiespolicieshaveappliedbeeninconsistentlythe preparationap 2.1 Basis of Preparation a) Statement of Compliance Thesestandardsconsolidatedas applicablefinancialin Pakistan.statementsApprovedhave beenaccountingprepa Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the CompaniesOrdinance, 1984. In case requirements differ, the provisions or directives ofthe Companies 100 Ordinance, 1984 shall prevail.

30,

2011

FINANCIAL

STATEMENTS

.99%underTextileisinmanufacturingHoldingPkakistan.50.12%)theMills(2010:CompaniesCompanyLimitedshares99.99%)Theof registeredyarnof(theholds

ctoryonAct,Road,all1913LimitedStockLahore.(NowExchanges(thetheTheSubsidiaryCompaniesSubsidiaryin Pakistan.) iswasOrdinance,engagedTheinco sidiaryof the Company) was incorporatedis situated atin 42-LawrencePakistan on MarchRoad,11,Lahore.2010 the Company) was incorporatedis situated atin 42-LawrencePakistan on MarchRoad,11,Lahore.2010 as a

he datearethatincludedcontrolinceases.the consolidated financial statements heldSubsidiaries.Subsidiariesby the HoldinghaveCompanybeen consolidatedis eliminatedon aagainstline byHoldingline basisCompanysand the

hatinpartaretheofnotconsolidatednetownedresultsbyoffinancialthetheoperationsHoldingstatements.Company.and of netNonassetscontrollingof the Sub

nsistentlythe preparationappliedof totheseall yearsconsolidatedpresented,financialunlessstatementsotherwise

dhave beenaccountingpreparedstandardsin accordancecomprisewithofapprovedsuch Internationalaccounting Standards Board as es issued under the es ofthe Companies

99%)Theof registeredyarnof(theholdsAct,1913VitalsharesandHolding64.63%Tradingcloth,ofoffice(NowConceptCompany(2010:processing(Private)Comp

an.) iswasOrdinance,engagedTheincorporatedregisteredin1984)productioninasofficePakistana publicandof onthecompanysale13SubsidiaryofApril,cem

ngline basisCompanysand the

d of netNonassetscontrollingof the Subsidiariesinterest is

ompany(2010:processing(Private)Companiesof theTrading50.13%))CompanyLimited.isandaOrdinance,public(Private)stitchingsharesTheislimitedsituate

hecompanysale13SubsidiaryofApril,cement.limited1960is

ate)stitchingsharesTheislimitedsituatedprincipalofLimitedthe1984)MaplecompanyclothatandactivityandLeaf42-LawrenceandlistedCementindirectlyinco

wrenceandlistedCementindirectlyincorporatedtradeof ontheofallHoldingFactorytextileRoad,holdsStockin

b)

c)

Accounting Convention These consolidated financial statements have been prepared under the historical cost convention, except for: financial instruments at fair value; freehold land of Holding Company at fair value; Investment properties at fair value; property, plant and equipment of Subsidiary at fair value; and recognition of certain employee retirement benefits at present value; Critical accounting estimates and judgments The preparation of consolidated financial statements in conformity with the approved accounting standards require the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Groups accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. 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: Financial instruments The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques based on assumptions that are dependent on conditions existing at balance sheet date. Useful lives, patterns of economic benefits and impairments Estimates with respect to residual values, useful lives and pattern of flow of economic benefits are based on the analysis of the management of the Group. Further, the Group reviews the value of assets for possible impairments on an annual basis. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with a corresponding effect on the depreciation charge and impairment. Inventories Net realizable value of inventories is determined with reference to currently prevailing selling prices less estimated expenditure to make sales. Taxation In making the estimates for income tax currently payable by the Group, the management takes into account the current income tax law and the decisions of appellate authorities on certain issues in the past. Provisions for doubtful debts The Group reviews its receivable against any provision required for any doubtful balances on an ongoing basis. The provision is made while taking into consideration expected recoveries, if any. Impairment of investments in associated companies In making an estimate of recoverable amount of the Groups investments in associated companies, the management considers future cash flows. 101

d)

e)

f)

Amendments to published approved standards that are effective in current year and are relevant to the Group Thefollowing amendmentsto published approved standards aremandatory for the Groupsaccounting periods beginning on or after 01 July 2010: International Accounting Standard (IAS) 1 (Amendment), Presentation of Financial Statements (effective for annual periods beginning on or after 01 January 2010). 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. By amending the definition of current liability, 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. 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. IAS 7 (Amendment), Statement of Cash Flows (effective for annual periods beginning on or after 01 January2010). Theamendment provides clarificationthat onlyexpenditure that results in a recognized asset in the balance sheet can be classified as a cash flow from investing activity. 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 Group as it is only concerned with presentation and disclosures. IFRS 8 (Amendment), Operating Segments (effective for annual periods beginning on or after 01 January 2010). The amendment is part of the International Accounting Standards Boards (IASB) annual improvements project published in April 2009. 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 application of the amendment does not affect the results or net assets of the Group as it is only concerned with presentation and disclosures. Interpretations and amendments to published approved standards that are effective in current year but 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 Groups financial statements and are therefore not detailed in these financial statements. Standards and amendments to published approved standards that are not yeteffective but relevant to the Group Following standards and amendments to existing standards have been published and are mandatory for the Groups accounting periods beginning on or after 01 July 2011 or later periods: IFRS 9 Financial Instruments (effective for annual periods beginning on or after 01 January 2013). This standard is the first step in the process to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets and is likely to affect the Groups accounting for its financial assets. IFRS 7 (Amendment), Financial Instruments: Disclosures (effective for annual periods beginning on or after 01 July 2011). The new disclosure requirements apply to transfer of financial assets. An entity transfers a financial asset when it transfers the contractual rights to receive cash flows of the asset 102 to another party. These amendments are part of the IASBs comprehensive review of off balance

r and are relevant to Groupsaccounting

ancial Statements mendment provides is not relevant to its ility, the amendment unconditional right after the accounting nterparty to settle in or net assets of the

ning on or after 01 ults in a recognized vity. The clarification m investing activities e balance sheet. The he Group as it is only

nning on or after 01 dards Boards (IASB) larification that the he Chief Operating ent does not affect nd disclosures. e effective in current

standards that are onsidered not to be s and are therefore

fective but relevant

and are mandatory

er 01 January 2013). ts: Recognition and financial assets and

riods beginning on cial assets. An entity h flows of the asset eview of off balance

g)

sheet activities. 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 entitys financial position, particularly those involving securitization of financial asset. The management of the Group is in the process of evaluating the impacts of the aforesaid amendment on the Groups financial statements. IFRS10Consolidated FinancialStatements (effective for annualperiod beginning on or after01January 2013). Concurrent with the issuance of IFRS 10, the IASB has also issued IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (revised 2011) Consolidated and Separate Financial Statements and IAS 28 (revised 2011) Investments in Associates. The objective of IFRS 10 is to have a single basis for consolidation for all entities, regardless of the nature of the investee, and that basis is control. The definition of control includes three elements: power over an investee, exposure or rights to variable returns of the investee and the ability to use power over the investee to affect the investors 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 statementsand replaces StandingInterpretations Committee(SIC) 12Consolidation Special Purpose Entities in its entirety. The management of the Company is in the process of evaluating the impacts of the aforesaid standard on the Companys 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 Groups 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 Groups 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 24Related Party Disclosures that are considered relevant to the Groups financial statements. These amendments are unlikely to have a significant impact on the Groups financial statements and have therefore not been analyzed in detail. 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 Groups financial statements and are therefore not detailed in these financial statements. 103

(a)

(b)

(c)

2.2 Employee benefits Holding Company The Holding Company operates an approved funded contribution provident fund covering all of its permanent employees. Equal monthly contributions are made both by the Holding Company and employees at the rate of 8.33 percent of basic salary and cost of living allowance to the fund. The Holding Companys contributions to the fund are charged to profit and loss account. Subsidiary Company - Maple Leaf Cement Factory Limited Defined contribution plan The Subsidiary operates a defined contributory approved provident fund for all of its employees. Equal monthly contributions are made both by the Subsidiary and employees at the rate of 10% of the basic salary to the fund. Defined benefit plan The Subsidiary operates approved funded gratuity scheme for all its employees who have completed the minimum qualifying period of service as defined under the respective scheme. Provision is made annually to cover obligations under the scheme on the basis of actuarial valuation and is charged to income. The amount recognized in the balance sheet represents the present value of defined benefit obligations as adjusted for unrecognized actuarial gains and losses. Cumulative net unrecognized actuarial gains and losses at the end of previous year which exceeds 10% of the present value of the Companys gratuity is amortized over the average expected remaining working lives of the employees. Details of the scheme are given in relevant note to the consolidated financial statements. Liability for employees compensated absences The Subsidiary accounts for the liability in respect of employees compensated absences in the year in which these are earned. Provision to cover the obligations is made using the current salary level of employees. 2.3 Taxation Current Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The 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. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from difference between the carrying amount of the assets and liabilities in the consolidated financial statements and corresponding tax bases used in the computation of 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 profit will be available against which 104 the deductible temporary differences, unused tax losses and tax credits can be utilized.

Company and the fund. The

its employees.

defined benefit

which exceeds cted remaining

salary level of

cordance with prevailing tax or current tax previous years

f all temporary liabilities in the on of taxable against which

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the 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. 2.4 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 obligation and a reliable estimate of the amount can be made. 2.5 Property, plant and equipment Owned Property, plant and equipment except freehold land, buildings on freehold land, roads, bridges and railway sidings, plant and machinery and capital work in progress are stated at cost less accumulated depreciation/ amortization and impairment in value, if any. Buildings on freehold land, roads, bridges and railway sidings and plant and machinery are stated at revalued amount being the fair value at the date of revaluation, less any subsequent accumulated depreciation and impairment losses while freehold land is stated at revalued amount being the fair value at the date of revaluation, less any subsequent impairment losses, if any. Any revaluation increase arising on the revaluation of such assets is credited in Surplus on Revaluation of Property, Plant and Equipment. A decrease in the carrying amount arising on revaluation is charged to profit or loss to the extent that it exceeds the balance, if any, held in the surplus on revaluation account relating to a previous revaluation of that asset. Capital work-in-progress are stated at cost less impairment losses, if any. All expenditure connected with specific assets incurred during installation and construction period are carried under capital work-in-progress. These are transferred to specific assets as and when these are available for use. All cost or expenditure attributable to work-in-progress are capitalized and apportioned to buildings and plant and machinery at the time of commencement of commercial operations. Cost in relation to certain plant and machinery represents historical cost, exchange differences capitalized up to June 30, 2004 and the cost of borrowings during the construction period in respect of loans and finances taken for the specific projects. All other repair and maintenance costs are charged to income during the period in which these are incurred. Gains / losses on disposal or retirement of property, plant and equipment, if any, are taken to profit and loss account. During the year, Group has changed its accounting policy regarding statement of components of property, plant and equipment to revalued amount less accumulated depreciation and impairment losses as per requirements of IAS-16. Previously components of property, plant and equipment except freehold land and capital work-in-progress were stated at cost less accumulated depreciation and impairment losses. The management of the Group is of the view that revaluation of property, plant and equipment would result in better presentation of financial information. Depreciation is calculated at the rates specified in note 18.1 on reducing balance method except that straight-line method is used for the plant and machinery and buildings relating to dry process plant after deducting residual value. Depreciation on additions is charged from the month in which the asset is put to use and on disposals up to the monthof disposal. The assets residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date. 105

2.6

2.7

2.8

a)

106

Leased Finance lease Assets held under finance lease arrangements are initially recorded at the lower of present value of minimum lease payments under the lease agreements and the fair value of the leased assets. Depreciation on leased assets is charged applying reducing balance method at the rates used for similar owned assets, so as to depreciate the assets over their estimated useful lives in view of certainty of ownership of assets at the end of lease term. Investment Properties Land and buildings held for capital appreciation or to earn rental income are classified as investment properties. Investment properties are carried at fair value which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. The valuation of the properties is carried out with sufficient regularity. Gain or losses arising from a change in the fair value of investment properties are included in the profit and loss account currently. Intangible assets 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 expenditurerelating 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 balance sheet date. Investments Classification of 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 purchaseand re-evaluates 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 and loss which is initially measured at fair value. The Group assesses 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 all investments, except investments in subsidiary companies, which are tested for impairment in accordance with the provisions of IAS 36 Impairment of Assets. Investment at fair value through profit or loss Investment classified as held-for-trading and those designated as such are included in this category. Investmentsare classified as held-for-trading if these areacquired for the purpose ofselling inthe short term. Gains or losses on investments held-for-trading are recognised in profit and loss account.

wer of present value of the leased assets. t the rates used for eful lives in view of

sified as investment ctive market prices, e specific asset. The

s are included in the

, are recognized at rectly attributable nition an intangible s, if any. Intangible use, using the straight ated useful life over mortization method

such investment. me of purchaseand

ectly attributable to initially measured

ny objective evidence he provisions of IAS ept investments in provisions of IAS 36

ed in this category. ofselling inthe short

b)

Held-to-maturity Investments withfixed or determinable payments and fixed maturity areclassified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long term investments that are intended to be held to maturity are subsequently measured at amortized cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative 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 derecognized or impaired, as well as through the amortization process. c) 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 other 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 other 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. 2.9 Inventories Inventories, except for stock in transit and waste stock / rags are stated at lower of cost and net realizable value. Cost is determined as follows: Stores, spare parts and loose tools Useable stores, spare parts and loose tools 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 material, work-in-process and finished goods is determined as follows:. (i) For raw materials: Annual average basis. (ii) For work-in-process and finished goods: Average manufacturing cost including a portion of production overheads. Materials in transit are valued at cost comprising invoice value plus other charges paid thereon. Waste stock / rags are 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 necessarily to make a sale. 107

a) b) c)

2.10 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 Group designates certain derivatives as cash flow hedges. The Group 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 Group 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 is 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 statement of other comprehensive income are recognized in profit and loss account in the periods when the hedged item will affect profit or loss. 2.11 Cash and cash equivalents Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values. 2.12 Non-current assets classified as held for sale Non-current assets are classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than continuous use. These are measured at lower of carrying amount and fair value less costs to sell. 2.13 Borrowing costs Interest, mark-up and other charges on long-term finances are capitalized up to the date of commissioning of respective qualifying assets acquired out of the proceeds of such long-term finances. All other interest, mark-up and other charges are recognized in profit and loss account. 2.14 Revenue recognition Revenue from different sources is recognized as under: Revenuefrom local sales is recognized on dispatch of goods to customers while in case of export sales it is recognized on the date of bill of lading. Dividend on equity investments is recognized when right to receive the dividend is established. Profit on deposits with banks is recognized on time proportion basis taking into account the amounts 108 outstanding and rates applicable thereon.

derivative contract ates. The method of nated as a hedging certain derivatives

etween the hedging egy for undertaking dge inception and ansactions are highly

d and qualify as cash or loss relating to

ed in profit and loss

, saving and deposit nvertible into known

ecovered principally at lower of carrying

up to the date of of such long-term nd loss account.

case of export sales

s established. ccount the amounts

#### Foreign currencies These financial statements are presented in Pak Rupees, which is the Groups 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 currency 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 recorded in the profit and loss account. #### Financial instruments Financial instruments carried on the balance sheet include investments, deposits, trade debts, advances, interest accrued, other receivables, cash and bank balances, long-term financing, liabilities against assets subject to finance lease, lease finance advance, short-term borrowings, accrued markup and trade and other payables etc. Financial assets and liabilities are recognized when the Group becomes a party to the contractual provisions of 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 arede-recognized when the Group loses control of the contractual rights that comprise the financial asset. TheGroup loses such control if it realizes the rights to benefits specifiedin contract, the rights expire or the Group 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 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. b) Borrowings Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. Any difference between the proceedsand the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest method. c) Trade and other payables Liabilities for trade and other amounts payable are initially recognized at fair value, which is normally the transaction cost. #### 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. 109

b)

2.18

2.19

2.20

110

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 with 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. Non financial assets The carrying amount of assets are reviewed at each balance sheet date for impairment whenever events are changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amounts. Recoverable amount is the higher of an assets fair value less costs to sell and value in use. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of that asset. Segment reporting Segment reporting is basedon the operating (business) segments of the Group. An operating segment is a component of the Group 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 Groups other components. An operating segments operating results are reviewed regularly by the chief executive officer 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 officer include items directly attributable to a segmentas well as those that can be allocated on a reasonable basis. Those income, expenses, assets, liabilities and other balances which can not be allocated to a particular segment on a reasonable basis are reported as unallocated. The Group 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 and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles) and cement . Transaction among the business segments are recorded at arms length prices using admissible valuation methods. Inter segment sales and purchases are eliminated from the total. Dividend and other appropriations Dividend distribution to the Groups shareholders is recognized as a liability in the Groups financial statements in the 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. Off setting of financial assets and liabilities 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 Group intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously.

ost is calculated as ed future cash flows f available for sale

basis. The remaining

pairment whenever e assets may not be timated recoverable unt is the higher of loss is taken to the djusted against the xceed the surplus on

operating segment t may earn revenues ons with any of the ed regularly by the segment and assess

ctly attributable to a e, expenses, assets, n a reasonable basis

rent quality of yarn e fabric using yarn), and dyed fabric and

es using admissible

e Groups financial tions are recognized

orted in the financial ds either to settle on

2011 (Rupees in thousand) 3.0 ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL 2011 2010 (Number of shares)
1,596,672 26,156,000 1,596,672 Ordinary shares of Rupees 10 each allotted on reorganisation of Kohinoor Industries Limited 26,156,000 Ordinary shares allotted under scheme of arrangement of merger of Part II of Maple Leaf Electric Company Limited 26,858,897 Ordinary shares allotted under scheme of arrangement of merger of Kohinoor Raiwind Mills Limited and Kohinoor Gujar Khan Mills Limited. 38,673,628 Ordinary shares of Rupees 10 each issued as fully paid bonus shares 52,241,019 Ordinary shares of Rupees 10 each issued as fully paid in cash 145,526,216 15,967

2010

15,967

261,560 268,589

261,560 268,589

26,858,897

38,673,628 152,241,019 245,526,216

386,736 1,522,410 2,455,262 1,455,262 1,000,000 2,455,262

386,736 522,410 1,455,262 1,455,262

3.1 Movement during the year


145,526,216 145,526,216 At 01 July 100,000,000 Ordinary shares of Rupees 10 each issued during the year as fully paid 245,526,216 145,526,216 At 30 June

1,455,262

3.2 During the period, the Company has issued 100,000,000 ordinary shares of Rupees 10 each at face value of Rupees 10 per share otherwise than right issue to Mercury Management Incorporated (25 million shares), Hutton Properties Limited (52 million shares) and Zimpex (Private) Limited (23 million shares) in accordance with the agreement dated 10 March 2010 among the three allottees, the Company and Maple Leaf Cement Factory Limited subsidiary company after the approval of Securities and Exchange Commission of Pakistan. 3.3 Zimpex (Private) Limited which is an associated company held 45,496,057 (2010: 22,510,635) ordinary shares of Holding Company of Rupees 10 each as at 30 June 2011. 111

Note 4.0 RESERVES Composition of reserves is as follows: Capital Share premium Fair value reserve - net of deferred tax Revenue General reserve Accumulated loss

2011 (Rupees in thousand)

2010

4.1 4.2

144,919 523,927 668,846

144,919 628,077 772,996

1,450,491 1,450,491 (1,459,647) (760,559) (9,156) 689,932 659,690 1,462,928 4.1 This reserve can be utilized by the Company only for the purposes specified in section 83(2) of the Companies Ordinance, 1984. 2011 2010 (Rupees in thousand) 4.2 Fair value reserve - net of deferred tax Balance as at 01 July 628,077 577,364 Add: Fair value adjustment on investment in Security General Insurance Company Limitedduring the year (141,220) 68,763 Less: Related deferred tax on investment in Security General Insurance Company Limited 37,070 (18,050) Balance as at 30 June 523,927 628,077 5.0 NON CONTROLLING INTEREST Opening balance 2,405,263 3,669,866 Add: Share during the year - Issue of shares to minority 290 - Surplus / (deficit) arising on remeasurement of available for sale investment to fair value (18,002) 26,509 - Surplus on revaluation of property, plant and equipment realized through incremental depreciation 49,059 - Reversal of surplus on revaluation on disposal of property, plant and equipment 4,085 - Increase in interest of equity holders of the Holding Company (578,015) - Loss for the year (816,445) (1,262,230) (1,359,028) (1,235,721) Less : Dividend paid on preference shares (1) (28,882) 112 1,046,234 2,405,263

ecified in section 83(2) of the

2011 2010 Note (Rupees in thousand) 6.0 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT AND INVESTMENT PROPERTIES Investment properties 1,263,592 1,263,592 Property, plant and equipment 6.1 7,970,025 2,410,233 9,233,617 3,673,825 6.1 Balance as at July 01 2,410,233 Add: surplus arising due to revaluation of property, plant and equipment 7,885,493 2,410,233 10,295,726 2,410,233 Less: transferred to accumulated loss in respect of incremental depreciation charged during the year (195,338) Less: transferred to accumulated loss on disposal of property, plant and equipment (16,263) (211,601) 10,084,125 2,410,233 Less: deferred tax liability on: Opening balance of revaluation Surplus arising due to revaluation of property, plant and equipment 2,175,451 Incremental depreciation charged on property, plant and equipment (56,636) Effect of disposal of property, plant and equipment(4,715) 2,114,100 Balance as at 30 June 7,970,025 2,410,233 6.2 Freehold land of Holding Company was revalued by an independent valuer Messers ARCH-e-decon (Evaluator, Surveyors, Architects and Engineers) as at 30 March 2010. The value of land increased by Rupees 2,410.233 million due to revaluation. During the current year, fair value of land situated at Raiwind Road, which was previously classified as held for sale, has been determined by Messers ARCH-e-decon as at 28 June 2011. The value of this land has increased by Rupees 11.672 million due to revaluation. 6.3 The Subsidiary Company had its freehold land, buildings on freehold land, roads, bridges and railway sidings and plant and machinery revalued by Empire Enterprises (Private) Limited, independent valuer not connected with the Subsidiary Company and approved by Pakistan Banks Association (PBA) in any amount category, at December 31, 2010. The basis used for the revaluation of these property, plant and equipment were as follows: 113

RCH-e-decon land increased f land situated d by Messers 72 million due

es and railway pendent valuer tion (PBA) in ese property,

Freehold land Fairdealersaccordingrelevantmarketinfactorstonearvalueexperience,asvicinityofwell.freeholdoflocationfreeholdland andw Buildings on freehold land, roads, bridges and railway sidings Constructionappliedreplacementaccordingvalues,specificationsto constructiondepreciationwere specificationsnotedwas c Plant and machinery Suppliersinformationvalue. Fairanddepreciationregardingdifferentcurrentcementfactor forpricesplanteachofconsultantsite and maintenance. 2011 2010 Note (Rupees in thousand) 7.0 LONG TERM FINANCING From banking companies and other financial institutions - secured Holding Company NIB Bank Limited (NIB - 1) 7.1 31,836 107,716 NIB Bank Limited (NIB - 2) 7.2 150,006 198,803 NIB Bank Limited (NIB - 3) 7.3 100,000 NIB Bank Limited (NIB - 4) 7.4 50,000 Allied Bank Limited (ABL -1 ) 7.5 7,232 65,094 Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-3) 7.6 125,000 156,250 Standard Chartered Bank (Pakistan) Limited - syndicated term finance 7.7 167,085 186,500 Allied Bank Limited - syndicated term finance 7.7 456,413 543,150 The Bank of Khyber - syndicated term finance 7.7 80,250 95,500 Pak Libya Holding Company Limited - syndicated term finance 7.7 40,125 47,750 Bank Al falah Limited - syndicated term finance 7.7 417,500 477,500 Faysal Bank Limited - syndicated term finance 7.7 250,500 279,750 The Bank of Punjab (BOP - 1) 26,623 Albaraka Bank (Pakistan) Limited 8,333 Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-1) 18,055 Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL-2) 10,000 114 Standard Chartered Bank (Pakistan) Limited (SCB-2)100,000

doflocationfreeholdland andwasland.assessedotherDifferentusagethroughvaluationof freeholdinquiriesmethodsland.to realValuerandestateexercisesha

were specificationsnotedwas calculatedfor eachfortobuildingcurrentdetermineandreplacementthestructurecurrentvalues.andassessednewAfterconstruc

icesplanteachofconsultantsitemcomparablewas appliedincementPakistanaccordingplantandtoabroadtodeterminetherewerephysicalcurrentcontactedco

nd.to realValuerandestateexerciseshadagentsalso wereconsideredand propertyadoptedall

tvalues.andassessednewAfterconstructionmarketdeterminingvalue.ratescurrentare

etherewerephysicalcurrentcontactedcondition,replacementto collectusage

Note Subsidiary Company Long term finance facility Deferred Markup Loan Habib Bank Limited (HBL)-Term Loan Facility Syndicated term finance Habib Bank Limited (HBL - 1) Habib Bank Limited (HBL - 2) 7.8 7.9 7.10 7.11

2011 (Rupees in thousand) 614,849 1,600,290 790,519 1,498,200 6,379,805 1,014,387 5,365,418

2010

790,520

Less: Current portion shown under current liabilities16 Holding Company Other loans - unsecured Kohinoor Sugar Mills Limited (KSML) Kohinoor Industries Limited (KIL)

1,499,400 580,000 210,519 5,401,463 1,181,865 4,219,598

7.12 7.13

4,794 2,683 7,477 5,372,895

4,794 2,683 7,477 4,227,075

7.1 NIB Bank Limited (NIB - 1) This represents Long Term Financing for Export Oriented Projects (LTF-EOP) facility of Rupees 157 million obtained for import of textile machinery for a period of three years including a grace period of six months. It is repayable in ten equal quarterly installments. It is secured by first exclusive hypothecation charge on the imported machinery and allied equipment, including installation and local component costs. It carries mark up at fixed rate of 6 % per annum. 7.2 NIB Bank Limited (NIB - 2) This represents LTF-EOP term finance facility of Rupees 300 million for a period of five years with a grace period of one year. The financing is for import of 72 Picanol Omni Plus wide width Air Jet Looms and Tying & Knotting machine plus five (5) Gen Set gas generators being part of BMR. It is repayable in equal quarterly installments after expiry of grace period. The facility is secured against first pari passu charge over fixed assets of Raiwind Division and personal guarantees of the sponsor directors. It carries fixed mark up at the rate of 7% per annum. 7.3 NIB Bank Limited (NIB - 3) This represents a term finance facility of Rupees 100 million for a period of three years. This facility is availed to partially term out existing exposure under finance against packing credit own source facility. It is repayable in thirty two equal monthly installments, commencing from July 2011. The facility is secured against exclusive charge on the plant and machinery imported under LTF facility and personal guarantees of the sponsor directors. It carries mark up at the rate of 3 months KIBOR plus 2.00% per annum. 115

7.4 NIB Bank Limited (NIB - 4) This represents pre -shipment loan being converted into long term loan during the year. It is repayable in thirty two monthly installments commencing from July 2011.This facility issecured against collateral covering the exposureincluding charges on bothcurrent and fixed assets of the Company and personal guarantees of the sponsor directors. It carries mark up at the rate of 3 months KIBOR plus 2.00% per annum. 7.5 Allied Bank Limited (ABL-1) Thisrepresents term finance facility of Rupees 300 million obtained for import of state of art machinery for a period of five years with a grace period of one year. The facility is repayable in sixteen equal quarterly installments commenced after conclusion of grace period. It is secured by first exclusive charge on machinery imported. Facility amounting to Rupees 100 million carries mark up at the rate of 6 months KIBOR plus 1.25% per annum, facility of Rupees 125 million carries mark up at the rate of 6 months KIBOR plus 1.75% per annum and facility of Rupees 75 million carries mark up at the rate of 6 months KIBOR plus 2.50% per annum with no floor and cap. On December 28, 2006 loans amounting to Rupees 124.732 million were converted to LTF-EOP at 7% per annum fixed rate of mark up. 7.6 Saudi Pak Industrial and Agricultural Investment Company Limited (SPIAICL - 3) This represents term finance facility of Rupees 250 million obtained for debt reprofiling for a period of five years including grace period of one year. Thefacility is repayable in 8 equal six monthly installments commenced from June 2007. It is secured by first pari passu charge by way of hypothecation on all present and future plant and machinery of the Company and by way of mortgage on land measuring 121 acres, 2 kanals and 1 marla, situated at main Peshawar Road, Rawalpindi with 25% margin. The facility carries mark up at the rate of 3 months KIBOR plus 1.70% per annum with quarterly repricing. 7.7 Syndicated Term Finance Syndicated term finance of Rupees 1.750 billion was arranged through Standard Chartered Bank (Pakistan) Limited (SCBL) to swap high priced loans. Long term facility was arranged and availed in Islamic and conventional mode of financing. Standard Chartered Bank (Pakistan) Limited (Arranger), Allied Bank Limited and Bank of Khyber disbursed Rupees 868.750 million under Islamic mode of financing whereas Bank Alfalah Limited, Faysal Bank Limited and Pak Libya Holding Company Limited disbursed Rupees 850 million under conventional means of financing. Tenor of the loan was 5 years including one year grace period and was repayable in 16 equal quarterly installments. During the year ended 30 June 2010, the Company entered into supplimental to its syndicated term finance facility agreement where by the repayment schedule of the purchase price was modified. The loan is repayble in twenty four installments within a tenor of six years . It is secured by first pari passu charge over the fixed assets of the Company including surplus land and buildings at Peshawar Road, Rawalpindi. It carries mark-up at 3 months average KIBOR plus 1.50% per annum to be repriced at the end of each quarter. 7.8 Long term finance facility Tenor of this LTFF is four and a half years. The principal amount of this LTFF is repayable in nine semi annual installments starting from June 2010. The facility carries mark-up ranging from 9.7 % to 11.1% (2010: 9.7% per annum) payable on quarterly basis in arrears. This finance facility is secured against first pari passu equitable hypothecation/mortgage charge of Rs. 2.250 billion on all present 116 and future fixed assets of the Company and personal guarantees of the directors of the Company.

e year. It is repayable ed against collateral mpany and personal BOR plus 2.00% per

tate of art machinery able in sixteen equal d by first exclusive mark up at the rate mark up at the rate rries mark up at the ber 28, 2006 loans m fixed rate of mark

ofiling for a period of monthly installments hypothecation on all on land measuring di with 25% margin. annum with quarterly

dard Chartered Bank anged and availed in Limited (Arranger), der Islamic mode of g Company Limited he loan was 5 years allments. During the dicated term finance modified. The loan ed by first pari passu at Peshawar Road, um to be repriced at

TFF is repayable in nine nging from 9.7 % to e facility is secured llion on all present of the Company.

7.9 Deferred Markup Loan As per terms of rescheduling agreement, through lead arranger and investors agent Allied Bank Limited (ABL), deferred mark up of redeemable capital and syndicated term finances for the period from December 2009 to March 2011 were transferred to interest free deferred mark up loan during the current year. This loan will be repaid in 24 equal quarterly installments starting from March 2012.0 #### Habib Bank Limited (HBL) -Term Loan Facility During the current year, Subsidiary has entered into restructuring agreement with HBL for Rupees 790.52 million. The purpose of this arrangement is to restructure the existing loans (Loan - I and Loan - II) for import of Waste Heat Recovery Plant. As per terms of agreement, the principal balance is repayable in 9 years including grace period of 24 months applicable from cut off date December 31, 2009.0 Principal repayment will commence from January 01, 2012 as follows: January 01, 2012 Rupees 25 million March 31, 2012 Rupees 25 million June 30, 2012 Rupees 25 million The remaining principal is to be repaid in twenty six equal quarterly installments of Rupees 27.52 million each, commencing from the quarter ending September 30, 2012. This facility carries mark-up at 6 month KIBOR plus 3% per annum. Up to December 2015, HBL agrees to give discount on the applicable mark-up rate, provided that mark-up is serviced regularly and repayment terms are strictly adhered. After rebate, markup rate will be as follows: From January 01, 2010 to December 31, 2013 KIBOR plus 1% per annum 6 month From January 01, 2014 to December 31, 2015 KIBOR plus 2% per annum 6 month From January 01, 2016 to December 31, 2018 KIBOR plus 3% per annum 6 month The facility is secured against first pari passu equitable mortgage/hypothecation charge of Rupees 2,250 million over fixed assets of the Company (Land, Building & Plant and Machinery). It is also secured by Personal Guarantee (PG) along with PNWS of directors of the company and subordination of the entire sum of directors/sponsors loan outstanding at any point in time. #### Syndicated Term Finances During the financial year 2010, the Company had arranged restructuring of syndicated term finance facility and entered into Second Addendum dated March 30, 2010 through lead arranger and investment agent Allied Bank Limited (ABL). 117

The salient terms of this syndicated term finance facility, as per Second addendum, are as follows: - Lead arranger and agent bank Allied Bank Ltd. (ABL) - Lenders Banks and DFIs - Facility amount Rupees 1,500 million - Tenor 9 Years including Grace period of 2.75 years - Mark-up rate 3 months KIBOR plus 100 bps Mark up will be increased to 3 months KIBOR plus 170 bps after 5 years or complete settlement of deferred mark-up, whichever is later. - Principal repayment 30 outstanding quarterly installments will be paid as per following schedule: Period Rupees in million September 2011 - June 2012 0.30 September 2012 - June 2015 37.50 September 2015 - June 2016 44.50 September 2016 - June 2017 56 September 2017 - June 2018 70 September 2018 - December 2018 181 Rental and markup payments Rentals are payable quarterly in arrears. Rentals, during the year, have been calculated at mark-up rates ranging from 13.16% to 14.59% (2010: 13.16% to 15.72%) per annum. Accrued mark up from March 2011 to June 2011 will be paid in September 2011. 118 Regular mark up payments will commence from September 2011 and will be payable on due dates.

will be payable on due dates.

- Security This First pari passu charge over all present and future fixed assets of the Company amounting to Rs. 3,333 million. 2011 2010 (Rupees in thousand) - Faysal Bank Limited 359,568 359,856 -Pak Libya Holding Company (Private) Limited 239,712 239,904 - MCB Bank Limited 149,820 149,940 - Askari Bank Limited 104,874 104,958 - Pak Brunei Investment Company Limited 89,892 - Soneri Bank Limited 89,892 89,964 -The Bank of Khyber 59,928 59,976 -Saudi Pak Industrial and Agricultural Investment Company Limited 59,928 59,976 -The Bank of Punjab 59,928 59,976 -First Women Bank Limited 59,928 59,976 - Atlas Bank Limited. 29,964 29,988 - Allied Bank Limited 194,766 194,922 1,498,200 1,409,436 Less : current portion 1,200 1,200 1,497,000 1,408,236 7.12 Kohinoor Sugar Mills Limited (KSML) A civil suit has been filed by KSML for recovery of disputed liability which is being contested by the Company. 7.13 Kohinoor Industries Limited (KIL) The balance is an old one, un-reconciled, unconfirmed and disputed. 7.14 Current portion of long term financing include overdue installments amounting to Rupees 97.118 million (2010 : Rupees 263.696 million). 2011 2010 Note (Rupees in thousand) 8.0 REDEEMABLE CAPITAL Islamic Sukuk certificates under musharaka agreement 8,296,600 8,000,000 Add: Sukuk certificates issued during the year 300,000 8,296,600 8,300,000 Less: Sukuk certificates paid during the year 6,800 3,400 Less: Current portion shown under current liabilities 16 306,800 6,800 7,983,000 8,289,800 119

TheCompany has issued Islamic SukukCertificates under Musharaka agreement amounting to Rupees 8,000 million during the year ended June 30, 2008. In the financial year 2010, the Company has arranged restructuring of issued Sukuk Certificates and entered into First Addendum with Investors Agent Allied Bank Limited (ABL). In the financial year 2010 , the Company has issued new Sukuk Certificates (as Bridge Finance) to existing Sukuk lenders amounting to Rupees 300 million. The salient terms and conditions of secured Sukuk issue of Rs. 8.300 billion made by the Company are detailed below: - Lead Arranger Allied Bank Limited (ABL) - Shariah Advisor Meezan Bank Limited - Purpose Balance sheet reprofiling and replacement of conventional debts with Shariah Compliant Financing. - Investors Banks, DFIs, NBFI and any other person. - Tenor of sukkuk issue of Rupees 8.000 billion 9 Years including grace period of 2.75 years and repayment is to be made in 6.25 years. Rupees 300.000 million Repayment is to be made in bullet in March 2012 - Mark up rate 3 months KIBOR plus 100 bps Mark up will be increased to 3 months KIBOR plus 170 bps after 5 years or complete settlement of deferred mark-up, whichever is later. - Musharaka Investment repurchase 30 outstanding quarterly installments will be paid as per following schedule: Period Rupees in million September 2011 - June 2012 1.70 September 2012 - June 2015 200.00 September 2015 - June 2016 237.50 September 2016 - June 2017 300.00 September 2017 - June 2018 375.00 September 2018 - December 2018 966.50 - Rental and mark up payments Rentals are payable quarterly in arrears. Rentals, during the year, have been calculatedat mark-up rates rangingfrom13.20% to14.59% (2010: 13.20% to 15.44%) per annum. Accrued mark up from March 2011 to June 2011 will be paid in September 2011. Regular mark up payments 120 will commence from September 2011.

wing schedule:

the year, have

-Form & delivery of Sukuk The Sukuk have been issued under section 120 issue of securities and redeemablecapital not based on interestof theCompanies Ordinance 1984.The SukukCertificates have been registeredand inducted into the Central Depository System (CDS) of the Central Depository Company ofPakistan(CDC). -Security First Sukuk issue of Rs. 8,000 million is secured against first Pari passu charge over all present and future fixed assets of the Company amounting to Rs. 10.667 million. New Sukuk certificates issued as bridge finance amounting to Rs. 300 million is secured against ranking charge on fixed assets and specific properties comprising of 393 kanals at Kala Shah Kaku and personal security of directors. -Trustee / investors agent Allied Bank Limited -Transaction structure The facility as approvedby Meezan Bank Limited, shariah advisor ofthe issue, is as follows: (a) Investors (as Investor Co-owners) and the Company (as managing Co-owner) have entered into a Musharaka Agreement as partners for the purpose of acquiring Musharaka assets from the Company (acting as Seller) and jointly own these Musharaka assets. (b) Investors have appointed ABL to act as Investor Agentfor the Sukuk Issue. (c) Investor co-owners have contributed their share in the Musharaka in cash that has been utilised by managing co-owner for acquiring Musharaka assets. Managing co-owner has contributed its Musharaka share in kind. (d) Upon acquisitionof Musharaka assets,Investor Agentand managing co-ownerhave executedAssets PurchaseAgreement with theCompany (acting as Seller). (e) The Company (as Issuer) has issued Sukuk Certificates to Investors thatrepresent latters undivided share in the Musharaka assets. (f) Investors have made the usufruct of their undivided share in the Musharaka assets available to the Company against rental payments linked to the rental bench marked. (g) The Company will purchase Musharaka share of investors on quarterly basis after expiry of 2.75 years from the rescheduling date. -Sell Down / Transferability As Sukuks have been induced into Central Depository Company (CDC), transfers are made in accordance with Central Depository Act, 1997 and other applicable CDC regulations. Call option The issuer may, at any time after expiry of one yearfrom the issue date, purchase all or any of the sukuk units from the certificate holders at their applicable Buy Out Prices (pre-purchase) to be calculated subject to the provisions of the trust deed, sale undertaking and the terms and conditions therein. 121

Note 9.0 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE Future minimum lease payments Less: Un-amortized finance charges Less: Security deposits of subsidiary Present value of future minimum lease payments Less: Current portion shown under current liabilities

2011 (Rupees in thousand)

1,338,606 134,206 30,000 1,174,400 16 667,191 507,209 9.1 The future minimum lease payments have been discounted at implicit interest rates which range from 6.00 % to 18.85% (2010: from 6.00% to 18.00%) per annum to arrive at their present values. The lease rentals are payable in monthly and quarterly installments. In case of any default, an additional charge at the rate of 0.1 percent per day shall be payable. Taxes, repairs, replacements and insurance costs are to be borne by the Company. The lease agreements carry renewal and purchase option at the end of the lease term. There are no financial restrictions in lease agreements. These are secured by deposit of Rupees 52.098 million (2010: Rupees 54.841 million) included in long term deposits, demand promissory notes, personal guarantees and pledge of sponsors shares in public limited companies. 9.2 Future minimum lease payments and their present values are regrouped as under: 30 June 2011 30 June 2010 thanNotyearlaterone thanbutLateronenotfiveyearthanlateryears thanNotyearlaterone ------------------(Rupees in thousand)--------------Future minimum lease payments 769,647 568,959 541,505 Less: Unamortized finance charge 102,456 61,750 94,282 Present value of future minimum lease payments 667,191 507,209 447,223 10. LONG TERM DEPOSITS These represent interest-freesecuritydeposits from stockists andare repayable on cancellation or withdrawal of the dealerships. These are being utilized by the Subsidiary in accordance with the terms of dealership agreements. 11. EMPLOYEES COMPENSATED ABSENCES 122 These represent amounts payable against un-availed leaves of employees.

2010 (Rupees in thousand)

1,406,886 161,915 30,000 1,214,971 447,223 767,748 nterest rates which range t their present values. The any default, an additional placements and insurance al and purchase option at ments. These are secured uded in long term deposits, s shares in public limited

30 June 2010 thanbutLateronenotfiveyearthanlateryears ousand)--------------865,381 97,633 767,748

llation or withdrawal e terms of dealership

12. DEFERRED INCOME TAX Note This comprises of following: Deferred tax liability on taxable temporary differences in respect of: - Accelerated tax depreciation - Surplus on revaluation of operating fixed assets - Surplus on revaluation of investment Deferred tax asset on deductible temporary differences in respect of: - Lease finances - Unused tax losses - Employees compensated absences - Minimum tax recoverable against normal tax charge in future years 13. TRADE AND OTHER PAYABLES Creditors Bills payable - secured Accrued liabilities Security deposits, repayable on demand Advances from customers Contractors retention money Royalty and excise duty payable Workers profit participation fund Workers welfare fund Excise duty payable Unclaimed dividend Withholding tax payable Payable to employees provident fund trust Employees gratuity fund Sales tax payable Others 13.1 Workers profit participation fund Balance as on 01 July Add: Interest for the year Provision for the year Less: Payments during the year

2011 (Rupees in thousand)

2010

3,467,968 2,114,100 238,717 5,820,785 137,482 2,992,582 5,552 270,211 3,405,827 2,414,958 1,231,124 1,333,468 623,144 43741 433,213 55,665 17,951 20,905 7,686 655,386 4,214 30,817 39,121 13,030 223,204 25,312 4,757,981 21,669 2,445 10,188 (13,397) 20,905

2,844,401 282,194 3,126,595 56,154 2,782,588 4,459 125,398 2,968,599 157,996 1,736,200 785,705 647,792 41,705 239,813 45,813 69,688 21,669 7,686 717,549 4,214 12,761 2,831 6,864 48,846 57,707 4,446,843 1,254 188 20,227 21,669 123

13.1

13.2

38 36

13.1.1 The Company retains workers profit participation fund for its business operations till the date of allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers Participation) Act, 1968 on funds utilized by the Company till the date of allocation to workers. 13.2 EMPLOYEE BENEFITS - Gratuity The future contribution rates of this scheme include allowance for deficit and surplus. Projected unit credit method, based on the following significant assumptions, is used for valuation of this plan: 2011 2010 - discount rate 14% 12% - expected return on plan assets 12% 12% - expected rate of growth per annum in13% salaries 11% future - average expected remaining working life time of employees 10 years 10 years 2011 2010 (Rupees in thousand) The amounts recognized in the balance sheet are as follows: Present value of defined benefit obligation 82,275 77,070 Fair value of plan assets (50,914) (43,201) Deficit 31,361 33,869 Unrecognized actuarial gain (18,331) (27,005) Net asset as at 30 June 13,030 6,864 Net asset/ (liability) as at 01 July, 6,864 (8,184) Charged to profit and loss account 10,391 6,864 Payments to fund during the year (4,225) (1,929) Amount paid to the Subsidiary 10,113 Net liability as at 30 June 13,030 6,864 Movement in the present value of defined benefit obligation is as follows: Present value of defined benefit obligation as at 77,070 01 July 60,082 Current service cost 4,397 3,987 Interest cost 9,248 7,210 Benefits paid (4,225) (1,959) Actuarial gain / (loss) (4,215) 7,750 Present value of defined benefit obligation as at 82,275 30 June 77,070 Movement in the fair value of plan assets is as follows: Fair value of plan assets as at 01 July 43,201 47,997 Expected return on plan assets 5,184 5,759 Contributions 4,225 1,929 Benefits paid (4,225) (1,959) Payment to outgoing members (10,113) Actuarial gain / (loss) 2,529 (412) Fair value of plan assets as at 30 June 50,914 43,201 124 Actual return on plan assets as at 30 June 7,713 5,348

anies Profit (Workers on to workers.

plus. Projected unit on of this plan:

2011 2010 (Rupees in thousand) Plan assets comprise of: Term deposit receipts - KASB Bank Trust investment Bank including accrued interest Al-Baraka Bank including accrued interest National Investment Trust Units Profit receivable from provident fund Cash at bank Benefit payments due, but not paid Charged to profit and loss are as follows: Current service cost Interest cost Expected return on plan assets Acturial losses charge 15,285 8,907 20,508 503 5,711 50,914 (30) 43,201 17,886 1,914 23,431

4,397 3,987 9,248 7,210 (5,184) (5,759) 1,930 1,426 10,391 6,864 Comparison of present value of defined benefit obligation, the fair value of plan assets and the surplus or deficit of gratuity fund for five years is as follows: 2011 2010 2009 2008 2007 ---------------- Rupees in thousand ------------Present value of defined benefit obligation (82,275) (77,070) (60,082) (50,663) (46,512) Fair Value of plan assets 50,914 43,201 47,997 61,382 60,785 (Deficit) / surplus 31,361 33,869 (12,085) 10,719 14,273 Experience adjustment on obligation (4,215) 7,750 3,216 (1,653) (3,825) Experience adjustment on plan assets 2,529 (412) (17,140) (6,697) 2,603 The Subsidiarys policy with regard to actuarial gains / losses is to follow the minimum recommended approach under IAS 19: Employee Benefits. The latest actuarial valuation of the gratuity scheme has been carried out on 30 June 2011. 2011 2010 (Rupees in thousand) 14. ACCRUED MARK-UP Long term financing 250,410 276,739 Redeemable capital 391,012 622,378 Short term borrowings 279,355 261,088 Liabilities against assets subject to finance lease 100,522 51,594 1,021,299 1,211,799 125

Note 15. SHORT TERM BORROWINGS From banking companies - secured Short term running finances Other short term finances State Bank of Pakistan (SBP) refinances Temporary bank overdraft

2011 (Rupees in thousand)

2010

5,607,276 6,047,173 1,815,701 2,200,553 1,435,000 1,555,000 356,954 328,547 9,214,931 10,131,273 15.1 The running finance facilities sanctioned by various banks aggregate to Rupees 6,841 million (2010: Rupees 6,152 million). The rates of mark-up range from 3.49% to 24.00% (2010: from 3.23% to 25%) per annum. These arrangements are secured by pledge of raw material, charge on current assets of the Company including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors. 15.2 The other short term finance facilities sanctioned by various banks aggregate to Rupees 2,426 million (2010: Rupees 3,638 million). The rates of mark-up range from 13.45% to 25.00% (2010: from 6.63% to 18.00%) per annum. These arrangements are secured by pledge of raw material, charge on current assets of the Company including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors. 15.3 The export refinance facilities sanctioned by various banks aggregate to Rupees 1,435 million (2010: Rupees 1,665 million). The rates of mark-up range from 8.50% to 11.00% (2010: 6.50% to 8.50%) per annum. These arrangements are secured by way of charge on current assets of the Company and personal guarantees of the sponsor directors. 15.4 This represents temporary overdraft due to cheques issued by the Company in excess of balance with banks which will be presented for payment in subsequent period. 2011 2010 (Rupees in thousand) 16. CURRENT PORTION OF NON-CURRENT LIABILITIES Long term financing - secured 7 1,014,387 1,181,865 Redeemable capital 8 306,800 6,800 Liabilities against assets subject to finance lease 9 667,191 447,223 1,988,378 1,635,888 17. CONTINGENCIES AND COMMITMENTS 17.1 Contingencies Holding company a) The Company has filed an appeal before AppellateTribunal Inland Revenue, Lahore for tax year 2003 under section 129/132 of Income Tax Ordinance, 2001, which is pending adjudication. The tax loss was restricted to Rupees 27.540 million against declared loss of Rupees 122.933 million. In addition to the above, another appeal for tax year 2003 against order under section 221 dated 24 January 2009, on the disallowance of depreciation expense of Rupees 62.665 million has been filed before 126 Appellate Tribunal Inland Revenue which is pending adjudication. This is a cross appeal. Although the

15.1 15.2 15.3 15.4

,841 million (2010: rom 3.23% to 25%) n current assets of ters of credit, firm

upees 2,426 million (2010: from 6.63% , charge on current spares, letters of

,435 million (2010: .50% to 8.50%) per of the Company and

cess of balance with

e for tax year 2003 ation. The tax loss million. In addition 1 dated 24 January s been filed before ppeal. Although the

learned Commissioner Inland Revenue (Appeals) has already annulled the order under section 221 of the Income Tax Ordinance, 2001, vide order dated 30 July 2009, the Taxation Officer has illegally repeated the original assessment. Therefore, an appeal has also been filed before Commissioner Inland Revenue under section 187 of Income Tax Ordinance, 2001 for tax year 2003, the appellate order of which is pending. The revenue involved on account of penalty was Rupees 17.484 million. The Company has strong grounds and is expecting favourable outcome. b) TheCompany has filed an appeal before the Appellate Tribunal Inland Revenue under section 122(5A) / 122(1) / 129 of Income Tax Ordinance, 2001 for tax year 2004 which is pending adjudication. The loss for the year has been assessed at Rupees 255.684million against declared loss of Rupees 255.886 million creating refund of Rupees 7.498 million.Department has also filed cross appeal mainlyon issue of chargeability of 3.5% tax on local purchases amounting to Rupees 955.547 million. The Company has strong grounds and is expecting favourable outcome. c) TheCompany has filed an appeal before the Appellate Tribunal Inland Revenue under section 122(5A) / 122(1) / 129 of Income Tax Ordinance, 2001 for tax year 2005, which is pending adjudication. The Income for the year has been assessed at Rupees 113.440 million against declared loss of Rupees 205.576 million creating payable of Rupees 74.576 million. Department has also filed cross appeal mainly on issue of chargeability of 3.5% tax on local purchases amounting to Rupees 828.839 million. The Company has strong grounds and is expecting favourable outcome. d) The Company and the tax authorities have filed appeals before different appellate authorities regarding sales tax matters. Pending the outcome of appeals filed by the Company and tax authorities, no provision has been made in these consolidated financial statements which on the basis adopted by the authorities would amount to Rupees 35.555 million (2010: Rupees 33.473 million), since the Company has strong grounds against the assessments framed by the tax authorities. e) The Company has filed recovery suits in civil courts of Rupees 8.390 million (2010: Rupees 4.589 million) against various suppliers and customers for goods supplied by/ to them. Pending the outcome of the cases, no provision there against has been made in these consolidated financial statements since the Company is confident about favourable outcome of the cases. f) Three cases are pending before the Punjab Labour Appellate Tribunal, Shadman 1, Lahore regarding the reinstatement into service of three employees dismissed from their jobs. No provision has been made in these consolidated financial statements, since the Company is confident about favourable outcome of the cases. g) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Company, to various institutions and corporate bodies aggregate Rupees 249.620 million as at 30 June 2011 (2010: Rupees 248.962 million) Subsidiary company a) The Subsidiary has filed writ petitions before the Lahore High Court (LHC) against the legality of judgment passed by the Customs, Excise & Sales Tax Appellate Tribunal whereby the Company was held liable on account of wrongful adjustment of input sales tax on raw materials and electricity bills; the amount involved pending adjudication before the LHC amounting to Rupees 13.252 million. No provision has been made in these consolidated financial statements in respect of the aforementioned Subsidiary. 127

b)

c)

d)

e)

TheSubsidiary has filed an appeal before the Customs, Central Excise and Sales Tax Appellate Tribunal, Karachi against the order of the Deputy Collector Customs whereby the refund claim of the Subsidiary amountingto Rupees 11.588 million was rejected and the Subsidiary was held liable to pay an amount of Rs. 37.051 million by way of 10% customs duty allegedly leviable in terms of SRO 584(I)/95 and 585(I)/95 dated July 01, 1995. The impugned demand was raised by the Department on the alleged ground that the Subsidiary was not entitled to exemption from payment of customs duty and sales tax in terms of SRO 279(I)/94 dated April 02, 1994. TheLHC, upon the Companys appeal, vide its order dated November 06, 2001 has decided the matter in favour of the Subsidiary; however, the Collector of Customs has preferred a petition before the Supreme Court of Pakistan, which is pending adjudication. No provision has been made in these consolidated financial statements in respect of the above stated amount as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. The Federal Board of Revenue (FBR) has filed an appeal before the Supreme Court of Pakistan against the judgment delivered by the LHC in favour of the Subsidiary in a writ petition. The Subsidiary, through the said writ petition, had challenged the demand raised by the FBR for payment of duties and taxes on the plant and machinery imported by the Company pursuant to the exemption granted in terms of SRO 484 (I) / 92 dated May 14, 1992. The FBR, however, alleged that the said plant & machinery could be locally manufactured and duties and taxes were therefore not exempted. A total demand of Rs. 1.387 billion was raised by the FBR out of which an amount of Rs. 269.328 million was deposited by the Subsidiary as undisputed liability. The Customs Department has filed an appeal before the Supreme Court of Pakistan against the judgment of Sindh High Court, which held that dump trucks were part of plant and machinery and the Tribunal had rightly subjected them to concessionary rate of duty. The Subsidiary had paid excess customs duties amounting Rs. 7.347 million on these trucks. The appeal is pending adjudication before the Supreme Court of Pakistan. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. As regards the balance disputed amount, the matter was decided in favour of the Subsidiary as per the judgment of LHC. After preferring the appeal before the Supreme Court of Pakistan, the matter has been referred to ADRC, Islamabad. No provision has been made in these consolidated financial statements in respect of the aforementioned disputed demands aggregating Rs. 1.118 billion as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. The Subsidiary has filed an appeal before the Supreme Court of Pakistan against the judgment of the Division Bench of the High Court of Sindh at Karachi. The Division Bench, by judgment dated September 15, 2008, has partly accepted the appeal by declaring that the levy and collection of infrastructure cess / fee prior to December 28, 2006 was illegal and ultra vires and after December 28, 2006, it was legal and the same was collected by the Excise Department in accordance with law. The appeal has been filed against the declaration that after December 28, 2006, the Excise Department has collected the infrastructure cess / fee in accordance with law. The Province of Sindh and Excise and Taxation Department has also preferred appeal against the judgment decided against them. The Supreme Court has consolidated both the appeals. The total financial exposure of the Subsidiary involved in the case amounts to Rupees 59.556 million. In the event of an adverse decision in appeal, the guarantees aggregating Rs. 145.700 million furnished by the Company will be encashed by the Government of Sindh. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this 128 case will be in favour of the Subsidiary.

x Appellate Tribunal, im of the Subsidiary le to pay an amount f SRO 584(I)/95 and ent on the alleged toms duty and sales

decided the matter a petition before the been made in these the management is

t of Pakistan against tition. The Subsidiary, payment of duties exemption granted that the said plant & t exempted. A total 269.328 million was

Pakistan against the and machinery and ary had paid excess pending adjudication nsolidated financial se will be in favour

e Subsidiary as per kistan, the matter nsolidated financial 1.118 billion as the of the Subsidiary. inst the judgment of by judgment dated levy and collection of d after December 28, ance with law. The Excise Department of Sindh and Excise against them. The

ees 59.556 million. 700 million furnished been made in these te outcome of this

f)

g)

h)

i)

j)

k)

CompetitionCommission of Pakistan (the Commission),vide orderdated August27, 2009, has imposed penalty on 20 cement factories of Pakistan at the rate of 7.5% of the turnover value as disclosed in the last financial statements. The Commission has imposed penalty amounting Rs. 586.187 million on the Company. The Commission has alleged that provisions of section 4(1) of the Competition Commission Ordinance, 2007 have been violated. However, after the abeyance of Islamabad High Court pursuant to the judgment of Honble Supreme Court of Pakistan dated July 31, 2009, the titled petition has become in fructuous and the Subsidiary has filed a writ petition no. 15618/2009 before the Lahore High Court. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. The Additional Collector, Karachi has issued show cause notice alleging therein that the Subsidiary has wrongly claimed the benefits of SRO No. 575(I)/2006 dated June 05, 2006 on the import of pre-fabricated buildings structure. Consequently, the Subsidiary is liable to pay Government dues amounting Rs. 5.552 million. The Subsidiary has submitted reply to the show cause notice and currently proceedings are pending before the Additional Collector. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. The custom department has filed an appeal against the judgment dated 19/05/2009 passed in favour of the Subsidiary pursuant to which the Subsidiary is not liable to pay custom duty amount of Rupees 0.589 million relating to import of some machinery vide L/C No. 0176-01-46-518-1201 in terms of SRO 484(1)/92 dated 14/05/1992 and SRO 978(1)/95 dated 04/10/1995. The appeal is pending before the Honourable Lahore High Court. The Subsidiary has preferred an appeal against the order in original No. 576/99 dated 18/09/1999 whereby the company was denied the benefitof SRO 484(1)/92 dated 14/05/1992 and SRO 978(1)/95 dated 04-10-1995. Accordingly the demand of Rupees 0.807 million was raised against the Subsidiary. Appeal was dismissed by Central Excise and Sales Tax Tribunal on 19/05/2009. The Subsidiary has filed petition before the Honourable Lahore High Court, which is pending adjudication. A rectification application under section 194 is also pending before the Customs Federal Excise and Sales Tax, Appellate Tribunal beside the customs reference. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. Through order in originalNo. 18/2009 dated December24, 2009 (ONO), the Additional Commissioner Inland Revenue, (Legal), Large Taxpayers Unit, Lahore (ACIR - Legal) finalized the adjudication proceedings in respect of audit conducted by departmental auditors and raised a demand of principal SalesTax and FederalExcise duty (FED) aggregatingto Rs. 336.738 million along withdefault surcharge and penalties. The Subsidiary has preferred appeals against this exparte order under the applicable provisions of Sales Tax Act and Federal Excise Act before Commissioner Inland Revenue, Appeals CIR(A). Such appealshave not yet been taken up for hearing by Commissioner Inland Revenue, Appeals [CIR(A)]. No provision has been made in these consolidated financial statements as the management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. The Income Tax Department (the Department) have selected tax years 2003 and 2006 for tax audit, and also initiated proceedings under section 161 and 205 of Income Tax Ordinance 2001 (the Ordinance) against the Subsidiary in the respect of tax years 2003 to 2007. Income tax assessments of the Subsidiary except described otherwise are deemed assessments in terms of section 120 (1) of the Income Tax Ordinance 2001. Provision for current year, in view of available tax losses, represents minimum tax due on turnover undersection 113 and tax deducted at source under section 5,15 and 154 of the income tax ordinance, 2001.0 129

In consequence of tax audit conducted by the Department for tax year 2003, vide order dated December 31, 2008, has amended the deemed assessment in respect of tax year 2003 under section 122(5)of the ordinance and the Subsidiarys taxable income has been enhanced by Rs. 177.750 million. The Subsidiary has preferred an appeal against aforesaid amendment order before the Commissioner of Inland Revenue (Appeals), which was disposed off through order dated November 1, 2009. Through such order, while CIR(A) upheld the departmental contentions on certain issues, a substantial relief was extended, reducing the taxable income for the year by an amount of Rs. 107 million as against the additions towards taxable income aggregating to Rs. 173 million contested by the Subsidiary. The Subsidiary has preferred further appeal before the Appellate Tribunal Inland Revenue (ATIR) against the order of CIR(A) against the disallowances confirmed by him through order. Subsidiarys appeal is pending for hearing by ATIR. The management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. m) Additional Commissioner Inland Revenue passed an order u/s 122(5A) and made additions of Rs. 21.6 million in Subsidiarys taxable income and raised a tax demand of Rs. 1.9 million against the Company. The Company has preferred an appeal before Commissioner Inland Revenue (Appeals) against the above addition in taxable income which relates to the admissibility of initial allowance on exchange loss capitalized u/s 76(5) of the Ordinance. Through appellate order dated May 30, 2011 passed by the Commissioner Inland Revenue ( Appeals) {CIR(A)}, companys appeal against amendment order dated March 10, 2010 earlier passed under section 122 (5A) of Ordinance has been disposed off. Through such order, while companys appeal on the issue of admissibility of initial allowance on exchange loss capitalized under section 76(5) of Income Tax Ordinance, 2001, has not been entertained, relief has been allowed regarding the issue of inclusion of profit on sale of fixed assets in turnover for computing minimum tax liability under section 113 of the Ordinance pending before appellate tribunal. n) The Deputy Commissioner (Adjudication) has passed an order in original No. 51/2009 dated October 10, 2009 for late filing return and delayed deposit of dues for the tax period November 2008 against the Subsidiary, raising demand amounting to Rs. 0.159 million being default surcharge u/s 34 and Rs. 3,500 being penalty u/s 33(5) of Sales Tax Act 1990 and Rs. 0.453 million being default surcharge u/s 8 and Rs. 7.809 million being penalty u/s 19(1) of Federal Excise Act 2005. In reference to above order appeal is pending before the Appellate Tribunal of Inland Revenue. The management is confident that the ultimate outcome of this case will be in favour of the Subsidiary. o) Guarantees issued by various commercial banks, in respect of financial and operational obligations of the Subsidiary, to various institutions and corporate bodies aggregate Rupees 397.867 million as at 30 June 2011 (2010: Rupees 343.179 million). 17.2 Commitments in respect of: a) Commitments for capital expenditure other than letter of credit amount to Rupees 235.014 million (2010: Rupees 178.127 million). b) Letters of credit for capital expenditure amount to Rupees Nil (2010: Rupees 668.696 million). c) Letters of credit other than for capital expenditure amount to Rupees 86.583 million (2010: Rupees 440.577 million). d) Bills discounted amounting to Rupees Nil (2010: 40.143 million) 2011 2010 (RUPEES IN THOUSAND) 18 PROPERTY, PLANT AND EQUIPMENT Operating fixed assets (Note 18.1) 31,154,898 24,246,851 Capital work in progress (Note 18.5) 3,796,034 3,226,768 Stores, spare parts and loose tools held for capital -expenditure 57,896 130 34,950,932 27,531,515

l)

year 2003, vide order dated tax year 2003 under section hanced by Rs. 177.750 million. der before the Commissioner d November 1, 2009. on certain issues, a substantial unt of Rs. 107 million as against tested by the Subsidiary. The nland Revenue (ATIR) against order. Subsidiarys appeal is mate outcome of this case will

) and made additions of Rs. of Rs. 1.9 million against the er Inland Revenue (Appeals) missibility of initial allowance pellate order dated May 30, }, companys appeal against n 122 (5A) of Ordinance has ssue of admissibility of initial x Ordinance, 2001, has not on of profit on sale of fixed 3 of the Ordinance pending

No. 51/2009 dated October iod November 2008 against ault surcharge u/s 34 and Rs. being default surcharge u/s 5. In reference to above order management is confident that

nd operational obligations of pees 397.867 million as at 30

t to Rupees 235.014 million

upees 668.696 million). 6.583 million (2010: Rupees

131

132

#### Had there been no revaluation the cost, accumulated depreciation and book value of revalued assets as at June 30, 2011 would have been as follows: Cost Accumulated Book Depreciation Value Rupees in thousand Freehold Land 468,219 468,219 Buildings on freehold land 3,944,560 1,074,384 2,870,176 Roads, bridges and railway sidings 87,615 60,979 26,636 Plant and machinery 19,602,760 6,739,150 12,863,610 24,103,154 7,874,513 16,228,641 2011 2010 Note (Rupees in thousand) #### Depreciation charged during the year has been allocated as follows: Cost of sales 33 1,574,369 350,778 Administrative expenses 35 36,643 20,840 1,611,012 371,618 #### Capital work in progress Tangible assets Civil works 105 67,593 Plant and machinery 3,203,712 2,644,753 Un-allocated capital expenditure 18.5.1 477,163 274,540 Advances to suppliers against: Plant and machinery 104,999 206,579 Purchase of land 2,000 2,000 Vehicles 4,550 1,414 Civil works 3,505 3,505 3,796,034 3,200,384 Intangible assets Computer software and consultancy cost 26,384 3,796,034 3,226,768 18.5.1 Un-allocated capital expenditure - net OpeningAdd:Salaries,TravellingVehiclesFinanceLegalCommunicationInsuranceExpenditurebalanceandcostwagesrunningprofessiona 274,540181,07710,3453,3725,974184117201,62059,5815,6191,3285,79711516050 Miscellaneous expenses 1,554 270 477,163 274,540 133

191,3285,79711516050

2011 (Rupees in thousand)

2010

19. INTANGIBLE ASSETS Computer softwares Year ended 30 June 2011 Opening net book value 1,774 7,332 Addition 36,220 Amortization (10,840) (5,558) Closing net book value 27,154 1,774 Cost as at 30 June 2011 59,470 23,250 Accumulated amortization (32,316) (21,476) Net book value 27,154 1,774 Amortization rate (per annum) 33.33% 33.33% 20. INVESTMENT PROPERTIES Year ended 30 June Opening net book amount 1,720,835 1,720,835 Fair value gain 879 Closing net book amount 1,721,714 1,720,835 20.1 Thefair value of investment properties comprising land and building situated at Lahore and Rawalpindi have been determined at 30 June 2011 and 30 June 2010 by an independent valuer having relevant professional qualifications. The fair value was determined on the basis of professional assessment of the current prices in an active market for similar properties in the same location and condition. No expenses directly related to investment properties were incurred during the year. 2011 2010 Note (Rupees in thousand) 21. LONG TERM LOANS TO EMPLOYEES - Secured House building 2,120 3,566 Vehicles 2,336 1,863 Others 247 287 4,703 5,716 Less: Current portion of long term loans to employees 26 2,172 2,423 2,531 3,293 These loans are secured against charge / lien on employees retirement benefits and carry interest at the rates ranging from 6.00% to 12.00% per annum (2010: 6.00% to 12.00% per annum). These loans are 134 recoverable in 30 to 120 monthly installments.

ore and Rawalpindi r having relevant nal assessment of and condition. No

Note 22. LONG TERM DEPOSITS AND PREPAYMENTS Security deposits Prepayments Less: current portion shown under current assets 23. STORES, SPARE PARTS AND LOOSE TOOLS Stores Spare parts Loose tools

2011 (Rupees in thousand) 97,080 97,080 27 (9,286) 87,794 23.1 23.2 1,527,972 1,800,578 38,533 3,367,083 (7,966)

2010

94,093 333 94,426 86,460

865,902 1,853,852 38,454 2,758,208 Less: Provision against slow moving items (5,744) (5,000) 3,361,339 2,753,208 23.1 This includes stores in transit of Rupees 623.474 million (2010: Rupees 129..243 million) 23.2 This includes spare parts in transit of Rupees Nil (2010: Rupees 80.540 million) 23.3 Stores having carrying value amounting to Rupees Nil (2010: Rupees 62.423 million) pledged as security against borrowings. 2011 2010 (Rupees in thousand) 24. STOCK-IN-TRADE Raw material 575,310 783,595 Packing material 72,340 65,302 Work-in-process 573,008 983,697 Finished goods 975,678 1,065,237 2,196,336 2,897,831 24.1 Raw material includes stock in transit of Rupees 210.034 million (2010: Rupees 55.351 million). 24.2 Stock in trade of Rupees 303.684 million (2010: Rupees Nil) is being carried at net realizable value. 24.3 Theaggregate amount of write-down of inventories to net realizable value recognized during the year was Rupees 47.216 million (2010: Rupees Nil). 135

n) pledged as

Note 25. TRADE DEBTS Considered good: Secured (against letters of credit) Unsecured Considered doubtful: Others - unsecured Less: Provision for doubtful debts As at 01 July Add: Provision for the year As at 30 June

2011 (Rupees in thousand)

2010

726,757 540,746 1,267,503 51,054

1,251,743 828,722 2,080,465 26,309

26,309 24,745 26,309 51,054 26,309 25.1 As at 30 June 2011, trade debts of Rupees 671.005 million (2010 : Rupees 819.745 million) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default. The ageing analysis of these trade debts is as follows: 2011 2010 (Rupees in thousand) Upto 1 month 351,052 593,127 1 to 6 months 205,570 156,108 More than 6 months 114,383 70,510 671,005 819,745 25.2 As at 30 June 2011, trade debts of Rupees 51.054 million (2010 : Rupees 26.309) were impaired and provided for. The ageing of these trade debts was more than three years. 2011 2010 Note (Rupees in thousand) 26. LOANS AND ADVANCES - Considered good Current portion of long term loans to employees 21 2,172 2,423 Advances to : - Executives 1,390 621 - Other employees 7,708 7,844 - Suppliers 358,390 850,970 367,488 859,435 Letters of credit 16,732 1,579 136 386,392 863,437 36

illion) were past hom there is no

e impaired and

2011 2010 Note (Rupees in thousand) 27. SECURITY DEPOSITS AND SHORT TERM PREPAYMENTS CurrentMarginPrepaymentsagainst:portion of long tern deposits 24,22651,80255,6279,286 LetterBank guaranteeof credit 22 25,12031,45872,8587,966 140,941 137,402 28. OTHER RECEIVABLES ConsideredSalesCustomMarkExportInsuranceResearchDutyInlandCottondrawtaxupfreightrebateclaimdutysubsidyrefundableandclaimsba 28.1 259,199119,55511,68942,66462,0603,642281472276,95847,56125,80862,06028,7453,642175473Others 48,330 49,494 547,892 494,916 28.1 This represents inland freight subsidy receivable by the Subsidiary subject to State Bank of Pakistan circular letter no. 6 regarding public notice by Trade Development Authority of Pakistan announcing 35% of the total inland freight cost as freight subsidy where dispatch location is more than 100 Km from sea port. 2011 2010 Note (Rupees in thousand) 29. SHORT TERM INVESTMENTS Available for sale Unquoted Security General Insurance Company Limited 29.1 12,000 12,000 10,968,930 (2010 : 10,968,930) ordinary shares of Rupees 10 each fully paid. Equity held 16.11% (2010 : 16.11%) Surplus on revaluation of investment 909,391 1,075,021 921,391 1,087,021 Investments at fair value through profit or loss Quoted Companies 12,817 25,726 Adjustment arising from measurement at fair value (7,566) (14,358) 5,251 11,368 Mutual funds 16,000 16,000 Adjustment arising from measurement at fair value 299 60 16,299 16,060 21,550 27,428 942,941 1,114,449 137

5,80862,06028,7453,642175473-

29.1 The fair value of investment as at 30 June 2011 was determined by considering the valuation report, preparedby Messers Anjum Asim Shahid Rahman,Chartered Accountants (Member of Grant Thornton International Limited), based on generally accepted valuation method. 29.2 Security General Insurance Company Limited ceased to be an associated company from 22 June 2011.0 2011 2010 (Rupees in thousand) 30. CASH AND BANK BALANCES Cash in hand 13,631 2,141 Cash at bank: - On current accounts 262,570 93,010 - On saving accounts 433,275 57,302 695,845 150,312 709,476 152,453 30.1 The balances in saving accounts carry interest ranging from 0.20% to 12% (2010: from 0.40% to 13%) per annum. 30.2 The balances in current and deposit accounts of Holding Company include US $ 217,802 (2010: US $ 37,000). 2011 2010 (Rupees in thousand) 31. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE Land 552,923 Advance against land 100,000 652,923 31.1 During the current year, the Company has disposed off its land at M.M. Alam Road, Lahore at an amount of Rupees 119.200 million. Advance of Rupees 100 million for purchase of land has been received back. Further, the Company has ceased to classify the other land at Raiwind Road as held for sale after managements assessment that the criteria prescribed by IFRS 5 Non-current Assets Held for Sale and Discontinued Operations is no longer being met. Now, this land at Raiwind Road has been classified as a non-current asset under the head Property, Plant and Equipment in these financial statements and is being carried at fair value in accordance with IAS 16 Property, Plant and 138 Equipment.

uation report, Grant Thornton

ny from 22 June

0.40% to 13%)

02 (2010: US $

ad, Lahore at an of land has been Road as held on-current Assets t Raiwind Road ment in these erty, Plant and

Note 32. SALES Export Local Duty drawback Export rebate 32.1 Local sales Less: Sales tax and excise duty Commission

2011 (Rupees in thousand) 10,223,035 14,724,110 116,458 46,389 25,109,992 18,359,334

2010

32.1

13,234,879 11,107,205 54,845 43,137 24,440,066 14,191,917

3,502,591 2,968,011 132,633 116,701 14,724,110 11,107,205 32.2 Exchange gain due to currency rate fluctuations relating to export sales amounting to Rupees 15.966 million (2010: Rupees 35.245 million) has been included in export sales. 2011 2010 Note (Rupees in thousand) 33. COST OF SALES RawClothSalaries,DyesProcessingStores,PackingFuelRepairInsuranceOtherAmortizationandmaterialsandandfactoryandsparematerialswag 33.133.2 1,443,5771,056,2881,383,7307,504,7495,885,167341,963991,993152 3,923,4082,464,6201,056,9151,119,6581,460,0267 Depreciation 18.4 1,574,369 1,379,838 20,611,037 19,714,313 Work-in-process Opening stock 983,720 915,368 Closing stock (573,008) (983,720) 410,712 (68,352) Cost of goods manufactured 21,021,749 19,645,961 Finished goods Opening stock 1,065,214 803,181 Closing stock (975,678) (1,065,214) 89,536 (262,033) Cost of sales 21,111,285 19,383,928 139

201,056,9151,119,6581,460,0267,351,678518,965151,766202,18212,26767,4325,558

2011 (Rupees in thousand) 33.1 Raw material consumed Opening stock Add: Purchased during the year

2010

728,243 581,345 5,559,137 4,070,306 6,287,380 4,651,651 Less: Closing stock (402,213) (728,243) 5,885,167 3,923,408 33.2 Salaries, wages and other benefits include provident fund contribution of Rupees 28.918 million (2010: Rupees 28.225 million) and employee benefit (gratuity) amounting to Rupees 8.010 million (2010 : 5.386 million). 2011 2010 Note (Rupees in thousand) 34. DISTRIBUTION COST Salaries and other benefits 34.1 82,826 73,637 Outward freight and handling 1,594,860 3,118,158 Clearing and forwarding 232,933 227,943 Travelling and conveyance 25,999 26,685 Insurance 505 348 Vehicles running expenses 10,302 8,057 Electricity, gas and water 910 808 Postage, telephone and fax 5,781 6,247 Legal and professional 80 Sales promotion and advertisement 22,475 23,732 Commission to selling agents 83,955 171,202 Miscellaneous expenses 11,069 10,591 2,071,695 3,667,408 34.1 Salaries, wages and other benefits include provident fund contribution of Rupees 3.088 million (2010: 2.176 million) and employee benefits (gratuity) amounting to Rupees 0.350 million (2010: Rupees 140 0.230 million).

Rupees 28.918 million Rupees 8.010 million

es 3.088 million (2010: million (2010: Rupees

Note 35. ADMINISTRATIVE EXPENSES Salaries and other benefits Travelling and conveyance Repairs and maintenance Rent, rates and taxes Insurance Vehicles running expenses Printing, stationery and periodicals Electricity, gas and water Postage, telephone and fax Legal and professional Security, gardening and sanitation Amortization Depreciation Miscellaneous expenses 35.1

2011 (Rupees in thousand)

2010

185,319 164,365 20,411 16,234 13,586 12,745 7,268 9,133 4,481 4,600 21,030 17,979 10,572 13,193 2,506 2,589 11,160 10,624 50,804 16,105 20,424 19,813 273 18.4 36,643 35,755 40,990 33,598 425,467 356,733 35.1 Salaries, wages and other benefits include provident fund contribution of Rupees 6.064 million (2010: 4.970 million) and employee benefits (gratuity) amounting to Rupees 2.031 million (2010: Rupees 0.276 million). 2011 2010 Note (Rupees in thousand) 36. OTHER OPERATING EXPENSES Auditors remuneration 36.1 3,257 2,610 Donations 36.2 1,526 14,502 Loss on disposal of land classified as held for sale 34,050 Loss on remeasurement of fair value of investments at fair value through profit or loss 102 Provision for doubtful debts 25 24,745 26,309 Provision for slow moving stores and spares 744 5,000 Workers profit participation fund 13.1 10,188 20,227 Workers welfare fund 5,487 7,686 Delay payment surcharge 36.3 155,832 Miscellaneous 34 152,284 235,965 228,618 36.1 Auditors remuneration Statutory audit fee 2,260 2,060 Certifications 997 550 3,257 2,610 36.2 None of the directors and their spouses have any interest in the donees fund. 36.3 This represents surcharge against delayed payments of electricity, sui gas and export running finance facility. 141

4 million (2010: (2010: Rupees

unning finance

Note

2011 (Rupees in thousand)

2010

37. OTHER OPERATING INCOME Income from financial assets: Exchange gain 5,570 19,261 Gain on disposal of investments at fair value through profit or loss 4,660 3,664 Gain on remeasurement of fair value of investments at fair value through profit or loss 1,869 Return on bank deposits 5,926 6,281 Dividend income 1,802 715 Income from related parties: 17,958 31,790 Dividend income - Security General Insurance Company Limited 26,178 21,938 Income from non-financial assets: Scrap sales 48,257 57,860 Gain on disposal of property, plant and equipment 18.2 12,766 10,392 Gain on remeasurement of fair value of investment property 879 Miscellaneous 27,978 13,702 89,880 81,954 38. FINANCE COST 134,016 135,682 Mark-up/finance charges/ interest on: Long term financing 480,581 540,266 Redeemable capital 1,155,496 1,151,738 Short term borrowings 1,339,971 1,164,673 Liabilities against assets subject to finance lease 88,634 87,177 Workers profit participation fund (WPPF) 13.1 2,445 188 Employees provident fund trust 6,407 2,968 3,073,534 2,947,010 Bank charges and commission 93,239 129,883 Loss on cross currency swap 12,728 13,970 Exchange loss 21,685 41,381 142 3,201,186 3,132,244

Note 39. TAXATION Current year Current tax Deferred tax Prior year Current tax

2011 (Rupees in thousand)

2010

39.1

264,077 186,061 124,987 (73,912) 389,064 112,149 -

885 389,064 113,034 39.1 Provision for current tax represents final tax on export sales, minimum tax on local sales and tax on income from other sources under the relevant provisions of the Income Tax Ordinance, 2001. Numeric tax reconciliation has not been presented, being impracticable. 2011 2010 Note (Rupees in thousand) 40. CASH GENERATED FROM OPERATIONS Loss before taxation (1,801,590) (2,193,183) Adjustment for non-cash charges and other items: Depreciation 1,611,012 1,415,593 Amortization 10,840 5,558 Finance cost 3,198,741 3,132,244 Gain on sale of property, plant and equipment (12,766) (10,392) Gain on disposal of investments at fair value through profit or loss (4,660) (3,664) Gain on remeasurement of investment property (879) Dividend income (27,980) (22,653) Provision for doubtful debts 24,745 26,309 Provision for slow moving stores and spares 744 5,000 Employees compensated absences 6,424 10,661 Return on bank deposits (5,926) (953) Loss ondisposal of non-current assets classified as held forsale 34,050 (Gain) / Loss on remeasurement of investments at fair value through profit or loss 102 (1,869) Working capital changes 40.1 1,630,938 296,652 4,663,795 2,659,303 143

al sales and tax dinance, 2001.

2011 (Rupees in thousand) 40.1 Working capital changes (Increase) / decrease in current assets: Stores, spare parts and loose tools Stock-in-trade Trade debts Loans and advances Security deposits and short term prepayments Other receivables Increase / (decrease) in trade and other payables

(608,875) 701,495 788,217 477,045 (3,206) 422,760 1,777,436 (146,498) 1,630,938

1,265,699

41. REMUNERATION OF CHIEF EXECUTIVE OFFICER, DIRECTORS AND EXECUTIVES The aggregate amounts charged in these financial statements in respect of remuneration including certain benefits to the chief executive officer, directors and executives of the Company are given below: Chief Executive Officer Directors Executives 2011 2010 2011 2010 2011 -----------------------( Rupees in Thousand )--------------------Managerial remuneration 9,805 9,337 11,427 11,412 95,039 Contribution to provident fund 726 691 310 377 6,766 Housing and utilities 656 504 1,869 1,992 36,523 Medical 408 467 1,404 1,362 10,780 Group insurance 95 92 324 Club subscription 67 64 Others 189 185 2,893 11,851 11,248 15,105 15,235 #### Number of persons 2 2 5 5 89 TheChief Executive Officer and directors are provided withthe Companys maintained vehicles, free medical facilities and residential telephone facilities for both business and personal use. Chief Executive Officer is also provided with free furnished accommodation along with utilities. Executives are provided with the Companys maintained vehicles in accordance with the Company policy. The aggregate amount charged in these financial statements in respect of directors meeting fee paid to 4 144 (2010: 4) directors was Rupees 240 thousand (2010: Rupees 205 thousand).

2010

481,933 (467,091) (374,429) (481,821) 34,287 (161,926) (969,047) 296,652

2010 72,529 5,325 26,575 3,086 252 6,096 113,863 61

42. TRANSACTIONS WITH RELATED PARTIES directors of the company and their close relatives, key management personnel and staff retirement fund. Detail of transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements are as follows: 2011 2010 (Rupees in thousand) AssociatedDividendPostContributionContributionOtherSale ofemploymentrelatedvehiclesincomeCompanytotopartiesprovidentgratuityb 26,17838,07010,3912,477 21,93823,82315,0482011 2010 43. LOSS PER SHARE - BASIC AND DILUTED There is no dilutive effect on the basic earning per share which is based on: Loss attributable to ordinary shareholders of the Holding Company (Rupees in thousand) (1,374,209) (1,043,987) Weighted average number of ordinary shares (Numbers) 221,964,572 145,526,216 Loss per share (Rupees) (6.19) (7.17) 44. PLANT CAPACITY AND ACTUAL PRODUCTION SPINNING: - Rawalpindi Division (Numbers) Spindles (average) installed / worked 85,680 85,680 (Kilograms in thousand) 100% Plant capacity converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 33,620 37,950 Actual production converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 23,547 35,211 - Gujar Khan Division (Numbers) Spindles (average) installed / worked 70,848 70,848 (Kilograms in thousand) 100% Plant capacity converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 32,042 33,313 Actual production converted into 20s count based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 25,989 31,295 145

WEAVING: - Raiwind Division Looms installed / worked

(Numbers) 204 204 2011 2010 (Square meters in thousand)

100% Plant capacity at 60 picks based on 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 72,568 72,568 Actual production converted to 60 picks based on 3 shifts per day for 1,072 shifts (2010: 1,072 shifts) 66,580 68,605 PROCESSING OF CLOTH: - Rawalpindi Division (Meters in thousand) Capacity at 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 41,975 41,975 Actual at 3 shifts per day for 1,095 shifts (2010: 1,095 shifts) 21,367 34,653 POWER PLANT: - Rawalpindi Division (Mega Watts) Annual rated capacity (based on 365 days) 207,787 207,787 Actual generation Main engines 884 2,198 Gas engines 60,935 78,080 - Raiwind Division Annual rated capacity (based on 365 days) 54,460 54,460 Actual generation Gas engines 22,432 26,212 Stitching The plant capacity of this division is indeterminable due to multi product plants involving varying processes of manufacturing and run length of order lots. CEMENT: Clinker: Annual rated capacity (Based on 300 days) 3,690 3,690 Annual production for the year 2,753 3,130 REASONS FOR LOW PRODUCTION Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality, interruption in gas and electricity supply. Cloth processing units working capacity was limited to actual export / local orders in hand. The generation of power was limited to actual demand. Shortfall in cement production was mainly due to break down in cement mills and market 146 constraints.

lity, interruption

mills and market

147

45.3 Geographical Information 45.3.1 The Companys revenue from external customers by geographical location is detailed below: 2011 2010 (Rupees in thousand) Europe 2,025,774 1,664,667 America 4,342,122 4,040,326 Asia, Africa, Australia 4,017,986 7,627,868 Pakistan 14,724,110 11,107,205 25,109,992 24,440,066 45.3.2 All non current assets as at reporting date are located and operated in Pakistan. 45.4 Revenue from major customers The Companys revenue is earned from a large mix of customers. 46. FINANCIAL RISK MANAGEMENT 46.1 Financial risk factors TheothermanagementpotentialinstrumentsGroupspriceadverserisktoactivitiesprogrammehedgeandeffectsinterest RiskBoardprovidescurrencyinstrumentsmanagementof Directors.principlesrisk,andothernonisTheforpricecarriedder (a) Market risk (i) Currency risk Currencybecausetransactionsofriskchangesorisreceivablesthe riskin foreignthatandtheexchangepayablesfair valueth ThetoisTherestrictedtheGroupGroupUnitedisusesexposedtoStatesbankforwardDollartobalances,currencyexchange( 148 appropriate. The Groups exposure to currency risk was as follows:

rogrammehedgeandeffectsinterestcertainexposeonfocusestheriskitrateCompanytoexposures.onrisk),a thevarietysunpredictabilitycreditfinancialof fina ndothernonisTheforpricecarriedderivativeoverallGroupsrisk,outriskinterestfinancialfinancebymanagement,the rateGroupsdepartmentinstrumentsrisk,

andtheexchangepayablesfair valuethatrates.or futureexistCurrencyduecashtoflowsrisktransactionsarisesof a financialmainlyin foreigninstrumentfrom cu Dollartobalances,currencyexchange(USD),theEuroriskcontractsamountsarisingand Yen.fromtoreceivableCurrently,hedgevariousitsthecurrency/ payablef

sunpredictabilitycreditfinancialof financialriskperformance.and risks:ofliquidityfinancialmarketTherisk.marketsGroupriskThe(includingusesCompanyand teGroupsdepartmentinstrumentsrisk,financecreditas evaluateswellandrisk,departmentinvestmentas liquiditypoliciesand hedgesundercoveringrisk,of e

cialmainlyin foreigninstrumentfrom currencies.futurewillcommercialfluctuate hedgevariousitsthecurrency/ payableforeignGroupsexposures,currencyfromforeign/ toexchangerisk,primarilythewhenforeignriskwithconsideredexpos

oupriskThe(includingusesCompanyandderivativeseeksscurrencytooverallminimisefinancialrisk,risk iciesand hedgesundercoveringrisk,of excessusefinancialpoliciesspecificofliquidity.derivativeapprovedrisks.areasThefinancialsuchbyBoardtheas

ewhenforeignriskwithconsideredexposureentities.respect

efinancialsuchbyBoardtheas

(ii)

2011 2010 (Amounts in thousand) Cash at banks - USD 218 37 Trade debts - USD 5,948 17,770 Trade debts - Euro 832 Trade and other payable - USD 10,811 9,119 Trade and other payable - Euro 541 1,003 Finance lease liability - USD 10,667 10,667 Outstading Letters of credit - USD 8 7,341 Outstading Letters of credit - Euro 351 1,056 Outstading Letters of credit -Yen 4,884 Net exposure - USD (15,320) (9,320) Net exposure - Euro (892) (1,227) Net exposure - Yen (4,884) The following significant exchange rates were applied during the year: Rupees per US Dollar Average rate 85.49 83.78 Reporting date rate 86.05 85.60 Rupees per Euro Average rate 116.13 112.1 Reporting date rate 124.89 104.58 Rupees per Yen Average rate 1.0400 0.9241 Reporting date rate 1.0700 0.9662 Sensitivity analysis IfEurowouldRupeesexchangeCurrencyInyearthemanagementendandfunctionalhave6.416exposureriskYengainsbeensensitivitywithm Other price risk OtherwillorinstrumentGroupcurrencyfluctuatepriceis notorriskrisk),exposedbecauseitsrepresentsissuer,whethertooforcommoditych Sensitivity analysis TheIndexisvariablesbasedtableon ontheheldbelowtheGroupsconstantassumptionsummariseslossandafterthatallthetaxationtheimpa correlation with the index: 149

reriskYengainsbeensensitivitywithmillions/currency,Rupeesopinion,lossesdoesall andothernotto62.555ontheatRupeesforeignreflectvariablesreportingt

sissuer,whethertooforcommoditychangesfactorsthosethe riskchangesaffectinginthatpricemarkettherisk.areallfairpricessimilarcausedvalue(otherfinancia

sandafterthatallthetaxationtheimpacttheGroupsequityforof theincreaseindexequityyearhadinstruments/anddecreaseincreasedon equityinmoved/the(

peesforeignreflectvariablesreportingtranslationsensitivitymillion,exchange0.236theheldexposuredate,analysisRupeesofmillion)constant,foreignmoveme

pricessimilarcausedvalue(otherfinancialorby futurefactorsthaninstrumentthosecashspecificflowsarisingtotradedofthefroma financialindividualininterest

reaseincreasedon equityinmoved/the(fairdecreasedKarachivalueaccordingreserve).Stockby 5%toExchangewiththeThehistoricalallanalysisother(KSE)

eesofmillion)constant,foreignmovementshadduring5.292isweakenedrespectivelyunrepresentativeexchangethemillionthehasimpactyear./been(30streng

hefroma financialindividualininterestthe market.instrumentfinancialrate Therisk

eThehistoricalallanalysisother(KSE)

llionthehasimpactyear./been(30strengthenedhigherdenominatedonJunecalculatedlossof/ 2010:inherentlower,afterbyRupeesfinancialonmainlytaxation

erbyRupeesfinancialonmainlytaxation5%currencya symmetricagainst39.890asinstruments.forarisktheresultthemillion,asbasis.USD,yeartheof

llion,asbasis.USD,yeartheof

Index

(iii)

KSE 100 (5% increase) KSE 100 (5% decrease) 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. The Group has no significant long-term interest-bearing assets. The Groups interest rate risk arises from long term financing, redeemable capital, liabilites against assets subject to finance lease and short term borrowings. Borrowings obtained at variable rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rate expose the Group to fair value interest rate risk. At the balance sheet date the interest rate profile of the Groups interestbearing financial instruments was: 2011 2010 (Rupees in thousand) Fixed rate instruments Financial Assets Loans to employees 4,456 5,429 Bank Balances at PLS account 121,642 44,629 Financial liabilities Long term financing 196,551 407,742 Short term borrowings 2,277,433 3,201,896 Liabilities against assets subject to finance lease Floating rate instruments Financial assets Bank balances- saving accounts 321,044 12,673 Financial liabilities Long term financing 6,190,730 5,001,198 Redeemable capital 8,289,800 8,296,600 Short term borrowings 6,937,498 6,929,377 Liabilities against assets subject to finance lease 1,174,401 1,214,971 Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rate at the balance sheet date would not affect loss of 150 the Group.

Impactafter taxationon profit Impactcomprehensiveon statementincomeof ot 2011 2010 2011 2010 --------------- (RUPEES IN THOUSAND) ----------------1,013 1,013 (1,013) (1,013) -

nsiveon statementincomeof other

ent will fluctuate

rate risk arises finance lease and ash flow interest

ncial instruments

fair value through ot affect loss of

(b)

Cash flow sensitivity analysis for variable rate instruments Ifconstant,Rupeesfloatingbalanceinterestrate214.421sheetlossrateborrowings.datesafteratmillion)thetaxationwereyearThislow Credit risk Creditother partyrisk representsby failing theto dischargerisk that onean partyobligation.to a financialThe carryinginstrumen the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows: 2011 2010 (Rupees in thousand) Investments 942,941 1,114,449 Deposits 127,080 125,551 Trade debts 1,318,557 2,106,774 Accrued interest 936 797 Other receivables 60,300 49,669 Loans and advances 154,742 264,219 Bank balances 695,845 150,312 3,300,401 3,811,771 The credit quality offinancial assets that are neither past duenor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate:
Short term Rating Long term AAA AA AA AA AA AA+ AA+ AA AA AAAAA AAAA AA+ A AA+ AA1 Agency JCR-VIS PACRA PACRA PACRA PACRA JCR-VIS PACRA PACRA PACRA PACRA PACRA JCR-VIS JCR-VIS PACRA JCR-VIS PACRA PACRA JCR-VIS Moody s 2011 (Rupees in thousand) 4,666 6,507 46,473 32,275 774 50 26,419 1,657 32 11,765 618 7 10 224 6,410 1,604 279,710 494 419,695 2010

Banks National Bank of Pakistan Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Faysal Bank Limited Habib Bank Limited MCB Bank Limited NIB Bank Limited The Royal Bank of Scotland Limited My Bank Limited The Bank of Punjab Meezan Bank Limited Silk bank Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited Al-Baraka Islamic Bank Limited Bank Al Habib Limited Burj Bank Limited Citi Bank N.A.

A-1+ A1+ A1+ A1+ A1+ A-1+ A1+ A1+ A1+ A2 A1+ A-1 A-2 A1+ A-1+ A2 A-1+ A-2 P-1

754 32,531 7,822 1,421 4,108 67 9,907 12,313 88 30 540 319 2,945 2,309 133 2,565 38

77,890

151

)thetaxationwereyearThisloweroutstandingendforanalysis/date,thehigher,yearfluctuatesisforpreparedmainlythewouldwholebyhaveasassuming1%ayear

ancialThe carryinginstrumentamountwillofcausefinanciala financialassets lossrepresentsfor the

ouldwholebyhaveasassuming1%ayear.resultbeenhighertheRupeesof / amountshigherlower233.883with/ lowerof liabilitiesallmillionotherinterest(30ou

f liabilitiesallmillionotherinterest(30outstandingvariablesexpenseJune 2010:heldonat

Subsidiary Companies

(c)

Total bank balance of Rs. 275.868 million (2010:Rs. 72.085 million) placed with banks have a short term credit rating of at least A1+ (2010: A1+). The analysis below summarises the credit quality of the Subsidiarys major investments. 2011 Rating Security General Insurance Company Limited N/A Noman Abid Reliance Inome Fund AM 3Alfalah GHP cash fund AM 3 The Groups exposure to credit risk and impairment losses related to trade debts is disclosed in Note 25.0 Due to the Groups long standing business relationships with these counterparties and after giving due consideration to their strong financial standing, management does not expect non-performance by these counterparties on their obligations to the Group. Accordingly the credit risk is minimal. Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. TheGroup manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. At 30 June 2011, the Group had Rupees 10,702 million available borrowing limits from financial institutions and Rupees 709.476 million cash and bank balances. Inspite the fact that the Group is in a negative working capital position at the year end, management believes the liquidity risk to be low. Following are the contractual maturities of financial liabilities, including interest payments. The amount disclosed in the table are undiscounted cash flows: Contractual maturities of financial liabilities as at 30 June 2011: Holding Company
Carrying amount Non-derivative financial liabilities: Long term financing Liabilities against assets subject to finance lease Trade and other payables Accrued mark-up Short term borrowings 89,873 754,095 230,138 5,130,265 8,087,795 101,238 754,095 230,138 5,335,524 8,685,492 16,607 754,095 230,138 5,301,394 6,774,722 34,130 372,101 ##### 24,888 ##### 1,883,424 2,264,497 472,488 313,083 ##### Contractual cash flows 6 month or less 6-12 month 1-2 Year

------------------- (Rupees in thousand) --------------------

152

with banks have a short

2010

A AM 3AM 3 bts is disclosed in Note

parties and after giving pect non-performance dit risk is minimal.

gations associated with

ility of funding through oup had Rupees 10,702 09.476 million cash and ital position at the year contractual maturities of able are undiscounted

More than 2 Years

757,628 16,068 773,696

Subsidiary Company
Carrying amount Non-derivative financial liabilities: Long term financing Redeemable capital Liabilities against assets subject to finance lease Long term deposits Trade and other payables Accrued profit / interest / mark up Short term borrowings 791,161 4,084,666 791,162 4,084,666 791,162 4,084,666 11,485,315 7,541,298 1,084,527 5,569 3,693,755 1,159,969 5,569 3,693,755 3,693,755 568,734 591,235 5,569 4,503,858 8,289,800 6,151,885 14,314,638 830,867 1,205,848 3,518,753 7,369,758 1,802,266 5,739,032 Contractual cash flows Less than one year 1 to 6 years More than 2 Years

------------------- (Rupees in thousand) --------------------

22,453,336 30,201,644 11,175,032

Contractual maturities of financial liabilities as at 30 June 2010: Holding Company


Carrying amount Non-derivative financial liabilities: Long term financing Liabilities against assets subject to finance lease Trade and other payables Accrued mark-up Short term borrowings 135,030 947,498 289,987 6,070,435 9,771,451 155,263 947,498 185,259 6,268,109 10,506,563 Carrying amount Non-derivative financial liabilities: Long term financing Redeemable capital Liabilities against assets subject to finance lease Long term deposits Trade and other payables Accrued mark-up Short term borrowings 1,079,941 2,739 3,277,516 921,812 4,060,838 20,719,885 1,203,843 2,739 3,277,516 921,812 4,060,838 27,953,967 3,277,516 921,812 4,060,838 9,691,403 9,422,923 429,186 774,657 2,739 8,839,641 3,080,439 8,296,600 4,527,362 13,959,857 718,231 283,820 2,413,858 6,231,669 1,395,273 7,444,368 53,450 947,498 185,259 5,796,162 7,524,730 Contractual cash flows 902,944 Less than one year 32,487 471,947 744,274 1 to 6 years 45,157 1,334,615 More than 2 Years 24,169 2,328,501 2,950,434 542,361 398,510 699,117 1,310,446 Contractual cash flows 6 month or less 6-12 month 1-2 Year More than 2 Years

------------------- (Rupees in thousand) --------------------

Subsidiary Company

------------------- (Rupees in thousand) --------------------

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. The rates of interest / mark up have been disclosed in note 7, note 9 and note 15 to these financial statements.

153

46.2 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values. The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, groupedin to levels 1 to 3 based on the degree to which fair value is observable: Level 1 Level 2 Level 3 -------------(Rupees in thousand)------------As at 30 June 2011 Assets Available for sale financial assets 921,391 As at 30 June 2010 Assets Available for sale financial assets 1,087,021 The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial instruments held by the Group is the current bid price. These financial instruments are classified under level 1 in above referred table. The Group has no such type of financial instruments as on 30 June 2011. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value a financial instrument are observable, those financial instruments are classified under level 2 in above referred table. If one or more of the significant inputs is not based on observable market data, the financial instrument is classified under level 3.The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. The Group has no such type of financial instruments as on 30 June 2011. 46.2 Financial instruments by categories receivablesLoans and Throughor lossprofit Availablefor sale -------------(Rupees in thousand)------------As at 30 June 2011 Assets as per balance sheet Investments 21,550 921,391 Deposits 127,080 Trade debts 1,318,557 Accrued interest 936 Other receivables 60,300 Loans and advances 154,742 Cash and bank balances 709,476 154 2,371,091 21,550 921,391

atements approximate nts that are measured on the degree to which Total

921,391

1,087,021 quoted market prices at s held by the Group is n above referred table.

is determined by using ble market data where nificant inputs required nts are classified under

rket data, the financial ment provision of trade e fair value of financial ctual cash flows at the instruments. The Group

Total

942,941 127,080 1,318,557 936 60,300 154,742 709,476 3,314,032

Financial liabilities at amortized cost (Rupees in thousand) Liabilities as per balance sheet Long term financing Redeemable capital Liabilities against assets subject to finance lease Short term borrowings Trade and other payables Accrued mark-up receivablesLoans and Throughor lossprofit Availablefor sale Total -------------(Rupees in thousand)------------As at 30 June 2010 Assets as per balance sheet Investments Deposits Trade debts Accrued interest Other receivables Loans and advances Cash and bank balances 6,387,282 8,289,800 1,174,400 9,214,931 4,447,850 1,021,299 30,535,562

125,551 2,106,774 797 49,669 264,219 152,453 2,699,463 -

27,428 27,428

1,087,021

1,087,021 Financial liabilities at amortized cost (Rupees in thousand)

1,114,449 125,551 2,106,774 797 49,669 264,219 152,453 3,813,912

Liabilities as per balance sheet Long term financing Redeemable capital Liabilities against assets subject to finance lease Short term borrowings Trade and other payables Accrued mark-up

5,408,940 8,296,600 1,214,971 10,131,273 3,632,506 1,211,799 29,896,089 155

43.3 a) Capital risk management The Groups objectives when managing capital are to safeguard the Groups 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. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders through repurchase of shares, issue new shares or sell assets to reduce debt. Consistent with others in the industry and the requirements of the lenders, the Group monitors the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital employed. Borrowings represent long-term financing, redeemable capital, liabilities against assets subject to finance lease and short-term borrowings obtained by the Group as referred to in note 8 and note 9 respectively. Total capital employed includes total equity as shown in the balance sheet plus borrowings. The gearing ratio as at year ended 30 June 2011 and 30 June 2010 is as follows: 2011 2010 (Rupees in thousand) Borrowings 25,066,413 #### Total equity 4,161,186 5,323,453 Total capital employed 29,227,599 #### Gearing Ratio 85.76% 82.47% 47. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorised for issue on September 28, 2011 by the Board of Directors of the Holding Company. 48. CORRESPONDING FIGURES No significant reclassification/ rearrangement of corresponding figures has been made. 49. GENERAL Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise. 156 CHIEF EXECUTIVE OFFICER DIRECTOR

KONINOOR42-LAWRENCE

ROAD,TEXTILELAHOREMILLS

LIMITED

PROXY

FORM

I/We ______________________________________________________________________________________ of ________________________________________________________________________________________ being a member of KOHINOOR TEXTILE MILLS LIMITED hereby appoint ________________________________________________________________________________________ (Name) of _____________________________________________________________another member of the Company or failing him/her ___________________________________________________________________________ (Name) of _____________________________________________________________another member of the Company (being a member of the Company) as my/our proxy to attend, speak and vote for and on my/our behalf, at the Annual General Meeting of the Company to be held at its Registered Office, 42-Lawrence Road, Lahore on Monday, October 31, 2011 at 3:00 PM and any adjournment thereof. As witnessed given under my/our hand(s) ________ day of October, 2011. 1. Witness: Signature : _______________________ RevenueAffix Name : _______________________ Stamp of Rs. 5/Address : _______________________ _______________________ ________________________ 2. Witness: Signature of Member Signature : _______________________ Name : _______________________ Shares Held ___________________________ Address : _______________________ Shareholders Folio No. __________________ : _______________________ CDC A/c #. ____________________________ CNIC No. Notes: 1.0 Proxies, in order to be effective, must be received at the Companys Registered Office, not less than 48 hours before the time for holding the meeting and must be duly stamped, signed and witnessed. 2.0 CDCShareholders, entitled to attend, speak andvote atthis meeting, mustbring withthem their Computerized National Identity Cards (CNIC) /Passports in original to prove his/her identity, and in case of Proxy, must enclose an attested copy of his/her CNIC or Passport. Representatives of corporate members should bring the usual documents required for such purpose. 157

AFFIX CORRECT

The Company Secretary KOHINOOR TEXTILE MILLS LIMITED 42-LAWRENCE ROAD, LAHORE 158 Tel: 042-36302261-62

POSTAGE