Brief Profile

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

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

Nishat (Chunian) Limited

JUNE 2011 1

Contents

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

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

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

Nishat (Chunian) Limited

JUNE 2011 3

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

ii) In case of corporate entity. iii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. A member eligible to attend and vote at this meeting may appoint another member as proxy to attend and vote in the meeting. In case of corporate entity. the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations. ii) The proxy form shall be witnessed by two persons whose names. Ahmad Subhani Company Secretary 2. To appoint auditors for the year ending 30 June 2012 and to fix their remuneration. the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations.Notice of Annual General Meeting Notice is hereby given that the 22nd Annual General Meeting of the Shareholders of Nishat (Chunian) Limited will be held at the Registered Office of the Company. the Board of Directors’ resolution/power of attorney with specimen signatures of the nominee shall be produced (unless it has been provided earlier) at the time of the Meeting For Appointing Proxies i) In case of individuals. H. By Order of the Board Lahore: 08 October 2011 Notes: 1. To transact any other business with the permission of the Chair. Nishat (Chunian) Limited JUNE 2011 5 . The Members’ Register will remain closed from 29-10-2011 to 04-11-2011 (both days inclusive). The present auditors M/s Riaz Ahmad & Co. 4. 3. 31-Q. iv) The proxy shall produce his original CNIC or original passport at the time of the Meeting. shall authenticate his/her identity by showing his original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting. addresses and CNIC numbers shall be mentioned on the form. Gulberg II.1 dated January 26. To receive and adopt audited accounts of the Company for the year ended 30 June 2011 together with Directors’ and Auditors’ reports thereon. Chartered Accountants. shall submit the proxy form as per the above requirement. 2000 issued by the Securities and Exchange Commission of Pakistan: a.Transfers received at Hameed Majeed Associate (Pvt) Limited. b. 4. the Board of Directors’ resolution/power of attorney with specimen signatures shall be submitted (unless it has been provided earlier) along with proxy form to the company.M. retire and being eligible. House. the Registrar and share transfer office of the Company by the close of business on 28-10-2011 will be considered in time for attending the AGM and also for 20% cash Dividend and 15% preferential dividend’s entitlements. Lahore on 31st October 2011 at 11. 3. 7-Bank Square.M to transact the following business:1. Shareholders are requested to immediately notify the change in address.. 2. if any. CDC account holders will further have to follow the guidelines as laid down in circular No. offer themselves for reappointment. Lahore. To approve 20% cash dividend for ordinary shares and 15% preferential dividend for preference shares as recommended by the Board of Directors. For attending the meeting i) In case of individuals. Proxies in order to be effective must be received by the company at the Registered Office not later than 48 hours before the time for holding the meeting. v). 5.30 A. To confirm the minutes of the last General Meeting.

Sales during the year were recorded at PKR 20. the Company recorded one of the best financial performances in its history. 2011.12:1. Increase in sales was mainly due to higher product prices resulting from record hike in cotton prices.10% last year.85:1.83 million last year.579 million. Despite the increase in sales. The company has always strived to maintain a conservative capital structure by raising capital from time to time to meet its funding requirements and to keep the leverage ratios at the desired level.00 and current ratio was 1. Financial Charges of the Company increased by 34.34 billion last year. Because of prudent financial management. because the higher input prices could not be completely passed on to the customers. 2011.080 million compared to PKR 2.25% last year.458. Company's net profit increased by 45.32 billion compared to PKR 13. Company's gross profit margin reduced to 16. Keeping in view the drop in market prices of cotton. Average SBP Export Refinance Loans availment remained at approximately PKR 2. as a percentage of sales. company's total leverage ratio was 1. However. registering an increase of 52%.48 billion from PKR 1.10 billion last year.51% last year.001. During the year. The provision to reduce the valuation of stocks to net realizable value has decreased the company's profitability by PKR 369.18% from 7.Directors’ Report Directors' Report We are pleased to present the Annual Report of Nishat (Chunian) Limited for the year ended June 30.29% compared to 8. the company has reduced the valuation of cotton stock as of June 30. Company's net profit margin reduced slightly to 7.77% from 20. the company's average availment of bank borrowings during the year.500 per maund. approximately PKR 11 billion. company's leverage decreased (maintaining the trend of last 3 years as exhibited in graph) despite significant investments made by the company in textiles operations and NCPL. Because of record high cotton prices.00 Nishat (Chunian) Limited JUNE 2011 6 Financial Cost and Capital Structure Company's financial charges increased to PKR 1.6% due to the increase in working capital requirements arising from high cotton prices. increased to . 2011 to the market value of PKR 6.60% to PKR 1. As of June 30.000 million last year. However.58 million during the year compared to PKR 1. in absolute terms. financial charges decreased to 7.

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

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

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

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

138.180 11.343.344 14.001.788.934.188 1.146 2.644 752.63 53:47 0.231 6.77 3.030 4.308.000 103.086 16.225.545 4.253 391.467.642 1.099 60.591.516.458 1.192 2.000 250.949 5.745 781.298 1.970.357.490 2.12 1.31 37:63 8.089.848.788 1.054.465.49 3.808 1.227 6.654.015 3.888 1.465.413.539 20.18% 1.209 1.838.778.002 1.236.247.263.833 3.43 43:57 6.247.880 1.550.863 1.000 50.355.207 6.230.157 12.308.429 919.77% 7.303 1.279 18.730.881 589.040.083.828 7.614 37.669 1.352 1.045 90.127 2.358.25 30:70 4.026 4.259.823 2.753.322.785.23 1.08 51:49 9.837.539 957.45 17.899 519.454.004 796.418 (Restated) 1.880 782.938 7.547 2.583 9.532 4. ** Restated as per IAS 33 (Earnings per share) 11 Nishat (Chunian) Limited JUNE 2011 .78 2.885 2.544.303 648.753.822 22.04% 0.843 2.110.17 50:50 0.191.458.893 5.14 1.542 721.626 1.106 1.832 20.020 2.657 2.315 4.102.583 9.194 3.6% 14.230.2% 0.964.146 101.2002 2003 2004 2005 2006 2007 * 2008 2009 2010 2011 (Rupees in thousand) 403.209 759.512 1.626.785.705 947.81 2.488.030 3.178 9.333.200 742.512 4.521.8% 0.399 204.677.22 9.922 Capital Reserves Net Worth Long Term Liabilities Current Liabilities Financial Highlights Total Equity & Liabilities 10.682.086 16.299 443.191 2.242 968.539 773.96% 1.717 2.559 3./Net Worth) Long Term Debt : Equity EPS ** * Performance figures for 2005 are for the period of nine months.008 752.20% 0.5% 0.954.116.418 4.536 65.191 1.861.715 6.107.183 1.199 2.35 1.293 6.524 3.014 187.580 16.800 17.85 37:63 9.7% 1.600.992.482.126 2.016.295 5.335 6.621 4.667 2.081.918 14.073.054 133.112 10.845 494.4% 1.295 9.807 426 386 1.145.34 742.183.927.787 218.545 13.19 38:62 8.084 5.116 12.654.178 9.206 1.226.001 705.068.686.783 1.101.215.077 48.87% 51:49 1.146.008 752.829 9.206 2.704.088 865.775 545 955.984.88 2.520 443.545 4.240.578.358.00 7.782 3.050.729.8% 3.13% 0.60 143.780.810 14.903.156 6.9% 327.036.249.062.062.409 503.5% 13.78 2.168.47% 0.12 1.201.85 2.835 1.800 4.099 966.19 2.491.676.39 55:45 3.000 10.646.829.186 1.538 5.408.557.39% 0.418 635.008 1.226 5.384 10.814 1.886.385 8.277 1.7% 9.023 5.932 7.822 58.362.790.570 3.07 Fixed Assets Long Term Deposits & Advances Current Assets Total Assets Sales Gross Profit Operating Profit plus Other Income Financial & Other charges Taxation Net Profit Gross Margin Net Margin Current Ratio Leverage (Total Liab.471 4.834.69 1.520 683.1% 7.000 18.646.586 111.441 3.9% 12.348 4.863 7.262 834.444.767 2.616 8.616 8.

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

The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 17. The terms of reference of the committee have been formed and advised to the committee for compliance. We confirm that all other material principles contained in the Code have been complied with. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP). 19 20. that they or any of the partners of the firm. conversant with the policies and procedures of the Company and involved in the internal audit function on a full time basis. 18. Shahzad Saleem Chief Executive Lahore: 08 October 2011 . The Board has set-up an effective internal audit function with suitably qualified and experienced staff. Shahzad Saleem Chief Executive Lahore: 08 October 2011 Statement of Compliance with the Best Practices on Transfer Pricing JUNE 2011 13 Nishat (Chunian) Limited The Company has fully complied with the best practices on Transfer Pricing as contained in the related Listing Regulations of the Karachi and Lahore Stock Exchanges. their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by ICAP.results of the Company and as required by the Code.

Further.Review Report to the members on Statement of Compliance with best practices of Code of Corporate Governance We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of NISHAT (CHUNIAN) LIMITED ("the Company") for the year ended 30 June 2011. the Company's corporate governance procedures and risks. Based on our review. all such transactions are also required to be separately placed before the audit committee. Further. to the extent where such compliance can be objectively verified. in all material respects. with the best practices contained in the Code of Corporate Governance as applicable to the Company for the year ended 30 June 2011. which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance. or to form an opinion on the effectiveness of such internal controls. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not. We are not required to consider whether the Board's statement on internal control covers all risks and controls. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code. whether the statement of compliance reflects the status of the Company's compliance with the provisions of the Code of Corporate Governance and report if it does not. Our responsibility is to review. RIAZ AHMAD & COMPANY Chartered Accountants Name of engagement partner: Syed Mustafa Ali JUNE 2011 Date: 08 October 2011 LAHORE 14 Nishat (Chunian) Limited . nothing has come to our attention. As part of our audit of financial statements. to comply with the Listing Regulations of the respective Stock Exchanges. where the Company is listed. we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the audit committee. Listing Regulations of The Karachi & Lahore Stock Exchanges require the Company to place before the Board of Directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price recording proper justification for using such alternate pricing mechanism.

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

418.921.488.201 -)))))) 3.730.440 4.672 1.932. subscribed and paid-up share capital Reserves Total equity NON-CURRENT LIABILITIES Long term financing Deferred income tax liability 6 3 4 5 30 June 2011 Rupees 1.308.000 1.091 454.668 7.523.429.333.950.615 7.717.183.440.000.050.604.864 5.905.847.041 1.333.500.127 191.523.413.648 3.252 3.131 662.654.881.813.618 TOTAL EQUITY AND LIABILITIES JUNE 2011 16.239 171.102 14.000 1.932.429 4.938.498 1.440 2.542.866.468 The annexed notes form an integral part of these financial statements.906 3.282 4.589 12.729.499.058 4.759 1.648 -)))))) 2.608.850 3.568 CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current portion of long term financing 7 8 9 6 892.002.022. 16 Nishat (Chunian) Limited CHIEF EXECUTIVE .318.230.089.552.338.854.000.930 TOTAL LIABILITIES CONTINGENCIES AND COMMITMENTS 10 10.020 3.654.531 5.181.061.704.321.255.201 2.797.950.085.831.914.971 1.525.299.750.578.000.505.657.240.Balance Sheet as at Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorized share capital Issued.316 1.443 9.834.295.729.088.821 216.457.368.667.050 8.938.615.830 1.191.443.418.819.000 1.

927.052 5.442 8.768 5.672 1.253.028 2.095.437.704 341.254.112.295.809.537.824.30 June 2011 Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE ASSETS NON-CURRENT ASSETS Fixed assets Investment in subsidiary company Long term loans Long term security deposits 11 12 13 30 June 2011 Rupees 6.305 1.768.774.891.589 12.068.970.718 1.632.860.469.103 4.112.665.058.499.796.095.666 1.810 263.347.778 1.155.950 6.865 4.218.728.779 5.658 -)))))) 29.234.513.518.632.082.724 211.880 3.065.657.445.284 8.220 3.796.999 -)))))) 4.516.308.085.975.045.029.916 2.468 JUNE 2011 17 Nishat (Chunian) Limited DIRECTOR .627.521 5.050 378.999 TOTAL ASSETS 16.169 1.644.162.073.442 8.390 390. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Accrued interest Cash and bank balances 14 15 16 17 18 19 20 448.215.975 1.369.160 1.102 14.660.063 379.188 614.111.987 372.050 Non-current asset held for sale 21 -)))))) 8.724.891.023.469 CURRENT ASSETS Stores.508 234.439 90.210.873.373 3.513.144.942.942 7.178 135.850.289.571.013 209.724 1.068.239.183.387 194.929.019 487.655.230.860 248.002.

914 1.524.819 1.788.974 2.832.001.071 1.713 111.101.713.091.408.541.615.782.399.638 204.208.07 8.921 1.322.662.287.501 631.145.82 Restated 2010 Rupees 13.965.054.699 16.360. 18 Nishat (Chunian) Limited JUNE 2011 CHIEF EXECUTIVE DIRECTOR .661.206 2.907.343.283 126.539.Profit and Loss Account for the year ended 30 June 2011 NOTE SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING EXPENSES 24 25 26 22 23 2011 Rupees 20.206.001.563 10.629.371.669.49 6.050.188.722 133.460 OTHER OPERATING INCOME PROFIT FROM OPERATIONS FINANCE COST PROFIT BEFORE TAXATION TAXATION PROFIT AFTER TAXATION BASIC EARNINGS PER SHARE DILUTED EARNINGS PER SHARE 30 30 29 28 27 603.976 2.416 3.808 8.913.717 9.611 3.458.236.833.097 1.59 The annexed notes form an integral part of these financial statements.477.433 1.760 81.586.135.332.613 186.624 866.283 599.558.587 438.482.579.916 141.298.823 2.682.

808) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1.001.579.252) (2.552.435.753) 1.055) The annexed notes form an integral part of these financial statements.832.717 Restated 2010 Rupees 1.458.882.005) 1. 19 Nishat (Chunian) Limited CHIEF EXECUTIVE DIRECTOR JUNE 2011 .Statement of Comprehensive Income for the year ended 30 June 2011 2011 Rupees PROFIT AFTER TAXATION OTHER COMPREHENSIVE INCOME Reclassification adjustment for gain included in profit or loss Deferred income tax relating to other comprehensive income Net loss recognized in other comprehensive income -)))))) -)))))) -)))))) (4.950.717 998.579.458.

321.963.628.net Proceeds from issue of right shares Share issuance cost Dividends paid Net cash from financing activities Net increase in cash and cash equivalents JUNE 2011 2011 Rupees Restated 2010 Rupees 31 1.419) (4.775.623) -)))))) (85.434.500) (1.721) (142.181.328.542.167. plant and equipment Proceeds from sale of shares of subsidiary company Investment in subsidiary company Long term loan made to subsidiary company Repayment of long term loan by subsidiary company Dividend received from subsidiary company Interest income received Net cash from / (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term financing Repayment of long term financing Short term borrowings .656) 29.974) 65.439) 73.225) (855.192) 279.373) 56.996) (1.610) (1.691) 138.966.960) -)))))) -)))))) 1.866) (604.828.194.000) (59.865) 90.960) 196.219.304) 44.255.521) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 20 Nishat (Chunian) Limited The annexed notes form an integral part of these financial statements.003) 1.622.129.290.804.283) 255.521) 135.900.445.638.774.123) 61.822.384.638.771.980.094) -)))))) (685.936.263) (12.604.727) (291.134.466. CHIEF EXECUTIVE DIRECTOR .325.413.460) (386.000) (1.774.485.445.298.284) 1.991.842.925.913) -)))))) -)))))) (245.799) (561.754.864) 1.157) 629.056.970.631) 413.047.733) (672.248.724) -)))))) (1.023.500) (2. plant and equipment Capital expenditure on intangible asset Proceeds from sale of property.692) 2.000) 471.577.471) (349.000.257.199.060.Cash Flow Statement for the year ended 30 June 2011 NOTE CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Net increase in long term security deposits Finance cost paid Income tax paid Net (increase) / decrease in long term loans Net cash (used in) / generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on property.340) 1.251) (5.943) 7.620.763) 90.

766) (10...830 2....220 413..Statement of Changes in Equity for the year ended 30 June 2011 RESERVES SHARE CAPITAL Ordinary shares Preference shares CAPITAL RESERVE TOTAL Hedging reserve REVENUE RESERVES General reserve Unappropriated profit TOTAL TOTAL EQUITY ..840) - - - - - - - - - - - (10..629....440 .333.1.610 (1.822.770 1..050..585.6) Balance as at 30 June 2009 .418.081) (14...801.553.526.488.766) (10.808 998...278 2.670 68.001) (237.712....579.101 3....629.950.152..220 413..251) 344.333.081) 827.027.490 33..251) (1..931 - - - - - (14.027.1.020 3..813.712.717 1.221.027..418.221.829..717 1.(237.950 1.505.restated Ordinary shares issued Share issuance cost.278 - 215. CHIEF EXECUTIVE DIRECTOR Nishat (Chunian) Limited 1.766) - - - (2..604..753 1.221..209...780 2..299.950.830 413.081) (14.604.903.458..822.278 1...717.1..055 998.861.822.058 4.840 (344. net Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2010 Total comprehensive income for the year ended 30 June 2010 Balance as at 30 June 2010 ...209.989 1..253 4.221.829.restated Final dividend for the year ended 30 June 2010 @ Rupees 1..240....243) (5..882.834.610 - 2.001) 35.243) (5.514.610 1.498 - - - - ..629.820 (35.657.420.579.318..070 1..022.654...458.629.376.243) .1.240.001) (237.820) - - - - - - Total comprehensive income for the year ended 30 June 2011 Balance as at 30 June 2011 - - - - .5 per ordinary share Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2011 827.620.440 .882.847.152.604.458.971 21 JUNE 2011 - - - - - (5.753) .088.717 The annexed notes form an integral part of these financial statements..077.610 - 413.753 1.579.152.604.813..832.102..278 229.055 1.531 5..205...604.610 1.829.704.882... Balance as at 30 June 2009 Effect of change in accounting policy (Note 2..891.376..654.440. Rupees ....470.850 (1.251) 413.333.400...001.

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

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

The charge for current tax also includes adjustments. g) Standards. 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. Under the rules. specifically in IFRS 7 'Financial Instruments: Disclosures'. Equal monthly contributions are made both by the employees and the Company to the fund in accordance with the fund rules. joint arrangements. IFRS 13 establishes a single framework for measuring fair value where that is required by other standards. The management of the Company is in the process of evaluating the impacts of the aforesaid standard on the Company's financial statements. except to the extent that it relates to items recognised in other comprehensive income or directly in equity. It clarifies that an entity will present an analysis of other comprehensive income for each component of equity. respectively. when the employees render service that increase their entitlement to future compensated absences. Deferred tax is charged or credited in the profit and loss account. Accumulating compensated absences The Company provides for accumulating compensated absences. There are other amendments resulting from annual improvements project initiated by International Accounting Standards Board in May 2010. unused tax losses and tax credits can be utilized. In this case the tax is also recognised in other comprehensive income or directly in equity. head office employees and 24 Nishat (Chunian) Limited JUNE 2011 . either in the statement of changes in equity or in the notes to the financial statements. 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.3 Employee benefits The main features of the schemes operated by the Company for its employees are as follows: Provident fund There is an approved contributory provident fund for employees of the Company. The Company's contributions to the fund are charged to income currently. IFRS 13 'Fair Value Measurement' (effective for annual period beginning on or after 01 January 2013). IAS 1 (Amendments). to provision for tax made in previous years arising from assessments framed during the year for such years. These amendments are unlikely to have a significant impact on the Company's financial statements and have therefore not been analyzed in detail. 2. interpretations and amendments to published approved standards that are not yet effective and not considered relevant to the Company There are other standards. associates or unconsolidated structured entities. where considered necessary. 2. IFRS 12 establishes disclosure objectives and specifies minimum disclosures that an entity must provide to meet those objectives. 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.IFRS 12 'Disclosure of Interests in Other Entities' (effective for annual period beginning on or after 01 January 2013). IFRS 13 applies to both financial and non-financial items measured at fair value. IAS 1 'Presentation of Financial Statements' and IAS 24 'Related Party Disclosures' that are considered relevant to the Company's financial statements. 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 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. 'Presentation of Financial Statements' (effective for annual periods beginning on or after 01 July 2012). 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.2 Taxation Current Provision for current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The management of the Company is in the process of evaluating the impacts of the aforesaid standard on the Company's financial statements. IFRS 12 applies to entities that have an interest in subsidiaries. amendments to published approved standards and new interpretations that are mandatory for accounting periods beginning on or after 01 July 2011 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements.

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

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

d)

26
Nishat (Chunian) Limited

JUNE 2011

2.7

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

2.8

2.9

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

b)

c)

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

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

JUNE 2011

28
Nishat (Chunian) Limited

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

966.903.000.000 Ordinary shares of Rupees 10 each 15% non-voting cumulative convertible preference shares of Rupees 10 each 2011 Rupees 2010 Rupees 1. AUTHORIZED SHARE CAPITAL 2011 2010 (Number of shares) 175.654.844 165. Lahore 913.000 1.657 1.418.317.670 3.620.090.000.242.844 Nishat (Chunian) Limited 12.000 200.950 1.889. 2.000 4.000 200.496.441.000 20.427 69.000 175.000.694. Inter segment sales and purchases are eliminated from the total.000.750.496. Transaction among the business segments are recorded at arm's length prices using admissible valuation methods.000.490 1.570 878.667 1.000 20. or to realize the assets and to settle the liabilities simultaneously.and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles) and Power Generation (Generating and distributing power).224.000.224.657 1.349 Preference shares 158.654.418.000.950. 3. SUBSCRIBED AND PAID UP SHARE CAPITAL 2011 2010 (Number of shares) Ordinary Shares 91.966. ISSUED.891.650 29 JUNE 2011 .000. 2.585.000 195.270 694.000 195.450 694.570 2011 Rupees 2010 Rupees 162.440 165.831.265 Ordinary shares of Rupees 10 each fully paid in cash Ordinary shares of Rupees 10 each issued as fully paid bonus shares Ordinary shares of Rupees 10 each issued as fully paid for consideration other than cash to members of Umer Fabrics Limited as per the Scheme of arrangement as approved by the Honourable Lahore High Court.000 1.514.000 1.18 Dividend to ordinary shareholders and other appropriations Dividend distribution to the ordinary shareholders is recognized as a liability in the Company's financial statements in period in which the dividends are declared and other appropriations are recognized in the period in which these are approved by the Board of Directors.552.526.19 Off setting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is a legal enforceable right to set off and the Company intends either to settle on a net basis.351.369.242.770 1.950.265 87.000.177 15% non-voting cumulative convertible preference shares of Rupees 10 each fully paid in cash 33.750.000.440 68.745 69.000.000.441.650 12.495 6.

321 5.604.820 1.537.585.610 3.552.2 Movement during the year 2011 2010 (Number of shares) 2011 Rupees 2010 Rupees Ordinary shares 158.1 The preference shares are non-voting in nature and enjoy preference over ordinary shares in case of payment of dividend and liquidation.950 (344.2011 2010 (Number of Shares) 4.610 (35.712.177 (3. during the financial year ended 30 June 2009.720.526.889.620.G.349 Preference shares 158.667 82.889.891. The salient terms of this issue are as follows: 4.284 35.891.351.552.090.010.922 41.903.321 5. had offered to the shareholders of the Company 41.380 4.059 27.209.514.604.461 At 01 July Ordinary shares of Rupees 10 each issued as fully paid right shares Preference shares converted into ordinary shares of Rupees 10 each at par 1.376.670 827.523.360.513.380 22.490 344. No cash dividend on ordinary shares will be payable until all the dividends on preference shares have been paid.376.820) 33.840 1.220 413.526.059 27. 30 Nishat (Chunian) Limited JUNE 2011 .1 Ordinary shares of the Company held by related parties Nishat Mills Limited D.471.712.010.770 413. This preference shares right issue was made in the ratio of 50 preference shares (non-voting cumulative convertible) for every 100 ordinary shares held by the Company's shareholders as on 10 February 2009.523.670 162.284) At 01 July Preference shares converted into ordinary shares of Rupees 10 each at par 68.471. These shares are listed on Lahore and Karachi Stock Exchanges of Pakistan.461 (34.360.682 34.177 The Company.537.585. Khan Cement Company Limited 22.461 preference shares of Rupees 10 each at par value.513.770 3.360.495 4.682) 41.840) 68.3.3 6.667 6.

058 2011 Rupees 6.648 .668 142.500.729.4 Preferred dividend will be paid on an annual basis at the end of each accounting period subsequent to 30 June 2009 or proportionately for the period prior to 30 June 2009 from the date of issue and after the approval of the dividend payment in the Annual General Meeting.316 JUNE 2011 31 Nishat (Chunian) Limited Less: Current portion shown under current liabilities Long term loans Long term musharaka Privately placed term finance certificates 1.205.750.000.316 587. except on preference shares which have been converted into ordinary shares.278 1.3 The preference shareholders have the option to serve the conversion notice after the end of the three months from the date of issue of preference shares and upto three years from the date of issue. 4.secured (Note 6. LONG TERM FINANCING From banking companies / financial institutions . 4.022.221.993. Preference shareholders have the option to serve a notice to convert the preference shares along with the accumulated dividend into the ordinary shares of the Company within the conversion period by providing a two months written notice to the Company.832.542.615 142.000 4.000 500.253 4.000 4. The preferred dividend amount will be determined after applying the relevant dividend rate to the outstanding preference shares.1) Long term musharaka (Note 6.2 The preference shareholders are not entitled to bonus or right shares in the event the Company increases its share capital by the issue of further ordinary shares or otherwise. No put or call option is available.400.050.4.2) Privately placed term finance certificates . The preferred dividend will be paid at the rate of 15%. The Company have one month after the two months conversion notice to issue ordinary shares to the preference shareholders at the conversion price.531 1.061.333. The preference shares along with the accumulated dividend will be convertible into ordinary shares at a price Rupees 10 per ordinary share.629.499.500. all outstanding preference shares will be converted into ordinary shares at the conversion price. RESERVES Composition of reserves is as follows: Revenue reserves General reserve Unappropriated profit 1.3.000. Restated 2010 Rupees 2011 Rupees 5.262. At the expiry of three years from the date of issue.811.000 93.685.077.366.221.615 3.201 1.938.420.278 2.629.805.299.3.834.668 2.3) 2010 Rupees 3.816 585.866.801.932.000 1.780 2.305.993.secured Long term loans (Note 6.747.272.500.816 3.3.000 1.

500.5% However. EOP + 3% United Bank Limited-1 United Bank Limited-2 United Bank Limited-3 United Bank Limited-4 United Bank Limited-5 United Bank Limited-6 United Bank Limited-7 United Bank Limited-8 United Bank Limited-9 United Bank Limited-10 Habib Bank Limited-1 Habib Bank Limited-2 Habib Bank Limited-3 Habib Bank Limited-4 Habib Bank Limited-5 62.Eight equal half yearly instalments commenced on 20 May 2011 and ending on 20 November 2014.500. EOP + 2% Eight equal half yearly instalments commenced on 25 SBP rate for LTFDecember 2006 and ended on 25 June 2011.816 231.000 9. 2.6.35% 6-month KIBOR + Eight equal half yearly instalments commencing on 23 June 2012 and ending on 23 December 2015. 2.963.5% SBP rate for LTFF.000 28.000 350.600.000 80.000 250.500.500.685.025. the 2. EOP + 2.05% Six equal half yearly instalments commenced on 23 December 2009 and ending on 23 June 2012.000.000.000 Rate of mark up per annum Number of installments Mark up repricing Half Yearly Mark up payable Half Yearly Standard Chartered Bank (Pakistan) Limited 6-month KIBOR + Five equal half yearly instalments commenced on 24 December 2010 and ending on 24 December 2012.666.50% SBP rate for LTFF. 2.500.668 Half Yearly Half Yearly Half Yearly Half Yearly Quarterly Quarterly Quarterly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Allied Bank Limited-1 100.000 1.000.500. 1.000.5% Eight equal half yearly instalments commencing on 18 SBP rate for LTFFJuly 2011 and ending on 18 January 2015.000 62.000 150.000 27.1 Long term loans Lender 2011 Rupees - 2010 Rupees 500. EOP + 2% 6-month KIBOR + Ten equal half yearly instalments commenced on 27 December 2007 and ending on 27 June 2012. EOP + 3% Half Yearly Half Yearly Quarterly Half Yearly Quarterly - .000.000 88.500. the Company made pre-payment of loan in full during the current year.747.000. 2.5% SBP rate for LTFF.238.111. EOP + 3% Eight equal half yearly instalments commenced on 03 SBP rate for LTFAugust 2007 and ending on 03 February 2012.155.000.333.000 187.000.000 437. SBP rate for LTFSix equal half yearly instalments commenced on 31 EOP + 2% December 2007 and ended on 27 June 2011.000 33.000 35.Eight equal half yearly instalments commenced on 24 May 2007 and ending on 24 November 2011.000. EOP + 3% SBP rate for LTF. However.Six equal half yearly instalments commenced on 30 March 2007 and ended on 30 September 2010.000 8.400.000.000. EOP + 2.000 88.777.334 25.Eight equal half yearly instalments commenced on 28 February 2007 and ending on 31 July 2011.408 - 187.500.600.000 177. EOP + 2. 1.350.Eight equal half yearly instalments commencing on 26 July 2011 and ending on 26 January 2015. 6-month KIBOR + 1.467.Sixteen equal quarterly instalments commencing on 15 January 2012 and ending on 15 October 2015.000. 1. EOP + 2.600. However.000.000 210.05% Eight equal half yearly instalments commenced on 30 6-month KIBOR + September 2009 and ending on 31 March 2013.778 250.Eighteen equal quarterly instalments commencing on 31 May 2012 and ending on 31 August 2016.5% Eight equal half yearly instalments commencing on 28 SBP rate for LTFFJuly 2011 and ending on 28 January 2015.000.000 26.111 Half Yearly Half Yearly Half Yearly Half Yearly - Quarterly Half Yearly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly 6-month KIBOR + Nine equal half yearly instalments commenced on 31 Half Yearly March 2010 and ending on 31 March 2014.000.000 23.000 3.000 250. SBP rate for LTF.800.800.316 JUNE 2011 Allied Bank Limited-2 Allied Bank Limited-3 Pak Kuwait Investment Company (Private) Limited-1 Pak Kuwait Investment Company (Private) Limited-2 Atlas Bank Limited National Bank of Pakistan The Bank of Punjab-1 The Bank of Punjab-2 Faysal Bank Limited SAMBA Bank Limited Saudi Pak Industrial and Agricultural Investment Company Limited 6-month KIBOR + Ten equal half yearly instalments commenced on 28 March 2008 and ending on 28 September 2012.5% SBP rate for LTF.40% SBP rate for LTFF.000 38.45% 6-month KIBOR + Twenty equal quarterly instalments commenced on 01 January 2008 and ending on 01 October 2012.993.000.15% Eight equal quarterly instalments commencing on 31 3-month KIBOR + January 2012 and ending on 31 October 2013. 1.333 Quarterly Citibank N.305.85% 32 Nishat (Chunian) Limited 6-month KIBOR + Eighteen equal quarterly instalments commenced on Half Yearly 14 January 2011 and ending on 14 April 2015.50% Company made pre-payment of loan in full during the current year.95% Eight equal half yearly instalments commenced on 31 6-month KIBOR + March 2010 and ending on 30 September 2013. 0.50% the Company made pre-payment of loan in full during the current year.5% Twelve equal quarterly instalments commencing on 30 6-month KIBOR + September 2011 and ending on 30 June 2014.000.500 3.30% SBP rate for LTFF.388 30.796 15.000 94.000 270. EOP + 2.000 312. Half Yearly Half Yearly Half Yearly Habib Bank Limited-6 - 213.75% Six equal half yearly instalments commenced on 31 6-month KIBOR + December 2010 and ending on 30 June 2013.476.816 200. 1.000 75.000 150.600.05% 6-month KIBOR + Ten equal half yearly instalments commenced on 24 June 2008 and ending on 24 December 2012. 2. 2.05% Ten equal half yearly instalments commenced on 15 6-month KIBOR + June 2008 and ending on 15 December 2012.000 250.000 200.000.000 125.000.000 250. 6-month KIBOR + Nine equal half yearly instalments commenced on 30 Half Yearly June 2010 and ending on 30 June 2014.000 26.50% Eighteen equal quarterly instalments commencing on Half Yearly 6-month KIBOR + 21 September 2011 and ending on 21 December 2015.000 8.000 27.000.000.Eight equal half yearly instalments commenced on 08 June 2011 and ending on 08 December 2014. 0.333. 2.000 40. EOP + 2.000 150.000.A - 74. 2.

25% 6-month KIBOR +1.000 Rate of Profit per annum 6-month KIBOR +1.3 Privately placed term finance certificates 500.222.803 23.2 Long term musharika 2011 Rupees 125.064.80% Number of installments Profit Repricing Profit payable Quarterly Sixteen equal quarterly instalments commenced on 30 Half Yearly September 2009 and ending on 30 June 2013.1) Accrued liabilities Advances from customers Securities from contractors .627.722.2) Workers' welfare fund Others (Note 7.345 million (2010: Rupees 7.000 -))))))) Quarterly Half Yearly 320.718 13.999 million (2010: Rupees 266.761 4.3) 402.960 . Half Yearly 140.863.004 5.666 million).569 2. Long term musharaka are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Company to the extent of Rupees 783.821 33 Nishat (Chunian) Limited JUNE 2011 TRADE AND OTHER PAYABLES Creditors (Note 7.000.000.500.333 million (2010: Rupees 250 million) and ranking charge on all present and future fixed assets of the Company to the extent of Rupees 187 million (2010: Rupees 533.616.000 585.905 57. 2011 Rupees 2010 Rupees 6.139 292.439.321.000 587.803 6.831.337.583 82. Ten equal half yearly instalments commenced on 01 October 2010 and ending on 01 April 2015.interest free and repayable on completion of contracts Retention money Income tax deducted at source Unclaimed dividend Preference dividend payable Workers' profit participation fund (Note 7. 662.5 7.797.000.115.000 - 3-month KIBOR +2.4 Long term loans and privately placed term finance certificates are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Company to the extent of Rupees 7.345 million) and ranking charge on all present and future fixed assets of the Company to the extent of Rupees 1.364.000 6.883.258 62.547 21.346 218.500.681.151 171.721 10.000 400.50% 6-month KIBOR +1.000.127 7.2 Dubai Islamic Bank (Pakistan) Limited 2010 Rupees 187.311.063 129.275. Quarterly Quarterly 6. Sixteen equal quarterly instalments commencing on 30 Half Yearly September 2012 and ending on 30 June 2016.730 15.229 million (2010: Rupees 3.000.333 million).681.680 2.292 791.112.1 It includes Rupees 0.000.6. 892.000 Lender Burj Bank Limited (Formerly Dawood Islamic Bank Limited) -1 Burj Bank Limited (Formerly Dawood Islamic Bank Limited) .657.582 3.25% Sixteen equal quarterly instalments commencing on 30 December 2011 and ending on 30 September 2015.495.184.694 million) due to related parties.696 21.637 6.905.

105.413. These form part of total credit facility of Rupees 9. The rates of mark-up range from 14.1 The Company retains workers' profit participation fund for its business operations till the date of allocation to workers. JUNE 2011 9. 10.344 1.547 141.401.2) Export finances .781 191.364 1.678 million) have been issued by the banks of the Company to Sui Northern Gas Pipelines Limited against gas connections and Shell Pakistan Limited against purchase of furance oil.743 million).696 67.432.547 9.648 50.87% to 15.2011 Rupees 7.1 These finances are obtained from banking companies under mark-up arrangements and are secured by hypothecation of all present and future current assets of the Company and lien on export bills to the extent of Rupees 13.934. Karachi against disputed amount of infrastructure cess.1 Guarantees of Rupees 200.2 9. SHORT TERM BORROWINGS From banking companies-secured Short term running finances (Notes 9.22%) per annum on the balance outstanding.000 million (2010: Rupees 32.861.2.1 and 9.457.2 Guarantees of Rupees 48.419 57.805.259 million).066.112.282 9.subsidiary company.112.696 7.1 and 9.364. .112.115 10.667.53% (2010: 1.3) Other short term finances (Notes 9. Interest is paid at prescribed rate under the Companies Profit (Workers' Participation) Act.464 million (2010: Rupees Nil) due to Nishat Chunian Power Limited .117.443.000 million) are given by banks of the Company to Director.16% (2010: 1.364.740 773.4) 1. The rates of mark-up range from 1.231 88.225 million (2010: Rupees 5.051.3 It includes Rupees 0. ACCRUED MARK-UP Long term financing Short term borrowings 2010 Rupees 141.615.467 4.841 2.9% to 14.738 million (2010: Rupees 10.696 2. 2011 Rupees 8.355.15% to 16. Excise and Taxation.57% to 17%) per annum on the balance outstanding.324.688.2 Workers’ profit participation fund Balance as on 01 July Add: Interest for the year (Note 28) Add: Provision for the year (Note 26) Less : Payments during the year 2010 Rupees 57.Preshipment / SBP refinance (Notes 9.075 57.715 59.570.1 and 9.74% (2010: 12.961.639 million (2010: Rupees 200.051 216.003.759 1.848.081. which is in the ordinary course of business and is intererst free.797.4 34 Nishat (Chunian) Limited 10. 1968 on funds utilized by the Company till the date of allocation to workers.472 82.429 127. CONTINGENCIES AND COMMITMENTS Contingencies 10.582.608.057.35% to 14.262.230. 7. The rates of mark-up range from 2.419 4.168 82.600 2.672 9.26% to 16%) per annum on the balance outstanding.3 9.

Pending the outcome of verification no provision for inadmissible input tax has been recognized in these financial statements. Lahore through a writ petition. 2001 pertaining to tax years 2007. The department has filed an appeal before Honourable Lahore High Court.833 million has been raised against the Company on various grounds. 10. The Company has also challenged the initiation of proceedings. ATIR decided the case in favour of the Company. The tax audit authorities have been restrained from proceeding with the audit. However.402 million (2010: Rupees 36. an amount of Rupees 9. ADRC vide its order dated 16 April 2008 has recommended the case in favour of the Company and forwarded the case to FBR. Hence. The Company considers that since it has taken benefit of remission of sales tax only. Lahore through writ petition. Through such order. Lahore against imposition of electricity duty on internal generation and the writ petition has been accepted. if not used for the purpose of exports made up to the 31 December 2005. the Deputy Commissioner Inland Revenue (DCIR) has raised a demand of Rupees 32.933 million) on imported material availed on the basis of consumption and export plans. for the month of June 2005. The Company expects a favourable outcome of the appeal based on advice of the tax counsel.156 million under sections 161 and 205 of the Income Tax Ordinance. The Company's appeal against the order of ACIR was disposed off by the Commissioner Inland Revenue (Appeals) [CIR(A)] through order dated 23 April 2011. be entitled to deduct or reclaim input tax paid in respect of stocks of such goods acquired up to 05 June 2005. the provision for taxation amounting to Rupees 17.120 million is payable on this account but the management of the Company is confident that payment of electricity duty will not be required.157 million) would be required. amounting to Rupees 1. cheque issued as security shall be encashable. The department is of the view that the Company has not submitted Appendix-1 as per Rule 297-A of the above referred scheme. it is entitled to full duty draw back and has filed appeal before Appellate Tribunal Inland Revenue (ATIR) Karachi Bench which is still pending. The Department has been restrained from passing any adverse order till the date of next hearing. In the event the documents of exports are not provided on due dates.4 The Collectorate of Customs (Export) has issued show cause notices with the intention to reject the duty draw back claims aggregating to Rupees 9.6 While framing assessment orders of Umer Fabrics Limited (merged entity) for the assessment years 199899. 10. Lahore. The Company also applied to Federal Board of Revenue (FBR) to constitute Alternate Dispute Resolution Committee (ADRC) in terms of section 195C of the Custom Act. 2001 whereby a demand of Rupees 42. Further. 10. The Company has fully provided its liability in respect of electricity duty on internal generation.5 Order was issued by the Assistant Commissioner Inland Revenue (ACIR) under section 122(1) of the Income Tax Ordinance. no provision has been recognized in these financial statements based on advice of the tax counsel. As at the reporting date. 2001 for tax year 2009 in Honourable Lahore High Court. 2001-02 and 2002-03.482 million (2010: Rupees 9. 10.157 million (2010: Rupees 17. The management of the Company believes that the expected favourable outcome of its appeal before ATIR. 2000-01. the Company has also impugned selection of its tax affairs for audit in terms of section 177 of the Income Tax Ordinance. 35 Nishat (Chunian) Limited JUNE 2011 . The matter is still pending at FBR end. If the decision of ATIR is not upheld. 2001 for tax year 2008 as a result of audit of the Company under section 177 of the Income Tax Ordinance. No provision against these disallowances and addition has been made in the financial statements as the management is confident that the matter would be settled in the Company's favour. The appeal of the Company before Appellate Tribunal Inland Revenue (ATIR) was successful and input tax claim of the Company is expected to be processed after necessary verification in this regard. Government of Punjab has moved to the Honourable Supreme Court of Pakistan against the order of Honourable Lahore High Court.9 Post dated cheques have been issued to custom authorities in respect of duties amounting to Rupees 927. either through zero-rating or otherwise. The Company being aggrieved filed appeals with the Commissioner Inland Revenue (Appeals) which was decided in Company's favour against which the department preferred an appeal to Appellate Tribunal Inland Revenue (ATIR). The Company considers that its stance is based on reasonable grounds and appeal is likely to succeed. the Company has further assailed the matter before ATIR so as the issues decided by CIR(A) against the Company are further contested. in the Honourable Lahore High Court.482 million) on blended grey fabrics exported under Duty and Tax Remission Rules for Export (DTRE) scheme. will dispose of the initiation of these proceedings.10.8 The Deputy Collector (Refund – Gold) by order dated 16 May 2007 rejected the input tax claim of the Company. The Company is in appeal before ATIR as its appeal before CIR(A) was unsuccessful.3 The Company preferred appeal against the Government of Punjab in the Honourable Lahore High Court. under section 161 and 205 of the Income Tax Ordinance. a significant relief was extended to the Company. 10. 1969 to settle the dispute.7 As a result of withholding tax audit for the tax year 2006. however. The Company's appeal has not yet been taken up for hearing by ATIR. 2008 and 2009.604 million incurred in zero rated local supplies of textile and articles thereof on the grounds that the input tax claim is in contravention of SRO 992(I)/2005 which states that no registered person engaged in the export of specified goods (including textile and articles thereof) shall. 2001. 10. the Officer Inland Revenue disallowed certain expenses on pro-rata basis and disagreed on certain additions. in respect of tax year 2006 on same issues.

886 4.323.322.777.114.776.132.522 10.655.114.163.319.965.621) 7.899.755.487.667 10 22.370.106 56.400.267.593. FIXED ASSETS Property.715 million (2010: Rupees 68. The reclassification adjustments represents the adjustments emanating from this exercise.593.074 43.773.371) 80.337.722) Building on freehold land Depreciation / amortization charge Closing net book value At 30 June 2010 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2011 Opening net book value AdditionsReclassification adjustments:* Cost Accumulated depreciation Disposals: Cost Accumulated depreciation 188.751) (17.010 10 84.384 8.467.016 38 2.272 (26.765 (5.323.631.074 931.961 4.776 78.722.667 138.901 (95.314 211.249) (87.2) 2010 Rupees 6.222.254.545.474 (72.196.480 5.307 80.332 (46.049.352.883.208.269.776.050 (94.382 million).700 923.001 63.184 56.025 111. Outstanding foreign currency forward contracts of Rupees 1.255.358.443) 56.054.793 .466 .818 (94.422 364.815.952.207 47.002 7.542 5.741.374.265) (13.900 (8.(736.961 4.348) 83.429 6.593.161) 77.454.800 6.310) 20.066 (56.947. plant and equipment Operating fixed assets (Note 11.207 24.(258.215.046.021 6.868.034.289 107.491 (16.807) 65.776.207.776 (10.922.343.220.222.485 40.248.626 527.096) (4.440 153.703 5.1) Intangible asset under development .901 145.323 168.224.770.696.542 5.679.845.133) 65.764.851 (2.776.857.600 4.385 7.245.943 5.963 (54.520 5.517.017) (293.426 (54.101 7.514.034.034.748.025 20 Depreciation / amortization charge Closing net book value At 30 June 2011 Cost Accumulated depreciation / amortization Net book value Annual rate of depreciation / amortization (%) 188.929.823.735.692 (9.946) 83.983.700) 527.269.021 30 Furniture.105.067.129.724 11.631.386.356.665.068 1.250) (535.405.466 4.017) 188.389.096.497.970.627.332 1.219.332 188.455 (95.857) (35.776.776.354.332 1.427) (93.655.(643.332 (46.295 6.332 188.823.800) 959.754.398) (517.532.947.148. Office Total fixture and Motor vehicles equipment equipment ------------------------------------------Rupees-----------------------------------------188.301.905.902.077.101.480 83.332 931.619.982.770 9.947. the management of the Company carried out a comprehensive exercise during the year which is included of physical verification of all operating fixed assets and checking of classification of all operating fixed assets.621 68.854.925.018.798.152.316 (3.000 (791.307 198.256.032 (2.916 5 10 77.603.634.337.659 (13.573.145.998) (50. 2011 Rupees 11.311 (2.658) 20.389.721.700 (2.1 Reconciliations of carrying amounts of operating fixed assets and intangible asset .461.521 - 188.400) 527.211.176.902.385.514.220.222.140) (3.226.106 113.(690.332 1.184 13.700 million).820 11.514 (2.485 (41.085.483 2.659.600 527.598) (5.029.980) (4.991.735.377.063) 43.024.955 (14.152.786 72.148.854.556.202.542 5.1) Capital work-in-progress (Note 11.664.087 (7.computer software 3.870.137 (24.832) 65.146.777.301.765.536) (3.295) 3.020) (4.925.396.000) 400 (23.776 927.532.835.713.757 210.253.776.423.384) (454.785.678 6.021 6.453) (18.794.452.025 58.586) 5.148.222) 7.048.290) (108.114.319. .243.941.886 4.517.207 10 56.627.232.computer software at the beginning and at the end of the year are as follows: Operating Fixed Assets Description At 30 June 2009 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2010 Opening net book value Additions Disposals: Cost Accumulated depreciation Intangible Assets Computer software 1.075.574.776.979.010 56.421) 72.818.030.593.158 (45.365) (104. Letters of credit other than for capital expenditure amounting to Rupees 171.444.466 4.418.332 927.934 5.396) (438.897 (3.104 .162.197 (8.337.776.556.713.281 181.854.925.106 33.183) 30.418.262) 29.916.964.905 129.207 10 * As part of the implementation of new Enterprise Resource Planning (ERP) system.494.282) Freehold land Plant and machinery Electric installations Factory equipment 188.796.118) (3.727 185.291 7.000) 27.237.277.593.736 9.253 27.295 40.688) 65.839.429 21.643) 36 Nishat (Chunian) Limited JUNE 2011 .009.550.354.207.800.410 million (2010: Rupees 3.897) 188.480 137.295 20.776.366) 29.600) (8.732.895) 3.085.712.423.370.438.032 24.429 63.733.326.332 959.722.617.471.300 923.056) 21.031.724.277 1.916 188.265) 4.323.361.487) 11.169 Intangible asset: Computer software (Note 11.106 371.220.291.882 (65.600 1.600 5.030 9.152.291 84.652) (45.924) 21.361.305 (6.934 5.000 (395.Commitments i) ii) iii) Contracts for capital expenditure amounting to Rupees 39.386.591.498) (3.161.466 4.284) 30.253 22.337.370.694) (38.800 6.267.300 (395.572.368 (25.619) 927.965.627.796.406.960) 56.786 5.064.899.115) 72.905.954 million).786 168.316 (2.605 (20.907) .778.603) 21.551.335.329 million (2010: Rupees 377.390) 40.965.207.

404 Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation As per Company policy Shan Associates. Naeem Iqbal.70%) per annum.477.888 351.922 (343.815) 6.471.535.208 614.293) (233. Muhammad Afzal Javed..000 (271.000 602.132 675.366.000 366.000 (27.746 (14.226.488) Mr.013.623 1..422 496.130 12. Lahore Mr.755) 470.1.100 (5..000 1.839) (372.164 (7.227 million (2010: Rupees 0. Mirza Abdul Ghafoor on behalf of Mr.942.000 1.558 120. Lahore Mr..938 10.1 and 21. Lahore Negotiation Mr.2.316.1 Detail of operating fixed assets.883 7.487.510 615.11.000 56. Muhammad Tayyab.164.1. Lahore Mr.016. Ilyas Ahmad (Employee).000 (379. exceeding the book value Rupees 50.822 (2010: 187.992) (55.928.290 1..302) 171. Tajammal Javed.910 265.656 172.112) (15.. Asghar Rahim (Employee).292 840.088 37. Asif Zaman Khan.991) (46.000 (280.963.711. Rupees .89% (2010: 57. Hamid Ullah Malik.962 100.82% (2010: 9.358.443 11.192 40. Peshawar Mr.000 (337. Asif Shoukat. disposed of during the year is as follow: Description Cost Accumulated Net Book Sale depreciation Value Proceeds .186.620.739) (8.200 60.000 58.563) 161.882) 65.615.495.757) 1.454.678.293.000..766 125.535.3 Amortization on intangible asset amounting to Rupees 2...0D LEB-07-3572 Suzuki Cultus LZQ-8338 Suzuki Cultus LW-8555 Hyundai Shehzore LZJ-9082 Honda CD-70 LRE-9358 Honda CD-70 LRS-4673 Honda CD-70 LZD-4408 BMW .165 318.388) (901.902 337. Lahore Mr.833) (42.144 43.000 765.346.000 (352.380) (1.000 450.396 million) has been allocated to administrative expenses.390 . Equity held 52. Abdul Qadir.822) 20. Karachi As per Company policy Mr.238 (39.383 154.027.300 24.168) (204.746.129.505 517.763 5.697 859.143.509.500 2.832 507.000.285 611.437 173.520 4.924 (185.705 million) using the capitalization rate ranging from 9.000 755.520 11.772. Sialkot Mr.245 189.200 (4.344) (429.213) (352.073 293.118 25.837. Sakhi.948. Faisalabad Mrs.. Karachi Tricon Genera Trading..608 529. Lahore 915. Muhammad Asif. Muhammad Ali..444 68.038) 480.876) 14.705) (436.657. Lahore Negotiation Mr.317.012.120 2.632) 18.948 60. Rana Khurram Sajjad.396.125 849.. Lahore Mr.902) (457.000 (323.344) 525.1) Civil works on freehold land Mobilization advance Unallocated expenses Letters of credit Advance against purchase of assets 2010 Rupees JUNE 2011 37 Nishat (Chunian) Limited 4.939) fully paid ordinary shares of Rupees 10 each.383 495. Peshawar Mr.409 18.040 535.170 9.276..81%)" 2009 Rupees 1.431 1. Lahore Negotiation Mr.098) 675.385 7.215) (584. Lahore Mr.500 (673.200 603..0000 2 93. Faisalabad Mr.792 11.2 The depreciation charge for the year has been allocated as follows: Cost of sales (Note 23) Administrative expenses (Note 25) 2010 Rupees 523.460. Lahore Negotiation Mr. Muhammad Shehryar Khan.027.119.791) 18.000 371.201.118 51.900) (5. Rehana Hafeez.quoted (Notes 12.434 9.056 555. Bannu Negotiation Mr. Lahore Negotiation Mr.536) (476.924 643.500.OD LZO-6839 Suzuki Mehran LWG-3284 Toyota Corolla LWB-4152 Honda City LEB-06-6823 Honda LZL-4035 Suzuki Cultus LEC-07-5322 Suzuki Cultus LEC-07-4092 Mercedes Benz C240 LXX-467 Suzuki Mehran LEB-09-6864 18 6 49 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 53.467.995 261.285 12.730 406. Muhammad Akram..339.243 478..336.678 210.220 1.469.768.159.115 17.916. Irfan Khan.090) (499. INVESTMENT IN SUBSIDIARY COMPANY .000 555..170 69. Jantaz Khan. 2011 Rupees 11.2 CAPITAL WORK-IN-PROGRESS Plant and machinery (Note 13.AT COST Nishat Chunian Power Limited .746.606 4.528) (821.820.955) (323.169 250.750LI LW-467 Hyundai Shehzore LZJ-6910 Toyota Hiace LZJ-5975 Hyundai Shehzore LZP-1429 Toyota 2.344.265 2011 Rupees 11.188.835) (236.758.1) "194.161 382.178 14..721.950 626.000 (1.209 13.659) 108.873.240) 1. (Gain)/ Loss Mode of Disposal Particulars of Purchaser Plant and machinery Picanol Air Jet 280 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni plus Vehicles Toyota Corolla 2.70% to 15.137 35.238) (502.240.3 Borrowing cost capitalized amounted to Rupees 35..985) 22. Lahore Tricon Genera Trading.1.759 (102..238. 2011 Rupees 12.364.. Kasur Aggregate of other items of equipment with individual book values not exceeding Rupees 50.950 1.900 3.000 (4.966.343 million (2010: Rupees 7.120 642.929.706 1.000 (340.831) (199.066) 14. Muhammad Safdar.341) (364. Karachi Shan Associates..569) (28.005) 585.... Lahore Mr.

513.2) Other employees (Note 13.666 1.373 14.605 million (2010: Rupees 2. .143 5.960 390. Interest on long term loans ranged from 13.33% to 14.1 Reconciliation of carrying amount of loans to executives: Opening balance as at 01 July Disbursements Less: Repayments Closing balance as at 30 June 1.00% to 13.621 390.541.175.50% per annum) while some loans are interest free.012 4.111.60 % to 14. the subsidiary company has repaid this loan to the Company.542 1.244 3. STORES.1 Stores and spare parts includes items which may result in fixed capital expenditure but are not distinguishable.907. The effective mark-up rate charged during the year on balance receivable ranged from 14.399 183.907.108 285. 13.850. However.898 976. payable in 48-60 and 15 monthly instalments respectively. LONG TERM LOANS Considered good: Executives (Notes 13.136 1.177 million).526 386.214.346. JUNE 2011 2011 Rupees 14. This loan was unsecured and carried mark-up at the rate of 3-month KIBOR plus 2% payable on quarterly basis.913 2. The bullet loan repayment date was five year after the last principal disbursement date.692 203.464.subsidiary company.046 8.541.939 (2010: 187.2 These represent motor vehicle loans and personal loans to executives and employees.103 222. The loan was subordinate to the prior payment in full by the subsidiary company of the secured obligations to its finance parties.3 The fair value adjustment in accordance with the requirements of IAS 39 'Financial Instruments: Recognition and Measurement' arising in respect of staff loans is not considered material and hence not recognized.274.898 2.52% (2010: 14.700 1. 2011 Rupees 13.4 This represented subordinated loan given to Nishat Chunian Power Limited .496 709.023.499.778 13.910 890. the Company has pledged its 187.298 150.4) Less: Current portion shown under current assets (Note 17) Executives Other employees 2010 Rupees 1.913 13. 13.853.269 147.557. Motor vehicle loans are secured against registration of cars in the name of the Company.125 1.318.34%) per annum. whereas personal loan is secured against balance standing to the credit of employee in the provident fund trust account.1. during the current year.929 387.009.913 3.389.116.783.1 The Company has to maintain at least 51% holding in the share capital of Nishat Chunian Power Limited (NCPL) during the period of first six years from the date of commercial operations of NCPL which is 21 July 2010.50% per annum (2010: 9. SPARE PARTS AND LOOSE TOOLS Stores Spare parts Loose tools 2010 Rupees 38 Nishat (Chunian) Limited 293.387.2) Subsidiary company (Note 13.685 3.541.662 448.939) ordinary shares to lenders of NCPL for the purpose of securing finance.058 378. Moreover. 13.346.289.638.12.1 and 13.29% to 15.1 Maximum aggregate balance due from executives at the end of any month during the year was Rupees 4.

724.579 million (2010: Rupees Nil).065.946.related party.254.416 1.175.086 million) were past due but not impaired.632.070.621 97.interest free: .Executives .086. JUNE 2011 39 Nishat (Chunian) Limited 16.753.725 million (2010: Rupees Nil) due from Nishat Mills Limited .378 120.1 As at 30 June 2011.612 36.959. 2011 Rupees 16.045.513. trade debts of Rupees 2.612.076 40.665.153.078.072.989.600 million).561.916 23.646 13.981 37.2 Finished goods include stock-in-transit of Rupees Nil (2010: Rupees 8.2) Finished goods .786 6.621.Other employees 2010 Rupees 566.101. The ageing analysis of these trade debts is as follows: 2011 Rupees Upto 1 month 1 to 6 months More than 6 months 1.629 7.368.153 12. 15.132 1. These relate to a number of independent customers from whom there is no recent history of default.144.200 4.027.119 3.412 1.336.608 22.172 million (2010: Rupees Nil) were impaired and written off.799 387.3) 2010 Rupees 1.trading stock Waste 3.518.741 75. 15. STOCK IN TRADE Raw materials Work-in-process Finished goods .own produced (Notes 15.803.046 16.088 209.040 681.514 2010 Rupees 12.194 2. 2011 Rupees 17.644.376 1.264. LOANS AND ADVANCES Considered good: Employees .893 million (2010: Rupees 55.709 million (2010: Rupees 37.630 6.371.149 1.708.2 As at 30 June 2011.567. trade debts of Rupees 8.018.013 491. The aging of these trade debts was more than three years.063 .885 8.927.707 76.058.802.3 The aggregate amount of write-down of inventories to net realizable value recognized during the year was Rupees 369.227 million) is being carried at net realizable value.945.297.338 629.819 879.387 Current portion of long term loans (Note 13) Advances to suppliers Advances to contractors Letters of credit 1.1 Stock-in-trade of Rupees 1.816.508 16.627.302 770.177 234. TRADE DEBTS Considered good: Secured (against letters of credit) Unsecured (Note 16.648 466.2011 Rupees 15.244 178.151.916 Restated 2010 Rupees 2.841.230.3 Trade debts include Rupees 0.133.356.160 15.

144.343.883 ordinary shares of Rupees 10 each of the subsidiary company have been reclassified to investment in subsidiary company and are being carried at cost.999.950 1.626.397. This portion of the total investment in ordinary shares of the subsidiary company was non-strategic and over and above 51% stake in the subsidiary company.000 248.413 39.699 9.1) Less: Loss on write-down of the investment to fair value less costs to sell - 249.999.876.subsidiary company.685 6.944.3 Included in cash with banks on current accounts are Rupees 48.1 During the year ended 30 June 2010.891. JUNE 2011 2010 Rupees NON-CURRENT ASSET HELD FOR SALE Nishat Chunian Power Limited .677 3.746.950 40 Nishat (Chunian) Limited 21.539.941. 20.217.798 20. The effective interest rate on term deposit receipts ranged from 6 % to 11% (2010: 11%) per annum.000 67.433 9.subsidiary company as non-current asset held for sale.2 These represents deposits under lien with a bank against bank guarantees of the same amount issued by the bank to the Director.765.5% (2010: 5% to 5.029 36.1) Including US$ 55. the Company classified 24.subsidiary company in the ordinary course of the business.327 13.322.097 36.172 (2010: US$ 12.157 (2010: US$ 89.000.571 million) on long term loan given to Nishat Chunian Power Limited .net Export rebate and claims Fair value of forward exchange contracts Mark-up rate support receivable against long term loans and export finance Receivable from employees' provident fund trust Others (Note 18.quoted Nil (2010: 24.839 1. 2011 Rupees 21.104 13.772.774.3) Including US$ 25. Out of it.284 1.091.994.499.500.729 98.809. 2011 Rupees 20.954 2.768 18. 20. SALES Export Local (Notes 22.750.109.581.1 Rate of profit on saving accounts ranged from 5% to 5.5%) per annum. OTHER RECEIVABLES Considered good: Sales tax recoverable Advance income tax . 18.812 29.070.449.774.828 4.208 614.878. CASH AND BANK BALANCES Cash with banks: On saving accounts (Note 20. 19.000.926.028.085 341. 2011 Rupees 22.562.571.300.075 6.999.828.563 .093.364 million (2010: Rupees 45.1) 2010 Rupees 307.297 13.599 135.107) Term deposit receipts (Note 20.217.970 68.571 million) with MCB Bank Limited .521 20.659.008 89.112 ordinary shares of Rupees 10 each were disposed of during the current year.857 126.034.782) Cash in hand 2010 Rupees 5. The remaining 6.485 million) from Nishat Chunian Power Limited . ACCRUED INTERST This includes interest receivable of Rupees Nil (2010: Rupees 5.305 199. Excise and Taxation against disputed amount of infrastructure cess.960 143.1 It includes interest free receivable of Rupees Nil (2010: Rupees 2.995 ordinary shares of Nishat Chunian Power Limited .740 128.000 100.001.023.945 22.188.323.825.2011 Rupees 18.015 52.828 6.1 and 22.288.995) fully paid ordinary shares of Rupees 10 each (Note 21.181 90.332 20.2) On current accounts (Note 20.associated company.361.340 1.929.2) Export rebate Duty draw back 2010 Rupees 13.371.

365 348.444 million (2010: Rupees 674.477 million) made to direct exporters against special purchase orders (SPOs).328.045 8.462 507.736.closing stocks Finished goods Waste (770.300.816.093.702 11.460 2.585.1.006.932 509.1 Sale of electricity during the year ended 30 June 2010 was exclusive of sales tax amounting to Rupees 9.169.133.996.133.302) (162.013 758.859 361.516 17.659.922.482 7.2 This includes sale of Rupees 2.080 Finished goods and waste .1 Local sales Sales Processing income Sale of electricity (Note 22.811.612 75.672.764.316.773.220 681.214.139.860) 10.781 million.848.1.own manufactured goods Opening stock of purchased finished goods Finished goods purchased Closing stock of purchased finished goods Cost of sales .913.535) 10.128.219 12.816.097 3.119) (717.262) Cost of goods manufactured Finished goods and waste . Further.961 (681.442.660.736.754.012.262 6.119 717.750. local sales includes waste sales of Rupees 614.249.203 1. 22.101 523.520.812 22.621.963.276) Cost of sales .401.052.040 (629.1) 2010 Rupees 6.151.113.661.542.749.913.2) Repair and maintenance Other factory overheads Work-in-process Opening stock Closing stock 466.592.104.608.632 368.842 14.532 million).020.875 10.448 61.076) (40.083.800. COST OF SALES Raw materials consumed (Note 23.741 36.741) (36.523 474.opening stocks Finished goods Waste 17. wages and other benefits (Note 23.567.365.102 11.633.040.168 23.949.974 383.200) (811.361.561.505 (466.335.561.724.purchased finished goods 16.2) Fuel and power Insurance Postage and telephone Traveling and conveyance Vehicles' running and maintenance Entertainment Depreciation on operating fixed assets (Note 11.2011 Rupees 22.981.332.378.143.647.477.553 175.031 2.542 916.835 147.628.860 17.577. 2011 Rupees 23.487 (75.168.745.362 633.402 28.949.092.101 13.976 JUNE 2011 41 Nishat (Chunian) Limited Restated 2010 Rupees 12.302 million (2010: Rupees 298.520.241 1.063.989.082 11.128 22.1) Packing materials consumed Stores.651 802.612 16.140.938 15.416 304.040) (161.297.394 .612) 13. spare parts and loose tools consumed Salaries.827 54.434.804 75.792 27.818.649.382.1.811 3.825 65.

3) Miscellaneous 2010 Rupees 42 Nishat (Chunian) Limited 52.895 1.201.505.423 1.113.801 1.226.494.091.103.656.821 2.728 million (2010: Rupees 0.639 69.410.166.1) Printing and stationery Vehicles' running and maintenance Traveling and conveyance Postage and telephone Fee and subscription Legal and professional Electricity and sui gas Insurance Repair and maintenance Entertainment Auditors' remuneration (Note 25.1 Salaries and other benefits include Rupees 0.422 million (2010: Rupees 1.601 59.147.232. wages and other benefits include Rupees 14.713.063.283 26.569.989.623.1.036 5.213 15.421 million) and Rupees 20.861 3.790 2.495.648 7.275.551.520.713 24.161.537 4.274 126.747.846 201. ADMINISTRATIVE EXPENSES Salaries and other benefits (Note 25.874.098 1.183.976 90.544 3.630 million (2010: Rupees 5.261.454.894 5.228.765.862.376 172.338 12.313.628.945 20.523 1.013 2.580 4.168.750 10.966.169 599.760 JUNE 2011 .070. DISTRIBUTION COST Salaries and other benefits (Note 24.602.2) Depreciation on operating fixed assets (Note 11.752 3.942 1.763 million (2010: Rupees 17.072.860 17.111 8.466.653 3.698.2011 Rupees 23.299 4.662 `134.070.916 46.393 110.804 4.301.1) Ocean freight Freight and octroi Forwarding and other expenses Export marketing expenses Commission to selling agents 2010 Rupees 28.648 13.480 107.518 16.249.471.567.629.834.049 438. 2011 Rupees 24.849.327 111.176.901 2.1.338.748.078.621.313 4.258 million) in respect of accumulating compensated absences and provident fund contribution by the Company respectively.505 395.049.972 3.365 23.360.078.500 11. 2011 Rupees 25.1 Raw material consumed Opening stock Add: Purchased during the year Less: Closing stock Restated 2010 Rupees 2.060 6.724.212.040 2.030.586.639.235.2 Salaries.247.316.336 million) in respect of accumulating compensated absences and provident fund contribution by the Company respectively.275 21.2) Amortization on intangible asset (Note 11.902 9.672 2.700 5.882 million) and Rupees 1.734.235.

Lahore Mr.450 1.000 4. Chairman and Mr.112.335 million) in respect of accumulating compensated absences and provident fund contribution by the Company respectively. OTHER OPERATING EXPENSES Workers' profit participation fund (Note 7.300 50.500 1.073 2.2 Name of donee in which a director or his spouse has an interest: Mian Muhammad Yahya Trust.200.200.000 110.000 178.547 51.632 million (2010: Rupees 1.000.1 Salaries and other benefits include Rupees 2.267 141.387.696 18. Chief Executive are trustees. Gulberg II.042.440 JUNE 2011 43 Nishat (Chunian) Limited .737 4.501 26.000 4. 2011 Rupees 25.128 million (2010: Rupees 0.000.1 Workers' welfare fund has not been provided for in these financial statements based on the advice of the Company's legal consultant.387.365 1.000 1.171. 31-Q.364.833.287.624 57.2) Workers' welfare fund (Note 26.750 26. 2010 Rupees 4.25.000 1. 2011 Rupees 26.1.2) Expenses on sale of shares of subsidiary company 82. Shahzad Saleem.093 million) and Rupees 1.000 109. Muhammad Saleem.500 50.2 Auditors’ remuneration Audit fee Half yearly review Certification fees Reimbursable expenses 2010 Rupees 1.316.440 81. plant and equipment (Note 11.500.833.1) Loss on write-down of the investment to fair value less costs to sell (Note 21) Bad debts written off Donations (Note 26.1) Loss on sale of property.338.000 157.509.

101.592 376.296 181.792.667 1.054.894.294 6.472 69.1 These are net of mark-up rate support against long term loans and export finance amounting to Rupees 26.net (Note 28.972 58.2011 Rupees 27.long term loans .751 301.517.340. 2001.051.782.509.short term finances Interest on workers' profit participation fund (Note 7.2) Bank charges and commission 554.1) .905. 29.611 2011 Rupees 2.438) 204. Provision for income tax is made accordingly. TAXATION Current (Note 29.Preshipment / SBP refinances (Note 28.497. JUNE 2011 2011 Rupees 29. OTHER OPERATING INCOME Income from financial assets Return on bank deposits Net exchange gain Income from investment in and loan to subsidiary company Interest income on loan to subsidiary company Dividend income Gain on sale of shares of subsidiary company Reversal of impairment loss on shares of subsidiary company Income from non-financial assets Gain on sale of property.794.890 477.643.265. plant and equipment Others Sale of scrap Miscellaneous 2010 Rupees 2.long term musharaka .295) 133.075 62.206 2010 Rupees 28.793 223.1 The company falls under the ambit of presumptive tax regime under section 169 of the Income Tax Ordinance.731 68.980.378.399.1) Prior year adjustment 2010 Rupees 44 Nishat (Chunian) Limited 208.614.304.226.433 522.3 Reconciliation of tax expense and product of accounting profit multiplied by the applicable tax rate is not required in view of presumptive taxation. FINANCE COST Mark-up on: .482.export finances .513. .1) .407 31.914 29.556.299. 29.061 1.706.short term running finances .575 199.256 603.208.439 100.252 1.536 million).397 65.209 (3.921 137.554 913.359 (4.214 million (2010: Rupees 14.845 277.710 415.572.787.319.855 196.397 - 34.457.741.privately placed term finance certificates .551 186.734.019. 2001 and no temporary differences are expected to arise in the foreseeable future.527.629.371.986 76.2 Provision for deferred tax is not required as the Company is chargeable to tax under section 169 of the Income Tax Ordinance.540.097 28.617 1.372 30.038 145.502 2.

980.499.192.808 10.070 5.458.474 1.82 2011 Rupees 31.717 160.832.758.042 160.710) (196. plant and equipment Gain on sale of shares of subsidiary company Dividend income Finance cost (Reversal) / recognition of impairment loss for write-down of non-current asset held for sale Interest income on long term loan to subsidiary company Interest on bank deposits Bad debts written off Working capital changes (Note 31.883.019.027.863.638 535. CASH GENERATED FROM OPERATIONS Profit before taxation Adjustment for non cash charges and other items: Depreciation on operating fixed assets Amortization on intangible asset Loss / (gain) on sale of property.458.794.000 (6.058.774 165.832 2.07 1.097 1.59 Diluted earnings per share (Rupees) 8.171.758.929.568 35.700 (2.844 8.249.855) (2.766 991.135.101.724 1.575) 2.2011 30.832.808 116.001.482.319.579.443 395.717 5.895 51.192.892) 1.397) (223.662.226.372) 1. EARNINGS PER SHARE .572.466.453.054.243 1.976.500.512) 1.088 152.226.49 1.579.788.001.199.300.263 JUNE 2011 45 Nishat (Chunian) Limited .467.793) (68.737 (1.070 116.1) Restated 2010 Rupees 1.552.656 6.038) (917.509.568 Basic earnings per share (Rupees) Diluted Profit after taxation (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Impact of dilutive potential preference shares (Number) 9.433 (415.073 (100.722 517.399.615.439) 1.828.333.485.BASIC AND DILUTED Basic Profit after taxation (Rupees) Less: Preference dividend (Rupees) Profit after taxation attributable to ordinary shareholders (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Restated 2010 1.441.

123.355 445.440 3.592) (2.020 (129. other related companies.070 23.371.091.290 160.1 No expenses was charged in the financial statements for the salary to chief executive of the Company.503.242) 25.032.983. director and executives of the Company is as follows: Director 2011 2010 Rupees Rupees Managerial remuneration Contribution to provident fund House rent Utilities Others 1.267) (1. 46 Nishat (Chunian) Limited TRANSACTIONS WITH RELATED PARTIES The related parties comprise subsidiary company.080 33.000 (2010: Rupees 40.840 15.117.813.368 60.816. JUNE 2011 33.069 1.951.484) (186.521) 138. Details of transactions with related parties.928. The Company provides to chief executive.031 (917.090.000 99.845.638.222.137 24 1.254 2.638.320 19.000.385.442) (1.632 293.276.265.577.823. key management personnel and post employment benefit plan.205.393.976.2. REMUNERATION OF CHIEF EXECUTIVE.440 Number of persons 1 Executives 2011 2010 Rupees Rupees 25.092 735.857 .015.931.995.000).275.355 .092 445.926 101. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Increase in current liabilities: Trade and other payables 2010 Rupees (69.1 Working capital changes (Increase) / decrease in current assets: Stores.034.345 (1.098 173. 32.960 1.816 184.840.2011 Rupees 31.347.960 1.863.892) 32.857) 233.004. directors and certain executives with free use of Company maintained cars and residential telephones.869 41.000 471.491 1 32 32.258.510.152.768.662.812.138.587 2. associated companies.882 41.800.153.000 2.008 3.756) (628.800.2 Aggregate amount charged in the financial statements for meeting fee to one director was Rupees 40.512) (115. other than those which have been specifically disclosed elsewhere in these financial statements are as follows: 2011 Rupees Subsidiary company Investment made Subordinated loan made during the year Repayment of subordinated loan by the subsidiary company Common facilities cost charged Share of ERP system implementation cost Other related parties Purchase of goods Sales of goods Preference dividend paid Ordinary dividend paid Contribution to employees' provident fund 85.000 186.460 386. DIRECTORS AND EXECUTIVES The aggregate amount charged in the financial statements for the year for remuneration including certain benefits to the chief executive.268 10.345) (1.640. The Company in the normal course of business carried out transactions with various related parties.600.285.883.378.923) 205.212.947 (184.291 2.455 2.904 639.225.093.730) (1.440 4.982 2010 Rupees 685.

768.606.792) 150.921) (133.166.774.054.808 34.809.640.469.135.904) 2.305 135.907 7.853.4 Revenue from major customers The Company's revenue is earned from a large mix of customers.458.001.777.551. revenue from transactions with a single external customer of the Processing and Home Textile business segment of the Company amounted to Rupees 2.699 1.961) (1.916) (725.993.606.237 1.244 333.300.132.501) 603.777) 1.659.916.256.588.012.659.318) (5.665.091.817.267 98.287.114 (365.2 Geographical information The Company's revenue from external customers by geographical location is detailed below: 2011 Rupees 2010 Rupees Europe Asia.819.650) (239.656 84.881.181.876.525.332.132.960) 254.226.322.288.126.376 27.097 20.665 6.836) (23.781 5.160 (4.588) 367.318 403.366. However.243.038.473) 2.284 23.399) (193.767.514.023.913.Company 2011 2010 ------------------------------------------Rupees-----------------------------------------6.707.974 (55.976 4.322.421.386.003.812 13.322.085.360.570.627.230.901.380 Unallocated income and expenses Other operating expenses Other operating income Finance cost Provision for taxation Profit after taxation (141.682.370.976) 2.673.131 146.660.752) (115.629.140.372.370 (8.020.067.832.163.110 (211.145.083.206.3 All non-current assets of the Company as at reporting dates are located and operating in Pakistan.390 341.604.540) (386.854.563 (12.077.703.678.432 (380.001.743 5.713.760) (550.563 JUNE 2011 47 Nishat (Chunian) Limited 34.685.699.208.682.814) (272.572.295.969.Company 2011 2010 2011 2010 ------------------------------------------Rupees-----------------------------------------Sales Cost of sales Gross profit / (loss) Distribution cost Administrative expenses 14.993.524.583) (5.242.942.962.782.305) (69.691 9.587 (438.551.577.076 4.665 33.572.213.069.673 16.540) (5.093.886.478) 20.583 5.886.399.539.090 1.199) 2.074.365.317) (23.035.142) (27.343.458.433) (21.883.478 (16. SEGMENT INFORMATION Spinning 2011 2010 2011 Weaving 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 'Elimination of inter-segment transactions Total .252.850.946.611 186.457.845 3. 34.337.560.085.264 (171.305 2.979.094.469.846.221.295.014 389.521 1.539 1.560.279) Profit / (loss) before taxation and unallocated income and expenses 2.994. .807) (5.892 million (2010: Rupees 2.586.858) 7.220 614.383.338.077 4.102 14.467. Africa and Australia United States of America and Canada Pakistan 2.893.283) (126.412 483.135.958 10.34.206 (1.744.966) (4.101.210) 8.809.857) (1.675 980.693.539.115 13.308.903 1.225.252 729.182.833.506.947.891.665.954.332.173 10.177 million).084 2.368.001.408.225 1.476) (6.937.482.069 9.829 3.467.916.237.356.032) (7.226.150 2.766.660.699 13.022 9.750 101.713) (111.189 (210.681.768 90.532.974) 1.832 (92.914) 1.634.759.659 (295.414.643) (79.203 10.875.118.052 161.097) (204.433) (1.049.969.234.729.477.707.624) (81.197.256 3.455.904) (4.515.361.589 4.717 1.020.579.661.283 (599.371.715.106 6.853.264.297 3.685.832) 209.873.416) (10.589 22.1 Reconciliation of reportable segment assets and liabilities Spinning 2011 Total assets for reportable segments Unallocated assets: Long term investments Other receivables Cash and bank balances Other corporate assets Total assets as per balance sheet Total liabilities for reportable segments Unallocated liabilities: Other corporate liabilities Total liabilities as per balance sheet 2010 2011 Weaving 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 Total .988.963) (61.343.091 34.123.476 -)))))) 385.144) (3.731.580.351.097.645.

Printing Number of stenter machine Number of shifts per day Capacity in meters Actual processing of fabrics .988 10 10 3 317.200. Stitching The plant capacity of this division is indeterminable due to multi product plant involving varying run length of order lots.522.357.square yards Actual production after conversion into 50 picks .732.900.698.949 3 50.094 48 Nishat (Chunian) Limited JUNE 2011 1 3 3 30. 2011 Weaving Number of looms installed Number of looms worked Number of shifts per day Capacity after conversion into 50 picks .225.000 20.) Actual production of yarn after conversion into 20/1 count (Kgs.meters Under utilization of available capacity was due to normal maintenance and power outages.417.454 147.698.due to normal maintenance Power plant Number of engines installed Number of engines worked Number of shifts per day Generation capacity (KWh) Actual generation (KWh) Under utilization of available capacity was due to normal maintenance.595 49.868 199.400.744 142.932.536 50.000 - Under utilization of available capacity was due to normal maintenance and low demand.higher count and cover factor .926 141.000 1 2 3 26. PLANT CAPACITY AND ACTUAL PRODUCTION 2011 Spinning Number of spindles installed Number of spindles worked Number of shifts per day Capacity after conversion into 20/1 count (Kgs.800.855 Under utilization of available capacity was due to normal maintenance and time lost in shifting of coarser counts to finer counts and vice versa.512.35.change of articles required .324 3 51. .948.000.) 2010 149.512.000 1.868 214. Dyeing Number of thermosol dyeing machines Number of stenters machines Number of shifts per day Capacity in meters Actual processing of fabrics .920 172.920 172.000 25.square yards Under utilization of available capacity was due to the following reasons: .588.831 1 2 6.481.meters 2010 293 293 3 215.823 10 10 3 317.592 293 293 3 215.

The Company uses forward exchange contracts to hedge its foreign currency risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance.USD Net exposure .USD Trade debts .935.60 . (a) (i) Market risk Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. credit risk.259 1. Currently.1 Financial risk factors The Company's activities expose it to a variety of financial risks: market risk (including currency risk.95 84.947.63 85. the amounts receivable / payable from / to the foreign entities.190 6. use of derivative financial instruments and non derivative financial instruments and investment of excess liquidity. the Company's foreign exchange risk exposure is restricted to bank balances.844. The Company's finance department evaluates and hedges financial risks.028 344.781 The following significant exchange rates were applied during the year: 2011 Rupees per US Dollar Average rate Reporting date rate 2010 49 Nishat (Chunian) Limited JUNE 2011 85. The Company's exposure to currency risk was as follows: 2011 Cash at banks . as well as policies covering specific areas such as currency risk.USD Trade and other payable . credit risk and liquidity risk.476. when considered appropriate. liquidity risk.36.USD Accrued mark-up on FE 25 import / export loans . Risk management is carried out by the Company's finance department under policies approved by the Board of Directors.460 11. The Company is exposed to currency risk arising from various currency exposures. The Board provides principles for overall risk management. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies.128.296 2010 101. The Company uses derivative financial instruments to hedge certain risk exposures.27 85. interest rate risk.801 607.618 7. FINANCIAL RISK MANAGEMENT 36.535 73.USD Short term borrowings as FE 25 import / export loans .377. other price risk and interest rate risk). other price risk.329 18. primarily with respect to the United States Dollar (USD).889 13.USD 80.908 11.

872 3. (ii) Other price risk Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). had weakened / strengthened by 5% against the USD with all other variables held constant.805. Borrowings obtained at fixed rate expose the Company to fair value interest rate risk. In management's opinion. at reporting date.389. Therefore. or factors affecting all similar financial instrument traded in the market. the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year.000. At the balance sheet date the interest rate profile of the Company’s interest bearing financial instruments was: 2011 Rupees Fixed rate instruments Financial liabilities Long term financing Short term borrowings Floating rate instruments Financial assets Loan to subsidiary company Bank balances .704 1. (b) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.803.651 million) lower / higher.332 20.444 1.611.060 600.557 million) respectively higher / lower.000. The Company has no significant long-term interest-bearing asset.699 386. The Company's interest rate risk arises from long term financing and short term borrowings.926. Cash flow sensitivity analysis for variable rate instruments If interest rates at the year end date.271 million (2010: Rupees 43.671.638. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis.945 22.429.saving accounts Term deposit receipts Financial liabilities Long term financing Short term borrowings 5.484 JUNE 2011 Fair value sensitivity analysis for fixed rate instruments The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. mainly as a result of higher / lower interest expense on floating rate borrowings.639 million (2010: Rupees 47. mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments.457.000 3.960 1.Sensitivity analysis If the functional currency.112 2.000 4. fluctuates by 1% higher / lower with all other variables held constant. The Company is not exposed to equity and commodity price risk. the impact on profit after taxation for the year would have been Rupees 45. Borrowings obtained at variable rates expose the Company to cash flow interest rate risk. 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.238.158.944. a change in interest rate at the balance sheet date would not affect profit or loss of the Company.408.860.198. whether those changes are caused by factors specific to the individual financial instrument or its issuer. The maximum exposure to credit risk at the reporting date was as follows: 50 Nishat (Chunian) Limited . The carrying amount of financial assets represents the maximum credit exposure. This analysis is prepared assuming the amounts of liabilities outstanding at balance sheet dates were outstanding for the whole year.034.382.188 2010 Rupees (iii) 634. profit after taxation for the year would have been Rupees 66.

The management believes liquidity risk to be low.242 15.442 1.518.508 46.028.285 119.148.144.534.404 128.668 12.059.607.099 89.119.318 14.873 153.445.364.848 322.106 72.399 1.391 15.326 1.831.521 4.622 4.A.638.851 The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate: Rating Short term Long term AA AAA AA AA A Aa3 AA1 Aa3 A AA AA+ AA+ A1 AA+ AAAA A+ AAA A AA AA+ Agency PACRA PACRA PACRA PACRA PACRA PACRA Moody’s JCR-VIS Moody’s Moody’s JCR-VIS PACRA JCR-VIS PACRA Moody’s PACRA JCR-VIS PACRA JCR-VIS PACRA JCR-VIS PACRA JCR-VIS 2011 Rupees 2010 Rupees Banks Askari Bank Limited Al-Baraka Bank (Pakistan) Limited Allied Bank Limited Bank Alfalah Limited Bank Al-Habib Limited BankIslami Pakistan Limited Barclays Bank Plc Burj Bank Limited (Formerly Dawood Islamic Bank Limited) Citibank N.685 2.430 7.727 441.496 171 7. At 30 June 2011.095.023 million cash and bank balances.007.203 553.491.2011 Rupees Loans and advances Deposits Trade debts Other receivables Accrued interest Bank balances 11.490 1.961 2. Following are the contractual maturities of financial liabilities.340 Due to the Company's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing.283.574.313.059.041.509 396.178 417.019.708 2.379 2.077. the Company had Rupees 4.724.144.644.144.442 2. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.855.685 20.067 616.761 10.975.433 691. The amount disclosed in the table are undiscounted cash flows: Nishat (Chunian) Limited The Company's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 16.631 1.397 2.198 1.236 23.616 million available borrowing limits from financial institutions and Rupees 135.887 45.769 463. management does not expect non-performance by these counter parties on their obligations to the Company.413.065. Deutsche Bank AG Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited HSBC Bank Middle East Limited MCB Bank Limited Meezan Bank Limited NIB Bank Limited Samba Bank Limited Standard Chartered Bank (Pakistan) Limited Summit Bank Limited The Bank of Punjab United Bank Limited A1+ A2 A1+ A1+ A1+ A1 P-1 A-2 P-1 P-1 A-1 A1+ A-1+ A1+ P-1 A1+ A-1+ A1+ A-1+ A1+ A-2 A1+ A-1+ 22.924 5.626.571.288.918.680 2010 Rupees 404.028.036 1.095.826 3 224. The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities.340 2.571.876 427.439 89.013 26.037 2. 51 JUNE 2011 . including interest payments.178 128.644 48. Accordingly the credit risk is minimal.818 1.612 90.

013 26.701.036 1.316 4.316 216.032 JUNE 2011 4.194 10.993.816 4.393.571.626.881.198 1.067.775.472 1.062.138.805.797.372 -))))))) -))))))) 2.280.315.413.280.320.390.282 1.975.508 46.563.062.280.482 11.863 Contractual maturities of financial liabilities as at 30 June 2010: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued mark-up 4.443.482 2010 Rupees 52 Nishat (Chunian) Limited 404.272.443.971 2.194 .841 9.672 520.3 Financial instruments by categories Loans and receivables Assets as per balance sheet Loans and advances Deposits Trade debts Other receivables Accrued interest Cash and bank balances 11.924 9.913.788.924 5.283.672 520.945.114.077.478 191.750.439 90.052 1.408 6.057.677.413.329 1.303.807 979.289.518.557 373.957 1.413.228 3.429 4.057.095.282 4.816 191. 2011 Rupees 36.143.724.619.917.413.279 Financial liabilities at amortized cost Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables 4.303.282 5.303.646 1.303.326 1.522 1.993.095.666.248.615.619.672 4.058 1.841 -))))))) -))))))) -))))))) 1.272.863 4.005.521. Fair value is determined on the basis of objective evidence at each reporting date.144.639.619.Rupees -------------------------6.178 135.797.478 10.572.667.238.774.924 216.429 - 10.619.443.608.280. The rates of interest / mark up have been disclosed in note 6 and note 9 to these financial statements.924 216.534.429 Contractual cash flows 6 months or less 6-12 months 1-2 Year More than 2 Years -------------------------.915 1.515.712.443.666.059.023.971 2.646 -))))))) -))))))) -))))))) 1.759 656.515.038 520.284 2.166.228.832.163.608.Rupees -------------------------5.137 656.442 2.429 191.759 656.478 656.667.805.329.112.608.147.638.478 191.339.2 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values.472.924 216.289.521 2.144.410 520.563.979.797.832.Contractual maturities of financial liabilities as at 30 June 2011: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued mark-up 4.278. 36.694 4.644.114.282 Contractual cash flows 6 months or less 6-12 months 1-2 Year More than 2 Years -------------------------.445.615.453.701.288 The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at 30 June.797.862.677.442 1.

704. UNUTILIZED CREDIT FACILITIES The Company has total credit facilities amounting to Rupees 9. 39.988 4.743 million) out of which Rupees 4. However. EVENTS AFTER THE REPORTING PERIOD The Board of Directors of the Company has proposed a cash dividend for the year ended 30 June 2011 of Rupees 2 /per ordinary share (2010: Rupees 1. GENERAL Figures have been rounded off to nearest of Rupee. Total capital employed includes 'total equity' as shown in the balance sheet plus 'borrowings'.58 Rupees 15.078 million) remained unutilized at the end of the year. the Company may adjust the amount of dividends paid to shareholders.717.429. In order to maintain or adjust the capital structure. CORRESPONDING FIGURES Corresponding figures have been rearranged / regrouped wherever necessary for the purpose of comparison.486 66. no significant rearrangements / regroupings have been made except lycra amounting to Rupees 31. 15% (2010: 15%) preference dividend has been proposed by the Board of Directors for payment after approval in forthcoming Annual General Meeting. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on 08 October 2011 by the Board of Directors of the Company.873 million has been reclassified from stores.971 2010 8.602.498 13.440. The Company's Strategy.50 per ordinary share) at their meeting held on 08 October 2011.609. Moreover. CAPITAL RISK MANAGEMENT The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.225 million (2010: Rupees 5.441. 53 Nishat (Chunian) Limited CHIEF EXECUTIVE DIRECTOR JUNE 2011 . Borrowings represent long term financing and short term borrowings obtained by the Company as referred to in note 6 and 9 respectively. spare parts and loose tools to stock-in-trade.940. This ratio is calculated as borrowings divided by total capital employed.575 5. 42. 2011 Borrowings Total equity Total capital employed Gearing ratio Rupees Rupees 9. in accordance with the approved terms and conditions of preference share issue.050.146. was to maintain a gearing ratio of 75% debt and 25% equity.320. which was unchanged from last year. Consistent with others in the industry and the requirements of the lenders.34 38.37.616 million (2010: Rupees 1.546 Percentage 62. 41. 40. issue new shares or sell assets to reduce debt.488. the Company monitors the capital structure on the basis of gearing ratio.

85 17.30 0.06 3.865.Chief Executive Mrs.321 22. 2010 to June 30. 2011 Sale NIL Purchanse NIL 54 Nishat (Chunian) Limited .750 8. Undertakings and related parties Public Sectors Companies & Corporations NIT and IDBP (ICP UNIT) Banks. carried out by its Directors.858. Shahzad Saleem .70 *13.349 0.10 TOTAL: B) Executives N/A 4 29.03 8.705. Ayesha Shahzad w/o Mr.321 31.321 % 13.513.00 0.360 200. Company Secretary and their spouses and minor childern during the year July 01.00 Associated Companies.531.227 13.513.89 19.569 4.Director Spouse: Mrs.00 4.47 0.927 162. Muhammad Saleem . CFO.513.Chairman Mr.926 53.31 100.587 17. Development Financial Institutions & Non-Banking Financial Institutions H) Insurance Companies I) Modarabas & Mutual Funds J) *Shareholding 10% or more K) Joint Stock Companies L) Others M) General Public TOTAL: - C) D) E) F) * Shareholders having 10% or above shares exist in other categories therefore not included in total.988.044 28.278.12 33.698.957. Farhat Saleem .654 7. Shareholding Detail of 10% or more Name of Shareholder Nishat Mills Limited TOTAL :JUNE 2011 Shares held 22.610 164. Shahzad Saleem Number of Total Shares Shareholders Held Percentage 1 1 1 1 6.89 13.Categories of Shareholders as on 30 June 2011 Categories of Shareholders A) Directors/Chief Executive Officer and their spouse and minor Children Mr.102.005.238 *22.95 6 28 7 24 *1 99 23 6.89 INFORMATION UNDER CLAUSE XIX(j) OF THE CODE OF CORPORATE GOVERNANCE All trade in the Company's shares. CEO.222 4.090.46 5.464 6.71 3.698 6.00 0.

55 0.26 0.954 582.000 367.549 330.36 0.24 0.698 387.Pattern of Shareholding as at 30 June 2011 Number of Shareholders 2557 1205 864 1348 304 89 61 42 16 12 6 9 18 7 6 9 5 10 5 5 3 1 4 1 1 2 1 2 1 1 2 2 1 1 1 1 2 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 6.594 1.920 283.240 95.000 1.09 0.741 5.04 0.82 7.72 4.724 12.745 300.09 0.684 413.277 1.08 0.000 308.23 0.10 1.202 119.10 0.088.483 440.75 5.000 670.300.330.55 0.85 100.702.283 378.07 0.608 15.41 0.21 0.665 279.090.574.122.964.704.10 0.600.17 0.943 552.46 0.000 888.102 3.000 2.44 3.000 2.31 0.305 393.200 587.16 0.24 0.18 0.05 1.20 0.20 0.14 0.24 0.60 1.788 382.48 7.771 5.352 8.93 0.532 1.160 344.000 1.025.091.047.79 0.470.730 381.734.000 1.17 1.604 331.27 0.900.494 1.267 158.23 0.07 0.000 400.345 889.19 0.37 0.843 272.000 221.126 170.673.67 0.273 7.715 334.000 505.770.17 0.62 0.86 9.757 3.300.000 232.832 1.278 231.18 0.000 180.11 0.98 1.07 2.587.127 153.887.000 104.000 1.185 162.931 826.368 1.93 0.65 0.130 600.42 1.890 299.835 629.654 Shareholding From 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 135001 140001 145001 150001 155001 165001 180001 185001 230001 270001 275001 295001 305001 325001 365001 390001 410001 435001 505001 580001 585001 595001 665001 745001 885001 995001 1045001 1120001 1170001 1270001 1295001 1505001 1545001 1585001 1700001 1730001 1770001 1780001 1895001 2145001 2300001 2595001 2755001 3355001 3885001 5470001 5570001 6025001 7700001 8790001 9770001 12115001 12670001 12740001 15960001 To 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 140000 145000 150000 155000 160000 170000 185000 190000 235000 275000 280000 300000 310000 330000 370000 395000 415000 440000 510000 585000 590000 600000 670000 750000 890000 1000000 1050000 1125000 1175000 1275000 1300000 1510000 1550000 1590000 1705000 1735000 1775000 1785000 1900000 2150000 2305000 2600000 2760000 3360000 3890000 5475000 5575000 6030000 7705000 8795000 9775000 12120000 12675000 12745000 15965000 Total Shares Held 60.172.000 2.318 1.485 263.713 12.117.275.742.39 2.030 6.820 126.67 0.09 1.122 1.05 1.349 % of Capital 0.03 7.598 2.24 0.910 12.138 738.38 3.791.000 1.830 440.19 0.490 1.95 0.000 1.705 988.324 139.150.34 0.38 0.72 0.70 2.510.06 0.232.51 0.304 242.14 0.301 372.42 6.15 0.773.80 0.000 110.412 1.14 0.06 0.69 0.755.36 0.27 0.07 1.318 9.40 3.61 0.355.21 0.00 55 Nishat (Chunian) Limited JUNE 2011 .33 1.25 0.000.840 1.547.600 2.23 0.841 3.780.500.

.

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

On behalf of the Board Shahzad Saleem 08 October 2011 Lahore JUNE 2011 Chief Executive 58 Nishat (Chunian) Limited and its subsidiary . Delay in payments from WAPDA and circular debt continues to be an issue as face by all other Independent Power Producers. Nishat Chunian Power Limited (NCPL). The Company has been listed on Karachi and Lahore Stock Exchanges since October 2009.612 billion and earnings per share (EPS) of Rs. is the subsidiary company of Nishat (Chunian) Limited. The group results comprise of financial statements of Nishat (Chunian) Limited and Nishat Chunian Power Limited. 2010.NCPL is experiencing good capacity utilization. Power shortage also remains to be a serious challenge for the country.353 billion with an after tax profit of Rs. The Directors' Report giving a commentary on the performance of Nishat (Chunian) Limited for the year ended 30 June 2011 has been presented separately.675 billion and EPS (Basic) for the year is Rs.40.389. the management expects high capacity utilization and looks forward to a profitable operations year ahead.12. 2007. 4. 1. incorporated under the Companies Ordinance 1984 on 23 February. The Company has commenced its commercial operation on July 21.89% shares of Nishat Chunian Power Limited. Group turnover for the year is Rs. Nishat (Chunian) Limited currently owns and controls 52. 2011. 20.Directors’ Report The directors are pleased to present their report together with the consolidated audited results of Nishat (Chunian) Limited and its subsidiary for the year ended 30 June.79 per ordinary share. NCPL's turnover for the year was Rs. The Operations and Maintenance contract is with Wartsila Pakistan (Private) Limited. In view of the overall situation.

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

552.292.327.764 10 39.472.742.063.032 8.214.500.532.143.654.000.679.563.351.593 30.620 6.067.537.687.808.000.775 TOTAL LIABILITIES CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES JUNE 2011 1.219.813.214.544 3.442.579 34.342. subscribed and paid-up share capital Reserves Equity attributable to equity holders of the Holding Company Non-controlling interest Total equity NON-CURRENT LIABILITIES Long term financing Deferred income tax liability 6 3 4 5 30 June 2011 Rupees 1.845.647.240.625.341 17.941.721.890 6.343 1.305.418.000 1.924 1.349.937 CURRENT LIABILITIES Trade and other payables Accrued mark-up Short term borrowings Current portion of long term financing 7 8 9 6 1.167 17.445.270.000 1.447 3.783 2.656 16.145.597.086.932.739.747 2.440 2.830 1.297.415.283.399 953.755.440 4.525 6.468.947.578.486.721.649 1.896 412.654.389.950.484 1.675 13.039 19.171.011.750.442.720 359.915.989 17.989 17.685 1.619.708.296.955.774 776.000 1.492.051.533.579.154 28.461.495 459.484.207.794.950.795.866.341 10.658.783.954 8.015.000.145.540.760 The annexed notes form an integral part of these consolidated financial statements.805 6.009.990.926 10.041 1.252 10.Consolidated Balance Sheet as at Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorized share capital Issued.814. 60 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE .477.750.418.953.194 3.815 4.

523 9.344 3.969.890.396 2.031. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Derivative financial instrument Accrued interest Short term investment Cash and bank balances 13 14 15 16 17 18 19 20 694.486.039 19.238 1.926.305.963.061.454.795.500 487.031 TOTAL ASSETS 39.145.187.203 284.660.429.637 24.660.996.785.200.718 1.537.942 599.899.366 34.987 374.092.094.442 22.200.324.651.027.351.292.251.704 488.261.175.560.442 24.263 7.110 3.798 174.679.210.425.382.097.639 694.633.742.020 15.811 16.178.239.149.812 3.178.724 216.760 JUNE 2011 61 Nishat (Chunian) Limited and its subsidiary DIRECTOR .063.784.807.360 5.004 5.150.708 4.305.949 3.130 770.678.399.028 2.910 10.538.019 263.516.728.053.975 1.338 194.062.940 131.942 15.415 3.30 June 2011 Restated 30 June 2010 Rupees Restated 01 July 2009 Rupees NOTE ASSETS NON-CURRENT ASSETS Fixed assets Long term loans Long term security deposits 11 12 30 June 2011 Rupees 22.943.500.579 34.987.468 1.191 1.645.729 CURRENT ASSETS Stores.

782) 2.951.989.100 992.248.346.754 OTHER OPERATING INCOME PROFIT FROM OPERATIONS FINANCE COST PROFIT BEFORE TAXATION TAXATION PROFIT AFTER TAXATION PROFIT ATTRIBUTABLE TO: EQUITY HOLDERS OF THE HOLDING COMPANY NON-CONTROLLING INTEREST 28 27 26 250.002.516 (135.Consolidated Profit and Loss Account for the year ended 30 June 2011 NOTE SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING EXPENSES 23 24 25 21 22 2011 Rupees 40.966 (599.739.563 (10.675.662.357.808 2.642) 2.206.771.275) 988.680) 2.921.661.781.79 8.101.781.056.682.097) 1.955.788.586.991 (3.054.867.501) (636.509.805 178.333.212) 7.975) 8.918.272.52 The annexed notes form an integral part of these consolidated financial statements.046.941 (32.976) 2.771. 62 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR .539.422 (4.012.054.551 717.613 (1.100 Restated 2010 Rupees 13.096.713) (117.224.549 2.360.081.241 2.053.331.126.241 BASIC EARNINGS PER SHARE 29 12.037.587 (438.086.42 6.750) 988.988.742 (217.249) (915.861.951.41 DILUTED EARNINGS PER SHARE JUNE 2011 29 12.332.974.283) (171.484.203.668 7.123.466.343.680) (145.568) (80.

100 989.771.951.238 (3.753) 985.750) 985.435.551 717.054.Consolidated Statement of Comprehensive Income for the year ended 30 June 2011 2011 Rupees PROFIT AFTER TAXATION OTHER COMPREHENSIVE INCOME Reclassification adjustment for gain included in profit or loss Deferred income tax relating to other comprehensive income Net loss recognized in other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2.552.100 Restated 2010 Rupees 988.252 (2.488 The annexed notes form an integral part of these consolidated financial statements.951.771.272.898.771.171.100 (4.241 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: EQUITY HOLDERS OF THE HOLDING COMPANY NON-CONTROLLING INTEREST 2.898.549 2.466.781.488 2.882.484.005) 1.951. 63 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR JUNE 2011 .

524.152) (95.099) 1.818.568) 1.274.152.192 14.608 413.226.317 1.003) 12.500) (736.821.368.208) (206.127) (12.176.646) (2.808.910 Cash and cash equivalents at the end of the year The annexed notes form an integral part of these consolidated financial statements.651.996.564) 131.750.617.890.575) (690. 64 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR .324.996.093.002.342 (1.963.634.811 9.161.540) 2.238 (2.804.244.767.398.373) 56.070 (15.651.603 (4.503.064.943) 7.net Proceeds from issue of right shares Proceeds from disposal of interest to non-controlling interest Dividend paid to non-controlling interest Share issuance cost Dividends paid Net cash from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year JUNE 2011 2011 Rupees Restated 2010 Rupees 30 2.397.039.451.259.493) (1.860) (247.817) (131.936.327.678) (672. plant and equipment Capital expenditure on intangible assets Proceeds from sale of property.604.672.500 (2.897.623 (170.585.178.486) (143.098 279.610 1.103) 1.491) (296.347) (7.376.656 (9.754.321.551.864) 2.202 34.527.910 174.066.925.556.Consolidated Cash Flow Statement for the year ended 30 June 2011 NOTE CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from / (used in) operations Net increase in long term security deposits Finance cost paid Income tax paid Net (increase) / decrease in short term investment Net increase in long term loans Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on property.601.255.477. plant and equipment Profit on bank deposits received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term financing Repayment of long term financing Short term borrowings .492.270.025) (5.426.094 1.367.408.278 (619.921 (1.708 1.620.190.992.727.581) (9.020.

..706.620.658.208) 35.468..333.488 1.001) .610 - 413.221..1.027.440 ..243) - (5..753) - 992..440 ..333.081) 827.936..610 (9..971 3..947.065 4. Balance as at 30 June 2009 Effect of change in accounting policy (Note 2.882.431.209.597.958.333.....220 413..878) 413.053.8) Balance as at 30 June 2009 .1.551 2.152..081) (14.431.770 1..343 6.830 413..167 (5...552 61.027.466..418.(237.342.537.221..766) - (10.333.924 1.238 989.712.431.505.....940 1.081) (14.958..1.891.. CHIEF EXECUTIVE DIRECTOR JUNE 2011 .878) 359..376..720 (9.647.813...240.629.447 3.009.278 227.272.829.248 - - - - - (14.878) (9.829.766) Increase in non-controlling interest Total comprehensive income for the year ended 30 June 2010 Balance as at 30 June 2010 .484 4.027....814.514..552 61.305.058.610 (15.190.629.(237.011..604.820 (35. net Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2010 827.015..859.527.(170.552 218.209.753 1.526.445.604.100..100 65 Nishat (Chunian) Limited and its subsidiary Balance as at 30 June 2011 1.054..840 (344...001) (237.670 68.054.753 1.585.490 33.054.011.367.221.771.801 359.086.243) (5.610 1...544 - - - - .070 1.554.712.070 - - - (2.540.636.171.840) - - - - - - - - - - - - - (10..278 3...2.243) (5.240...147) 413..447 3.001) - - - - - - - .190.629..549 2..951.604.171.081) - (14.604.604.629.958.813.032 8.Consolidated Statement of Changes in Equity for the year ended 30 June 2011 ATTRIBUTABLE TO EQUITY HOLDERS OF THE HOLDING COMPANY RESERVES SHARE CAPITAL CAPITAL RESERVE Sub Total Hedging reserve REVENUE RESERVES General reserve Unappropriated profit Sub Total SHAREHOLDERS' EQUITY NONCONTROLLING INTEREST TOTAL EQUITY Ordinary shares Preference shares ....484.604.484.623 - - - - .810.950 1.815 The annexed notes form an integral part of these consolidated financial statements.376.624.551 717..897.527.903..208) (170. Rupees .829.654...152.238 (3.783 2.484.472.027.750) 985.185.687.938.882.830 2.restated Ordinary shares issued Share issuance cost..restated Final dividend for the year ended 30 June 2010 @ Rupees 1.890 3.5 per ordinary share Dividend paid to non-controlling interest Preference shares converted into ordinary shares Preference dividend for the year ended 30 June 2011 Disposal of interest to non-controlling interest Total comprehensive income for the year ended 30 June 2011 .766) - (10.829..654.376.991 989.152..484.859 1.001) (237.278 - 213.610 1.220 413.206 2.025) 344.278 1.071 279...882.327.766) - (10.820) - - - - - - - - - - - - - (5.152.243) - - - - - 61.845.620 6.955.898.367.418.221.283.551 2..459.932..316..610 - 2.

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

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

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

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

68
Nishat (Chunian) Limited and its subsidiary

2.2

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

2.3

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

2.4

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

Nishat (Chunian) Limited and its subsidiary

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

69

JUNE 2011

2.5

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

70
Nishat (Chunian) Limited and its subsidiary

JUNE 2011

2.6

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

2.7

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

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

The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy of investments. which is the Group's functional currency. cash and bank balances.081 (70. while the transactions in foreign currencies during the year are initially recorded in functional currency at the rates of exchange prevailing at the transaction date.10 Borrowing cost Borrowing costs are recognized as expense in the period in which these are incurred except to the extent of borrowing costs that are directly attributable to the acquisition.239. Financial assets and liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.2011 Rupees Unappropriated profit as at the beginning of the year would be (lower) / higher by Profit for the year ended 30 June would be lower by Stock-in-trade as at 30 June would be lower by Earnings per share .358. whereas on account of capacity is recognized when due. trade debts. 72 Nishat (Chunian) Limited and its subsidiary JUNE 2011 b) . except for 'financial instrument at fair value through profit or loss' which is measured initially at fair value. a) Trade debts and other receivables Trade debts and other receivables are carried at original invoice value less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Financial liabilities are de-recognized when the obligation specified in the contract is discharged. are capitalized as part of cost of that asset. other receivables. All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the reporting date.46) Foreign currencies These consolidated financial statements are presented in Pak Rupees. short term borrowings. 2. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction. accrued mark-up and trade and other payables.9 2010 Rupees (56.12 Share capital Ordinary shares and irredeemable preference shares are classified as equity.basic would be lower by Earnings per share .diluted would be lower by 2. if any. from the proceeds. 2. Dividend income on equity investments is recognized as and when the right to receive dividend is established. The Group loses such control if it realizes the rights to benefits specified in contract. loans and advances.446. Exchange gains and losses are included in the income currently. Such borrowing costs. construction or production of a qualifying asset.206.60) (0.206. 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.11 Revenue recognition Revenue from different sources is recognized as under: Revenue from sales is recognized on dispatch of goods to customers. 2. cancelled or expired. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition.539) (2. Revenue on account of energy is recognized on transmission of electricity to National Transmission and Despatch Company Limited.852) (340. Borrowings Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. accrued interest. Bad debts are written off when identified. net of tax.687) (396.12) (2.152. long term financing. the rights expire or the Group surrenders those rights.933) (56. Return on bank deposits is accrued on a time proportionate basis by reference to the principal outstanding and the applicable rate of return. Financial assets are de-recognized when the Group loses control of the contractual rights that comprise the financial asset.06) 14. Any gain or loss on subsequent measurement (except available for sale investments) and de-recognition is charged to the profit or loss currently. any difference between the proceeds and the redemption value is recognized in the consolidated profit and loss account over the period of the borrowings using the effective interest rate method.13 Financial instruments Financial instruments carried on the balance sheet include deposits. derivative financial instrument. 2.852) (0.

b) Non-financial assets The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.18 Segment reporting Segment reporting is based on the operating (business) segments of the Group. Individually significant financial assets are tested for impairment on an individual basis. An operating segment's operating results are reviewed regularly by the Group's chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance. The Group designates certain derivatives as cash flow hedges.16 Provisions Provisions are recognized when the Group has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and a reliable estimate of the amount can be made. including revenues and expenses that relate to the transactions with any of the Group's other components. 2.17 Impairment a) Financial assets A financial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on the estimated future cash flow of that asset. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument. Such reversal is recognized in consolidated profit and loss account. Segment results that are reported to the chief operating decision makers include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. An impairment loss in respect of available for sale financial asset is calculated by reference to its current fair value. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. For the purpose of cash flow statement. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.14 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at book value which approximates their fair value. Amounts accumulated in equity are recognized in consolidated profit and loss account in the periods when the hedged item will affect profit or loss. had no impairment loss been recognized for the asset in prior years. both at hedge inception and on an ongoing basis. An impairment loss in respect of a financial asset measured at amortized cost is calculated as a difference between its carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined. If such indication exists. the nature of the item being hedged. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in equity. cash and cash equivalents comprise cash in hand. The Group documents at the inception of the transaction the relationship between the hedging instruments and hedged items. net of depreciation. An impairment loss is recognized wherever the carrying amount of the asset exceeds its recoverable amount. other short term highly liquid instruments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.15 Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. saving and deposit accounts. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated profit and loss account. of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items. the recoverable amount of such asset is estimated. Impairment losses are recognized in consolidated profit and loss account. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. and for which discrete financial information is available. 2. 2. Those incomes. .c) Trade and other payables Liabilities for trade and other amounts payable are initially recognized at fair value which is normally the transaction cost. The Group also documents its assessment. JUNE 2011 73 Nishat (Chunian) Limited and its subsidiary 2. expenses. If that is the case. 2. and if so. as well as its risk management objective and strategy for undertaking various hedge transactions. cash at banks on current. assets. liabilities and other balances which cannot be allocated to a particular segment on a reasonable basis are reported as unallocated.

000.000 1.889.657 87.650 1.654. or to realize the assets and to settle the liabilities simultaneously. 2.000.620.000.000.770 1.450 694.351.694.657 Ordinary shares of Rupees 10 each fully paid in cash Ordinary shares of Rupees 10 each issued as fully paid bonus shares Ordinary shares of Rupees 10 each issued as fully paid for consideration other than cash to members of Umer Fabrics Limited as per the Scheme of arrangement as approved by the Honourable Lahore High Court.265 1.441.The Group has four reportable business segments.000 175.000 20.654.000 4.427 69.650 1.19 Dividend to ordinary shareholders and other appropriations Dividend distribution to the ordinary shareholders is recognized as a liability in the Group financial statements in period in which the dividends are declared and other appropriations are recognized in the period in which these are approved by the Board of Directors. Spinning (Producing different quality of yarn using natural and artificial fibers).418.418.000.552.000 200. Lahore 913.667 6.000 1. Processing and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of home textile articles) and Power Generation (Generating.000 200.966.570 878.000.496.745 69. transmitting and distributing power).000.20 Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are set off and the net amount is reported in the consolidated financial statements when there is a legal enforceable right to set off and the management intends either to settle on a net basis.242.177 15% non-voting cumulative convertible preference shares of Rupees 10 each fully paid in cash 33.950 1.270 694.000.844 165.000.224. Inter segment sales and purchases are eliminated from the total.242.750.440 68. 195. Weaving (Producing different quality of greige fabric using yarn).224.000.090.000 195.966.496.831.000 Ordinary shares of Rupees 10 each 15% non-voting cumulative convertible preference shares of Rupees 10 each 2011 Rupees 2010 Rupees 1.495 158. Transaction among the business segments are recorded at arm's length prices using admissible valuation methods.844 .903.000 20.000. 3. AUTHORIZED SHARE CAPITAL 2011 2010 (Number of Shares) 175.265 12.950.585.369.750. SUBSCRIBED AND PAID UP SHARE CAPITAL 2011 2010 (Number of shares) Ordinary shares 91.950.891.570 2011 Rupees 2010 Rupees 74 Nishat (Chunian) Limited and its subsidiary JUNE 2011 1.514.000 ISSUED.440 165.317.670 162.000 1.526.349 Preference shares 3. 2.441.000.490 12.

1 The preference shares are non-voting in nature and enjoy preference over ordinary shares in case of payment of dividend and liquidation.3 The preference shareholders have the option to serve the conversion notice after the end of the three months from the date of issue of preference shares and upto three years from the date of issue.585. No cash dividend on ordinary shares will be payable until all the dividends on preference shares have been paid.552.840) 3.2 The preference shareholders are not entitled to bonus or right shares in the event the Holding Company increases its share capital by the issue of further ordinary shares or otherwise.010. At the expiry of three years from the date of issue.513.922 41.177 33.604. The Holding Company will have one month after the two months conversion notice to issue ordinary shares to the preference shareholders at the conversion price.712.010.840 3.471.770 (35. This preference shares right issue was made in the ratio of 50 preference shares (non-voting cumulative convertible) for every 100 ordinary shares held by the Holding Company's shareholders as on 10 February 2009. Preference shareholders have the option to serve a notice to convert the preference shares along with the accumulated dividend into the ordinary shares of the Holding Company within the conversion period by providing a two months written notice to the Holding Company.321 5.514.3.513.351.537.537.604.552.376. No put or call option is available.220 35.903.667 1.3.682) 158.526.610 344. .712.670 827.059 27.820) 413.667 - 82.090.284 162.461 (34.2 Movement during the year 2011 Rupees 2010 Rupees 2011 2010 (Number of shares) Ordinary shares 158.495 4.682 34. 4.380 4.360.360. during the financial year ended 30 June 2009. The salient terms of this issue are as follows: JUNE 2011 75 Nishat (Chunian) Limited and its subsidiary 4.490 1. except on preference shares which have been converted into ordinary shares.526. all outstanding preference shares will be converted into ordinary shares at the conversion price.891. These shares are listed on Lahore and Karachi Stock Exchanges of Pakistan.360. had offered to the shareholders of the Company 41.461 preference shares of Rupees 10 each at par value.321 5.349 Preference shares 6.950 68.523.3.889.G.376.670 41. The preference shares along with the accumulated dividend will be convertible into ordinary shares at a price Rupees 10 per ordinary share.820 413.720.209.770 The Holding Company.177 (3. 4.461 At 01 July Ordinary shares of Rupees 10 each issued as fully paid right shares Preference shares converted into ordinary shares of Rupees 10 each at par 1.3 6.380 22.4.889.523.585.891.059 27.471.610 (344. Khan Cement Company Limited 22.284) At 01 July Preference shares converted into ordinary shares of Rupees 10 each at par 68.1 Ordinary shares of the Holding Company held by related parties 2011 2010 (Number of shares) Nishat Mills Limited D.620.

secured (Note 6.674.000 19.316.000 19.783.278 3.593.087.143.998.185.221.058.989 76 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .675 142.998.145.500.065 4.341 Less: Current portion shown under current liabilities Long term loans Long term musharaka Privately placed term finance certificates 2.206 2.926 17. The preferred dividend amount will be determined after applying the relevant dividend rate to the outstanding preference shares. 2011 Rupees 5. The preferred dividend will be paid at the rate of 15%.376.810.secured Long term loans (Note 6.814.629.267 1.3) 2010 Rupees 18. RESERVES Composition of reserves is as follows: Revenue reserves General reserve Unappropriated profit 2010 Rupees 1. LONG TERM FINANCING From banking companies / financial institutions .000 93.687.664 19.953.4 Preferred dividend will be paid on an annual basis at the end of each accounting period subsequent to 30 June 2009 or proportionately for the period prior to 30 June 2009 from the date of issue and after the approval of the dividend payment in the Annual General Meeting.926 142.000 2.500.000 500.537.343 1.000.484 2011 Rupees 6.214.1) Long term musharaka (Note 6.629.500.000 1.442.3.533.4.586.000.2) Privately placed term finance certificates .675 17.678.278 1.086.221.664 585.597.750.297.643.533.721.267 587.

000 187.500. 6-month KIBOR + 1. Ten equal half yearly instalments commenced on 28 March 2008 and ending on 28 September 2012.777.000 62.500.000. Habib Bank Limited-6 - 213.85% Six equal half yearly instalments commenced on 23 December 2009 and ending on 23 June 2012.000 80.05% 6-month KIBOR + Eight equal half yearly instalments commenced on 30 September 2009 and ending on 31 March 2013.668 Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Quarterly Quarterly Quarterly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Allied Bank Limited-1 Allied Bank Limited-2 Allied Bank Limited-3 Pak Kuwait Investment Company (Private) Limited-1 Pak Kuwait Investment Company (Private) Limited-2 Atlas Bank Limited National Bank of Pakistan The Bank of Punjab-1 The Bank of Punjab-2 Faysal Bank Limited SAMBA Bank Limited Saudi Pak Industrial and Agricultural Investment Company Limited 100. SBP rate for LTFSix equal half yearly instalments commenced on 31 EOP + 2% December 2007 and ended on 27 June 2011.666.5% SBP rate for LTFF.778 250.5% SBP rate for LTFF.000.000.305.500.000.000 94. Ten equal half yearly instalments commenced on 15 June 2008 and ending on 15 December 2012.75% 6-month KIBOR + Six equal half yearly instalments commenced on 31 December 2010 and ending on 30 June 2013.Eighteen equal quarterly instalments commencing on 31 May 2012 and ending on 31 August 2016.000 88.500.796 15.45% 6-month KIBOR + Twenty equal quarterly instalments commenced on 01 January 2008 and ending on 01 October 2012. Eight equal half yearly instalments commenced on 25 December 2006 and ended on 25 June 2011. the Company made pre-payment of loan in full during the current year.35% 6-month KIBOR + Eight equal half yearly instalments commencing on 23 June 2012 and ending on 23 December 2015.5% However.50% SBP rate for LTFF.05% 6-month KIBOR + 0. Ten equal half yearly instalments commenced on 24 June 2008 and ending on 24 December 2012.408 - 187.5% 6-month KIBOR + Twelve equal quarterly instalments commencing on 30 September 2011 and ending on 30 June 2014.000.40% Eight equal half yearly instalments commenced on 20 SBP rate for LTFFMay 2011 and ending on 20 November 2014.800. However.333.000.1 Long term loans Lender 2011 Rupees 2010 Rupees Rate of mark-up per annum Number of installments Mark-up repricing Mark-up payable Nishat (Chunian) Limited Holding Company Standard Chartered Bank (Pakistan) Limited 500. Eight equal half yearly instalments commenced on 24 May 2007 and ending on 24 November 2011.000 33. 2.000 27.000 3.000 8. EOP + 2.600. EOP + 2.000.000 150.15% 3-month KIBOR + Eight equal quarterly instalments commencing on 31 January 2012 and ending on 31 October 2013.Eight equal half yearly instalments commencing on 28 July 2011 and ending on 28 January 2015.000 75. EOP + 2.05% 6-month KIBOR + 1.05% 6-month KIBOR + 0.816 200.000 210.000 8.000 6-month KIBOR + Five equal half yearly instalments commenced on 24 December 2010 and ending on 24 December 2012.993. EOP + 2.000 1.000 250. 2.000 38.50% the Holding Company made pre-payment of loan in full during the current year.400.5% SBP rate for LTFEOP + 2% SBP rate for LTFEOP + 3% SBP rate for LTFEOP + 3% SBP rate for LTFEOP + 3% Six equal half yearly instalments commenced on 30 March 2007 and ended on 30 September 2010.476.500.333.Eight equal half yearly instalments commencing on 18 July 2011 and ending on 18 January 2015.500 3. EOP + 2. 2.350.000 26.000 177.000 437.000.238.467.000.6.000 125. SBP rate for LTFEOP + 2% 6-month KIBOR + 1. 1.000 28.316 6-month KIBOR + Eighteen equal quarterly instalments commenced on Half Yearly 14 January 2011 and ending on 14 April 2015.000.334 25. 2.000 250.111. Half Yearly Half Yearly United Bank Limited-1 United Bank Limited-2 United Bank Limited-3 United Bank Limited-4 United Bank Limited-5 United Bank Limited-6 United Bank Limited-7 United Bank Limited-8 United Bank Limited-9 United Bank Limited-10 Habib Bank Limited-1 Habib Bank Limited-2 Habib Bank Limited-3 Habib Bank Limited-4 Habib Bank Limited-5 62.000.000 270.Eight equal half yearly instalments commencing on 26 July 2011 and ending on 26 January 2015. 2.A - 74.30% SBP rate for LTFF.000 26.500.600.50% 6-month KIBOR + Eighteen equal quarterly instalments commencing on Half Yearly 21 September 2011 and ending on 21 December 2015.000 23. 2.000 250.000 312.000.000.000. Ten equal half yearly instalments commenced on 27 December 2007 and ending on 27 June 2012. 1. the 2.800.600.000 27.600.000 88.000. 6-month KIBOR + Nine equal half yearly instalments commenced on 31 March 2010 and ending on 31 March 2014.000.50% Holding Company made pre-payment of loan in full during the current year.111 Half Yearly Half Yearly Half Yearly Half Yearly Half Yearly Quarterly Half Yearly Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly 6-month KIBOR + Eight equal half yearly instalments commenced on 31 March 2010 and ending on 30 September 2013.747.155. 2.000.500.5% SBP rate for LTFF. EOP + 2.025.95% Eight equal half yearly instalments commenced on 28 February 2007 and ending on 31 July 2011.000.000 200.000 150. Eight equal half yearly instalments commenced on 03 August 2007 and ending on 03 February 2012.000.5% SBP rate for LTFF.000 9.000 150. 2. EOP + 3% Half Yearly Half Yearly Quarterly Half Yearly Quarterly - 77 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .Sixteen equal quarterly instalments commencing on 15 January 2012 and ending on 15 October 2015.000 35.000 350.333 Half Yearly Quarterly Citibank N. 6-month KIBOR + Nine equal half yearly instalments commenced on 30 June 2010 and ending on 30 June 2014. However.388 30.816 231.000 40.000 250.000.500.Eight equal half yearly instalments commenced on 08 June 2011 and ending on 08 December 2014.963.000. 1.000.685.

000 587.Lender Nishat Chunian Power Limited .999 million (2010: Rupees 266.278.000 Number of installments Profit Profit repricing payable Quarterly 6-month KIBOR + Sixteen equal quarterly instalments commenced on 30 Half Yearly September 2009 and ending on 30 June 2013.1 The overall financing is secured against registered first joint pari passu charge on immovable property. mortgage of project receivables (excluding energy payment receivables).502. Quarterly Quarterly Quarterly Quarterly 6.846. The original project financing facility was Rupees 12.346. During the previous year.360. hypothecation of all present and future assets and all properties of the Subsidiary Company (excluding working capital hypothecated property).5 6.6. 1.25% 6-month KIBOR + Sixteen equal quarterly instalments commencing on 30 September 2012 and ending on 30 June 2016.000. on the same terms and conditions.605 15.644.605 to cover the additional cost of the power project from the lenders of the original project finance facility.25% Quarterly 6.000 320. The portion of long term financing from Faysal Bank Limited is on murabaha basis.Nishat (Chunian) Limited .087.267 3-month KIBOR + Thirty seven quarterly instalments ending on 01 July 2020.000.345 million) and ranking charge on all present and future fixed assets of the Holding Company to the extent of Rupees 1.52% (2010: 15.2 In accordance with the terms of agreement with the lenders of long term finances there are certain restrictions on the distribution of dividends by the Subsidiary Company.500.80% Half Yearly Quarterly Half Yearly 6.969.086.047.000.666 million).6.50% Half Yearly Ten equal half yearly instalments commenced on 01 6-month KIBOR + October 2010 and ending on 01 April 2015.29% to 16.Subsidiary Company Senior facility (Note 6. excluding one bank. lien over project bank accounts and pledge of shares held by the Holding Company in the Subsidiary Company.354.354.000.998.2 Long term musharaka .346 3.345 million (2010: Rupees 7.333 million).502.951 19.401.2 Dubai Islamic Bank (Pakistan) Limited 2011 Rupees 125. the Subsidiary Company obtained a term finance facility of Rupees 3. The effective mark-up rate charged during the year on the outstanding balance ranges from 15. 2.000. 6. 6.6) Term finance facility (Note 6.Holding Company Rate of profit per annum Lender Burj Bank Limited (Formerly Dawood Islamic Bank Limited) -1 Burj Bank Limited (Formerly Dawood Islamic Bank Limited) . 3% 3-month KIBOR + 3% Thirty seven quarterly instalments ending on 01 July 2020.668 14.047.000 585.000 140.664 12.004.848 18.000.876.780.278.593.333 million (2010: Rupees 250 million) and ranking charge on all present and future fixed assets of the Holding Company to the extent of Rupees 187 million (2010: Rupees 533.000 2010 Rupees 187. 1.6) 2011 Rupees 2010 Rupees Rate of mark-up per annum Number of installments Mark-up repricing Mark-up payable 11. Long term musharaka are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Holding Company to the extent of Rupees 783. 1.62%) per annum.4 Long term loans and privately placed term finance certificates of Holding Company are secured by first joint pari passu hypothecation and equitable mortgage on all present and future fixed assets of the Holding Company to the extent of Rupees 7. 6.500.34% to 15.6 78 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .3 Privately placed term finance certificates 500.000 400. This represents long term financing obtained by the Subsidiary Company from a consortium of banks led by United Bank Limited (Agent Bank).000 - 3-month KIBOR + Sixteen equal quarterly instalments commencing on 30 Quarterly December 2011 and ending on 30 September 2015.180 2.

439.805 JUNE 2011 7.563. Interest is paid at prescribed rate under the Companies Profit (Workers' Participation) Act.133 953.708.457.1 The Holding Company retains workers' profit participation fund for its business operations till the date of allocation to workers.171.948.315.2) Workers' welfare fund Commitment fee Others 2010 Rupees 775.112.714.674.681. .344 789.230.204 21.345.696 67. TRADE AND OTHER PAYABLES Creditors (Note 7.029.570.interest free and repayable on completion of contracts Retention money Income tax deducted at source Sales tax payable Unclaimed dividend Preference dividend payable Workers' profit participation fund (Note 7.696 Less : Payments during the year 59.696 21.361.916 1.977 776.2 Workers' profit participation fund Balance as on 01 July Add: Interest for the year (Note 27) Add: Provision for the year 57.803 468.221 32.472 163.774 7.828 114.2.222.761 5.229 million (2010: Rupees 3.508.585.495.066. 2011 Rupees 2010 Rupees 7.051.246 54.168 163.954 662.112.583 163.994.529.536.204 2011 Rupees 8.1 It includes Rupees 0.719 5.721 10.419 57.451 129.694 million) due to related parties.115 10.074 794. ACCRUED MARK-UP Long term financing Short term borrowings 2010 Rupees 79 Nishat (Chunian) Limited and its subsidiary 755.235.681.112.204 223.665.674.991.534 56.298 308.2011 Rupees 7.337.750. 1968 on funds utilized by the Holding Company till the date of allocation to workers.901 24.569 2.115.680 2.112.696 2.665.372 9.258 62.937 13.532.665.821 197.117.075 57.010 1.344 1.1) Payable to equipment suppliers Accrued liabilities Advances from customers Securities from contractors .637 9.919.311.902 171.399 368.803 7.979.184.990.905 57.

688.30%) per annum.467 1.257.26% to 16%) per annum on the balance outstanding.000 million under mark-up arrangements from a commercial bank at mark-up rates ranging from three to nine month KIBOR plus 2% per annum.3 9. Of the aggregate facilities of Rupees 902.259 million).649 9. on the balance outstanding.328. Mark-up is payable at the maturity of the respective murabaha transaction.401.15% to 16.225 million (2010: Rupees 5.081.292 million equivalent to Rupees 623. These form part of total credit facility of Rupees 9.200 million (2010: Rupees 623.5) Short term finance (Note 9.2011 Rupees 9.299.29% to 15.003.1 These finances are obtained from banking companies under mark-up arrangements and are secured by hypothecation of all present and future current assets of the Holding Company and lien on export bills to the extent of Rupees 13.1 and 9. Short term running finance facilities available from commercial banks to the Subsidiary Company under mark-up arrangements amount to Rupees 4.600 2.215.53% (2010: 1.4 9.492.74% (2010: 12.4) Nishat Chunian Power Limited .22%) per annum on the balance outstanding.015 million) for opening letters of credit and guarantees.Subsidiary Company Short term running finances (Note 9.740 773. to finance the procurement of multiple oils from the fuel suppliers. The aggregate facility is secured against first pari passu charge on current assets comprising of fuel stocks. payable quarterly.000.739.57% to 17%) per annum on the balance outstanding. SHORT TERM BORROWINGS From banking companies-secured Nishat (Chunian) Limited .726 million (2010: USD 7.738 million (2010: Rupees 10.6) 2010 Rupees 1. The effective mark-up rate charged during the year on the outstanding balance ranges from 14. The rates of mark-up range from 14.000.Preshipment / SBP refinance (Notes 9.977 496.87% to 15. ranking charge over all present and future project assets (including moveable/immoveable assets) of the Subsidiary Company.611.841 2.805.2) Export finances .262.29% to 16.364 1.35% to 14.33 million) at mark-up rate of three month KIBOR plus 2% per annum.3) Other short term finances (Notes 9. The effective mark-up rate charged during the year on the outstanding balance ranges from 14.1 and 9.52% (2010: 14.432.9% to 14.684.747 1. the amount utilised at 30 June 2011 was Rupees 336.06 million (2010: Rupees 2.915.105. first parri passu hypothecation charge on the fuel stock and inventory.28%) per annum.Holding Company Short term running finances (Notes 9.324. inventories and assignment of energy payment receivables from National Transmission and Despatch Company Limited (NTDCL).000 6.1 and 9.743 million).34% to 14. This represents murabaha finance facility obtained by the Subsidiary Company of Rupees 1.988 1.16% (2010: 1.14% (2010: 14. The aggregate facilities for opening letters of credit and guarantees are secured by lien on import documents and a first pari passu charge on current assets comprising of fuel stocks and inventories of the Subsidiary Company.015 million).026. The rates of mark-up range from 1.219. The rates of mark-up range from 2.000 8. The aggregate running finances are secured against first parri passu assignment of the present or future energy payment price of the tariff.5 9.848. 9.6 JUNE 2011 80 Nishat (Chunian) Limited and its subsidiary .419 2.961.2 9.

the Deputy Commissioner Inland Revenue (DCIR) has raised a demand of Rupees 32. The Holding Company considers that since it has taken benefit of remission of sales tax only. Hence. an amount of Rupees 9. Lahore. 2001 for tax year 2008 as a result of audit of the Holding Company under section 177 of the Income Tax Ordinance. the provision for taxation amounting to Rupees 17. If the decision of ATIR is not upheld. The Holding Company also applied to Federal Board of Revenue (FBR) to constitute Alternate Dispute Resolution Committee (ADRC) in terms of section 195C of the Custom Act. However. 2008 and 2009. ADRC vide its order dated 16 April 2008 has recommended the case in favour of the Holding Company and forwarded the case to FBR. ATIR decided the case in favour of the Holding Company. Karachi against disputed amount of infrastructure cess. The Holding Company being aggrieved filed appeals with the Commissioner Inland Revenue (Appeals) which was decided in Holding Company's favour against which the department preferred an appeal to ATIR.4 The Collectorate of Customs (Export) has issued show cause notices with the intention to reject the duty draw back claims aggregating to Rupees 9. 2000-01. The Holding Company considers that its stance is based on reasonable grounds and appeal is likely to succeed. Further. the Holding Company has also impugned selection of its tax affairs for audit in terms of section 177 of the Income Tax Ordinance. Lahore through a writ petition. As at the reporting date.678 million) have been issued by the banks of the Holding Company to Sui Northern Gas Pipelines Limited against gas connections and Shell Pakistan Limited against purchase of furnace oil. 2001 pertaining to tax years 2007. 2001 whereby a demand of Rupees 42.10.482 million) on blended grey fabrics exported under Duty and Tax Remission Rules for Export (DTRE) scheme. The Department has been restrained from passing any adverse order till the date of next hearing.6 While framing assessment orders of Umer Fabrics Limited (merged entity) for the assessment years 199899. Lahore. it is entitled to full duty draw back and has filed appeal before Appellate Tribunal Inland Revenue (ATIR) Karachi Bench which is still pending.157 million (2010: Rupees 17. 10. Excise and Taxation. The matter is still pending at FBR end. 2001.2 Guarantees of Rupees 48. 2001-02 and 2002-03. 10. No provision against these disallowances and addition has been made in the financial statements as the management is confident that the matter would be settled in the Holding Company's favour. 2001 for tax year 2009 in Honourable Lahore High Court. 10.000 million (2010: Rupees 32.120 million is payable on this account but the management of the Holding Company is confident that payment of electricity duty will not be required. under section 161 and 205 of the Income Tax Ordinance. The Holding Company's appeal has not yet been taken up for hearing by ATIR.833 million has been raised against the Holding Company on various grounds. no provision has been recognized in these financial statements based on advice of the tax counsel. The management of the Holding Company believes that the expected favourable JUNE 2011 81 Nishat (Chunian) Limited and its subsidiary . a significant relief was extended to the Holding Company.1 Guarantees of Rupees 200. Through such order. Lahore through writ petition.156 million under sections 161 and 205 of the Income Tax Ordinance.157 million) would be required. the Company has further assailed the matter before ATIR so as the issues decided by CIR(A) against the Company are further contested. 10. The Holding Company has also challenged the initiation of proceedings.7 As a result of withholding tax audit for the tax year 2006. in the Honourable Lahore High Court.639 million (2010: Rupees 200. The Holding Company expects a favourable outcome of the appeal based on advice of the tax counsel. The Holding Company has fully provided its liability in respect of electricity duty on internal generation. The Holding Company is in appeal before ATIR as its appeal before CIR(A) was unsuccessful. The department is of the view that the Holding Company has not submitted Appendix-1 as per Rule 297-A of the above referred scheme. 10.5 Order was issued by the Assistant Commissioner Inland Revenue (ACIR) under section 122(1) of the Income Tax Ordinance. however. 10.3 The Holding Company preferred appeal against the Government of Punjab in the Honourable Lahore High Court. CONTINGENCIES AND COMMITMENTS Contingencies 10. The department has filed an appeal before Honourable Lahore High Court.000 million) are given by banks of the Holding Company to Director.482 million (2010: Rupees 9. Lahore against imposition of electricity duty on internal generation and the writ petition has been accepted. the Officer Inland Revenue disallowed certain expenses on pro-rata basis and disagreed on certain additions. 1969 to settle the dispute. The tax audit authorities have been restrained from proceeding with the audit. The Holding Company's appeal against the order of ACIR was disposed off by the Commissioner Inland Revenue (Appeals) [CIR(A)] through order dated 23 April 2011. Government of Punjab has moved to the Honourable Supreme Court of Pakistan against the order of Honourable Lahore High Court.

Commitments i) Contracts for capital expenditure amounting to Rupees 40.309 million (2010: Rupees 68. 82 Nishat (Chunian) Limited and its subsidiary JUNE 2011 v) . Outstanding foreign currency forward contracts of Holding Company amounting to Rupees 1.8 The Deputy Collector (Refund – Gold) by order dated 16 May 2007 rejected the input tax claim of the Holding Company.329 million (2010: Rupees 389. in respect of tax year 2006 on same issues. the Subsidiary Company is required to pay a monthly fixed O&M fee and a variable O&M fee depending on the net electrical output.461. cheque issued as security shall be encashable. 21 July 2010.031.933 million) on imported material availed on the basis of consumption and export plans.410 million (2010: Rupees 3.outcome of its appeal before ATIR. Pending the outcome of verification no provision for inadmissible input tax has been recognized in these financial statements. ii) iii) iv) Letters of credit other than for capital expenditure of the Group amounting to Rupees 462.000 million (2010: Rupees Nil) in favour of Wartsila Pakistan (Private) Limited as required under the terms of the Operations and Maintenance Agreement.700 million). amounting to Rupees 1. if not used for the purpose of exports made up to the 31 December 2005. 10. In the event the documents of exports are not provided on due dates. Under the terms of the O&M agreement. the Subsidiary Company is not required to buy any minimum quantity of oil from SPL. both of which are adjustable according to the Wholesale Price Index. Excise and Taxation. Karachi under direction of Sindh High Court in respect of suit filed for levy of infrastructure cess. will dispose of the initiation of these proceedings.954 million).e.402 million (2010: Rupees 36. for the month of June 2005.159 million). Under the terms of the Fuel Supply Agreement. The Subsidiary Company has entered into a contract for purchase of fuel oil from Shell Pakistan Limited ('SPL') for a period of ten years starting from the Commercial Operations Date of the power station i.9 Post dated cheques have been issued by the Holding Company to custom authorities in respect of duties amounting to Rupees 927. 10. 10. The Subsidiary Company has also entered into an agreement with Wartsila Pakistan (Private) Limited for the operations and maintenance ('O&M') of the power station for a five years period starting from the Commercial Operations Date of the power station i.604 million incurred in zero rated local supplies of textile and articles thereof on the grounds that the input tax claim is in contravention of SRO 992(I)/2005 which states that no registered person engaged in the export of specified goods (including textile and articles thereof) shall.10 The following have been issued by the bank on behalf of the Subsidiary Company: i) ii) Irrevocable standby letter of credit of Rupees 45. Letter of guarantee of Rupees 1. The appeal of the Holding Company before ATIR was successful and input tax claim of the Holding Company is expected to be processed after necessary verification in this regard.e. be entitled to deduct or reclaim input tax paid in respect of stocks of such goods acquired up to 05 June 2005.132 million (2010: Rupees Nil) in favour of Director. 21 July 2010. either through zero-rating or otherwise.

307.017) 259.406.963 5.793.929 56.514.287 21.839.925.255.705 (18.376.542) (104.981.898.697.799) 84.957.895) 5.319.873.064.755.765 (5.790.159.323 .004 11.105.047.427) (93.1 Reconciliations of carrying amounts of operating fixed assets and intangible assets .035) 29.532.326.776 927.657) 84.947.314 211.659 83 JUNE 2011 .669.276.603.688) 65.322.793.725 10.429 63.1) Intangible asset under development .777.090.252.977) 259.354.354.428) 34.070.900 (8.783.606.143 (54.358.627.028.359) (1.277.021 20 .570) 61.057.598) (5.839.114.603) 21.923.047 259.223.382 24.762) 72.211.818 (94.961 4.305 (6.400.067 (49.063) 43.627.232.713) (1. fixture and equipment Office Motor vehicles equipment Total Intangible assets Computer software -RupeesAt 30 June 2009 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2010 Opening net book value Additions Disposals: Cost Accumulated depreciation 259.936.386.444 18.793.991.751) (17.032 24.487.748.807) 65.494.038.786 7.342 38 2.721.095) 29.307.319.495.936.001.001 (87.882 (65.667 138.487) 11.002 7.756.631 41.203 60.606.963 5.981.110 Intangible assets: Computer software (Note 11.093 184.818 8.265) 4.233.767.022 9.055.154.047 259.077.185 39.924) 21.823.000 (791.862 (51.290) (108.356.649 (58.047 931.150 10 As part of the implementation of new Enterprise Resource Planning (ERP) system.178.600 8.485 (38.839.573 410.615 (95.568.722) 1.589.432.122.249.30 (46.727 185.1) Capital work-in-progress (Note 11.679.349.606.000) 400 (23.947.835.703.694) 80.197 (8.857) (13.140) (3.223.429 21.(258.941.950.983 5.024.987.573 22.182.751.493) 259.001.551 4-5 4 .150 63.865.222.300 923.466 4.269.659) 60.105 (20.185 18.793.818 84.368 (18.785.600) (8.442.305 122.092.163.692 (9.621) 7.343.220.497.047 1.474 (72.776 (11.162.617.047 Depreciation / amortization charge Closing net book value At 30 June 2010 Cost Accumulated depreciation / amortization Net book value Year ended 30 June 2011 Opening net book value Additions Reclassification adjustments:* Cost Accumulated depreciation Disposals: Cost Accumulated depreciation 259.916.390) 40.222.668 (24.464 19.385.651.447.370.249) 259.143.185 119.791.556.386. plant and equipment Operating fixed assets (Note 11.669.517.021 22.647.925.768.806.277.945 22.639) 34.873.907) .524.460.224.873.925.793.32 79.760 26.815.087 9.097.729 10 112.786 168.067.642.036.955 (14.252 153.901 (95.945 22.287 21.473) (5.897 (3.586) 5.114.374.493.809.961 4.132) 22.963.713 212.574.122.340.536) (3.600 1.567 527.619) 927.793.017) (293.400.019.087 84.300 (395.770.521 - 259.800.553.391 5.658 29.699.776 248.857.178.222.030.631 6.269.600 7.056) 21.370.577.445.000 (395.229.786 72.883.307 198. Nishat (Chunian) Limited and its subsidiary .868.371) 168.943 24.713) (6.370.173 10.391 5.368 (25.400 (2.633.551 259.196.464) 61.793.656.950.047 1.074 931.103.352. FIXED ASSETS Property.678 22.987.220.712.251.316 (3.514 (2.011.307.485 (41.979.700) 527.924 7.(690.396) (438.070.936.532.517.311 (2.computer software at the beginning and at the end of the year are as follows: Operating Fixed assets Description Freehold land Buildings on freehold land Plant and machinery Electric installations Factory equipment Furniture.936.474) 20.793.947.429 6.902.823.032 (2.210) (4.667 10 40.514.047 1.342) 20.793.669.307 80.265) (16.220.445.2) 2010 Rupees 22.129.390) (518.483 2.computer software 5.722. The reclassification adjustments represents the adjustments emanating from this exercise.398.074 43.203 14.047 1.421) 72.175.936.115) 72.340.368.732.400) 527.050 (35.049.118) (3.818.631 20.001.593.642.047 927. the management of the Holding Company carried out a comprehensive exercise during the year which is included of physical verification of all operating fixed assets and checking of classification of all operating fixed assets.000) 27.024 (26.316 (2.034.070.621 68.901 145.305 20 Depreciation / amortization charge Closing net book value At 30 June 2011 Cost Accumulated depreciation / amortization Net book value Annual rate of depreciation / amortization (%) - (53.532.127.936.605.009.545.101 7.611.(643.700) 923.334) (4.376.087 138.(743.274 (7.669.600 527.729 52.757) 79.101.856.453) 24.295) 5.056) 84.777.132.154.475 (45.643) - (94.027.572.963 (54.466 4.021 9.305 58.222) 7.898.594.577.565.233.845.291.793 .793.466 4.791.736 9.929 10 130.187.573.957) 72.2011 Rupees 11.185 61.096.422 364.898.047 1.963 5.438.798.643 .851 (2.696.

416 35.790.186.657. Ilyas Ahmad (Employee of the holding company). Karachi Shan Associates.213) (352.705) (436.165 318.606 4.924 643.170 69.285 611.902 337.200 60.000 2 93.200 603.882) 65..833) (42.535.846 2. Muhammad Ali. Sakhi.694.839) (372.763 5. exceeding the book value Rupees 50.000 (271.918.766 120.238) (502.169 250.000...434 9.422 496.382 .883 7.000 555.403.178 14.240.000 (340.344.. Peshawar Mr.488) Aggregate of other items of equipment with individual book values not exceeding Rupees 50. 2011 Rupees 2010 Rupees 84 Nishat (Chunian) Limited and its subsidiary 11.1.957 507.670.000. Karachi Mr.704 million (2010: Rupees 0.000 1.605.615.341) (364.659) 108.143.831) (199.565.000 1. Kasur 915.535.678 15.750LI LW-467 Hyundai Shehzore LZJ-6910 Toyota Hiace LZJ-5975 Hyundai Shehzore LZP-1429 Toyota 2.471.528) (821.746 (14.238 (39. Lahore Mr.201.985) 22.928.570 11.444 68..245 189.000 (379.864.777.. Lahore Mr.188.1.0D LEB-07-3572 Suzuki Cultus LZQ-8338 Suzuki Cultus LW-8555 Hyundai Shehzore LZJ-9082 Honda CD-70 LRE-9358 Honda CD-70 LRS-4673 Honda CD-70 LZD-4408 BMW .321 947.100 (5.822) 20.945.434. Rupees . Lahore Mr.916.922 (343.632) 18.357 13.132 5. Muhammad Safdar.112) (15.292 840.500.924 (185.129.730 406. Lahore Mr.016.013.2 The depreciation charge for the year has been allocated as follows: Cost of sales (Note 22) Administrative expenses (Note 24) Unallocated expenses 2010 Rupees 1. Lahore Mr.215) (584.739) (8.500 2.772.574.118 25.815.291 2.. Hamid Ullah Malik.265 2011 Rupees 11.000 765.159. Rehana Hafeez.938 10.316.079 2.170 9. Naeem Iqbal.349. Lahore Mr..125 849.902) (457.510 615.2 Captial Work-In-Progress Plant and machinery Electric installations Buildings Mobilization advance Letters of credit Advance for purchase of assets Unallocated expenses (Note 11.995 261. Abdul Qadir.694. (Gain)/ Loss Mode of Disposal Particulars of Purchaser Description Plant and machinery Picanol Air Jet 280 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni Picanol Air Jet 340 cm Omni plus Vehicles Toyota Corolla 2.977.876) 14.300 24.311 518..317.383 495.000 56. Lahore Mr.539 191.656 172.130 12.569) (28. Lahore Tricon Genera Trading.746.539 166. Asghar Rahim (Employee).759 (102. Mirza Abdul Ghafoor on behalf of Mr.751.385 7..837.209 13.536) (476. Asif Zaman Khan.734.955) (323.005) 585. Muhammad Akram. Jantaz Khan.302) 171.000 (1.120 642..383 154. Lahore Mr.535.950 626.380) (1. Lahore Mr.697 859..820. Muhammad Tayyab.3) Transferred to operating fixed assets 15.992) (55.012. Muhammad Shehryar Khan.027..243 478.251.285 12.358.056 555.OD LZO-6839 Suzuki Mehran LWG-3284 Toyota Corolla LWB-4152 Honda City LEB-06-6823 Honda LZL-4035 Suzuki Cultus LEC-07-5322 Suzuki Cultus LEC-07-4092 Mercedes Benz C240 LXX-467 Suzuki Mehran LEB-09-6864 18 6 49 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 53.293) (233.144 43.000 602.431 1.757) 1.456 (17.746.038) 480.835) (236.623 1.437 173. Irfan Khan.226.130.388) (901..118 51.290 1.000 366.535.382 18.208 614..721.509.090) (499. Karachi Tricon Genera Trading.678.364.200 (4.000 (337.349..991) (46.240) 1.293.3 JUNE 2011 Amortization on intangible asset amounting to Rupees 2.. Lahore Mr.706 1.164 (7.336..168) (204.344) 525.094.900) (5.11. Lahore Mr.621.487.161 382.120 2.714 17.073 293.. Peshawar Mr.620..900 3.027.404 Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation As per holding Company policy Negotiation Negotiation Negotiation Negotiation Negotiation Negotiation As per holding Company policy Shan Associates. Bannu Mr..1.332.098) 675.000 (323. Tajammal Javed.000 450.910 265. Muhammad Asif. Muhammad Afzal Javed.815) 6.251..777.711.000 (27.948.324.366.044 18.115 17.396 million) has been allocated to administrative expenses.755) 470.778) 58.238.791) 18.192 40.500 (673.495.344) (429.962 100.888 351.745 1.364 2.950 1.563) 161..000 (352. Rana Khurram Sajjad.. Lahore Mr.339.000 (280.1 Detail of operating fixed assets. Faisalabad Mrs. disposed of during the year is as follows: Cost Accumulated Net Book Sale depreciation Value Proceeds .000 (4..608 6.066) 14. Faisalabad Mr.477. Asif Shoukat. Sialkot Mr..855 296.948 60.520 4.000 755. Lahore Mr.

411 2.254.332.661 571.secured Bank charges and financing fee Bank guarantee commission Payment under O&M Agreement Depreciation Miscellaneous Sale of trial production Scrap sales Delay liquidated damages recovered 2010 Rupees 1.494.193 9.362 1.349.611 2.246 2.480 589.626.570.705 million) using the capitalization rate ranging from 9.709 (2.82% (2010: 9.686 734.70% to 15.070.235 5.674.263.759.878.747.739 9.793.103) (617.128 4.274) 2.951 1.146.545 421.009 26.000 1.048 47.670.047 771.744 26.622 7.409.608 14.673 1.441 9.226 8.945.658.700.804 33.712.330 218.Short term borrowings .520.153.000 1.70%) per annum.713 1.629.947.618.830 156.408.618 364.500.608 16.343 million (2010: Rupees 7.2011 Rupees 11.453.4 The Holding Company has capitalized borrowing cost amounting to Rupees 35.793.958.077 211.922 172.403.391 16.545.022 153.448 1.034.561.086 7.853.968) 2.867.712.040.053.337.940 29.253.044 11.103) (782.480.618) (3.714 1.189.712 44.464 33.178.998 16.941.692 (1.567 50.773.991.858 9.586.499 159. wages and other benefits Electricity consumed in house Insurance Travelling and conveyance Entertainment Vehicle running and maintenance Printing and stationery Postage and telephone Fuel and power Advertisement Legal and professional charges Consultancy charges Fee and subscription Mark up on: .500.802.848 2.577) (3.492.972.530.610.757.3 Unallocated expenses Unallocated expenditure incurred upto commercial operations date: Raw material consumed Stores and spares consumed Salaries.044.Long term financing .secured . 85 Nishat (Chunian) Limited and its subsidiary JUNE 2011 .

50% per annum (2010: 9. 2011 Rupees 2010 Rupees JUNE 2011 12.009.388. .2) 4.1.573 1.399.910 976. SPARE PARTS AND LOOSE TOOLS Stores Spare parts Loose tools 296. payable in 48-60 and 15-30 monthly instalments respectively.599 3.2 These represent motor vehicle loans and personal loans to executives and employees.750 12. Motor vehicle loans are secured against registration of cars in the name of respective Company.058 million).505 million (2010: Rupees 3.232.132.017 8. LONG TERM LOANS Considered good: Executives (Notes 12.2) Other employees (Note 12.382.2011 Rupees 2010 Rupees 12.00% to 13.469.731 5.551.1 Stores and spare parts includes items which may result in fixed capital expenditure but are not distinguishable.276 713.929 917.921 5.101.344 13.402.1 and 12.191 2011 Rupees 12.3 86 Nishat (Chunian) Limited and its subsidiary 13.1 Reconciliation of carrying amount of loans to executives: Opening balance as at 01 July Disbursements Less: Repayments Closing balance as at 30 June 2010 Rupees 2.468 Less: Current portion shown under current assets (Note 16) Executives Other employees 1.214.647.557. 12.269 368.633.579.360 222.012 7.783.595 285.318.542 2.808 3.750 5.439 4.365 2. whereas personal loan is secured against balance standing to the credit of employee in the provident fund trust account.50 % to 14.232.831.136.579.922 2. The fair value adjustment in accordance with the requirements of IAS 39 'Financial Instruments: Recognition and Measurement' arising in respect of staff loans is not considered material and hence not recognized.50% per annum) while some loans are interest free.1 Maximum aggregate balance due from executives at the end of any month during the year was Rupees 7.994.943.777 393.750 2.232.879 203.136 1.058 599.910 2.754.662 694. STORES. Interest on long term loans ranged from 13.526 4.

3 The aggregate amount of write-down of inventories to net realizable value recognized during the year was Rupees 369. .053.991. The ageing analysis of these trade debts is as follows: 2011 Rupees Upto 1 month 1 to 6 months More than 6 months 2.133.178.149 1.424.194 9.2 Finished goods include stock-in-transit of Rupees Nil (2010: Rupees 8.251.5% is charged in case the amounts are not paid within due dates.32%) per annum.68% to 17.101.305.737.1 As at 30 June 2011.2) Finished goods .998 1.203 2.424.885 2. 2011 Rupees 15.040 681.816.119 3.223.983.trading stock Waste Restated 2010 Rupees 2.2 As at 30 June 2011. trade debts of Rupees 2.296.903 466. The effective rate of delayed payment mark-up charged during the year on outstanding amounts ranges from 16.560. 15.086 million) were past due but not impaired.75% to 18.130 2010 Rupees 15.916 23. however.612 36.own produced (Notes 14.175. 14. 15.725 million (2010: Rupees Nil) due from Nishat Mills Limited .415 3.802.375.1) Work-in-process Finished goods .289 2010 Rupees 12. trade debts of Rupees 2.132 3.945 629.009 879.989.172 million (2010: Rupees Nil) were impaired and written off.230.297.151.related party.086. TRADE DEBTS Considered good: Secured (Note 15.741 75.417.200 5.2011 Rupees 14.893 million (2010: Rupees 55.785.668 million (2010: Rupees 37.753.227 million) is being carried at net realizable value.600 million).718.3 Trade debts include Rupees 0.302 770.668.818. The ageing of these trade debts was more than three years.4 These include trade receivables from NTDCL and are considered good.579 million (2010: Rupees Nil). 14. These are secured by a guarantee from the Government of Pakistan under the Implementation Agreement and are in the normal course of business of the Subsidiary Company and interest free.027.046 JUNE 2011 87 Nishat (Chunian) Limited and its subsidiary 15.371.1 Stock-in-trade of Rupees 1.076 40.173.4) Unsecured (Note 15.561. a delayed payment mark-up at the rate of three month KIBOR plus 4.404 7.523 14. STOCK-IN-TRADE Raw materials (Note 14.981 37.356. These relate to a number of independent customers from whom there is no recent history of default.567.3) 8.22% (2010: 16.429.

interest free: .327 13.750.657 19.153 12. the Subsidiary Company has entered into derivative cross currency swap with a commercial bank.509 284.362.300.005 Current portion of long term loans (Note 12) Advances to suppliers Advances to contractors Letters of credit Advance against expenses 1.Executives .378 120.375 6. DERIVATIVE FINANCIAL INSTRUMENT During the year.260 488.010.610.784.927.808 633.217.737 39. the Subsidiary Company pays London InterBank Offered Rate (LIBOR) plus bank spread to the arranging bank on the notional USD amount for the purposes of the cross currency swap.058.754.731 253. payments to Workers' Profit Participation Fund by the Subsidiary Company are recoverable from NTDCL.2011 Rupees 16.954 2.418.340.127 52.106 694.754. The derivative cross currency swap outstanding as at 30 June 2011 has been marked to market and the resulting gain of Rupees 3.772. Under the terms of the cross currency swap arrangement.765.net Export rebate and claims Fair value of forward exchange contracts Mark-up rate support receivable against long term loans and export finance Receivable from employees' provident fund trust Delay liquidated damages Insurance claim receivable Claim recoverable from NTDCL for pass through item Workers' Profit Participation Fund (Note 17.410 76.500 9.029 36.327 1.946.626.091.949 239.630 6.1) Others 2010 Rupees 307.940 JUNE 2011 88 Nishat (Chunian) Limited and its subsidiary 17.828 4.1 Under section 9.807.018.061 million has been recognised in the consolidated profit and loss account.235. only the nature of the interest payment has changed.297 81.839 1. There has been no transfer of liability under the arrangement.188.397.Other employees 566.646 13. OTHER RECEIVABLES Considered good: Sales tax recoverable Advance income tax .3(a) of the Power Purchase Agreement (PPA) with NTDCL.799 917.177 849 770.150.338 2011 Rupees 17.625.678. 18.945. LOANS AND ADVANCES Considered good: Employees .263 2010 Rupees 1.782.061 4.049 143.288.857 118.604. and receives KIBOR from the arranging bank.608 23.828 6.632.433 106. .

403.262 26.563 2011 Rupees 21. 2011 Rupees 21.124.343.532 million).774.811 20.000.941 9. SALES Export Local (Notes 21. CASH AND BANK BALANCES Cash with banks: On saving accounts (Note 20. Further.737.729 98.3 Included in cash with banks on current accounts are Rupees 48.107) Term deposit receipts (Note 20.5%) per annum. Excise and Taxation against disputed amount of infrastructure cess.562.812 21.339 36.077 147.571.148.000.567.910 Cash in hand 6. 20.5% (2010: 5% to 5.1 and 21.042.300.1) Including US$ 55.040.970 68. SHORT TERM INVESTMENT Investment in the units of UBL Liquidity Plus Fund has been redeemed during the year and the resulting gain has been recognised as part of other operating income.599 174.798 40.324.651.148.677 3.446.941.346 1.302 million (2010: Rupees 298.540.250.659.181 1.944.2) Export rebate Duty draw back 2010 Rupees 13. .000 139.000 68.782) 6.212 1.108.466 million (2010: Rupees 46.812 29.056.associated company.710.3) Including US$ 25.746.538 22. local sales includes waste sales of Rupees 614.714.448 3.300.157 (2010: US$ 89.2) On current accounts (Note 20.104 JUNE 2011 89 Nishat (Chunian) Limited and its subsidiary 13.674 167. 2011 Rupees 2010 Rupees 20.081 million) with MCB Bank Limited .996.650.444 million (2010: Rupees 674.3) Processing income 2010 Rupees 26.364 175.539.2 These represents deposits under lien with a bank against bank guarantees of the same amount issued by the bank to the Director.172 (2010: US$ 12.075 26. 20. The effective interest rate on term deposit receipts ranged from 6 % to 11% (2010: 11%) per annum.825.2 This includes sale of Rupees 2.659.1 Local sales Sales (Note 21.714.922.675.383 20.561.19.729 1.109.828.1 Rate of profit on saving accounts ranged from 5% to 5.878.477 million) made to direct exporters by the Holding Company against special purchase orders (SPOs).339 3.

848.825 65.938 15.612 75.436. wages and other benefits (Note 22.816.989.050 32.949.612 32.702 11.460 2.749.2) Fuel and power Fee and subscription Insurance Postage and telephone Traveling and conveyance Vehicles' running and maintenance Entertainment Depreciation on operating fixed assets (Note 11.466 852.961 (681.012.974 383.764.324.own manufactured goods Opening stock of purchased finished goods Finished goods purchased Closing stock of purchased finished goods Cost of sales .365.040 (629.302 56.101 13.505 (466.224 928.628.276) 90 Nishat (Chunian) Limited and its subsidiary Cost of sales .481.020.520.764.089.133.168 23.21.403.773.333 14.781 million).363 75.113 1.297.362 633.741 36.378.749.013 758.294 million (2010: Rupees 9.974.046.672.816.535) 10.633.140.859 361. 2011 Rupees 22.918.273 1.754.741) (36.128.615.3 Local sales is exclusive of sales tax amounting to Rupees 2.128 22.627.382.661.opening stocks Finished goods Waste 32.469 3.632 368.194.872 13.487 (75.076) (40.630.662.purchased finished goods 32.2) Repair and maintenance Other factory overheads Restated 2010 Rupees 26.474.119) (717.561.647.129.651 262. COST OF SALES Raw materials consumed (Note 22.535 158.585.031 2.442.151.335.083.981.811.736.1.133. spare parts and loose tools consumed Salaries.119 717.045 8.139.102 11.633.929.040) (161.009 474.394 304.143.639 JUNE 2011 Finished goods and waste .949.875 10.357 29.976 Work-in-process Opening stock Closing stock 466.612) 13.203 1.1) Packing materials consumed Operations and maintenance Stores.039.593.750.577.041 7.332.818.168.975 .262) Cost of goods manufactured Finished goods and waste .660.200) (811.736.302) (162.756.860) 10.closing stocks Finished goods Waste (770.899.860 33.356 2.219 12.520.662.462 507.777.826.365 348.779 681.561.621.

510.846 201.429.283 26.009 22.950 10.299 4.169 599.130.903 27.375.307.360.337.821 2.310.433.728 million (2010: Rupees 0.509.301.471. ADMINISTRATIVE EXPENSES Salaries and other benefits (Note 24.517 5.421 million) and Rupees 21.676.834.860 17.638 16.078.532.1 Salaries and other benefits include Rupees 0.394.313. Nishat (Chunian) Limited and its subsidiary 75.1) Ocean freight Freight and octroi Forwarding and other expenses Export marketing expenses Commission to selling agents 2010 Rupees 28.605.672 2.365 2.393 110.147.1) Printing and stationery Vehicles' running and maintenance Traveling and conveyance Postage and telephone Fee and subscription Legal and professional Electricity and sui gas Insurance Repair and maintenance Entertainment Auditors' remuneration (Note 24.327 91 JUNE 2011 .803 3.2) Depreciation on operating fixed assets (Note 11.662 134.247.568 24.639 69.421 million) in respect of accumulating compensated absences and provident fund contribution by the Group respectively.862.602.943 49.724.800 4.894 5. 2011 Rupees 24.222 1.2 Salaries.747.882 million) and Rupees 1.315.945 20.991.855 2.2011 Rupees 22.852.496 28.954 3.976 90.623.103.765. wages and other benefits include Rupees 14.790 2.217 5.176.586.275.945 26.078 13.955.249.648 7.228.705 4.942 1.049 438.628.432.495.895 5.554.168.049.063.698.801 1.972 3.902 9.070.1 Salaries and other benefits include Rupees 2.131 million (2010: Rupees 17.494.601 59.744 6.3) Miscellaneous 2010 Rupees 171.013 2.718.2) Amortization on intangible asset (Note 11.183.011.379 4.253.051 30.258 million) in respect of accumulating compensated absences and provident fund contribution by the Group respectively. DISTRIBUTION COST Salaries and other benefits (Note 23.128 million (2010: Rupees 0.1.1 Raw material consumed Opening stock Add: Purchased during the year Less: Closing stock Restated 2010 Rupees 1.713 23. 2011 Rupees 23.737.38 million (2010: Rupees 1.422 million (2010: Rupees 1.1.551.244 7.593.331.376 172.630 million (2010: Rupees 5.321 395.717.111 8.403.336 million) in respect of accumulating compensated absences and provident fund contribution by the Group respectively.410.705.281 6.235.451 3.480 107.185.093 million) and Rupees 2.703.313.485.700 7.491 2.037.680 117.

751.598 62.2 This includes following donation in which directors of the Holding Company have interest: Mian Muhammad Yahya Trust.803 1.510.861.267 145.737 6.578 2.791 664. 31-Q.918.365 4.1) Loss on sale of property.073 2.625 1.578 3.364.650 1.249 57.554 913.000 120.000 110.372 30.000 2011 Rupees 4.000. OTHER OPERATING EXPENSES Workers' profit participation fund (Note 7. Statutory audit Half yearly review Tax services Other assurance services Re-imbursement of expenses 1.000 81.684.527.931.000 40. plant and equipment Others Sale of scrap Miscellaneous 54.500 1.2 Auditors' remuneration Riaz Ahmad & Company Audit fee Half yearly review Certification fee and other services Reimbursable expenses 2010 Rupees 1. Chairman and Mr.668 .638 3.000 550.000 2. F.1 Workers' welfare fund has not been provided for in these financial statements based on the advice of the Company's legal consultant.200.000 232.833.808 Income from non-financial assets Gain on sale of property.396 3.200.387. Chief Executive are trustees.551 178.547 51.171.076 167.2) Workers' welfare fund (Note 25.011.300 115. Muhammad Saleem. plant and equipment (Note 11.034 1. Lahore Mr.810 57.112.717.717.965 6.1) Bad debts written off Donations (Note 25. JUNE 2011 2010 Rupees 4.066.500 50.250.440 2010 Rupees 92 Nishat (Chunian) Limited and its subsidiary 26.331.725. Ferguson & Co.950 1. Gulberg II.390.988 2. 2011 Rupees 25. OTHER OPERATING INCOME Income from financial assets Return on bank deposits Net exchange gain Unrealized fair value gain on revaluation of financial asset at fair value through profit or loss Gain on redemption of financial asset at fair value through profit or loss Mark up on loan to executives Gain on derivative financial instrument: Realized Un-realized 16.000 178.440 80.086 1.632.572.1.656 141.696 18.000 1.387.936 622.256 250. Shahzad Saleem.338.509.2) Interest on delayed payment Expenses on sale of shares of subsidiary company 82.171.061.078 2011 Rupees 25.000 500.950 2010 Rupees A.333.042.043.000.501 25.787.2011 Rupees 24.

2001.643.010 2. Provision for deferred tax is not required as the Holding Company is chargeable to tax under section 169 of the Income Tax Ordinance.061 1.536 million).058.551 160.short term finances Interest on workers' profit participation fund (Note 7.243 2. provision is made in consolidated profit and loss account on income from sources not covered under the aforesaid clause.086.710) 135.680 522. 2001 and no temporary differences are expected to arise in the foreseeable future.053.551.088 152.900.617 1.940.407 31.41 992.308 160.484. However.457.2011 Rupees 27.1 and 28.070 5. 28.296 181.991 10.054. 2001. TAXATION Current (Note 28.592 376.299.101.484.1 The Nishat (Chunian) Limited .741.568 8.333.093.long term musharaka .1) .774 165.766 981.556.075 62.441.short term running finances .79 2.509. Restated 2011 2010 29.249.894.948 4.214 million (2010: Rupees 14.2 The income of Nishat Chunian Power Limited .720.300.465.054.42 JUNE 2011 .export finances .642 138.551 5.52 93 Nishat (Chunian) Limited and its subsidiary Diluted earnings per share (Rupees) 12.656 6.706.284. FINANCE COST Mark-up on: .070 12.051.049.privately placed term finance certificates .497.027.357.472 82.568 35.986 76.1) .863.985 (3.248.991 116.097 27. Part I of the Second Schedule to the Income Tax Ordinance.758.890 477.751 301. Reconciliation of tax expense and product of accounting profit multiplied by the applicable tax rate is not required in view of presumptive taxation.BASIC AND DILUTED Basic Profit after taxation (Rupees) Less: Preference dividend (Rupees) Profit after taxation attributable to ordinary shareholders (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Basic earnings per share (Rupees) Diluted Profit after taxation (Rupees) Weighted average number of ordinary shares outstanding during the year (Number) Impact of dilutive potential preference shares (Number) 2.192.1 These are net of mark-up rate support against long term loans and export finance amounting to Rupees 26.304.080 (4.054.2) Bank charges and commission 2010 Rupees 2.378.844 992. EARNINGS PER SHARE .192.2) Prior year adjustment 2010 Rupees 222.net (Note 27.Holding Company falls under the ambit of presumptive tax regime under section 169 of the Income Tax Ordinance.Preshipment / SBP refinances (Note 27.788.long term loans .457.Subsidiary Company is exempt from tax subject to conditions and limitations provided in clause (132). 2011 Rupees 28.397 581.438) 217.053.845 277.430 58. Provision for income tax is made accordingly.225 116.758.275 28.

739.742 1.703.127) 2. CASH GENERATED FROM / (USED IN) OPERATIONS Profit before taxation Adjustment for non cash charges and other items: Depreciation on operating fixed assets Amortization on intangible asset Loss / (gain) on sale of property.123.004) 1.904 15.101.896) (247.066.139.989.396) 2.189.070.895 51.503.372) 1.869 41.544.491 32 Executives 2010 Rupees 25.002.790.378. JUNE 2011 REMUNERATION OF CHIEF EXECUTIVE.706.1 Working capital changes (Increase) / decrease in current assets: Stores.290 3.440 Number of persons 1 2010 Rupees 1.076) (3.579.172.355 4. DIRECTOR AND EXECUTIVES The aggregate amount charged in the financial statements for the year for remuneration including certain benefits to the chief executive.603 2011 Rupees 30.707.587 60.009) 2.813.700 (2.700.840.051) (7.254 2.958) (5.768.786.112.680 (16.030) (4.931.987. plant and equipment Finance cost Interest on bank deposits Unrealized fair value gain on revaluation of financial asset at fair value through profit or loss Unrealized gain on derivative financial instrument Bad debts written off Working capital changes (Note 30.368 1 2011 Rupees 33.092 735.172.355 2. director and executives of the Holding Company is as follows: Director 2011 Rupees Managerial remuneration Contribution to provident fund House rent Utilities Others 1.812.171.737 (7.935) (126.097 (1.896) 31.840 160.781.2011 Rupees 30.086) (2.093.090.867.320.440 2.092 445.644.005.998 (7.510.276.565.080 639.143) (396.440 3.656) (664.222.112.020 (270.845.804.166.009) (336.232.108) (5.205.951.572.570 395.600.020.751.108 (2.509.810) 486.124.073 4.248.697) (1.618.446.137 24 94 Nishat (Chunian) Limited and its subsidiary .291 2.455 2.516 518.087) (7.957 2.016) (1.057.426.061.357.838) 293.987.008 445.268 10.734.054.316) (1.816 184.034.1) Restated 2010 Rupees 1.005.879. spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term prepayments Other receivables Increase in current liabilities: Trade and other payables 2010 Rupees (95.704.

645.318 209.283.627.256. Details of transactions with related parties.277.1 No expenses were charged in the financial statements for the salary to chief executive of the Holding Company.552.816.731.331.976 (7.777.306 (145.591.701.983.376 27.038.698.365 (50.814) 483.169.910 1.486.665.650) (239.069.552 10.037.097) (217.051.2 Aggregate amount charged in the financial statements for meeting fee to one director of the Holding Company was Rupees 40.360.332.661.766 34.712) 8.295.752) 4.077.172.893.256.123.623.926 101.457.583) (5.433) (21.665 6.012.150 2.189 (210.789.069 1.343.703.665.288.997.579 22. The Holding Company provides to chief executive.223.383. key management personnel and post employment benefit plan.901.351.212.370.918.715.742.332.249) (80.478 (32.244 254.210) 8.681.637.792) 403.836) (23.808 (4.979.640.501) 250.777) (115.764 30.509.960) 389.101.Group 2011 2010 2011 2010 ------------------------------------------Rupees-----------------------------------------9.052 161.788.680) (770.583 5.855 19.020.850.750 101.416) 333.067.166.225.656 84.876.778 21.366.937.789.305 2.870.076 4.904.285.241 Unallocated income and expenses Other operating expenses Other operating income Finance cost Provision for taxation Profit after taxation 33.000 (2010: Rupees 40.304) 1.588) 2.963) (61.054.241.563 (1.951.642) (135.668 178.643) (79.181.823.322.126.212 30.888.707.053. associated companies.729.966 2.811 23.336.081.275) 2.206.213. other related companies.356.886.923.221 33.237.233 9.281) (272.458.996.305) (69.457.248.320 20.931.962.383. 32.Group ------------------------------------------Rupees-----------------------------------------6.975) (10.974.145.000).032) 2.100 988.781.097.974 (55.675. The Group in the normal course of business carried out transactions with various related parties.713) (117.916. SEGMENT INFORMATION Spinning 2011 Sales Cost of sales Gross profit Distribution cost Administrative expenses 14.685.160 (10.729 694.712) (10.380 1.142) (27.252.455.660.135.083.551.645.31.070 23.949 174.941 13.853.781 (3.940 1.415.476) (6.961) (17.085.098 173.090 39.056. other than those which have been specifically disclosed elsewhere in these financial statements are as follows: 2011 Rupees Other related parties Purchase of goods Sales of goods Preference dividend paid Ordinary dividend paid Contribution to employees' provident fund 99.634. 31.604.135.570.853.150.903 1.794.172.086.262 28.357.221.226.243.199.283) (171.744.014 150. directors and certain executives with free use of Company maintained cars and residential telephones.699.279) Profit / (loss) before taxation and unallocated income and expenses 2010 2011 Weaving 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 'Elimination of inter-segment transactions Total .163.587 (599.003 2.423 488.039 19.881.707.651.861.784.580.994.832 (92.297 3.587.144) 1.552) - - 7.875.743 5.694.767.197.444.412 367.478) 40.660.693.685.659 (295.691 (12.265.568) (555.333.800.110 (211.954.495 95 Nishat (Chunian) Limited and its subsidiary JUNE 2011 2011 2010 .675 25.577.807) (5.061 (3.440.963) (438.304) (50.317) (23.477.479.966) (4.552.662.324.832) 4.012.759.665 33.164 20.588.301 38.883.225 21.572.264.586.781 5.399) (193.370 (8.994.988.432 4.131.560.682.1 Reconciliation of reportable segment assets and liabilities Spinning 2011 Total assets for reportable segments Unallocated assets: Other receivables Cash and bank balances Other corporate assets Total assets as per consolidated balance sheet Total liabilities for reportable segments Unallocated liabilities: Other corporate liabilities Total liabilities as per consolidated balance sheet Weaving 2010 2011 2010 Processing and Home Textile 2011 2010 Power Generation 2011 2010 Total .035.226.264 (171.467.976) 7.974) (365.539.882 41.947.143. TRANSACTIONS WITH RELATED PARTIES The related parties comprise.680) (1.049.982 2010 Rupees 186.067.094.886.267 19.771.551.063.

817.242.higher count and cover factor .square yards 2009 JUNE 2011 293 293 3 215.3 All non-current assets of the Group as at reporting dates are located and operating in Pakistan.812 13.1 Nishat (Chunian) Limited .Subsidiary Company sells electricity only to NTDCL.324 3 51.300.469.square yards Actual production after conversion into 50 picks .182.056.868 214.948.512.) Actual production of yarn after conversion into 20/1 count (Kgs.2011 Rupees 33.829 3.855 Under utilization of available capacity was due to normal maintenance and time lost in shifting of coarser counts to finer counts and vice versa.941 1.592 293 293 3 215.481.969.589 4.845 3.588.536 50.4 Revenue from major customers Nishat Chunian Power Limited .932.) 2010 149.177 million).512.148.417.675.714. 33.744 142. Africa and Australia United States of America and Canada Pakistan 2010 Rupees 2. revenue from transactions with a single external customer of the Processing and Home Textile business segment of the Group amounted to Rupees 2.339 40.2 Geographical information The Group's revenue from external customers by geographical location is detailed below: Europe Asia.225.907 7. 34.868 199.572.106 26.Holding Company Spinning Number of spindles installed Number of spindles worked Number of shifts per day Capacity after conversion into 20/1 count (Kgs.595 49.077 4.due to normal maintenance . However.809.454 147.366.988 96 Nishat (Chunian) Limited and its subsidiary Under utilization of available capacity was due to the following reasons: . PLANT CAPACITY AND ACTUAL PRODUCTION 2011 34.458.916.351.560.766.539.926 141.337.892 million (2010: Rupees 2. 2010 Weaving Number of looms installed Number of looms worked Number of shifts per day Capacity after conversion into 50 picks .change of articles required .343.563 33.949 3 50.659.

831 Under utilization of available capacity was due to normal maintenance and power outages.732.522.1 Financial risk factors The Group's activities expose it to a variety of financial risks: market risk (including currency risk.meters 2010 1 3 3 30.094 Under utilization of available capacity was due to normal maintenance. 2011 Dyeing Number of thermosol dyeing machines Number of stenters machines Number of shifts per day Capacity in meters Actual processing of fabrics .000 25.Subsidiary Company Installed capacity [based on 8.751 JUNE 2011 97 Nishat (Chunian) Limited and its subsidiary The under utilisation of available capacity is due to less demand by NTDCL. as well as policies covering specific areas such as currency risk. Nishat Chunian Power Limited .698. other price risk and interest rate risk). credit risk and liquidity risk.698. Risk management is carried out by finance departments of the Group Companies under policies approved by their respective Board of Directors. .000 1 2 3 26. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies. other price risk.405. use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity.000 20. 2011 Printing Number of stenter machine Number of shifts per day Capacity in meters Actual processing of fabrics . The Group uses derivative financial instruments to hedge certain risk exposures.620.920 172.400. FINANCIAL RISK MANAGEMENT 35.900.000. credit risk. 35.578 1.920 172.000 1.280 hours (2010: Nil)] Actual energy delivered 1. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.000 - Under utilization of available capacity was due to normal maintenance and low demand. (a) (i) Market risk Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.200. interest rate risk.2011 Power Plant Number of engines installed Number of engines worked Number of shifts per day Generation capacity (KWh) Actual generation (KWh) 2010 10 10 3 317.823 10 10 3 317. The Board of each Group Company provides principles for overall risk management. Stitching The plant capacity of this division is indeterminable due to multi product plant involving varying run length of order lots. liquidity risk.800.357. The finance departments evaluate and hedge financial risks.meters 2010 1 2 6.

USD Other receivable .935. primarily with respect to the United States Dollar (USD) and Euro.618 7.58 Sensitivity analysis If the functional currency. at reporting date. had weakened / strengthened by 5% against the USD and Euro with all other variables held constant.460 10.296 2010 101. 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.553.Euro Short term borrowings as FE 25 import / export loans-USD Accrued mark-up on FE 25 import / export loans .330) 85. the Group's foreign exchange risk exposure is restricted to bank balances and the amounts receivable / payable from / to the foreign entities. The Group is not exposed to equity and commodity price risks.Euro The following significant exchange rates were applied during the year: Rupees per US Dollar Average rate Reporting date rate Rupees per Euro Average rate Reporting date rate 80.639 million and Rupees Nil [2010: Rupees 39.60 116.570 2.970 (4.801 993. or factors affecting all similar financial instrument traded in the market. The Group has no significant long-term interest-bearing assets. At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was: (iii) JUNE 2011 98 Nishat (Chunian) Limited and its subsidiary . The Group's exposure to currency risk was as follows: 2011 Cash at banks .001.Euro Trade and other payable .USD Trade and other payable . whether those changes are caused by factors specific to the individual financial instrument or its issuer.514) million] respectively higher / lower. Currently. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis.476.900 1. The Group uses forward exchange contracts to hedge its foreign currency risk.95 117.The Group is exposed to currency risk arising from various currency exposures. Borrowings obtained at fixed rate expose the Group to fair value interest rate risk. The Group's interest rate risk arises from long term financing and short term borrowings.63 85.128.028 344.89 84.USD Trade debts .96 124. In management's opinion. the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year. (ii) Other price risk Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk).190 6.879. when considered appropriate.377. mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments.844.USD Net exposure .27 85.329 18. the impact on profit after taxation for the year would have been Rupees 45.908 11.229 million and Rupees (25.872.070 5.535 73.USD Net exposure . Borrowings obtained at variable rates expose the Group to cash flow interest rate risk.24 104.889 13.

446.538 22.053.725.389.442 9.419 3.457.660.442 3.203 120.130 154.798 167.397 2010 Rupees 18.416.687 600.238.000 19.250. The maximum exposure to credit risk at the reporting date was as follows: 2011 Rupees Loans and advances Deposits Trade debts Other receivables Short term investment Derivative financial instrument Accrued interest Bank balances 13.860.761.221.458.710.484 1.165 The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss.350.561. a change in interest rate at the balance sheet date would not affect profit or loss of the Group.000 19. Therefore.704 1.615. Cash flow sensitivity analysis for variable rate instruments If interest rates at the year end date.044.305.396 2.060 6. profit after taxation for the year would have been Rupees 241.927 1.saving accounts Term deposit receipts Financial liabilities Long term financing Short term borrowings Fair value sensitivity analysis for fixed rate instruments 2010 Rupees 634.382.785.212 9.383 20. This analysis is prepared assuming the amounts of liabilities outstanding at balance sheet dates were outstanding for the whole year.042.729 5.175.238 1.200.000. The carrying amount of financial assets represents the maximum credit exposure.614 131.803.362.000.650.246 million) lower / higher. fluctuates by 1% higher / lower with all other variables held constant.228 JUNE 2011 99 Nishat (Chunian) Limited and its subsidiary .395 3.207.756.615 million (2010: Rupees 47.960 6. (b) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.061.075 1.2011 Rupees Fixed rate instruments Financial liabilities Long term financing Short term borrowings Floating rate instruments Financial assets Bank balances .742.890.497.254. mainly as a result of higher / lower interest expense on floating rate borrowings.200.251.872 3.073.

646 3.007.771.379.899 PACRA 2.961 1. The amount disclosed in the table are undiscounted cash flows: Contractual maturities of financial liabilities as at 30 June 2011: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued markup Contractual cash flows 6 months or less 2.855.521 PACRA 15.112 JCR-VIS 3 Moody’s 2.737 12.449.650.225.362. The Group manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities.318 JCR-VIS 12.712.954 4.219.159.391 553.465. Following are the contractual maturities of financial liabilities.947 PACRA 2.937.631 PACRA 1.876 JCR-VIS 427.808 167.570.642.760 million available borrowing limits from financial institutions and Rupees 174.954 953.509 1.937.496 PACRA 1.570.The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate: Rating Short term Long term Agency 2011 Rupees 2010 Rupees Banks Askari Bank Limited Al-Baraka Bank (Pakistan) Limited Allied Bank Limited Bank Alfalah Limited Bank Al-Habib Limited BankIslami Pakistan Limited Barclays Bank Plc Burj Bank Limited (Formerly Dawood Islamic Bank Limited) Citibank N.998. management does not expect non-performance by these counter parties on their obligations to the Group.678.826.242 PACRA 15. the Group had Rupees 6.644 7.873 PACRA 153.238 46.159.288.467.043 953.080.148. Deutsche Bank AG Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited HSBC Bank Middle East Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Samba Bank Limited Standard Chartered Bank (Pakistan) Limited Summit Bank Limited The Bank of Punjab United Bank Limited A1+ A2 A1+ A1+ A1+ A1 P-1 A-2 P-1 P-1 A-1 A1+ A-1+ A1+ P-1 A1+ A-1+ A-1+ A1+ A-1+ A1+ A-2 A1+ A-1+ AA AAA AA AA A Aa3 AA1 Aa3 A AA AA+ AA+ A1 AA+ AAAAA AA A+ AAA A AA AA+ PACRA 22.106 JCR-VIS 518.379 20.762.490 14.041.433 171 Moody’s 691.712.826.708.012.A.798 PACRA 325.119.043 953. The management believes liquidity risk to be low.446.811.769 JCR-VIS 90.064.944.250.826 Moody’s 41.832.325 million cash and bank balances.416.203 Moody’s 119.607.020.670 8.048.979 24.230.029.362.058 625.792 PACRA 441.831.159.212 1.662 239.000 30.727 23.283.178 JCR-VIS 4.856.729 The Group's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 15.600. Due to the Group's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing.761 PACRA 10.424 1.979 24.634 4.826.470.744 JCR-VIS 2.668 463.000 4.708.664 34.070 1.093 4.918.413.818 417. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.030.043 1.308 1-2 Year More than 2 Years 100 Nishat (Chunian) Limited and its subsidiary JUNE 2011 19.815.747 8.915.285 224.887 PACRA 48.096.450 .408 45. including interest payments.954 6-12 months 2.612 7.610 1.029 8.708.066.430 JCR-VIS 4.560. At 30 June 2011. Accordingly the credit risk is minimal.826.

200.660.494.660.200.852.915.305.449.708.026.045.492.159.026.961 1.442 9.362.369.038.442 9.811 9.333 1-2 Year More than 2 Years 19.805 6-12 months 2.045.122.998.305.163.240.099.335.138.108.649 6.510.372 3.798 174.2 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in financial statements approximate their fair values.586.664 953.798 174.658 1.861.061.954 8.396 3.949 6. 35.658 776.379 46.990.267 37.747 1.953.Contractual maturities of financial liabilities as at 30 June 2010: Carrying Amount Non-derivative financial liabilities: Long term financing Short term borrowings Trade and other payables Accrued mark-up Contractual cash flows 6 months or less 2. The rates of interest / mark up have been disclosed in note 6 and note 9 to these financial statements.494.417 28.739.391.996 30.826.523 5.785.794.318.938.963.043 .184.144.048 27.452 1.048 27.366.419 2.061.396 13.352.219.658 776.324.3 Financial instruments by categories At fair value through profit or loss As at 30 June 2011 Assets as per balance sheet Loans and advances Deposits Trade debts Other receivables Derivative financial instrument Accrued interest Cash and bank balances Loans and receivables Total -------------------------Rupees-----------------------3.061.408 101 Nishat (Chunian) Limited and its subsidiary JUNE 2011 Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables Financial liabilities at amortized cost Rupees 19.805 4.436.811 9.391.674.012.391.045.600 13.927 1.990.203 120. Fair value is determined on the basis of objective evidence at each reporting date.861.240.053.328.396 2. 35.203 120.417 4.714.678.990.438 The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at 30 June.053.371.761.324.927 1.761.236 10.785.805 776.824 1.419 3.

2011 Borrowings Total equity Total capital employed Rupees Rupees Rupees Percentage 27.379 36.335.009.649 1.916 6.815 36.947.130 154.546.502.614 131.890. was to maintain a gearing ratio of 75% debt and 25% equity.442 3.077.391.890.238 18.238 1.251.742.226 76.805 6.544 32.409 Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables Financial liabilities at amortized cost Rupees 19.075 1.996.075 1.651.910 5.267 776. Borrowings represent long term financing and short term borrowings obtained by the Group as referred to in note 6 and 9 respectively.614 1. Capital risk management The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.175.238 131.32 JUNE 2011 Gearing ratio 102 Nishat (Chunian) Limited and its subsidiary .497. The Group's Strategy.411 8. Total capital employed includes 'total equity' as shown in the balance sheet plus 'borrowings'.990. In order to maintain or adjust the capital structure. which was unchanged from last year.045.34 2010 26.647.251.612.325.739. This ratio is calculated as borrowings divided by total capital employed.283.497.651.175.898. the Group may adjust the amount of dividends paid to shareholders.At fair value through profit or loss As at 30 June 2010 Assets as per balance sheet Loans and advances Deposits Trade debts Other receivables Short term investment Cash and bank balances Loans and receivables Total -------------------------Rupees-----------------------131.442 3. the Group monitors the capital structure on the basis of gearing ratio.914.742.171 18.609.130 154. issue new shares or sell assets to reduce debt.492.910 5.862.362.200.200.586.658 28.890.209.460 81.176.167.996.674. Consistent with others in the industry and the requirements of the lenders.

882 million) remained unutilized at the end of the year. 2011. in accordance with the approved terms and conditions of preference share issue.50 per ordinary share) at their meeting held on 08 October. UNUTILIZED CREDIT FACILITIES The Group has total credit facilities amounting to Rupees 14.760 million (2010: Rupees 2.06 million (2010: Rupees 25. no significant rearrangements / regroupings have been made except lycra amounting to Rupees 31. GENERAL Figures have been rounded off to nearest of Rupee. CORRESPONDING FIGURES Corresponding figures have been rearranged / regrouped wherever necessary for the purpose of comparison.251. DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on 08 October. 15% (2010: 15%) preference dividend has been proposed by the Board of Directors of Holding Company for payment after approval in forthcoming Annual General Meeting. However.per ordinary share (2010: Rupees 1. spare parts and loose tools to stock-in-trade. 2011 by the Board of Directors of the Company. 41. 40. 38. 103 Nishat (Chunian) Limited and its subsidiary CHIEF EXECUTIVE DIRECTOR JUNE 2011 .873 million has been reclassified from stores. Moreover. 39.160 million) out of which Rupees 6. EVENTS AFTER THE REPORTING PERIOD The Board of Directors of the Holding Company has proposed a cash dividend for the year ended 30 June 2011 of Rupees 2/.37.030.

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