You are on page 1of 138

ANNUAL REPORT 2009

KOHINOOR TEXTILE MILLS LIMITED


A Kohinoor Maple Leaf Group Company
CONTENTS

KOHINOOR TEXTILE MILLS LIMITED

Company Profile 2
Company Information 3
Vision Statement 4
Mission Statement 4
Statement of Ethics and Business Practices 5
Statement of Strategic Objectives 6
Notice of Annual General Meeting 7
Directors’ Report 10
Key Operating and Financial Data Six Years Summary 20
Horizontal Analysis of Financial Statements 21
Vertical Analysis of Financial Statements 22
Distribution of wealth 23
Statement of Compliance with Best Practices of
Code of Corporate Governance 24
Review Report to the Members on Statement of
Compliance with Best Practices of Code of
Corporate Governance 26
Auditors’ Report 27
Balance Sheet 28
Profit and Loss Account 30
Cash Flow Statement 31
Statement of Changes in Equity 32
Notes to the Financial Statements 33
Pattern of Holding of the Shares 70

Kohinoor Textile Mills Limited


CONSOLIDATED FINANCIAL STATEMENT

Directors’ Report on Consolidated Financial Statements 74


Auditors’ Report 75
Balance Sheet 76
Profit and loss Account 78
Cash Flow Statement 79
Statement of Changes in Equity 80
Notes to the Consolidated Financial Statements 81
ANNUAL REPORT 2009

FORM OF PROXY
COMPANY PROFILE

THEN AND NOW The processing facilities at the Rawalpindi unit are
capable of dyeing and printing fabrics for the home
The Company commenced operation in 1953 as a textile market. The stitching facilities produce a
private limited company and became a public limited diversified range of home textiles for the export
company in 1968. The initial capacity of its market. Both the dyeing and stitching facilities are
Rawalpindi unit comprised 25,000 spindles and being augmented to take advantage of greater market
600 looms. Later, fabric processing facilities were access.
added and spinning capacity was augmented.
Additional production facilities were acquired on Fully equipped laboratory facilities for quality control
the Raiwind-Manga Road near Lahore in District and process optimization have been up at all three
Kasur and on the Gulyana Road near Gujar Khan, sites. The Company has been investing heavily in
by way of merger. Information Technology, training of its human
resources and preparing its management to meet
The Company’s production facilities now comprise the challenges of market integration.
151, 902 ring spindles capable of spinning a wide
rang of counts using cotton and Man-made fibers. Kohinoor Textile Mills Limited continues to ensure
The weaving facilities at Raiwind comprise 204 that its current competitive position is maintained
looms capable of weaving wide range of greige as well as supporting the ongoing improvement
fabrics. process in our endeavour to maintain world best
Kohinoor Textile Mills Limited

practice manufacturing.

TANGIBLE FIXED ASSETS SHARE HOLDER'S EQUITY


4,500 8,000
3,971 3,973 4,140 7,293
4,000 7,000
3,561
3,500
6,000
RUPEES IN MILLIONS

RUPEES IN MILLIONS

3,000 4,986
2,666 5,000 4,717 4,707
2,500
2,077 4,000 3,799
2,000
2,869
2 1,500
3,000

1,000 2,000
ANNUAL REPORT 2009

500 1,000
- -
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

FIXED ASSETS EQUITY


COMPANY INFORMATION

BOARD OF DIRECTORS

MR. TARIQ SAYEED SAIGOL Chairman


MR. TAUFIQUE SAYEED SAIGOL Chief Executive
MR. SAYEED TARIQ SAIGOL
MR. WALEED TARIQ SAIGOL
MR. KAMIL TAUFIQUE SAIGOL
MR. ZAMIRUDDIN AZAR
MR. ABDUL HAI MEHMOOD BHAIMIA

AUDIT COMMITTEE BANKERS


MR. ZAMIRUDDIN AZAR CHAIRMAN AL BARAKA ISLAMIC BANK B.S.C. (E.C.)
MR. SAYEED TARIQ SAIGOL MEMBER ALLIED BANK LIMITED
MR. WALEED TARIQ SAIGOL MEMBER
ASKARI BANK LIMITED
MR. KAMIL TAUFIQUE SAIGOL MEMBER
BANK ALFALAH LIMITED
CHIEF FINANCIAL OFFICER FAYSAL BANK LIMITED
MS. BUSHRA NAZ MALIK MCB BANK LIMITED
MEEZAN BANK LIMITED
COMPANY SECRETARY
NATIONAL BANK OF PAKISTAN
MR. MUHAMMAD ASHRAF
NIB BANK LIMITED
INTERNAL AUDITOR SILK BANK LIMITED
MR. ZEESHAN AHMAD STANDARD CHARTERED BANK (PAKISTAN) LIMITED
HSBC BANK MIDDLE EAST LIMITED
AUDITORS THE BANK OF PUNJAB
M/S. RIAZ AHMAD & COMPANY
UNITED BANK LIMITED
CHARTERED ACCOUNTANTS

REGISTERED OFFICE MILLS

Kohinoor Textile Mills Limited


42-LAWRENCE ROAD, LAHORE. • PESHAWAR ROAD, RAWALPINDI.
TEL: (92-042) 36302261-62 TEL: (92-051) 5473940-3 FAX: (92-051) 5471795
FAX: (92-042) 36368721
• 8th K.M., MANGA RAIWIND ROAD, DISTRICT KASUR.
SHARE REGISTRAR TEL: (92-042) 35394133-35 FAX: (92-042) 35394132
VISION CONSULTING LIMITED • GULYANA ROAD, GUJAR KHAN, DISTRICT RAWALPINDI.
3-C, LDA FLATS, LAWRENCE ROAD, LAHORE. TEL: (92-0513) 564472-74 FAX: (92-0513) 564337
TEL: (92-042) 36375531- 36375339 WEB SITE: www.kmlg.com
FAX: (92-042) 36374839 Note: KTML financial statements are also available at
E-Mail: info@vcl.com.pk & vclcom@yahoo.com
WEB SITE: www.vcl.com.pk
above website. 3
ANNUAL REPORT 2009
Vision Statement
The Kohinoor Textile Mills Limited stated vision is to
achieve and then remain as the most progressive and profitable
Company in Pakistan in terms of industry standards and
stakeholders interest.
Kohinoor Textile Mills Limited

Mission Statement
The Company shall achieve its mission through a continuous
process of having sourced, developed, implemented and managed
4 the best leading edge technology, industry best practice, human
resource and innovative products and services and sold these to
ANNUAL REPORT 2009

its customers, suppliers and stakeholders.


Statement of Ethics and
Business Practices
2009 - 2010
The following principles constitute the code of conduct which all Directors and employees
of Kohinoor Textile Mills Limited are required to apply in their daily work and observe
in the conduct of Company’s business. While the Company will ensure that all employees
are fully aware of these principles, it is the responsibility of each employee to implement
the Company’s policies. Contravention is viewed as misconduct.
The code emphasizes the need for a high standard of honesty and integrity which are vital
for the success of any business.
PRINCIPLES
1. Directors and employees are expected not to engage in any activity which can cause
conflict between their personal interest and the interest of the Company such as interest
in an organization supplying goods/services to the Company or purchasing its products.
In case a relationship with such an organization exists the same must be disclosed to
the Management.
2. Dealings with third parties which include Government officials, suppliers, buyers, agents
and consultants must always ensure that the integrity and reputation of the Company
is not in any way compromised.
3. Directors and employees are not allowed to accept any favours, gifts or kickbacks from
any organization dealing with the Company.

4. Directors and employees are not permitted to divulge any confidential information relating
to the Company to any unauthorized person. Nor should they issue any misleading

Kohinoor Textile Mills Limited


statements pertaining to the affairs of the Company.
5. The Company has strong commitment to the health and safety of its employees and
preservation of environment and the Company will persevere towards achieving continuous
improvement of its HSE performance by reducing potential hazards preventing pollution
and improving awareness. Employees are required to operate the Company’s facilities
and processes keeping this commitment in view.
6. Commitment and team work are key elements to ensure that the Company’s work is
5
carried out effectively and efficiently. Also all employees will be equally respected and
actions such as sexual harassment and disparaging remarks based on gender, religion,
ANNUAL REPORT 2009

race or ethnicity will be avoided.


Statement of
Strategic Objectives
2009 - 2010
Following are the main principles constitute the strategic objectives of Kohinoor
Textile Mills Limited:

1 Effective use of available resources and improved capacity utilization of the


Company's production facilities;

2 Modernization of production facilities in order to ensure the most effective


production;

3 Effective marketing and innovative concepts;

4 Implementation of effective technical and human resource solutions;

5 Strengthening independence in terms of secure supply of low-cost services and


resources, including energy supply, transportation and logistics services;

6 Explore alternative energy resources;

7 Further improvements in corporate code governance through restructuring of


assets and optimization of management processes;

8 Personnel development, creating proper environment for professional growth


Kohinoor Textile Mills Limited

of highly skilled professionals, ensuring safe labor environment, competitive


staff remuneration and social benefits in accordance with scope and quality
of their work;

9 Compliance with local and international environmental and quality management


standards, implementation of technologies allowing to comply with the limitations
imposed on pollutant emissions; and
6

10 Implementation of projects in social and economic development of communities.


ANNUAL REPORT 2009
NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 41st Annual General Meeting of the members of KOHINOOR TEXTILE MILLS
LIMITED (“Company”) will be held on Thursday, October 29, 2009 at 3:00 p.m. at its Registered Office,
42-Lawrence Road, Lahore, to transact the following business:-

Ordinary Business:-

1. To confirm the minutes of the Annual General Meeting held on October 30, 2008.

2. To receive, consider and adopt the audited accounts of the Company for the year ended
June 30, 2009 together with the Directors' and Auditors' Reports thereon.

3. To appoint Auditors for the ensuing year and fix their remuneration.

Special Business:-

4. To consider and approve investment in associated company and if thought fit to pass the following
resolution as a special resolution with or without modification under section 208 of the Companies
Ordinance, 1984:-

Resolved unanimously, “The Company be and is hereby authorized under section 208 of the
Companies Ordinance, 1984 to make investment in the form of loan / advances to Maple Leaf
Cement Factory Limited, subsidiary of the Company, up to an aggregate sum of Rs. 200 (M)
(Rupees Two Hundred Million only) for a period of two years commencing from 01 November,
2009 to 31 October, 2011 (both days inclusive) and at a mark-up rate not less than the average
borrowing cost of the Company.”

Further resolved, “Mr. Taufique Sayeed Saigol, Director/Chief Executive of the Company and /
or Mr. Muhammad Ashraf, Secretary of the Company be and is / are hereby authorized to give
effect to the above resolution and take all necessary steps as required under law or otherwise
and to sign and execute documents etc. for and on behalf of the Company in relation to the above
loan and advances.”

Other Business:-

5. To transact any other business with the permission of the Chair.

BY ORDER OF THE BOARD


Kohinoor Textile Mills Limited

(MUHAMMAD ASHRAF)
Lahore: October 08, 2009 Company Secretary

NOTES:
7
1. Share transfer books of the Company will remain closed from 21-10-2009 to 29-10-2009 (both days
ANNUAL REPORT 2009

inclusive). Physical transfers/CDS Transaction IDs received in order at Share Registrar of the Company
i.e. M/s. Vision Consulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore upto the close of business
on October 20, 2009 will be considered in time.
2. A member eligible to attend and vote at this meeting may appoint another member as his/her proxy
to attend and vote instead of him/her. Proxies in order to be effective must reach the Company's
Registered Office not less than 48 hours before the time for holding the meeting.
3. CDC Shareholders, entitled to attend and vote at this meeting, must bring with them their Computerized
National Identity Cards / Passports in original along with Participants' ID Numbers and their Account
Numbers to prove his/her identity, and in case of Proxy, must enclose an attested copy of his/her CNIC
or Passport. Representatives of corporate members should bring the usual documents required for
such purpose.
4. Shareholders are requested to immediately notify the change in their addresses, if any, to the Company's
Share Registrar M/s. Vision Consulting Ltd, 3-C, LDA Flats, Lawrence Road, Lahore.
5. Members, who have not yet submitted photocopies of their Computerized National Identity Cards to
our Share Registrar, are requested to send the same at the earliest.
STATEMENT UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984.

Material facts to be transacted at the annual general meeting concerning the special business related to
loan / advances to Maple Leaf Cement Factory Limited are given below:-

(i) Name of the investee company Maple Leaf Cement Factory Limited (MLCF)

(ii) Amount of loan / advances Rupees Two Hundred Million only

(iii) Purpose of loan / advances In order to meet the working capital and other
requirements of the investee company.

(iv) In case any loan had already been provided NIL


or loan has been written off to the said
investee company, the complete details of
the said loan;

(v) A brief obout the financial position of the Based on the audited financial statements for the
investee company on the basis of last financial year ended 30 June, 2009, the financial
published financial statements; position of MLCF is as under:

Particulars Amount
Rupees (000)

Paid up capital : 4,264,108


Kohinoor Textile Mills Limited

General reserves : 1,400,000


Long term loans / leases
and other liabilities : 8,977,573
Sponsors loans : Nil
Long term deposits : 2,580
Turnover : 15,251,374
Accumulated losses : (1,673,584)
Surplus on revaluation of
fixed assets : Nil
8 Net current assets : (4,748,007)
Profit / (loss) after tax : (982,970)
ANNUAL REPORT 2009

Current ratio : 0.52


Earning per share : Rs. (2.78)
Break up value of share : Rs. 15.75
(vi) Rate of mark-up to be charged; Mark-up will be charged at a rate which shall not be
less than the average borrowing cost of the Company.

(vii) Particulars of collateral security to be Management of the Company does not consider it
obtained from borrower and; if not needed, necessary to obtain direct collateral security from
justification thereof; MLCF, since MLCF is a subsidiary of the Company
and under common management and control.

(viii) Source of funds from where loan / advance The Company will use its surplus funds or available
will be given; credit facilities to make loan / advances, if any.

(ix) Repayment schedule; The loan / advances would be for a period from 01
November, 2009 to 31 October, 2011 (both days
inclusive). MLCF will make payment from time to
time subject to availability of funds within the
stipulated period. However, two years period of
repayment is renewable on same terms and
conditions as approved by the Board of Directors of
both Companies.

(x) Benefits likely to accrue to the Company The Company will receive mark up on the actual
and the shareholders from loan / advance. amount advanced to subsidiary company, the rate
of which shall not be less than average borrowing
cost of the Company. Therefore, there would be no
financial loss to the Company. The financial position
of subsidiary company will be improved and as a
result the holding company will be benefited.

(xi) Interest of Directors and their relatives in None of the Directors of the Company and their
the investee company relatives have interest in this item of business except
their shareholdings in subsidiary company.

Kohinoor Textile Mills Limited

9
ANNUAL REPORT 2009
DIRECTORS’ REPORT TO THE SHAREHOLDERS

The Directors feel pleasure in presenting the 41st annual report along with audited financial statements for
the year ended 30th June, 2009.

OPERATIONS’ REVIEW

The financial year ended 30-6-2009 saw


some of the most difficult conditions under
which the Company had to operate since its
inception. Global recession in the export
markets, particularly in the U.S.A. and Europe
drastically reduced demand for our goods
and adverse economic conditions at home
had a negative impact on the cost line which
resulted in reduction in operating margins.
Continued power and gas supply disruptions
and the ongoing war on terror marred
operations and affected buyer confidence
adversely.

Frequent power shut downs, gas load shedd-


ing, price hike in input costs and high interest
rates which were necessitated owing to
monetary tightening with a view to controlling
inflation, led to a much higher cost of doing
business and the textile sector particularly,
has had to face the consequences which are
reflected in the less than satisfactory financial
results of the Company.

However, despite these adverse circums-


tances some of the initiatives taken by the
Company in the last few years had a salutary
effect on the performance. The electric
generators based on natural gas provided
stable and reliable power supply but during
the winter season output was reduced due
to severe gas load shedding. The moderni-
Kohinoor Textile Mills Limited

zation in the spinning plants, in particular


induction of compact spinning at both
Rawalpindi and Gujar Khan proved to be a
very useful initiative and saved the Company
from a crisis situation which otherwise
generally prevailed at most spinning facilities
all over Pakistan. Sluggish activity in the yarn
markets and resultant decrease in sale prices
with increased cost of raw materials seriously
affected economics of the spinning business.
10
Operating results in the weaving segment improved during the period. Projected profitability was achieved
ANNUAL REPORT 2009

despite unprecedented increase in wages, gas tariff and financial charges. B grade production and wastage
had been reduced which had a positive effect on profit margins.
Cloth processing and cut and sew facilities
were unable to achieve their performance
targets due to increase in prices of grey fabric
and upward movement in the price of
accessories. However, the main reason for
less than satisfactory performance in this
division is due to the over all price deflation
in export markets and reduced demand due
to global recession which resulted in under
utilization of available capacity. The efforts
to market goods, direct to retailers are meeting
with some success and sales growth can be
safely envisaged during the current year. The
effluent treatment plant under construction
is about to be commissioned which will allow
the Company to add to its customer base.
This will be a major milestone as certain large retailers will only place orders with companies who are
compliant in all aspects of environmental best practices.

FINANCIAL REVIEW G.P % TO SALE

25.00%
During the year under review the Company achieved
sales volume of Rs. 8,458.899 million (2008: 20.00%
15.77% 15.39%
14.80% 14.89%
7,558.322 million) showing an increase of 11.92%. 14.26% 14.64%
PERCENTAGE

15.00%

Gross profit amounted to Rs. 1,259.906 million (2008: 10.00%


1,162.700 million) showing an increase of 8.36% over
the last year. Profit from operations for the year, 5.00%

amounted to Rs. 723.554 million (2008: 1,013.140 0.00%


2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
million). YEARS

Financing costs increased to Rs. 1,260.230 million


as compared to Rs. 882.335 million for the last year SALES TREND
which is the main factor eroding profit margins. 9,000

8,000
8,459
7,558
6,904 7,140
7,000

The Company also incurred a cost of Rs. 196.057 6,000 5,538


RUPEES IN MILLIONS

million owing to winding up cost of currency swap 5,000 4,695

options which were considered by the Management 4,000

3,000
as inappropriate to be continued owing to the country’s 2,000
macro economic imbalances which may result in

Kohinoor Textile Mills Limited


1,000

further depreciation of the Pakistani rupee. -


2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
SALES
After adjusting other operating income and financial
cost, loss before taxation for the year amounted to
Rs. 536.676 million and loss after taxation amounted DEBT : EQUITY RATIO

to Rs. 439.811 million. 100


90 18
27
33 37 35 42
80

There being loss for the year and nil Earnings per 70
60
Share, the Directors express inability to pay any
PERCENTAGE

50

dividend for the year. However, Management of the 40


30
82
67 63
73
65 58 11
Company is committed to ensure efficient operation 20
ANNUAL REPORT 2009

of the Company to deliver value to the customers and 10


0
other stakeholders. 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

EQUITY % DEBT %
The Directors recommend as under:
Rs. 000
Loss before taxation (536,676)
Provision for taxation (96,865)
Loss after taxation (439,811)
Un-appropriated profit brought forward 10,063

(429,748)

INFORMATION TECHNOLOGY
The Company is currently utilizing Oracle e-Business
suite 11i for its record keeping and financial reporting,
which is world re-nowned ERP solution for financial
systems. The Company is in process of
upgrading its ERP solution with the latest release of
Oracle e-Business suite R12 to adopt best business
practices for its financial reporting. The Company
maintains its financial data by adopting Oracle
recommended standard practices for the integrity
and reliability of its data.
The Company is also developing in house soft ware
solutions which are fully integrated with Oracle
Financials to provide better reporting and paper free
environment.
SOCIAL COMPLIANCE AND HUMAN RESOURCES
The Company believes that our people are our asset.
Highly skilled and motivated workforce is essential
for success. The management remains committed
to ensuring that all employees are treated with dignity
and respect.
Human resource policy has been based on the
underlying values of fairness, merit, equal opportunity
and social responsibility. These values manifest
themselves in the Company’s polices of recruitment,
performance appraisal, training and development,
health and safety and industrial relations.

Complying with our human resource polices, the Company does not employ any child Labor and is an
equal opportunity employer. Company maintains a high standard of employees working and living conditions;
providing free, safe and clean residential facilities, utilities medical acre, life insurance and education.
Kohinoor Textile Mills Limited

The Company has taken a number of measures to develop its employees to meet the challenges of today’s
competitive corporate world. The Company has invested extensively in employee development programs
by providing technical, computer, management,
health & safety training in our in house training facility
instead with the latest audio / visual equipment.
The Company is committed to comply with
international standards and is a Social Accountability
Standard SA-8000: 2001 certificated company.
SOCIAL SECTOR PROJECTS
12
Currently, the Company is playing a major role in the
ANNUAL REPORT 2009

construction of Sayeed Saigol Cardiac Complex at


the Gulab Devi Chest Hospital, Lahore by donating
fur ther a sum of Rs. 20.755 million during
the year. Civil works have been fully completed and the complex shall be handed over to the Management
of Gulab Devi Chest Hospital Lahore during the ensuing year.

QUALITY MANAGEMENT SYSTEMS

Conforming to the Company’s Quality Management


Systems, Product quality is consistently maintained
and monitored at every stage. Yarn fabric is tested
in most modern textile testing laboratories working
at all divisions. These laboratories are equipped with
latest equipments and are environmentally control
to the most stringent of international standards.
Quality control in made ups production facilities is
based on AQL system, ensuring high control on
quality of products. Internal / external audits and
management reviews, clearly demonstrate control
improvements and Company’s long term commitment
to improve its management system to any reputed
international standard.

Your Company is ISO-9001:2000 certificated. The surveillance audits are being regularly and successfully
completed on six monthly bases.

Kohinoor Textile Mills Limited

13
ANNUAL REPORT 2009
SAFETY, HEALTH AND ENVIRONMENT

Your Company provides and maintains, so far as practicable equipment, systems and working conditions
which are safe and without risk to the health of all employees, visitors, contractors and public. Management
has maintained its strong commitment to a safe environment in its operations
through out the year.
The Company is well aware of the relation ship between the textile production and
related environment issues. Keeping in view the ethical obligations to the environment,
the working on implementation of ISO-14001-2004 “Environment Management
System” the documentation and environment monitoring process has been completed
and certification process is targeted to be completed by the end of current year.
In an attempt to cut our carbon footprints, Company has planned to install open
end spinning unit. This will also result in bringing the value added business to the
Company. More over, installation of effluent treatment plant (ETP) is at final stages
and is expected to be completed by end of November 2009.
The Company takes care and applies appropriates procedures to design
/manufacture textile products so as to ensure that no harmful substances are
present in its products. It adopts recognized “environment friendly” working methods
and makes careful selection of dye stuffs, optimizes dye baths, uses chlorine free
bleaching techniques, low formaldehyde finishing methods and heavy metal free
materials. By employing these recognized methods, the Company produces safe
products and has been able to comply with requirements of European legislation
regarding use of azo dyes and been certificated under OEKO Tex 100 Standard, confirming
the Company’s commitment to using harmless dyes and chemicals in its production processes.
Kohinoor Textile Mills Limited

14
ANNUAL REPORT 2009
SECURITY

Kohinoor is dedicated to the principles of social


responsibility in the workplace. We believe in the
dignity of our employees, are convinced that all
employees must work in safe and healthful
workplaces, and are committed to workplace
practices that are not harmful to the environment we
all share.

Therefore, KTML participates in all social responsibility


education and monitoring activities. KTML supports
United State’s Customs Trade Partnership against
Terrorism (C- TPAT) and is committed to improve
security conditions within the organization as well as throughout its supply chain from the factory to
overseas. KTML is proud to be a partner of Customs Trade Partnership against Terrorism (C - TPAT) and
is a certified Company and is meeting all requirements of this security standard.

Kohinoor Textile Mills Limited

15
ANNUAL REPORT 2009
BUSINESS PROCESS REENGINEERING

Your company is in process to implement the


methodologies to redesign business process. The
methodology includes the five activities: Prepare for
reengineering, Map and analyze as-is-process, Design
To-be process, Implement reengineered process,
learn and Improve continuously.

LIQUIDITY MANAGEMENT

Regarding liquidity management your company has


ability to generate the cash when it is needed.
Resources are available to tap into cash balances
for the repayment of debts and to convert other
assets or extend other liabilities into cash for use in
keeping the entity solvent.

FUTURE PROSPECTS

With a view to constantly upgrading the production


capability of the Company so as to improve
productivity, quality and improved market prospects,
it is planned to under the following:-

Spinning:

a) Increase compact spinning at both Rawalpindi and Gujar Khan projects.


b) To improve productivity and achieve greater diversification in spin plan, two auto winders will
be added.
c) Replacement of obsolete draw frames at Rawalpindi.
d) To install open end spinning unit for recycle and consumption of 100% waste to cut carbon
Kohinoor Textile Mills Limited

footprints.

Weaving:

Financial feasibility will be prepared to increase capacity at the weaving Division.

Power Division:

16 Due to increase in electricity demand at Rawalpindi an additional 1 MW gas engine is to be added at


Rawalpindi.
ANNUAL REPORT 2009

The above steps are also necessary for the recovery of losses.
COMPLIANCE OF CODE OF CORPORATE GOVERNANCE

The Board of Directors periodically reviews the Company’s strategic direction. Business plans and targets
are set by the Chief Executive and reviewed by the Board. The Board is committed to maintain a high
standard of corporate governance. The Board has reviewed the Code of Corporate Governance and confirms
that:-

a) The financial statements, prepared by the


management of the Company, present fairly its
state of affairs, the result of its operations, cash
flows and change in equity.

b) Proper books of account of the Company have


been maintained.

c) Appropriate accounting policies have been


consistently applied in preparation of financial
statements and accounting estimates are based
on reasonable and prudent judgment.

d) International Accounting Standards, as applicable in Pakistan, have been followed in preparation of


financial statements and any departure there from, has been adequately disclosed.

e) The system of internal control is sound in design and has been effectively implemented and monitored.

f) There are no significant doubts upon the Company’s ability to continue as a going concern.

g) There has been no material departure from the best practices of corporate governance, as detailed
in the listing regulations of the stock exchanges.

h) Outstanding taxes and other government levies are given in related note(s) to the audited accounts.

i) Key operating and financial data of last six years is annexed.

Value of investment of provident fund trust, based on their unaudited accounts of June 30, 2009 is as
under:-
(Rs. in thousand)
Provident fund 186,869

DIRECTORS AND BOARD MEETINGS

Kohinoor Textile Mills Limited


During the year, there is one change in the Board of Directors. Mrs. Shehla Tariq Saigol resigned from the
Board and Mr. Kamil Taufique Saigol was appointed as Director in her place to fill the casual vacancy for
the remainder of the term.

17
ANNUAL REPORT 2009
During the year under report, the Board of Directors met four times. The number of meetings attended by
each Director during the year is shown below: -
Name Meetings Attended
Mr. Tariq Sayeed Saigol 3
Mr. Taufique Sayeed Saigol 3
Mr. Sayeed Tariq Saigol 3
Mr. Waleed Tariq Saigol 3
Mr. Kamil Taufique Saigol 1
Mr. Zamiruddin Azar 4
Mr. Abdul Hai Mehmood Bhaimia 4

Leave of absence was granted to Directors who could not attend the Board meetings.

CRITERIA TO EVALUATE BOARD PERFORMANCE

Following are the main criteria:

1. Financial policies reviewed and updated;


2. Capital and operating budgets approved annually;
3. Board receives regular financial reports;
4. Procedure for annual audit;
5. Board approves annual business plan;
6. Board focus on goals and results;
7. Availability of board guidelines to management;
8. Regular follow up to measure the impact of boards decisions;
9. Assessment to ensure compliance with code of ethics and corporate governance.

AUDIT COMMITTEE

Name Designation

Mr. Zamiruddin Azar Chairman


Mr. Sayeed Tariq Saigol Member
Mr. Waleed Tariq Saigol Member
Mr. Kamil Taufique Saigol Member

The Main terms of reference of the Audit Committee of the


Company include the following:
Kohinoor Textile Mills Limited

a. Determination of appropriate measures to safeguard the Company’s assets;

b. Review of preliminary announcements of results prior to publication;

c. Review of quarterly, half-yearly and annual financial statements of the Company, prior to their approval
by the Board of Directors, focusing on:

• major judgmental areas;


18
• significant adjustments resulting from the audit;
• the going-concern assumption;
ANNUAL REPORT 2009

• any changes in accounting policies and practices;


• compliance with applicable accounting standards; and
• compliance with listing regulations and other statutory and regulatory requirements.
d. Ensuring coordination between the internal and external auditors of the Company;

e. Review of the scope and extent of internal audit and ensuring that the internal audit function has
adequate resources and is appropriately placed within the Company;

f. Ascertaining that the internal control system including financial and operational controls, accounting
system and reporting structure are adequate and effective;

g. Instituting special projects, value for money studies or other investigations on any matter specified
by the Board of Directors;

i. Monitoring compliance with the best practices of corporate governance and identification of significant
violations thereof; and

j. Consideration of any other issue or matter as may be assigned by the Board of Directors.

TRADE OF COMPANY’S SHARES

During the financial year no share transfers involving Directors, Company Secretary, CFO and Executives
of the Company (including their spouses and minor children) were reported.

PATTERN OF SHAREHOLDING

The statement of shareholding of the Company as at June 30, 2009, is annexed. This statement is in
accordance with the Code of Corporate Governance and Companies Ordinance, 1984.

AUDITORS

The Auditors of the Company M/s. Riaz Ahmad & Company, Chartered Accountants, have retired and
offered their services again. The Audit Committee has recommended their appointment as Auditors of the
Company for the accounting year ending June 30, 2010.

ACKNOWLEDGMENT

The Directors are grateful to the Company’s members, financial institutions, customers and employees
for their cooperation and support. They also appreciate the hard work and dedication of the employees
working at various divisions.

For and on behalf of the Board


Kohinoor Textile Mills Limited

Lahore: September 26, 2009 TAUFIQUE SAYEED SAIGOL


Chief Executive

19
ANNUAL REPORT 2009
KEY OPERATING AND FINANCIAL DATA
SIX YEARS SUMMARY
2008-2009 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004
9-Months
Net sale (Rs. 000) 8,458,899 7,558,322 7,140,167 6,903,625 4,695,280 5,537,755
Profitability(Rs.000)
Gross Profit 1,259,906 1,162,700 1,045,526 1,021,807 669,444 873,030
Operating profit 723,554 1,013,140 575,658 803,056 320,804 597,039
Profit / (Loss) before tax (536,676) 130,805 (28,293) 354,984 147,598 444,793
Provision for income tax (96,865) 134,325 11,529 56,780 59,071 81,626
Profit / (Loss) after tax (439,811) (3,520) (39,822) 298,204 88,527 363,167
Financial Position (Rs.000)
Tangible fixed assets-net 4,140,233 3,972,540 3,971,021 3,561,259 2,666,186 2,077,025
Investment & Other assets 2,549,406 3,785,561 5,965,967 3,839,313 2,979,365 3,311,615
6,689,639 7,758,101 9,936,988 7,400,572 5,645,551 5,388,640
Current assets 5,131,884 5,757,221 4,547,065 3,939,417 3,170,105 3,169,575
Current liabilities 6,762,527 5,477,572 4,231,049 3,855,596 3,106,544 2,780,693
Net working capital (1,630,643) 279,649 316,016 83,821 63,561 388,882
Capital employed 5,058,996 8,037,750 10,253,004 7,484,393 5,709,112 5,777,522
Less: Redeemable Capital,
long term loan
& other liabilities 2,190,079 3,052,128 2,959,093 2,776,985 1,910,160 1,060,387
Share holders Equity 2,868,917 4,985,622 7,293,911 4,707,408 3,798,952 4,717,135
Represented By:
Share capital 1,455,262 1,455,262 1,455,262 1,058,374 962,158 801,798
Reserves & un-app. Profit 150,063 2,266,768 4,575,057 3,649,034 2,836,794 3,915,337
Surplus on revaluation of
investment property 1,263,592 1,263,592 1,263,592 - - -
2,868,917 4,985,622 7,293,911 4,707,408 3,798,952 4,717,135
Investors information
Gross Profit to sales (%age) 14.89 15.39 14.64 14.80 14.26 15.77
Net Profit to sales (%age) (5.20) (0.05) (0.56) 4.32 1.89 6.56
Profit magin (0.05) (0.00) (0.01) 0.04 0.02 0.07
Debt : equity ratio 48 : 52 35 : 65 27 : 73 37 : 63 33 : 67 18 : 82
Current ratio 0.76 1.06 1.07 1.02 1.02 1.14
Acid test ratio 0.45 0.69 0.59 0.47 0.51 0.69
Breakup value per share
of Rs.10 each 19.71 34.26 50.12 44.48 39.48 58.83
Earning per share (3.02) (0.02) (0.32) 2.82 0.93 4.53
Dividend
Bonus - - - 10.00 10.00 10.00
Average collection period 51.58 58.18 49.83 40.39 45.80 17.36
Inventory turn over 4.17 3.73 3.62 4.32 4.08 10.86
Average age of inventory 87.53 98.09 100.70 84.41 89.39 33.71
Summary of Cash flows
Net cash flow from operating activities 110,909.00 (51) (215,658) (226,700) 176,304 293,200
Net cash flow from investing activities (649,519.00) (776,196) (1,155,933) (636,823) (1,320,706) (189,813)
Net cash flow from financing activities 543,520.00 787,903 998,512 1,151,994 1,147,547 (90,600)
Kohinoor Textile Mills Limited

Net change in cash and cash equivalents 4,910 11,656 (373,079) 288,471 3,145 12,787
Quantitative Data
Yarn (Kgs "000") :
Production (cont. into 20s)
KTM Division 35,298 36,605 33,388 31,223 22,675 29,601
KGM Division 26,318 28,899 26,028 23,680 15,026 19,321
61,616 65,504 59,416 54,903 37,701 48,922
Sales/Tran.for wvg.(actual count)
KTM Division 6,042 6,790 6,788 7,595 5,461 7,784
KGM Division 2,987 4,265 3,862 3,639 2,192 2,575
9,029 11,055 10,650 11,234 7,653 10,359
20 Cloth (Linear meters "000"):
Processing (Rawalpindi Division)
ANNUAL REPORT 2009

Production 30,626 22,988 27,358 30,855 17,623 22,003


Sales 28,783 23,581 26,768 21,860 16,991 21,443
Weaving (Raiwind Division)
Production 22,727 21,986 20,806 20,090 16,409 21,771
Sales 23,316 22,220 21,094 20,942 16,267 20,791
HORIZONTAL ANALYSIS OF FINANCIAL STATEMENTS

% change % change
2009 2008 2007 2009 Vs 2008 2009 Vs 2007
Rupees in thousand
Balance Sheet

Total equity 2,868,917 4,985,622 7,293,911 (42.46) (60.67)


Total non-current liabilities 2,190,079 3,052,128 2,959,093 (28.24) (25.99)
Total current liabilities 6,762,527 5,477,572 4,231,049 23.46 59.83

Total equity and liabilities 11,821,523 13,515,322 14,484,053 (12.53) (18.38)

Total non-current assets 6,689,639 7,758,101 9,936,988 (13.77) (32.68)


Total current assets 5,131,884 5,757,221 4,547,065 (10.86) 12.86
Total assets
11,821,523 13,515,322 14,484,053 (12.53) (18.38)

Profit and Loss Account

Net sales 8,458,899 7,558,322 7,140,167 11.92 18.47


Cost of sales 7,198,993 6,395,622 6,094,641 12.56 18.12

Gross profit 1,259,906 1,162,700 1,045,526 8.36 20.50


Selling and distribution expenses 464,848 381,161 372,793 21.96 24.69
Administrative expenses 175,965 149,542 135,347 17.67 30.01
Other operating expenses 34,281 22,158 12,412 54.71 176.19
Other operating income 138,742 403,301 50,684 (65.60) 173.74

Profit from operations 723,554 1,013,140 575,658 (28.58) 25.69

Kohinoor Textile Mills Limited


Finance cost 1,260,230 882,335 603,951 42.83 108.66

Profit/ (Loss) before taxation (536,676) 130,805 (28,293) (510.29) 1,796.85


Provision for taxation (96,865) 134,325 11,529 (172.11) (940.19)

Loss after taxation (439,811) (3,520) (39,822) 12,394.63 1,004.44

21
ANNUAL REPORT 2009
Maple Leaf Cement
Maple
Factory
Leaf Limited
CementMaple
Factory
Leaf Limited
CementMaple
Factory
Leaf Limited
CementMaple
Factory
Leaf Limited
Cement Factory
Maple Limited
Leaf Cement Factory Limited

VERTICAL ANALYSIS OF FINANCIAL STATEMENTS

2009 % 2008 % 2008 %


Rupees in thousand
Balance Sheet

Total equity 2,868,917 24.27 4,985,622 36.89 7,293,911 50.36


Total non-current liabilities 2,190,079 18.53 3,052,128 22.58 2,959,093 20.43
Total current liabilities 6,762,527 57.21 5,477,572 40.53 4,231,049 29.21

Total equity and liabilities 11,821,523 100.00 13,515,322 100.00 14,484,053 100.00

Total non-current assets 6,689,639 56.59 7,758,101 57.40 9,936,988 68.61


Total current assets 5,131,884 43.41 5,757,221 42.60 4,547,065 31.39

Total assets 11,821,523 100.00 13,515,322 100.00 14,484,053 100.00

Profit and Loss Account

Net sales 8,458,899 100.00 7,558,322 100.00 7,140,167 100.00


Cost of sales 7,198,993 85.11 6,395,622 84.62 6,094,641 85.36

Gross profit 1,259,906 14.89 1,162,700 15.38 1,045,526 14.64


Selling and distribution expenses 464,848 5.50 381,161 5.04 372,793 5.22
Administrative expenses 175,965 2.08 149,542 1.98 135,347 1.90
Other operating expenses 34,281 0.41 22,158 0.29 12,412 0.17
Other operating income 138,742 1.64 403,301 5.34 50,684 0.71

Profit from operations 723,554 8.55 1,013,140 13.40 575,658 8.06


Finance cost 1,260,230 14.90 882,335 11.67 603,951 8.46
Kohinoor Textile Mills Limited

Profit/ (Loss) before taxation (536,676) (6.34) 130,805 1.73 (28,293) (0.40)
Provision for taxation (96,865) (1.15) 134,325 1.78 11,529 0.16

Loss after taxation (439,811) (5.20) (3,520) (0.05) (39,822) (0.56)

22
ANNUAL REPORT 2009
DISTRIBUTION OF WEALTH
2009 2008
Rs in thousand % age Rs in thousand % age

Wealth Generation
Net sales 8,458,899 98.39% 7,558,322 99.12%
Other operating income 138,742 1.61% 067,043 0.88%

8,597,641 100.00% 7,625,365 100.00%

Wealth Distribution
Cost of sales (Adjusted) 5,916,066 68.81% 5,632,748 73.87%
Marketing, selling and
administration expenses 558,204 6.49% 455,876 5.98%
Employees' remuneration 807,226 9.39% 615,995 8.08%
Financial charges 1,260,230 14.66% 882,335 11.57%
Government taxes
(includes income tax) 55,915 0.65% 38,411 0.50%

8,597,641 100.00% 7,625,365 100.00%

69% 74%

Cost of sales (Adjusted) Cost of sales (Adjusted)

Kohinoor Textile Mills Limited


6% 6%

Marketing, selling Marketing, selling


and administration and administration
9% 8%

Employees’ Employees’
Remuneration Remuneration

15% 12%

Financial Charges Financial Charges


23
0.50%
ANNUAL REPORT 2009

1%

Government taxes Government taxes


(inclides income tax) (inclides income tax)
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE
FOR THE YEAR ENDED JUNE 30, 2009

This statement is being presented to comply with the Code of Corporate Governance contained in Listing
Regulations of Stock Exchanges in Pakistan for the purpose of establishing a framework of good governance,
whereby a listed company is managed in compliance with the best practices of corporate governance.

The Company has applied the principles contained in the Code in the following manner:-

1. The Company encourages the representation of non-executive Directors on its Board of Directors. At
present the Board of Directors includes four independent non-executive Directors.

2. The Directors have confirmed that none of them is serving as a Director in more than ten listed
companies, including this Company.

3. All the resident Directors of the Company are registered as taxpayers and none of them has defaulted
in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange,
has been declared as a defaulter by that stock exchange.

4. One casual vacancy occurred in the Board during the period, was filled in within 30 days thereof.

5. The Company has prepared a ‘Statement of Ethics and Business Practices’, which has been signed
by all the Directors and employees of the Company.

6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies
of the Company. A complete record of particulars of significant policies along with the dates on which
they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions, including
appointment and determination of remuneration and terms and conditions of employment of the CEO
and other Executive Directors, have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and, in his absence, by a Director
elected by the Board for this purpose and the Board met at least once in every quarter. Written notices
of the Board meetings, along with agenda and working papers, were circulated at least seven days
before the meetings. The minutes of the meetings were appropriately recorded and circulated.

9. The Board arranged Orientation Course for its Directors during the year to apprise them of their duties
Kohinoor Textile Mills Limited

and responsibilities.

10. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including
their remuneration and terms and conditions of employment, as determined by the CEO.

11. 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.

24 12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the
Board.
ANNUAL REPORT 2009

13. The Directors, CEO and executives do not hold any interest in the shares of the Company other than
that disclosed in the pattern of shareholding.
14. The Company has complied with all the corporate and financial reporting requirements of the Code.

15. The Board has formed an Audit Committee. It comprises four members. Two of them are non-executive
Directors including the Chairman of the Committee.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim
and final results of the Company and as required by the Code. The terms of reference of the Committee
have been formed and advised to the Committee for compliance.

17. The Board has set-up an effective internal audit function.

18. The Statutory Auditors of the Company have confirmed that they have been given a satisfactory rating
under the Quality Control Review programme of the Institute of Chartered Accountants of Pakistan,
that they or any of the partners of the firm, their spouses and minor children do not hold shares of
the Company and that the firm and all its partners are in compliance with International Federation of
Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants
of Pakistan.

19. 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.

20. We confirm that all other material principles contained in the Code have been complied with.

For & on behalf of the Board

Lahore: September 26, 2009 TAUFIQUE SAYEED SAIGOL


Chief Executive

Kohinoor Textile Mills Limited

25
ANNUAL REPORT 2009
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 KOHINOOR TEXTILE MILLS LIMITED ("the Company")
for the year ended 30 June 2009, to comply with the Listing Regulations of the respective Stock Exchanges,
where the Company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors
of the Company. Our responsibility is to review, to the extent where such compliance can be objectively
verified, whether the statement of compliance reflects the status of the Company's compliance with the
provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to
inquiries of the Company personnel and review of various documents prepared by the Company to comply
with the Code.

As part of our audit of financial statements, we are required to obtain an understanding of the accounting
and internal control systems sufficient to plan the audit and develop an effective audit approach. We are
not required to consider whether the Board's statement on internal control covers all risks and controls,
or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance
procedures and risks.

Further, Sub-Regulation (xiii a) of Listing Regulations 35 (Previously Regulation No. 37) notified by The
Karachi Stock Exchange (Guarantee) Limited vide circular KSE/N-269 dated 19 January 2009 requires the
company to place before the Board of Directors for their consideration and approval related party transactions
distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length
transactions and transactions which are not executed at arm's length price recording proper justification
for using such alternate pricing mechanism. Further, all such transactions are also required to be separately
placed before the audit committee. We are only required and have ensured compliance of requirement to
the extent of approval of related party transactions by the Board of Directors and placement of such
transactions before the audit committee. We have not carried out any procedures to determine whether
the related party transactions were undertaken at arm's length price or not.

Based on our review, nothing has come to our attention, which causes us to believe that the Statement
of Compliance does not appropriately reflect the Company's compliance, in all material respects, with the
best practices contained in the Code of Corporate Governance as applicable to the Company for the year
ended 30 June 2009.
Kohinoor Textile Mills Limited

RIAZ AHMAD & COMPANY


Chartered Accountants

Atif Bin Arshad


26
ISLAMABAD:
ANNUAL REPORT 2009

Date: September 26, 2009


AUDITORS’ REPORT TO THE MEMBERS

We have audited the annexed balance sheet of KOHINOOR TEXTILE MILLS LIMITED as at 30 June 2009
and the related profit and loss account, cash flow statement and statement of changes in equity together
with the notes forming part thereof, for the year then ended and we state that we have obtained all the
information and explanations which, to the best of our knowledge and belief, were necessary for the
purposes of our audit.
It is the responsibility of the company's management to establish and maintain a system of internal control,
and prepare and present the above said statements in conformity with the approved accounting standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on
these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the above said
statements are free of any material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the above said statements. An audit also includes assessing
the accounting policies and significant estimates made by management, as well as, evaluating the overall
presentation of the above said statements. We believe that our audit provides a reasonable basis for our
opinion and, after due verification, we report that:
a) in our opinion, proper books of account have been kept by the company as required by the Companies
Ordinance, 1984;
b) in our opinion:
(i) the balance sheet and profit and loss account together with the notes thereon have been drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement with the books of
account and are further in accordance with accounting policies consistently applied;
(ii) the expenditure incurred during the year was for the purpose of the company's business; and
(iii) the business conducted, investments made and the expenditure incurred during the year were
in accordance with the objects of the company;
c) in our opinion and to the best of our information and according to the explanations given to us, the
balance sheet, profit and loss account, cash flow statement and statement of changes in equity together
with the notes forming part thereof conform with approved accounting standards as applicable in
Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so
required and respectively give a true and fair view of the state of the company's affairs as at 30 June
2009 and of the loss, its cash flows and changes in equity for the year then ended; and

Kohinoor Textile Mills Limited


d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII
of 1980).

RIAZ AHMAD & COMPANY


Chartered Accountants

Atif Bin Arshad 27


ANNUAL REPORT 2009

ISLAMABAD

Date: September 26, 2009


Maple
Maple Leaf Cement Leaf Limited
Factory Cement Factory Limited

BALANCE SHEET

Note
EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized share capital


170,000,000 (2008: 170,000,000)
ordinary shares of Rupees 10 each 1,700,000 1,700,000
30,000,000 ( 2008: 30,000,000)
preference shares of Rupees 10 each 300,000 300,000
2,000,000 2,000,000

Issued, subscribed and paid up share capital 3 1,455,262 1,455,262


Reserves 4 150,063 2,266,768
Total equity 1,605,325 3,722,030
Surplus on revaluation of investment properties 1,263,592 1,263,592

NON-CURRENT LIABILITIES
Long term financing 5 1,918,571 2,451,030
Liabilities against assets subject to finance lease 6 100,919 134,199
Lease finance advance 7 35,922 -
Deferred tax 8 134,667 466,899
2,190,079 3,052,128
CURRENT LIABILITIES
Trade and other payables 9 849,755 636,998
Accrued mark-up 10 185,259 236,396
Short term borrowings 11 4,810,471 3,994,524
Current portion of non-current liabilities 12 917,042 609,654
6,762,527 5,477,572
Kohinoor Textile Mills Limited

CONTINGENCIES AND COMMITMENTS 13


11,821,523 13,515,322

The annexed notes form an integral part of these financial statements.

28
ANNUAL REPORT 2009

Chief Executive
Maple
Maple Leaf Cement Leaf Cement
Factory LimitedFactory Limited

AS AT 30 JUNE 2009

Note
ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 14 4,140,233 3,972,540


Investment properties 15 1,720,835 1,720,835
Long term investment 16 794,954 2,035,902
Long term deposits 17 33,617 28,824
6,689,639 7,758,101

CURRENT ASSETS
Stores, spares and loose tools 18 303,947 290,947
Stock -in- trade 19 1,779,826 1,673,062
Trade debts 20 1,050,101 1,340,460
Advances 21 303,362 370,422
Derivative financial instrument 22 - 206,054
Security deposits and prepayments 23 28,383 9,114
Accrued interest 122 115
Other receivables 24 301,732 294,257
Short term investments 25 607,610 1,016,477
Taxation recoverable 74,842 52,684
Cash and bank balances 26 80,297 75,387
4,530,222 5,328,979

Non current assets classified as held for sale 27 601,662 428,242


5,131,884 5,757,221

Kohinoor Textile Mills Limited


11,821,523 13,515,322

29
ANNUAL REPORT 2009

Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2009

Note

SALES 28 8,458,899 7,558,322


COST OF SALES 29 7,198,993 6,395,622

GROSS PROFIT 1,259,906 1,162,700

SELLING AND DISTRIBUTION EXPENSES 30 464,848 381,161


ADMINISTRATIVE EXPENSES 31 175,965 149,542
OTHER OPERATING EXPENSES 32 34,281 22,158

675,094 552,861

584,812 609,839

OTHER OPERATING INCOME 33 138,742 403,301

PROFIT FROM OPERATIONS 723,554 1,013,140

FINANCE COST 34 1,260,230 882,335

PROFIT / (LOSS) BEFORE TAXATION (536,676) 130,805

PROVISION FOR TAXATION 35 (96,865) 134,325

LOSS AFTER TAXATION (439,811) (3,520)

LOSS PER SHARE - RUPEES 39 (3.02) (0.02)

The annexed notes form an integral part of these financial statements.


Kohinoor Textile Mills Limited

30
ANNUAL REPORT 2009

Chief Executive Director


Maple
Maple Leaf Cement Leaf Limited
Factory Cement Factory Limited

CASH FLOW STATEMENT


FOR THE YEAR ENDED 30 JUNE 2009

Note

CASH FLOWS FROM OPERATING ACTIVITIES


Cash generated from operations 36 1,500,213 756,793
Finance cost paid (1,311,367) (705,158)
WPPF paid (25) (5)
Income tax paid (77,912) (51,681)
Net cash generated from/ (used) in operating activities 110,909 (51)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure on property, plant and equipment (490,255) (366,981)
Payment for land classified as held for sale (190,230) (428,242)
Long term deposits (4,793) (689)
Investments made (20,225) (419,229)
Return on bank deposits 2,230 2,232
Sale of property, plant and equipment 4,817 19,299
Sale of investments 7,395 404,400
Sale of land classified as held for sale 25,000 -
Dividend received 16,542 13,014
Net cash used in investing activities (649,519) (776,196)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Long term financing 200,000 1,828,256
Short term borrowings - net 815,947 1,219,019
Lease finance advance received 35,922 -
Repayment of:
Long term financing (408,395) (2,101,339)
Repayment of term finance certificates - (71,250)
Payment of finance leases liabilities (99,954) (86,782)
Dividend paid - (1)

Kohinoor Textile Mills Limited


Net cash from financing activities 543,520 787,903
Net increase in cash and cash equivalents 4,910 11,656
Cash and cash equivalents at the beginning of the year 75,387 63,731
Cash and cash equivalents at the end of the year 26 80,297 75,387

The annexed notes form an integral part of these financial statements.


31
ANNUAL REPORT 2009

Chief Executive Director


ANNUAL REPORT 2009 Kohinoor Textile Mills Limited

32
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2009
Reserves
Capital Reserves Revenue Reserves
Share Total Total
Capital Dividend Reserves Equity
Share Fair Value Hedging General
Sub Total Equalization Accumulated Sub Total
premium Reserve Reserve Reserve Reserve loss

.......................(R u p e e s i n t h o u s a n d ) . . . . . . . . . . . . ... . . . . . . . .

Balance as at 30 June 2007 1,455,262 144,919 2,966,064 - 3,110,983 1,490,491 9,509 (35,926) 1,464,074 4,575,057 6,030,319

Transfer from dividend equalization reserve - - - - - - (9,509) 9,509 - - -


Fair value adjustment on investments - net of deferred tax - - (2,438,704) - (2,438,704) - - - - (2,438,704) (2,438,704)
Gain arising on derivative cross currency interest rate swap - - - 133,935 133,935 - - - - 133,935 133,935
Net loss for the year ended 30 June 2008 - - - - - - - (3,520) (3,520) (3,520) (3,520)

Balance as at 30 June 2008 1,455,262 144,919 527,360 133,935 806,214 1,490,491 - (29,937) 1,460,554 2,266,768 3,722,030
Transfer to accumulated loss - - - - - (40,000) - 40,000 - - -
Fair value adjustment on investments - net of deferred tax - - (1,542,959) - (1,542,959) - - - - (1,542,959) (1,542,959)
Adjustment of derivative cross currency interest rate swap - - - (133,935) (133,935) - - - - (133,935) (133,935)
Net loss for the year ended 30 June 2009 - - - - - - - (439,811) (439,811) (439,811) (439,811)

Balance as at 30 June 2009 1,455,262 144,919 (1,015,599) - (870,680) 1,450,491 - (429,748) 1,020,743 150,063 1,605,325

The annexed notes form an integral part of these financial statements.

Chief Executive Director


NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009

1. THE COMPANY AND ITS OPERATIONS

Kohinoor Textile Mills Limited is a public limited company incorporated in Pakistan under the Companies
Act, 1913 (now Companies Ordinance, 1984) and listed on the Karachi, Lahore and Islamabad Stock
Exchanges. The registered office of the Company is situated at 42 Lawrence Road, Lahore. The
principal activity of the Company is manufacturing of yarn and cloth, processing and stitching the
cloth and trade of textile products.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all years presented, unless otherwise stated:

2.1 Basis of Preparation

a) Statement of Compliance

These financial statements have been prepared in accordance with approved accounting
standards as applicable in Pakistan. Approved accounting standards comprise of such
International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board as are notified under the Companies Ordinance, 1984, provisions of and
directives issued under the Companies Ordinance, 1984. In case requirements differ, the
provisions or directives of the Companies Ordinance, 1984 shall prevail.

b) Accounting Convention

These financial statements have been prepared under the historical cost convention,
except for financial instruments and investment property which are carried at their fair
value. These financial statements represent separate financial statements of the Company.
The consolidated financial statements of the Group are being issued separately.

c) Critical accounting estimates and judgments

The preparation of financial statements in conformity with the approved accounting


standards requires the use of certain critical accounting estimates. It also requires the
management to exercise its judgment in the process of applying the Company's accounting
policies. Estimates and judgments are continually evaluated and are based on historical

Kohinoor Textile Mills Limited


experience, including expectation of future events that are believed to be reasonable under
the circumstances. The areas where various assumptions and estimates are significant
to the Company's financial statements or where judgments were exercised in application
of accounting policies are as follows:

Financial instruments

The fair value of financial instruments that are not traded in an active market is determined
by using valuation techniques based on assumptions that are dependent on conditions
existing at balance sheet date. 33
Useful lives, patterns of economic benefits and impairments
ANNUAL REPORT 2009

Estimates with respect to residual values, depreciable lives and pattern of flow of economic
benefits are based on the analysis of the management of the Company. Further, the
Company reviews the value of assets for possible impairments on an annual basis. Any
change in the estimates in the future might affect the carrying amount of respective item
of property, plant and equipment, with a corresponding effect on the depreciation charge
and impairment.

Taxation

In making the estimates for income tax currently payable by the Company, the management
takes into account the current income tax law and the decisions of appellate authorities
on certain issues in the past.

Provisions for doubtful debts

The Company reviews its receivable against any provision required for any doubtful
balances on an ongoing basis. The provision is made while taking into consideration
expected recoveries, if any.

Impairment of investments in associated companies

In making an estimate of future cash flows from the Company's investments in associated
companies, the management considers future dividend stream and an estimate of the
terminal value of these investments.

d) Standard that is effective in current year

IFRS 7 'Financial Instruments: Disclosures'. The Securities and Exchange Commission


of Pakistan (SECP) vide S.R.O 411(1) / 2008 dated 28 April 2008 notified the adoption
of IFRS 7. IFRS 7 is mandatory for Company's accounting periods beginning on or after
the date of notification i.e 28 April 2008. IFRS 7 has superseded IAS 30 and disclosure
requirements of IAS 32. Adoption of IFRS 7 has only impacted the format and extent of
disclosures presented in the financial statements.

e) Standards, interpretations and amendments to published approved accounting standards


that are effective in current year but not relevant

There are other new standards, interpretations and amendments to the published approved
accounting standards that are mandatory for accounting periods beginning on or after
01 July 2008 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
Kohinoor Textile Mills Limited

statements.

f) Standards and amendments to published approved accounting standards that are not
yet effective but relevant

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 2009 or
later periods:

34 IAS 1 'Presentantion of Financial Statements' (effective for annual periods beginning on


or after 01 January 2009), issued in September 2007 revises the existing IAS 1 and
ANNUAL REPORT 2009

requires apart from changing the names of certain financial statements, presentation of
transactions with owners in statement of changes in equity and with non-owners in the
Comprehensive Income Statement. Adoption of the aforesaid standard will only impact
the presentation of the financial statements.
IAS 23 (Amendment) 'Borrowing Costs' (effective for annual periods beginning on or after
01 January 2009). It requires an entity to capitalize borrowing costs directly attributable
to the acquisition, construction or production of a qualifying asset (one that takes a
substantial period of time to get ready for use or sale) as part of the cost of that asset.
On adoption the option of immediately expensing those borrowing costs will be withdrawn.
This change will not effect the financial statements as the Company already has the policy
to capitalize its borrowing cost.

IFRS 7 (Amendment) 'Financial Instruments: Disclosures' (effective for annual periods


beginning on or after 01 January 2009). This amendment has expanded the disclosures
required in respect of fair value measurements recognized in the Statement of Financial
Position. Moreover, amendments have also been made to the liquidity risk disclosures.
Such amendments are not expected to have any significant impact on the Company's
financial statements other than increase in disclosures.

IFRS 8 'Operating Segments' (effective for annual periods beginning on or after 01 January
2009). It introduces the "management approach" to segment reporting. IFRS 8 will require
presentation and disclosure of segment information based on the internal reports regularly
reviewed by the Company's chief operating decision makers in order to assess each
segment's performance and to allocate resources to them. Currently, the Company does
not present segment information as IAS 14 limited reportable segments to those that earn
a majority of their revenue from sales to external customers and therefore did not require
the different stages of vertically integrated operations to be identified as separate segments.
Under the management approach, the Company will present segment information in
respect of each reportable segment.

There are other amendments resulting from May 2008 and April 2009 Annual Improvements
to IFRSs, specifically in IFRS 8 'Operating Segments', IAS 1 'Presentation of Financial
Statements', IAS 7 'Statement of Cash Flows', IAS 23 'Borrowing Costs', IAS 28 'Investments
in Associates', IAS 36 'Impairment of Assets' and IAS 39 'Financial Instruments: Recognition
and Measurement' that are considered relevant to the Company's financial statements.
These amendments are unlikely to have a significant impact on the Company's financial
statements and have therefore not been analyzed in detail.

g) Standards, interpretations and amendments to published approved accounting standards


that are not effective in current year and not considered relevant

There are other accounting standards, amendments to published approved accounting


standards and new interpretations that are mandatory for accounting periods beginning
on or after 01 July 2009 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
Kohinoor Textile Mills Limited
financial statements.

2.2 Employee benefits

The Company operates an approved funded contribution provident fund covering all permanent
employees. Equal monthly contributions are made both by the Company and employees at the
rate of 8.33 percent of basic salary and cost of living allowance to the fund. The Company's
contributions to the fund are charged to profit and loss account.

2.3 Taxation 35
ANNUAL REPORT 2009

Current

Provision for current tax is based on the taxable income for the year determined in accordance
with the prevailing law for taxation of income. The charge for current tax is calculated using
prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge
for current tax also includes adjustments, where considered necessary, to provision for tax
made in previous years arising from assessments framed during the year for such years.

Deferred

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary
timing differences arising from difference between the carrying amount of the assets and
liabilities in the financial statements and corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are recognized for all taxable temporary differences and
deferred tax assets are recognized for all deductible temporary differences to the extent that it
is probable that taxable profit will be available against which the deductible temporary differences,
unused tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the
differences reverse, based on tax rates that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is charged or credited in the income statement, except where
deferred tax arises on the items credited or charged to equity in which case it is included in
equity.

2.4 Trade and other payables

Liabilities for trade and other amounts payable are initially recognized at fair value which is
normally the transaction cost.

2.5 Provisions

Provisions are recognized when the Company has a legal or constructive obligation as a result
of past event, if it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate of the amount can be made. Provisions
are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.

2.6 Finance leases

Leases where the Company has substantially all the risks and rewards of ownership are classified
as finance leases. Assets subject to finance lease are stated at the lower of present value of
minimum lease payments under the lease agreements and the fair value of the assets. The
related rental obligations, net of finance charges, are included in liabilities against assets subject
to finance lease.
Kohinoor Textile Mills Limited

Each lease payment is allocated between the liability and finance charge so as to achieve a
constant rate on the balance outstanding. Finance charge of the rental is charged to profit and
loss account over the lease term.

2.7 Property, plant, equipment and depreciation

Owned

36 Property, plant and equipment except freehold land and capital work in progress are stated at
cost less accumulated depreciation and impairment losses (if any). Freehold land and capital
ANNUAL REPORT 2009

work in progress are stated at cost less any recognized impairment loss, if any . Cost of property,
plant and equipment consists of historical cost, borrowing cost pertaining to erection/construction
period of qualifying asset and other directly attributable cost of bringing the asset to working
condition.
Subsequent costs are included in the asset's carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. All other
repair and maintenance costs are charged to profit and loss account during the period in which
they are incurred.

Depreciation

Depreciation on all operating property, plant and equipment is charged to profit and loss account
on reducing balance method after taking into account residual value, if any, so as to write off
the depreciable amount of an asset over its estimated useful life at the rates given in Note 14.1.
Depreciation on additions is charged from the month the assets are available for use while no
depreciation is charged in the month in which the assets are disposed off. The residual values
and useful lives of assets are reviewed by the management at each financial year end and
adjusted if impact on depreciation is significant.

Derecognition

An item of property, plant and equipment is derecognized on 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 profit and loss account in the year the asset is derecognized.

Leased

Finance lease

Leases where the Company has substantially all the risks and rewards of ownership are classified
as finance lease. Assets subject to finance lease are capitalized at the commencement of the
lease term at the lower of present value of minimum lease payments under the lease agreements
and the fair value of the leased assets, each determined at the inception of the lease.

The related rental obligation, net of finance cost, is included in liabilities against assets subject
to finance lease. The liabilities are classified as current and long term depending upon the timing
of payments.

Each lease payment is allocated between the liability and finance cost so as to achieve a

Kohinoor Textile Mills Limited


constant rate on the balance outstanding. The finance cost is charged to profit and loss account
over the lease term.

Depreciation of assets subject to finance lease is recognized in the same manner as for owned
assets. Depreciation of the leased assets is charged to profit and loss account.

2.8 Investment properties

Investment properties are carried at fair value which is based on active market prices, adjusted,
if necessary, for any difference in the nature, location or condition of the specific asset. The 37
valuation of the properties is carried out with sufficient regularity.
ANNUAL REPORT 2009

Gains or losses arising from a change in the fair value of investment properties are included
in the profit and loss account currently.
2.9 Intangible assets

Intangible assets, which are non-monetary assets without physical substance, are recognized
at cost, which comprise purchase price, non-refundable purchase taxes and other directly
attributable 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 Company. The
useful life and amortization method is reviewed and adjusted, if appropriate, at each balance
sheet date.

2.10 Investments

Management determines the appropriate classification of its investments at the time of purchase.

Investments are initially measured at fair value plus transaction costs directly attributable to
acquisition, except for "investment at fair value through profit and loss account" which is
measured initially at fair value.

The Company assesses at the end of each reporting period whether there is any objective
evidence that investments are impaired. If any such evidence exists, the Company applies the
provisions of IAS 39 'Financial Instruments: Recognition and Measurement' to all investments,
except investments in subsidiary and associates, which are tested for impairment in accordance
with the provisions of IAS 36 'Impairment of Assets'.

a) Investments at fair value through profit and loss

Investments classified as held-for-trading and those designated as such are included in


this category. Investments are classified as held-for-trading if they are acquired for the
purpose of selling in the short term. Gains or losses on investments held-for-trading are
recognised in profit and loss account.

b) 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.
Investments intended to be held for an undefined period are not included in this classification.
Other long term investments that are intended to be held to maturity are subsequently
measured at amortized cost. This cost is computed as the amount initially recognised
minus principal repayments, plus or minus the cumulative amortisation using the effective
interest method of any difference between the initially recognized amount and the maturity
Kohinoor Textile Mills Limited

amount. For investments carried at amortised cost, gains and losses are recognized in
profit and loss account when the investments are derecognized or impaired, as well as
through the amortisation process.

c) Available-for-sale

Investments intended to be held for an indefinite period of time, which may be sold in
response to need for liquidity, or changes to interest rates or equity prices are classified
as available-for-sale. After initial recognition, investments which are classified as available-
38 for-sale are measured at fair value. Gains or losses on available-for-sale investments are
recognized directly in equity until the investment is sold, de-recognized or is determined
ANNUAL REPORT 2009

to be impaired, at which time the cumulative gain or loss previously reported in equity
is included in profit and loss account. All purchases and sales of investments are reconized
on the trade date which is the date that the Company commit to purchase or sell the
investment. Available for sale investments 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
These are carried at fair value determined on the basis of appropriate valuations techniques
as allowed by IAS 39 “Financial Instruments: Recognition and Measurement”.
Change in Accounting Estimate
During the year ended 30 June 2009 the Company has changed the accounting estimate
for valuation of unquoted available for sale investments. Fair value of unquoted, available
for sale investment is now determined by using dividend stream method. Previously,
valuation was carried out using net asset based valuation model. Effect of this change
in estimate is recognized prospectively in accordance with the requirements of International
Accounting Standard (IAS) 8 "Accounting Policies, Changes in Accounting Estimates and
Errors". Had there been no change in this accounting estimate, short term investments,
fair value reserve and deferred taxation would have been lower by Rupees 95.978 million,
Rupees 70.783 million and Rupees 25.194 million respectively with nil effect on the loss
for the year ended 30 June 2009.
d) Equity investments in subsidiary and associated companies
The investments in subsidiary where control can be established and those associates
where the company does not have significant influence are classified as "Available-for-
Sale".

2.11 Inventories

Inventories, except for stock in transit and waste stock/ rags are stated at lower of cost and
net realizable value. Cost is determined as follows:

Stores, spare parts and loose tools

Useable stores, spare parts and loose tools are valued principally at moving average cost, while
items considered obsolete are carried at nil value. Items in transit are valued at cost comprising
invoice value plus other charges paid thereon.

Stock in trade

Cost of raw material is determined on annual average cost basis.

Kohinoor Textile Mills Limited


Cost of work in process and finished goods comprises cost of direct material, labour and
appropriate manufacturing overheads. Cost of goods purchased for resale are based on weighted
average.

Materials in transit are valued at cost comprising invoice value 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
costs necessarily to be incurred in order to make a sale.

2.12 Trade and other receivables 39


ANNUAL REPORT 2009

Trade debts and other receivables are carried at original invoice amount less an estimate made
for doubtful debts and other receivables based on a review of all outstanding amounts at the
year end. Bad debts are written off when identified.
2.13 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 is recognized in equity. The gain or loss relating to the ineffective portion
is recognized immediately in the profit and loss account.

Amounts accumulated in equity are recognized in profit and loss account in the periods when
the hedged item will affect profit or loss.

2.14 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 the cash flow statement, cash equivalents comprise cash
in hand, cash at banks and other short term highly liquid instruments that are readily convertible
into known amounts of cash and which are subject to insignificant risk of changes in values.

2.15 Non current assets classified as held for sale

Non-current assets that are expected to be sold within a period of one year from the balance
sheet date are classified as held for sale and are measured at lower of carrying amount and
fair value less costs to sell.

2.16 Revenue recognition

a) Revenue from local sales is recognized on dispatch of goods to customers while in case
of export sales it is recognized on the date of bill of lading.

b) Dividend on equity investments is recognized as income when right to receive dividend


is established.
Kohinoor Textile Mills Limited

c) Profit on deposits with banks is recognized on time proportion basis taking into account
the amounts outstanding and rates applicable thereon.

2.17 Borrowing costs

Interest, mark-up and other charges on long-term finances are capitalized up to the date of
commissioning of respective qualifying assets acquired out of the proceeds of such long-term
finances. All other interest, mark-up and other charges are recognized in profit and loss account.

2.18 Foreign currencies


40
These financial statements are presented in Pak Rupees, which is the Company’s functional
ANNUAL REPORT 2009

currency. Transactions in foreign currency during the year are translated into Pak Rupees at
the rates of exchange prevailing on the date of transaction. All monetary assets and liabilities
in foreign currencies are translated into Pak Rupees at the rate of exchange prevailing on the
balance sheet date except where forward exchange contracts have been made, in which case
the contracted rates are applied. All exchange differences are charged to the profit and loss
account.

2.19 Financial instruments

Financial instruments are recognized at fair value when the Company becomes party to the
contractual provisions of the instrument by following trade date accounting. Any gain or loss
on the subsequent measurement is charged to the profit and loss account. The Company
derecognizes a financial asset or a portion of financial asset when, and only when, the enterprise
loses the control over contractual right that comprises the financial asset or a portion of financial
asset. While a financial liability or a part of financial liability is derecognized from the balance
sheet when, and only when, it is extinguished, i.e. when the obligation specified in contract is
discharged, cancelled or expired.

The particular measurement methods adopted are disclosed in the individual policy statements
associated with each item.

Financial assets are investments, deposits, trade debts, loans and advances, other receivables
and cash and bank balances.

Financial liabilities are classified according to the substance of the contractual agreements
entered into. Significant financial liabilities are long term financing, liabilities against assets
subject to finance lease, lease finance advance, short term borrowings and trade and other
payables.

2.20 Impairment

The carrying amounts of the Company's assets are reviewed at each balance sheet date to
determine whether there is any indication of impairment loss. If any such indication exists, the
recoverable amount of such assets is estimated. An impairment loss is recognized whenever
the carrying amount of the asset exceeds its recoverable amount. Impairment losses are
recognized in the profit and loss account. Where an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the revised recoverable amount but limited to
the extent of the initial cost of the asset. A reversal of the impairment loss is recognized in the
profit and loss account.

2.21 Related party transactions

Transactions and contracts with related parties are carried out at an arm's length price determined
in accordance with comparable uncontrolled price method.

2.22 Dividend and other appropriations

Dividend to the shareholders is recognized in the period in which it is declared and other Kohinoor Textile Mills Limited
appropriations are recognized in the period in which these are approved by the Board of Directors.

2.23 Off setting

Financial assets and liabilities are set off and the net amount is reported in the financial statements
when there is legally enforceable right to set off and the Company intends either to settle on a
net basis, or to realize the asset and settle the liability simultaneously.
41
2.24 Borrowings
ANNUAL REPORT 2009

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 borrowing using the effective interest rate method.
3. ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL

1,596,672 1,596,672 Ordinary shares of Rupees 10 each 15,967 15,967


allotted on reorganisation of
Kohinoor Industries Limited
26,156,000 26,156,000 Ordinary shares allotted under scheme 261,560 261,560
of arrangement of merger of Part II of
Maple Leaf Electric Company Limited
26,858,897 26,858,897 Ordinary shares allotted under scheme 268,589 268,589
of arrangement of merger of Kohinoor
Raiwind Mills Limited and Kohinoor
Gujar Khan Mills Limited.
38,673,628 38,673,628 Ordinary shares of Rupees 10 each 386,736 386,736
issued as bonus shares
52,241,019 52,241,019 Ordinary shares of Rupees 10 each 522,410 522,410
issued for cash
145,526,216 145,526,216 1,455,262 1,455,262

Zimpex (Private) Limited which is an associated company, held 22,510,635 (2008 :22,510,635)
ordinary shares of Rupees 10 each at 30 June 2009.

4. RESERVES

Note

Composition of reserves is as follows:


Capital

Share premium 4.1 144,919 144,919


Hedging reserve - net of deferred tax - 133,935
Surplus/ (deficit) on revaluation of investments
- net of deferred tax 4.2 (1,015,599) 527,360
Kohinoor Textile Mills Limited

(870,680) 806,214

Revenue

General reserve 1,490,491 1,490,491


Transfer during the period (40,000) -
Accumulated loss (429,748) (29,937)

1,020,743 1,460,554
42
150,063 2,266,768
ANNUAL REPORT 2009

4.1 This reserve can be utilized by the Company only for the purposes specified in section 83(2)
of the Companies Ordinance, 1984.
4.2 Surplus/ (deficit) on revaluation of investments - net of deferred tax

Balance as at July 01 527,360 2,966,064


Add/ (less) : Fair value adjustments on investments :
Maple Leaf Cement Factory
Maple Leaf CementLimited
Factory
Maple Limited (1,240,948)
Leaf Cement Factory Limited (2,517,353)
Security General Insurance Company Limited (409,506) 106,642
(1,650,454) (2,410,711)
Less deferred tax asset/ liability
- On Security General Insurance Company Limited
(Unquoted equity investment) (107,495) 27,993
Balance as at June 30 (1,015,599) 527,360

5. LONG TERM FINANCING

Note
From banking companies and other
financial institutions - Secured
The Bank of Punjab (BOP - 1) 5.1 46,598 105,019
NIB Bank Limited (NIB - 1) 5.2 139,815 180,262
NIB Bank Limited (NIB - 2) 5.3 223,200 259,800
Albaraka Islamic Bank Limited (ABIB) 5.4 41,666 66,667
Faysal Bank Limited (FBL - 1) 5.5 34,376 85,938
Allied Bank Limited (ABL -1 ) 5.6 113,067 164,709
Saudi Pak Industrial and Agricultural Investment
Company (Private) Limited (SPIAICPL-1) 5.7 21,666 28,889
Saudi Pak Industrial and Agricultural Investment
Company (Private) Limited (SPIAICPL-2) 5.8 20,000 30,000
Saudi Pak Industrial and Agricultural Investment
Company (Private) Limited (SPIAICPL-3) 5.9 187,500 250,000
Standard Chartered Bank (Pakistan) Limited (SCB-1) 5.10 20,226 47,726
Standard Chartered Bank (Pakistan) Limited (SCB-2) 5.11 175,000 -
Standard Chartered Bank (Pakistan) Limited - Syndicated
term finance 5.12 200,000 200,000
Allied Bank Limited - Syndicated term finance 5.12 568,750 568,750
The Bank of Khyber - Syndicated term finance 5.12 100,000 100,000
Pak Libya Holding Company - Syndicated term finance 5.12 50,000 50,000
Kohinoor Textile Mills Limited
Bank Al Falah Limited - Syndicated term finance 5.12 500,000 500,000
Faysal Bank Limited - Syndicated term finance 5.12 300,000 300,000
United Bank Limited (UBL) 5.13 - 12,500
2,741,864 2,950,260
Less: Current portion shown under current liabilities 12 830,770 506,707
1,911,094 2,443,553
Other loans - Unsecured
Kohinoor Sugar Mills Limited (KSML) 5.14 4,794 4,794 43
Kohinoor Industries Limited (KIL) 5.15 2,683 2,683
ANNUAL REPORT 2009

7,477 7,477
1,918,571 2,451,030
5.1 The Bank of Punjab - (BOP-1)

This represents demand finance facility of Rupees 400 million, obtained for import of state of
art machinery and is allowed for a period of four years with a grace period of six months. The
loan is repayable in 7 equal half yearly installments commenced after conclusion of grace
period. It is secured by bank's exclusive hypothecation charge on machinery imported and
personal guarantees of sponsor directors. Facility amounting to Rupees 300 million carries
mark up at the rate of 6 months average KIBOR plus 100 basis points (bps) and additional
facility of Rupees 100 million carries mark up at the rate of 6 months average KIBOR plus 275
bps with a floor of 5% per annum, payable quarterly. On November 29, 2006 loans amounting
to Rupees. 150.431 million were converted to LTF-EOP consisting of Rupees 61.725 million
at 6 % per annum and Rupees 88.706 million at 7 % fixed rate of mark up.

5.2 NIB Bank Limited (NIB - 1)

This represents LTF-EOP facility obtained for import of textile machinery for a period of three
years including a grace period of six months. It is repayable in ten equal quarterly installments.
It is secured by first exclusive hypothecation charge on the imported machinery and allied
equipment, including installation and local component costs and personal guarantees of the
sponsor directors . It carries mark up at fixed rate of 6 % per annum.

5.3 NIB Bank Limited (NIB - 2)

This represents a term finance facility of Rupees 300 million under State Bank of Pakistan (LTF-
EOP) scheme for a period of five years with a grace period of one year. The financing is for
import of 72 Picanol Omni Plus wide width Air Jet Looms and Tying & Knotting machine plus
five (5) Gen Set gas generators being part of BMR. It is repayable in equal quarterly installments,
commencing after expiry of grace period. The facility is secured against first pari passu charge
over fixed assets of Raiwind Division and personal guarantees of the sponsor directors. It carries
fixed mark up at the rate of 7% per annum.

5.4 Albaraka Islamic Bank Limited (ABIB)

This represents Murabaha finance facility of Rupees 100 million, obtained for construction of
buildings. The facility is allowed for a period of four years including a grace period of one year.
The facility is repayable in sixteen equal quarterly installments commencing with first payment
being due at the end of 15th month from the date of disbursement. It is secured by pari passu
charge and hypothecation on fixed assets i.e. land and building constructed for ring spinning
and stitching. It carries mark up at the rate of 3-years KIBOR plus 2% per annum with floor of
12.75% per annum.
Kohinoor Textile Mills Limited

5.5 Faysal Bank Limited (FBL - 1)

This represents a term finance facility of Rupees 137.50 million under State Bank of Pakistan
scheme for a period of three years with one year grace period, for import of 36 Picanol Omni
Plus wide width high speed looms and one warping machine being part of BMR, repayable in
equal quarterly installments. The facility is secured against exclusive charge on the aforesaid
imported machinery, first pari passu charge on the fixed assets of Raiwind Division to the extent
of Rupees 47.50 million to cover the margin element and personal guarantees of the sponsor
44 directors. The loan carries a fixed rate of mark-up of 6% per annum.

5.6 Allied Bank Limited (ABL-1)


ANNUAL REPORT 2009

This represents term finance facility of Rupees 300 million , obtained for import of state of art
machinery and is allowed for a period of five years with a grace period of one year. The facility
is repayable in sixteen (16) equal quarterly installments commencing after conclusion of grace
period. It is secured by first exclusive charge on machinery imported. Facility amounting to
Rupees 100 million carries mark up at the rate of 6 months KIBOR plus 1.25% per annum,
facility of Rupees 125 million carries mark up at the rate of 6 months KIBOR plus 1.75% per
annum and facility of Rupees 75 million carries mark up at the rate of 6 months KIBOR plus
2.50% per annum with no floor and cap. On December 28, 2006 loans amounting to Rupees
124.732 million were converted to LTF-EOP at 7% per annum fixed rate of mark up.

5.7 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited (SPIAICPL- 1)

This represents the LTF-EOP facility of Rupees 65 million for import of textile machinery and
is allowed for a period of five years with a grace period of six months. The facility is repayable
in eighteen (18) equal quarterly installments commencing from February 19, 2006. It is secured
by first exclusive charge on imported machinery. It carries mark up at a fixed rate of 7% per
annum.

5.8 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited (SPIAICPL- 2)

This represents a term finance of Rupees 40 million under State Bank of Pakistan (LTF-EOP)
scheme at subsidized and fixed rate of mark up of 7% per annum. The financing is for import
of warping and sizing machines being part of BMR. This facility for a period of five years with
a grace period of one year and is repayable in equal quarterly installments.

5.9 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited (SPIAICPL- 3)

This represents term finance facility of Rupees 250 million obtained for debt reprofiling for a
period of five years including grace period of one year. The facility is repayable in 8 equal six
monthly installments. It is secured by first pari passu charge by way of hypothecation on all
present and future plant and machinery of the Company and by way of mortgage on land
measuring 121 acres, 2 kanals and 1 marla, situated at main Peshawar Road, Rawalpindi with
25% margin. Initially ranking charge will be created which will be upgraded within 90 days from
the date of disbursement. The facility carries mark up at the rate of 3 months KIBOR plus 170
bps per annum with quarterly repricing effective from March 03, 2008.

5.10 Standard Chartered Bank (Pakistan) Limited (SCB-1)

This represents the term finance facility of Rupees 110 million, obtained for import of state of
art machinery and is allowed for a period of five years including a grace period of one year.
The facility is repayable in sixteen equal quarterly installments. It is secured by first exclusive
charge on machinery and personal guarantees of sponsor directors. It carries mark up at the

Kohinoor Textile Mills Limited


rate of 3-months KIBOR plus 2.25% per annum with no floor and cap.

5.11 Standard Chartered Bank (Pakistan) Limited (SCB-2)

This represents the term finance facility of Rupees 200 million, obtained for the purpose of
financing the unwinding cost of cross currency swap deal with the bank and is allowed for a
period of two years. The facility is payable in eight equal quarterly installments. It is secured
by ranking charge of Rupees 266.666 million on land of Kohinoor Textile Mills Limited situated
at Rawalpindi. It carries mark up at the rate of 3-months average KIBOR plus 2.75% per annum
with no floor and cap.
45
5.12 Syndicated Term Finance Facility
ANNUAL REPORT 2009

Syndicated Finance of Rupees 1.750 billion was arranged through Standard Chartered Bank
(Pakistan) limited (SCBL) to swap highly priced loans. Long term facility was arranged and
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

availed in Islamic and conventional mode of financing. Standard Chartered Bank (Pakistan)
Limited (Arranger), Allied Bank Limited and Bank of Khyber disbursed Rupees 868.750 million
under Islamic mode of financing whereas Bank Alfalah Limited, Faysal Bank Limited and Pak
Libya Holding Company disbursed Rupees 850 million under conventional means of financing.
Tenor of the loan is 5 years including one year grace period and will be repaid in 16 equal
quarterly installments. It is secured by first pari passu charge over the fixed assets of the
Company including surplus land and buildings at Peshawar Road, Rawalpindi. It carries mark-
up at 3 months average KIBOR plus 150 bps to be refixed at the end of each quarter.

5.13 United Bank Limited (UBL)

This represents the term Loan facility of Rs. 200 million, to finance BMR at Kohinoor Textile
Mills Limited (Rawalpindi and Gujar Khan Divisions) and to refinance loans of other banks. The
term loan facility was allowed for a period of five years with one year grace period and was
repayable in sixteen equal quarterly installments, commenced from December 31, 2004. It
carried mark up at the rate of 6 months treasury bills cut-off rate plus 225 basis points with a
floor of 4% per annum. It is secured by first pari passu charge for Rupees 266 million on all
existing and future fixed assets of Kohinoor Textile Mills Limited (Raiwind Division) and personal
guarantees of the sponsor directors. The loan has been fully repaid however, the charge has
not yet been vacated.

5.14 Kohinoor Sugar Mills Limited (KSML)

A civil suit has been filed by KSML for recovery of disputed liability which is being contested
by the Company.

5.15 Kohinoor Industries Limited (KIL)

The balance is an old one, un-reconciled, unconfirmed and disputed.

6. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

2009 2008
Note (Rupees in thousand)

Minimum lease payments 207,348 270,833


Less: Un-amortized finance charges 20,157 33,687

Present value of minimum lease payments 187,191 237,146


Kohinoor Textile Mills Limited

Less: Current portion shown under current liabilities 12 86,272 102,947

100,919 134,199

6.1 The minimum lease payments has been discounted at an implicit interest rate ranges from
6.00% to 17.64% (2008: from 6.00% to 15.06%) per annum to arrive at their present value.

The lease rentals are payable in monthly and quarterly installments. In case of any default an
additional charge at the rate of 0.1 percent per day shall be payable. Taxes, repairs, replacements
46 and insurance costs are to be borne by the Company. The lease agreements carry renewal and
purchase option at the end of the lease term. There are no financial restrictions in lease
ANNUAL REPORT 2009

agreements. These are secured by deposit of Rupees 24.841 million (2008: Rupees 19.258
million) included in long term security deposits, demand promissory notes, personal guarantees
and pledge of sponsors' shares in public limited companies.
6.2 Minimum lease payments and present value of minimum lease payments are regrouped
as under:
30 June 2009 30 June 2008
Minimum lease Present value Minimum lease Present value
payments of minimum payments of minimum
lease payments lease payments
................(Rupees in thousand)................
Due not later than one year 88,922 86,272 123,410 102,947
Due later than one year but
not later than five years 118,426 100,919 147,423 134,199

207,348 187,191 270,833 237,146

7. LEASE FINANCE ADVANCE

This represents advance against sanctioned direct finance lease agreement of Rupees 42,102 thousand.
The lease arrangement is for a period of three years. The lease term will start on 11 July 2009 and
first rental will be due on 11 August 2009 whereas the final lease rental will be due on 11 July 2012.
The lease finance facility carries interest rate of 3 months KIBOR plus spread of 400 bps with quarterly
reset/ re-fixation and is secured against the first exclusive charge on compact spinning devices. The
rate of interest on the principal amount outstanding as at 30 June 2009 is 15.86 % and this advance
will be grouped under liabilites against assets subject to finance lease in the next financial year.

8. DEFERRED TAX
2009 2008
(Rupees in thousand)
The liability for deferred taxation comprises timing differences relating to:
Taxable temporary differences
Accelerated tax depreciation allowance 289,245 356,607
Surplus on revaluation of investment 156,047 263,542
Unrealized gain on derivative financial instrument - 72,119
445,292 692,268
Deductible temporary differences
Tax losses carry forward 310,625 225,369
134,667 466,899

8.1 The movement in deferred tax assets and liabilities during the year without taking into consideration

Kohinoor Textile Mills Limited


the off setting balances within the same tax jurisdiction is as follows:

Deferred tax liabilities Deferred tax assets


Accelerated Surplus/Deficit Unrealized gain Net liability
Provision for (asset)
tax on revaluation on derivative Total Tax losses doubtful Total
debts
depreciation of investment financial
instrument
................(Rupees in thousand)................

Balance as at July 01, 2007 240,443 235,549 - 475,992 205,048 132 205,180 270,812
Charged to equity - 27,993 72,119 100,112 - - - 100,112
Charged to profit and loss account 116,164 - - 116,164 20,321 (132) 20,189 95,975 47
Balance as at June 30, 2008 356,607 263,542 72,119 692,268 225,369 - 225,369 466,899
ANNUAL REPORT 2009

Charged to equity - (107,495) (72,119) (179,614) - - - (179,614)


Charged to profit and loss account (67,362) - - (67,362) 85,256 - 85,256 (152,618)
Balance as at June 30, 2009 289,245 156,047 - 445,292 310,625 - 310,625 134,667
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
9. TRADE AND OTHER PAYABLES
2009 2008
Note (Rupees in thousand)

Creditors 700,490 554,481


Accrued liabilities 99,980 62,631
Advances from customers 32,839 10,449
Workers' profit participation fund 9.1 1,254 1,279
Unclaimed dividend 2,681 2,681
Withholding tax payable 2,388 1,563
Provident fund 5,138 137
Others 4,985 3,777

849,755 636,998

9.1 Workers' profit participation fund


Balance at the beginning of the year 1,279 1,223

Add: Interest on funds utilized in the Company's business 164 61


Less: Payments to the fund 189 5

1,254 1,279

9.1.1 The Company retains workers’ profit participation fund for its business operations till the date
of allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers
Participation Act,1968) on funds utilized by the Company till the date of allocation to workers.

10. ACCRUED MARK UP


2009 2008
Note (Rupees in thousand)

Long term financing 62,793 162,949


Short term borrowings 120,542 71,855
Liabilities against assets subject to finance lease 1,924 1,592

185,259 236,396

11. SHORT TERM BORROWINGS - Secured


Kohinoor Textile Mills Limited

From banking companies:


Short term running finance 11.1 1,253,594 1,435,066
Other short term finances 11.1 1,968,863 1,169,739
State Bank of Pakistan (SBP) refinances 11.2 1,580,000 1,370,000
Temporary bank overdraft 8,014 19,719

4,810,471 3,994,524

11.1 The running finance facilities sanctioned by various banks aggregate to Rupees 3,603 million
48 (2008:Rupees 5,046 million). The rates of mark-up range from 13.25% to 18.48% (2008: from
3.62% to 16.10%) per annum. These arrangements are secured by pledge of raw material,
ANNUAL REPORT 2009

charge on current assets of the Company including hypothecation of work-in-process, stores


and spares, letters of credit, firm contracts, book debts and personal guarantees of the sponsor
directors.
11.2 The export refinance facilities sanctioned by various banks aggregate to Rupees 2,950 million
(2008:Rupees 1,580 million). The rate of mark-up was 7.50% (2008: 7.50%) per annum. These
arrangements are secured by way of charge on current assets of the Company and personal
guarantees of the sponsor directors.
12. CURRENT PORTION OF NON-CURRENT LIABILITIES
2009 2008
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
Note (Rupees in thousand)
Long term financing - secured 5 830,770 506,707
Liabilities against assets subject to finance lease 6 86,272 102,947
917,042 609,654
13. CONTINGENCIES AND COMMITMENTS
13.1 Contingencies
a) In framing the assessment for the assessment year 2002-03, the tax authorities assessed
loss for the year at Rupees 16.486 million by charging to tax the dividend income separately
against the declared income of Rupees 5.101 million in addition to disallowing profit and
loss expenses previously accepted by them. The Company has disputed the contention
of the tax authorities for these demands and has filed appeal with the Income Tax Appellate
Tribunal against the order of the tax authorities. Pending the outcome of the appeal no
provision has been made in these financial statements for the additional demand for the
assessment year 2002-03, which on the basis adopted by the authorities would amount
to Rupees 2.541 million, since the Company has strong grounds against the assessment
framed by the tax authorities.
b) The Company and the tax authorities have filed appeals before different appellate authorities
regarding sales tax matters. Pending the outcome of appeals filed by the Company and
tax authorities, no provision has been made in these financial statements which on the
basis adopted by the authorities would amount to Rupees 33.473 million, since the
Company has strong grounds against the assessments framed by the tax authorities.
c) The Company has filed recovery suits in civil courts of Rupees 3.322 million against
various suppliers and customers for goods supplied by/ to them. Pending the outcome
of the cases, no provision thereagainst has been made in the financial statements since
the Company is confident about favourable outcome of the cases.
d) Guarantees issued by various commercial banks, in respect of financial and operational
obligations of the Company, to various institutions and corporate bodies aggregate Rupees
319.430 million as at 30 June, 2009 (2008: Rupees 286.531 million).
13.2 Commitments in respect of

Kohinoor Textile Mills Limited


a) Letters of credit for capital expenditure amount to Rupees 43.996 million (2008:
Rupees 116.318 million).
b) Letter of credit other than for capital expenditure amount to Rupees 235.345 million (2008:
Rupees 237.430 million).
c) Post dated cheques issued to suppliers amount to Rupees 212.902 million (2008:
Rupees 107.925 million).
14. PROPERTY, PLANT AND EQUIPMENT
2009 2008
Note (Rupees in thousand) 49
Operating fixed assets 14.1 4,047,897 3,899,877
ANNUAL REPORT 2009

Capital work in progress 14.2 92,336 72,663


4,140,233 3,972,540
ANNUAL REPORT 2009 Kohinoor Textile Mills Limited

50
14.1 OPERATING FIXED ASSETS
AS AT 30 JUNE 2008 MOVEMENT DURING THE YEAR AS AT 30 JUNE 2009
Description Accumulated Net Book Disposal Cost / Transfer Cost / Depreciation Accumulated Net Book Rates
Cost Additions Accumulated Accumulated Cost
Depreciation Value charge Depreciation Value
Depreciation Depreciation
.............................(R u p e e s i n t h o u s a n d )............................. %
Owned
Freehold land 14,836 - 14,836 - - - - 14,836 - 14,836 -
Office buildings 12,272 4,673 7,599 462 - - 405 12,734 5,078 7,656 5
Factory buildings 700,992 306,075 394,917 110,172 - - 37,294 811,164 343,369 467,795 10
Other buildings 46,746 6,058 40,688 12,249 - - 2,545 58,995 8,603 50,392 5
Residential buildings 69,260 31,529 37,731 25,838 - - 2,543 95,098 34,072 61,026 5
School and hospital 3,710 892 2,818 - - - 138 3,710 1,030 2,680 5
Plant and machinery 4,520,668 1,578,682 2,941,986 284,417 7,443 (4,418) 273,270 4,793,224 1,842,164 2,951,060 10
- - - - (6,409) 3,379 - - - - -
Service and other equipment 30,582 20,095 10,487 271 - - 1,046 30,853 21,141 9,712 10
Computer and IT installations 54,133 34,087 20,046 1,821 45 - 6,047 55,909 40,134 15,775 30
Furniture and fixture 61,949 31,608 30,341 5,323 142 - 3,175 67,130 34,666 32,464 10
- - - - (117) - - - - - -
Office equipment 21,176 10,519 10,657 2,430 121 - 1,042 23,485 11,486 11,999 10
- - - - (75) - - - - - -
Vehicles 95,867 43,315 52,552 7,198 4,646 - 8,720 98,419 49,186 49,233 20
- - - - (2,849) - - - - - -
5,632,191 2,067,533 3,564,658 450,181 12,397 (4,418) 336,225 6,065,557 2,390,929 3,674,628
- - - - (9,450) 3,379 - - - - -
Leased
Plant and machinery 408,248 78,910 329,338 71,441 - - 32,459 479,689 111,369 368,320 10
Vehicles 7,660 1,779 5,881 - - - 932 7,660 2,711 4,949 20
415,908 80,689 335,219 71,441 - - 33,391 487,349 114,080 373,269

6,048,099 2,148,222 3,899,877 521,622 12,397 (4,418) 369,616 6,552,906 2,505,009 4,047,897
- - - - (9,450) 3,379 - - - -
14.1.1 Depreciation charge for the year has been allocated as follows:
2009 2008
Owned Note (Rupees in thousand)
Cost of sales 29.2 314,743 310,235
Administrative expenses 31.2 21,482 21,845
336,225 332,080
Leased
Cost of sales 29.2 32,459 30,450
Administrative expenses 31.2 932 1,323
33,391 31,773
369,616 363,853
14.1.2 OPERATING FIXED ASSETS
AS AT 01 JULY 2007 MOVEMENT DURING THE YEAR AS AT 30 JUNE 2008
Description Accumulated Net Book Disposal Cost / Transfer Cost / Depreciation Accumulated Net Book Rates
Cost Depreciation Value Additions Accumulated Accumulated charge Cost Depreciation Value
Depreciation Depreciation
.............................(R u p e e s i n t h o u s a n d )............................. %

Owned
Freehold land 14,836 - 14,836 - - - - 14,836 - 14,836 -
Office buildings 11,861 4,260 7,601 411 - - 413 12,272 4,673 7,599 5
Factory buildings 622,780 273,865 348,915 78,212 - - 32,210 700,992 306,075 394,917 10
Other buildings 36,130 3,930 32,200 10,616 - - 2,128 46,746 6,058 40,688 5
Residential buildings 67,582 29,045 38,537 1,678 - - 2,484 69,260 31,529 37,731 5
School and hospital 2,494 796 1,698 1,216 - - 96 3,710 892 2,818 5
Plant and machinery 4,090,782 1,331,739 2,759,043 463,933 34,047 - 273,018 4,520,668 1,578,682 2,941,986 10
- - - - (26,075) - - - - - -
Service and other equipment 29,834 19,023 10,811 5,102 4,354 - 1,084 30,582 20,095 10,487 10
- - - - (12) - - - - - -
Computer and IT installations 52,590 30,331 22,259 5,420 3,877 - 6,964 54,133 34,087 20,046 30
- - - - (3,208) - - - - - -
Furniture and fixture 58,960 28,726 30,234 3,315 326 - 3,058 61,949 31,608 30,341 10
- - - - (176) - - - - - -
Office equipment 20,548 9,905 10,643 1,072 444 - 1,000 21,176 10,519 10,657 10
- - - - (386) - - - - - -
Vehicles 93,601 40,590 53,011 13,978 11,712 - 9,625 95,867 43,315 52,552 20
- - - - (6,900) - - - - - -

5,101,998 1,772,210 3,329,788 584,953 54,760 - 332,080 5,632,191 2,067,533 3,564,658 -


- - - - (36,757) - - - - - -
Leased
Plant and machinery 358,973 48,460 310,513 49,275 - - 30,450 408,248 78,910 329,338 10
Vehicles 14,620 3,465 11,155 - 6,960 - 1,323 7,660 1,779 5,881 20
- - - - (3,009) - - - - - -

373,593 51,925 321,668 49,275 6,960 - 31,773 415,908 80,689 335,219


- - - - (3,009) - - - - -

5,475,591 1,824,135 3,651,456 634,228 61,720 - 363,853 6,048,099 2,148,222 3,899,877


- - - - (39,766) - - - - -

51
ANNUAL REPORT 2009 Kohinoor Textile Mills Limited
ANNUAL REPORT 2009 Kohinoor Textile Mills Limited

52
14.1.3 DETAIL OF DISPOSAL OF ASSETS

Description Cost Accumulated Net Book Sale Proceed Gain / (Loss) Mode of
Depreciation Value Disposal Particulars of purchaser

.............................(R u p e e s i n t h o u s a n d ).............................
6- Comber CM-10 W/LAP FORMER 7,443 6,410 1,033 1,035 2 Negotiation Ali Asghar Textile Mills Ltd, Karachi, 306-8, Unitower, I.I.Chandrigar Road, Karachi
Suzuki Mehran RIW-9820 338 284 54 181 127 Negotiation Muhammad Aslam, Rawalpindi
Honda Civic EXI RLA-6975 584 103 481 517 36 Negotiation Raja Muhammad Akram, Rawalpindi
Suzuki Khyber RIW-4721 393 341 52 228 176 Negotiation Mr . Rehmat Jalil s/o Abdul Jalil
Honda Civic AJS-262 1,328 473 855 820 (35) Negotiation Muhammad Amin Rajanpur
Toyota Corolla LOW - 3064 349 300 49 474 425 Negotiation Muhammad Zafar H. # 551, St # 68 Sector I-8/3 Islamabad.
Suzuki Van LRU-1215 373 229 144 299 155 Negotiation Muhammad Rafi-u-Zaman, 26-A Green land street, Ali park, Samanabad, Lahore
Pajero LOY - 6000 1,282 1,117 165 1,150 985 Negotiation Mr. Ghulam Abbas 57-G Sher Shah Road, Multan Cantt.
Items of net book value below Rupees 307 193 114 113 (1) Negotiation
50,000 each

2009 12,397 9,450 2,947 4,817 1,870

2008 54,760 36,757 18,003 19,299 1,296


Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
14.2 CAPITAL WORK IN PROGRESS
2009 2008
(Rupees in thousand)
Civil works and buildings 15,897 42,964
Plant and machinery 76,439 29,699
Maple Leaf Cement Factory
Maple Limited 92,336
Leaf Cement Factory Limited 72,663
15. INVESTMENT PROPERTIES
Balance as on July 01 1,720,835 1,384,577
Net gain from fair value adjustment - 336,258
Balance as on June 30 1,720,835 1,720,835
The fair value of the investment property situated at Lahore has been determined by Messers Hasib
Associates Private Limited at Rupees 769,192 thousand as at 26 June 2008. Land situated at Rawalpindi
has been determined by Messers Asrem Private Limited at Rupees 951,643 thousand as at
20 May 2008. The fair value was determined on the basis of professional assessment of the current
prices in an active market for similar properties in the same location and condition. The valuers have
certified that there is no material change in fair value during the current financial year and as on the
balance sheet date.
16. LONG TERM INVESTMENT
2009 2008
(Rupees in thousand)
Investment in subsidiary - available for sale
Quoted
Maple Leaf Cement Factory Limited
186,608,808 (2008: 186,608,808) ordinary shares of
Rupees 10 each fully paid
Equity held 50.13% (2008: 50.13%)
Fair value of investment at the beginning of the year 2,035,902 4,553,255
Deficit on revaluation of investment (1,240,948) (2,517,353)
Fair value of investment at the end of the year 794,954 2,035,902
Due to the prevailing economic conditions, the equity markets plunged significantly during the year.
Due to these “ rare circumstances”, indications existed that the investment may be impaired. The
management, in accordance with provisions of International Accounting Standard (IAS) 36 “Impairment
of Assets” has determined the recoverable amount of its investment i.e. higher of fair value less cost
to sell and value in use. Based on favourable value in use, the management concludes that the carrying
amount of investment in Maple Leaf Cement Factory Limited does not exceed its recoverable amount.
17. LONG TERM DEPOSITS Kohinoor Textile Mills Limited
2009 2008
Note (Rupees in thousand)
Security deposits 44,901 32,470
Less: current portion shown under current assets 23 11,284 3,646
33,617 28,824
18. STORES, SPARES AND LOOSE TOOLS
Stores including in transit Rupees 8.484 million 53
(2008: Rupees 21.238 million) 215,516 208,134
ANNUAL REPORT 2009

Spares 87,871 82,813


Loose tools 560 -
303,947 290,947
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

19. STOCK-IN-TRADE
2009 2008
(Rupees in thousand)
Raw material including in transit Rupees 60.232 million
(2008: Rupees 108.212 million) 618,265 578,372
Work-in-process 546,792 471,943
Finished goods Maple Leaf Cement Factory
Maple Limited 614,769
Leaf Cement Factory Limited 622,747
1,779,826 1,673,062

20. TRADE DEBTS

Considered Good:
Secured (against letter of credit) 592,941 813,228
Unsecured 457,160 527,232
1,050,101 1,340,460

20.1 As at 30 June 2009, trade debts of Rupees 225.526 million (30 June 2008 : Rupees 527.171
million) were past due but not impaired. These relate to a number of independent customers
from whom there is no recent history of default. The ageing analysis of these trade debts is
as follows:
2009 2008
(Rupees in thousand)
Upto 1 month 190,322 391,435
1 to 6 months 20,427 119,896
More than 6 months 14,777 15,840
225,526 527,171

21. ADVANCES - considered good


Advances to :
- Executives 2,255 2,866
- Other employees 466 851
- Suppliers 299,019 345,571
301,740 349,288
Letters of credit 1,622 21,134
Kohinoor Textile Mills Limited

303,362 370,422
22. DERIVATIVE FINANCIAL INSTRUMENT
During the period under review, the Company has derecognized the derivative financial instrument
pursuant to the termination of cross currency swap agreement with the financial institution. The related
costs amounting to Rupees 196.057 million have been charged to finance cost.

23. SECURITY DEPOSITS AND PREPAYMENTS


2009 2008
54 Note (Rupees in thousand)
ANNUAL REPORT 2009

Current portion of security deposits 17 11,284 3,646


Prepayments 17,099 5,468
28,383 9,114
24. OTHER RECEIVABLES
2009 2008
Note (Rupees in thousand)
Sales tax refundable 215,877 214,371
Custom duty receivable 3,642 3,642
Export rebate 32,302 25,547
Insurance claims Maple Leaf Cement Factory
Maple Limited
181
Leaf Cement Factory Limited
537
Due from subsidiary undertaking (Maple Leaf Cement Factory Limited) 24.1 10,657 458
Research and development support 25,735 42,957
Others 13,338 6,745
301,732 294,257
24.1 This represents amount receivable against allocation of pool expenses.

25. SHORT TERM INVESTMENTS


2009 2008
Note (Rupees in thousand)
Investments
Held for trading
Quoted companies 13,611 6,545
Loss on remeasurement of fair value during the year (7,464) (1,037)
6,147 5,508
Available for sale
Associated Company - unquoted
Security General Insurance Company Limited 25.1 1,010,969 904,327
6,398,541 (2008 : 6,398,541) Ordinary shares of
Rupees 10 each fully paid.
Equity held 9.40% (2008 : 9.40%)
Chief executive officer - Ms. Nabiha Samad
Surplus/ (deficit) on revaluation of investment (409,506) 106,642
601,463 1,010,969
607,610 1,016,477

25.1 During the year ended 30 June 2009, the Company has changed the accounting estimate for
valuation of unquoted available for sale investments. Fair value of unquoted, available for sale
investment is now determined by using dividend stream method. Previously, valuation was
carried out using net assets based valuation model. Fair value of Rupees 94 per share was
calculated using present value dividend stream method based upon dividend yield in the expected
cash flow from the investment as per unaudited accounts for the period ended 30 June 2009.
25.2 Maple Leaf Cement Factory Limited, a subsidiary of the Company holds 4,570,389 (2008: Kohinoor Textile Mills Limited
4,570,389) ordinary shares of Security General Insurance Company representing 6.71% (2008:
6.71%) equity.
26. CASH AND BANK BALANCES
2009 2008
(Rupees in thousand)
Cash in hand 721 2,348
Cash at bank: 55
- On current accounts 65,685 35,487
ANNUAL REPORT 2009

- On saving accounts 13,891 37,552


79,576 73,039
80,297 75,387
The balances in deposit accounts carry interest ranging from 0.20% to 12% (2008: from 0.10% to
6.50%) per annum.

The balances in current and deposit accounts include US $ 72,465 (2008: US $ 329,290)

27. NON CURRENT ASSETS CLASSIFIED AS HELD FOR SALE


2009 2008
Maple Leaf Cement Factory
Maple Limited (Rupees
Leaf Cement Factory Limitedin thousand)
Land 551,662 392,242
Advance against land 50,000 36,000
601,662 428,242

The management intends to dispose off this land located at Raiwind Road, after negotiating with its
intended buyer. Land is expected to be sold in next financial year. The proceeds of the disposal are
expected to exceed the cost of land. Accordingly, no impairment loss has been recognized on the
asset classified as held for sale.

28. SALES
2009 2008
Note (Rupees in thousand)
Export 5,452,211 3,843,485
Local 2,971,466 3,694,079
Export rebate 35,222 20,758
8,458,899 7,558,322

29. COST OF SALES

Raw materials consumed 29.1 3,192,060 2,852,417


Cloth and yarn procured and consumed 1,405,218 1,278,889
Salaries, wages and other benefits 674,443 505,138
Provident fund contributions 15,893 13,872
Dyes and chemicals consumed 505,493 336,530
Processing charges 22,452 2,710
Stores and spares consumed 234,522 239,557
Packing materials 322,317 207,118
Fuel and power 453,899 561,915
Repair and maintenance 36,086 64,629
Insurance 19,717 15,858
Other factory overheads 36,562 31,307
Kohinoor Textile Mills Limited

Depreciation 29.2 347,202 340,685


7,265,864 6,450,625
Work-in-process
Opening stock 471,943 458,329
Closing stock (546,792) (471,943)
(74,849) (13,614)
Cost of goods manufactured 7,191,015 6,437,011
Finished goods
56 Opening stock 622,747 581,358
Closing stock (614,769) (622,747)
ANNUAL REPORT 2009

7,978 (41,389)
Cost of sales 7,198,993 6,395,622
29.1 Raw material consumed
2009 2008
Note (Rupees in thousand)

Opening stock 470,160 678,895


Add: Purchased during the year 3,279,933 2,643,682
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
3,750,093 3,322,577
Less: Closing stock 558,033 470,160

3,192,060 2,852,417

29.2 Depreciation

Property, plant and equipment


Owned 14.1.1 314,743 310,235
Leased 14.1.1 32,459 30,450

347,202 340,685

30. SELLING AND DISTRIBUTION EXPENSES

Salaries, wages and other benefits 32,867 26,628


Provident fund contributions 1,009 1,012
Outward freight and handling 28,492 39,462
Clearing and forwarding 160,317 137,092
Travelling and conveyance 18,651 11,967
Insurance 405 701
Vehicles' running expenses 3,699 3,824
Electricity, gas and water 679 419
Postage, telephone and telex 3,201 3,315
Legal and professional - 4
Sales promotion and advertisement 17,370 20
Commission to selling agents 190,877 151,043
Miscellaneous expenses 7,281 5,674

464,848 381,161

31. ADMINISTRATIVE EXPENSES

Salaries, wages and other benefits 80,794 67,481


Provident fund contributions 2,220 1,864
Kohinoor Textile Mills Limited
Travelling and conveyance 4,382 4,833
Repairs and maintenance 9,743 7,962
Rent, rates and taxes 2,908 3,284
Insurance 4,483 2,338
Vehicles' running expenses 7,099 4,975
Printing, stationery and periodicals 4,795 4,366
Electricity, gas and water 1,175 788
Postage, telephone and telex 3,987 3,525
Legal and professional 2,995 3,036
Research and development 31.1 - 4 57
Security, gardening and sanitation 18,915 14,264
Depreciation 31.2 22,414 23,168
ANNUAL REPORT 2009

Miscellaneous expenses 10,055 7,654

175,965 149,542
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

31.1 Research and development

Note
Maple Leaf Cement Factory
Maple Leaf
Limited
Cement Factory Limited
Support on account of research and development 31.1.1 - 108,302
Less : Utilization
Product development - 86,685
Professional consultancy - 2,499
Participation in exhibition - 19,122

- 108,306

- 4

31.1.1The research and development support was given by Ministry of Commerce, Government of
Pakistan vide SRO 803(1)/2006 dated 04 August 2006 in order to encourage and regulate the
research and development in textile sector.

31.2 Depreciation

Note

Property, plant and equipment

Owned 14.1.1 21,482 21,845


Leased 14.1.1 932 1,323

22,414 23,168

32. OTHER OPERATING EXPENSES

Auditors' remuneration 32.1 1,045 877


Loss on disposal of investments 4,727 8,284

Loss on remeasurement of fair value of


investments held for trading 7,464 1,037
Kohinoor Textile Mills Limited

Donations 32.2 21,000 11,960


Miscellaneous 45 -

34,281 22,158
32.1 Auditors' remuneration

Statutory audit fee 750 425


Certification including half yearly review 215 350
Out of pocket expenses 80 102
58
1,045 877
ANNUAL REPORT 2009

32.2 None of the directors and their spouses have any interest in the donees' fund.
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

33. OTHER OPERATING INCOME


2009 2008
Note (Rupees in thousand)
Maple Leaf Cement Factory
Maple Leaf
Limited
Cement Factory Limited
Income from financial assets:

Exchange gain 78,350 22,781


Return on bank deposits 2,237 1,961
Dividend income 546 217
81,133 24,959
Income from Associated Company:

Dividend income
Security General Insurance Company Limited 15,996 12,797
Income from non-financial assets:
Scrap sales 30,479 27,584
Gain on disposal of property, plant and equipment 14.1.3 1,870 1,296
Gain on investment property - 336,258
Gain on sale of land classified as held for sale 8,190 -
Miscellaneous 1,074 407
41,613 365,545
138,742 403,301
34. FINANCE COST

Mark-up/finance charges/ interest on:


Long term financing 397,809 317,622
Term finance certificates - 3,611
Short term borrowings 575,378 289,854
Liabilities against assets subject to finance lease 24,842 28,119
Loss on cross currency swap 196,057 156,898
Workers' profit participation fund (WPPF) 164 61
Provident fund 322 -
1,194,572 796,165
Bank charges and commission 24,616 29,389

Kohinoor Textile Mills Limited


Exchange loss 41,042 56,781
1,260,230 882,335
35. PROVISION FOR TAXATION

Current year
Current 35.1 55,754 38,350
Deferred (152,619) 95,975
(96,865) 134,325 59
ANNUAL REPORT 2009

35.1 Provision of income tax has been made according to the provisions of Income Tax Ordinance,
2001. Numeric tax reconciliation is not given as the Company falls under the ambit of persumptive
tax regime under section 169 of Income Tax Ordinance, 2001 due to available tax losses.
36. CASH GENERATED FROM OPERATIONS
2009 2008
Note (Rupees in thousand)
Profit / (Loss) before taxation (536,676) 130,805

Adjustment for non-cash charges and other items:


Depreciation
Maple Leaf Cement
Maple Factory
Leaf Cement
Maple
Limited
Factory
Leaf Cement
Maple
Limited
Factory
Leaf Cement
Maple
Limited
Factory
Leaf Cement
Limited
Maple Factory 369,616
Limited Factory
Leaf Cement Limited 363,853
Finance cost 1,260,230 882,335
Gain on sale of fixed assets (1,870) (1,296)
Loss on disposal of investments 4,727 8,284
Dividend income (16,542) (13,014)
Return on bank deposits (2,237) (1,961)
Gain on sale of land classified as held for sale (8,190) -
Loss on remeasurement of fair value of
investments held for trading 7,464 1,037
Gain on remeasurement of fair value of
investment property - (336,258)
Working capital changes 36.1 423,691 (276,992)

1,500,213 756,793

36.1 Working capital changes

(Increase)/ decrease in current assets:


Stores and spares (13,000) (6,719)
Stock-in-trade (106,764) 82,035
Trade debts 290,359 (278,140)
Advances 67,060 (232,646)
Security deposits and short term prepayments (19,269) 5,349
Other receivables (7,475) (8,875)

210,911 (438,996)

Increase in current liabilities


Trade and other payables 212,780 162,004
423,691 (276,992)

37. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amount charged in the financial statements for the year for remuneration including
Kohinoor Textile Mills Limited

certain benefits to the chief executive, directors and executives of the Company is as follows:
Chief Executive Directors Executives
2009 2008 2009 2008 2009 2008
Number of persons 1 1 3 3 31 28
..............(R u p e e s i n t h o u s a n d )..............
Managerial remuneration 4,800 3,570 4,297 2,747 32,715 26,484
Contribution to provident fund 308 243 99 25 2,410 1,759
Housing and utilities - - 87 115 5,458 4,367
60 Medical - 230 1,246 1,284 1,849 1,534
Group insurance 185 146 59 15 122 20
ANNUAL REPORT 2009

Club subscription 73 60 - 10 - -
Others - - - - 4,132 4,900
5,366 4,249 5,788 4,196 46,686 39,064
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

Maple Leaf Cement Factory


Maple Leaf
Limited
Cement Factory Limited

Maple Leaf Cement Factory


Maple Leaf
Limited
Cement Factory Limited

The Chief Executive Officer and directors are provided with free transport, residential telephone facilities
for both business and personal use and free medical facilities. Chief executive is also provided free
furnished accommodation.

Executives are provided with free use of Company maintained vehicles in accordance with the Company
policy.

The aggregate amount charged in the financial statements in respect of directors' meeting fee paid
to 2 (2008: 3) directors was Rupees 60,000 (2008: Rupees 16,800).

38. TRANSACTIONS WITH RELATED PARTIES

The related parties comprise of subsidiary, associated companies, directors of the company and their
close relatives, key management personnel and staff retirement fund. Detail of transactions with related
parties, other than those which have been specifically disclosed elsewhere in these financial statements
are as follows:
2009 2008
Note (Rupees in thousand)
Subsidiary
Purchase of goods and services 4,523 763
Sale of goods and services 1,485 2,109
Purchase of property, plant and equipment - 972
Sale of property, plant and equipment - 4,865

Associated
Dividend income 15,996 12,797

Post employment benefit plan


Contribution to provident fund 38.1 19,122 16,748
Interest paid on provident fund 322 -

38.1 Contributions to the provident fund are in accordance with the terms of the entitlement of
employees.
2009 2008
39. EARNINGS PER SHARE - BASIC AND DILUTED

Kohinoor Textile Mills Limited


Net loss for the year Rupee in thousand (439,811) (3,520)
Weighted average ordinary shares in issue Numbers 145,526,216 145,526,216
Earnings per share Rupees (3.02) (0.02)

No figure for diluted earnings per share has been presented as the Company has not issued any
instrument carrying options which would have an impact on the basic earnings per share, when
exercised.
61
ANNUAL REPORT 2009
40. PLANT CAPACITY AND ACTUAL PRODUCTION
2009 2008
SPINNING:
- Rawalpindi Division (Numbers)
Spindles (average) installed / worked; 85,834 84,672
(Kilograms in thousand)
100% Plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 37,945 38,892
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 35,298 36,605
- Gujar Khan Division (Numbers)
Spindles (average) installed / worked; 66,068 66,996
(Kilograms in thousand)
100% Plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 27,732 30,763
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 26,318 28,899
WEAVING:
- Raiwind Division (Numbers)
Looms installed / worked 204 204
(Square meters in thousand)
100% Plant capacity at 60 picks based on 3 shifts
per day for 1,093 shifts (2008: 1,096 shifts) 84,875 84,875
Actual production converted to 60 picks based on 3 shifts
per day for 1,093 shifts (2008: 1,096 shifts) 68,271 70,050
PROCESSING OF CLOTH:
- Rawalpindi Division (Meters in thousand)
Capacity at 3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 54,750 54,900
Actual at 3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 30,626 22,988

POWER PLANT: (Mega Watts)


- Rawalpindi Division
Annual rated capacity - based on 365 days (2008: 366 days) 207,787 199,027
Actual generation
Kohinoor Textile Mills Limited

Main engines 7,124 15,773


Gas engines 64,663 51,927
- Raiwind Division
Annual rated capacity - based on 365 days (2008: 366 days) 54,312 54,460
Actual generation
Gas engines 28,166 29,732
Standby generators 50 50
REASONS FOR LOW PRODUCTION
62
- Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality,
interruption in gas and electricity supply.
ANNUAL REPORT 2009

- Cloth processing units working capacity was limited to actual export / local orders in hand.
- The generation of power was limited to actual demand.
41. FINANCIAL RISK MANAGEMENT

41.1 Financial risk factors

The Company's activities expose it to a variety of financial risks: market risk (including currency
risk, other price risk and interest rate risk), credit risk and liquidity risk. The Company's overall
risk management programme focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance.

Risk management is carried out by the Board of Directors (the Board). The Board provides
principles for overall risk management, as well as policies covering specific areas such as
currency risk, other price risk, interest rate risk, credit risk and liquidity risk.

(a) Market risk

(i) 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. Currency
risk arises mainly from future commercial transactions or receivables and payables
that exist due to transactions in foreign currencies.

The Company is exposed to currency risk arising from various currency exposures,
primarily with respect to the United States Dollar (USD), Euro and GBP. Currently,
the Company's foreign exchange risk exposure is restricted to bank balances, the
amounts receivable / payable from / to the foreign entities. The Company uses
forward exchange contracts to hedge its foreign currency risk, when considered
appropriate. The Company's exposure to currency risk was as follows:
2009 2008
(Rupees in thousand)
Cash at banks - USD 72 329
Trade debts - USD 10,473 12,419
Trade debts - Euro 245 913
Trade debts - GBP 18 44
Trade and other payable - USD 26 18
Net exposure - USD 10,519 12,730
Net exposure - Euro 245 913
Net exposure - GBP 18 44

Kohinoor Textile Mills Limited


The following significant exchange rates
were applied during the year:

Rupees per US Dollar


Average rate 78.73 62.45
Reporting date rate 81.10 68.00

Rupees per Euro


Average rate 107.74 101.28
Reporting date rate 114.54 107.33 63
ANNUAL REPORT 2009

Rupees per GBP


Average rate 126.45 124.30
Reporting date rate 135.05 135.54
Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5%


against the USD, Euro and GBP with all other variables held constant, the impact
on loss after taxation for the year would have been Rupees 42.655 million, Rupees
1.403 million and Rupees 0.122 million (30 June 2008: Rupees 43.282 million,
Rupees 4.900 million and Rupees 0.298 million) respectively higher / lower, mainly
as a result of exchange gains / losses on translation of foreign exchange denominated
financial instruments. Currency risk sensitivity to foreign exchange movements has
been calculated on a symmetric basis. 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), whether those changes are
caused by factors specific to the individual financial instrument or its issuer, or
factors affecting all similar financial instrument traded in the market. The Company
is not exposed to commodity price risk.

Sensitivity analysis

The table below summarises the impact of increase / decrease in the Karachi Stock
Exchange (KSE) Index on the Company's loss after taxation for the year and on
equity (fair value reserve). The analysis is based on the assumption that the equity
index had increased / decreased by 5% with all other variables held constant and
all the Company's equity instruments moved according to the historical correlation
with the index:
Impact on other
Impact on profit / (loss) components of equity
Index after taxation (fair value reserve)
2009 2008 2009 2008
.............. (Rupees in thousand) ..............

KSE 100 (5% increase) 307 275 39,747 101,795


KSE 100 (5% decrease) (307) (275) (39,747) (101,795)
Kohinoor Textile Mills Limited

Equity (fair value reserve) would increase / decrease as a result of gains / losses
on equity investments classified as available for sale.

(iii) Interest rate risk

This represents the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates.

The Company has no significant long-term interest-bearing assets. The Company's


64 interest rate risk arises from long term financing, liabilities against assets subject
to finance lease, lease finance advance and short term borrowings. Borrowings
ANNUAL REPORT 2009

obtained at variable rates expose the Company to cash flow interest rate risk.
Borrowings obtained at fixed rate expose the Company to fair value interest rate
risk.
At the balance sheet date the interest rate profile of the Company’s interest bearing
financial instruments was:
2009 2008
(Rupees in thousand)
Fixed rate instruments
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
Financial liabilities
Long term financing 549,141 738,329
Short term borrowings 1,580,000 1,370,000
Liabilities against assets subject to finance lease 8,017 16,033

Floating rate instruments


Financial assets
Bank balances- saving accounts 13,891 37,552

Financial liabilities
Long term financing 2,200,200 2,219,408
Short term borrowings 3,230,471 2,624,524
Liabilities against assets subject to finance lease 179,174 221,113
Lease finance advance 35,922 -

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at
fair value through profit or loss. Therefore, a change in interest rate at the balance
sheet date would not affect profit or loss of the Company.

Cash flow sensitivity analysis for variable rate instruments

If interest rate at the year end date, fluctuates by 1% higher / lower with all other
variables held constant, loss after taxation for the year would have been Rupees
56.458 million (30 June 2008: Rupees 50.650 million) lower / higher, mainly as
a result of higher / lower interest expense on floating rate borrowings. This analysis
is prepared assuming the amounts of liabilities outstanding at balance sheet dates
were outstanding for the whole year.

(b) Credit risk

Kohinoor Textile Mills Limited


Credit risk represents the risk that one party to a financial instrument will cause a financial
loss for the other party by failing to discharge an obligation. The carrying amount of
financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was as follows:
2009 2008
(Rupees in thousand)

Investments 1,402,564 3,052,379


Deposits 20,060 13,212
Trade debts 1,050,101 1,340,460 65
Other receivables 24,176 7,740
ANNUAL REPORT 2009

Bank balances 79,576 73,039

2,576,477 4,486,830
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 2009 2008
Short term Long term Agency (Rupees in thousand)

Banks
National Bank of Pakistan A-1+ AAA JCR-VIS 4,656 9,110
Allied Bank Limited A1+ AA PACRA 31,292 10,731
Askari Bank Limited A1+ AA PACRA 5,703 5,587
Bank Alfalah Limited A1+ AA PACRA 2,536 3,197
Faysal Bank Limited A1+ AA PACRA 1,872 5,320
Habib Bank Limited A-1+ AA+ JCR-VIS 103 86
MCB Bank Limited A1+ AA+ PACRA 12,611 14,655
NIB Bank Limited A1+ AA- PACRA 11,106 9,425
The Royal Bank of Scotland
Limited A1+ AA PACRA 76 227
My Bank Limited A2 A- PACRA 30 30
The Bank of Punjab A1+ AA- PACRA 1,763 536
Meezan Bank Limited A-1 A+ JCR-VIS - 2,355
Silkbank Limited A-3 A- JCR-VIS 30 43
Standard Chartered Bank
(Pakistan) Limited A1+ AAA PACRA 837 1,744
United Bank Limited A-1+ AA+ JCR-VIS 2,611 580
Al-Baraka Islamic Bank Limited A-1 A JCR-VIS 4,350 9,413
79,576 73,039

Investments
Maple Leaf Cement Factory Limited A JCR-VIS 794,954 2,035,902
Security General Insurance
Company Limited A-2 PACRA 601,463 1,010,969
1,396,417 3,046,871
1,475,993 3,119,910

The Company's exposure to credit risk and impairment losses related to trade debts is disclosed
in Note 20.
Due to the Company's long standing business relationships with these counterparties and after
giving due consideration to their strong financial standing, management does not expect non-
Kohinoor Textile Mills Limited

performance by these counter parties on their obligations to the Company. Accordingly the credit
risk is minimal.

(c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities.

The Company manages liquidity risk by maintaining sufficient cash and the availability of funding
66 through an adequate amount of committed credit facilities. At 30 June 2009, the Company had
Rupees 10,474.41 million available borrowing limits from financial institutions and Rupees 80.297
million cash and bank balances. Inspite the fact that the Company is in a negative working capital
ANNUAL REPORT 2009

position at the year end, management believes the liquidity risk to be low. Following are the contractual
maturities of financial liabilities, including interest payments. The amount disclosed in the table are
undiscounted cash flows:
Contractual maturities of financial liabilities as at 30 June 2009
Carrying Contractual 6 months 6 - 12 1-2 More than
Amount cash flows or less months years 2 years
..............(R u p e e s i n t h o u s a n d )..............

Long term financing 2,749,341 3,413,720 506,992 606,169 1,031,773 1,268,786


Maple Leaf Cement
Liabilities Maple
Factory
againstLeaf Limited
Cement
assets Maple
Factory
Leaf Limited
Cement Factory
Maple LeafLimited
Cement Factory Limited
subject to finance lease 187,191 207,348 35,963 52,959 50,812 67,614
Lease finance advance 35,922 36,460 36,460 - - -
Trade and other payables 808,136 808,136 808,136 - - -
Accrued mark-up 185,259 185,259 185,259 - - -
Short term borrowings 4,810,471 4,991,732 4,438,253 553,479 - -

8,776,320 9,642,655 6,011,063 1,212,607 1,082,585 1,336,400

Contractual maturities of financial liabilities as at 30 June 2008


Carrying Contractual 6 months 6 - 12 1-2 More than
Amount cash flows or less months years 2 years
..............(R u p e e s i n t h o u s a n d )..............

Long term financing 2,957,737 4,191,145 423,556 358,190 1,234,256 2,175,143


Liabilities against assets
subject to finance lease 237,146 270,833 67,400 56,010 59,091 88,332
Trade and other payables 623,570 623,570 623,570 - - -
Accrued mark-up 236,396 236,396 236,396 - - -
Short term borrowings 3,994,524 4,126,163 3,781,560 344,603 - -

8,049,373 9,448,107 5,132,482 758,803 1,293,347 2,263,475

The contractual cash flows relating to the above financial liabilities have been determined
on the basis of interest rates / mark up rates effective as at 30 June. The rates of interest
/mark up have been disclosed in note 5, note 6, note 7 and note 11 to these financial
statements.

41.2 Fair values of financial assets and liabilities

The carrying values of all financial assets and liabilities reflected in financial statements
approximate their fair values. Fair value is determined on the basis of objective evidence at each
reporting date.

41.3 Financial instruments by categories


Loans and Throug profit Available Total Kohinoor Textile Mills Limited
receivables and loss for sale
.....................(Rupees in thousand).....................
As at 30 June 2009

Assets as per balance sheet


Investments - 6,147 1,396,417 1,402,564
Deposits 20,060 - - 20,060
Trade debts 1,050,101 - - 1,050,101 67
Other receivables 24,176 - - 24,176
Cash and bank balances 80,297 - - 80,297
ANNUAL REPORT 2009

1,174,634 6,147 1,396,417 2,577,198


Maple Leaf Cement Factory Limited

Financial liabilities
at amortized cost
(Rupees in thousand)
Liabilities as per balance sheet
Long term financing 2,749,341
Liabilities against assets subject
to finance lease 187,191
Lease finance advance 35,922
Short term borrowings 4,810,471
Trade and other payables 808,136
Accrued mark-up 185,259

8,776,320

Loans and Throug profit Available Total


receivables and loss for sale
.....................(Rupees in thousand).....................
As at 30 June 2008

Assets as per balance sheet


Investments - 5,508 3,046,871 3,052,379
Deposits 13,212 - - 13,212
Trade debts 1,340,460 - - 1,340,460
Other receivables 7,740 - - 7,740
Cash and bank balances 75,387 - - 75,387

1,436,799 5,508 3,046,871 4,489,178

Financial liabilities
at amortized cost
(Rupees in thousand)
Liabilities as per balance sheet
Long term financing 2,957,737
Liabilities against assets subject
to finance lease 237,146
Short term borrowings 3,994,524
Trade and other payables 623,570
Kohinoor Textile Mills Limited

Accrued mark-up 236,396

8,049,373

41.3 a) 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. In order
68 to maintain or adjust the capital structure, the Company may adjust the amount of dividends
paid to shareholders, return capital to shareholders through repurchase of shares, issue new
ANNUAL REPORT 2009

shares or sell assets to reduce debt. Consistent with others in the industry and the requirements
of the lenders, the Company monitors the capital structure on the basis of gearing ratio. This
ratio is calculated as borrowings divided by total capital employed. Borrowings represent long-
term financing, liabilities against assets subject to finance lease, lease finance advance and
short-term borrowings obtained by the Company as referred to in note 5, note 6, note 7 and
note 11 respectively. Total capital employed includes ‘total equity’ as shown in the balance
sheet plus ‘borrowings’. The gearing ratio as at year ended 30 June 2009 and 30 June 2008
is as follows:
2009 2008
(Rupees in thousand)

Borrowings 7,782,925 7,189,407


Total equity 1,605,325 3,722,030

Total capital employed 9,388,250 10,911,437

Gearing Ratio 82.90% 65.89%

42. DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorised for issue on September 26, 2009 by the Board of Directors
of the Company.

43. CORRESPONDING FIGURES

No significant reclassification/ rearrangement of corresponding figures has been made.

44. GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.

Kohinoor Textile Mills Limited


Chief Executive Director

69
ANNUAL REPORT 2009
PATTERN OF SHAREHOLDING
1. CUIN (Incorporation Number) 0002805
2. Name of Company Kohinoor Textile Mills Limited
3. Pattern of holding of shares held by the shareholders as at 30.06.2009

4. Size of Holding
No. of From To Total
Shareholders shares held
2,649 1 100 74,574
1,148 101 500 335,593
455 501 1000 354,735
720 1001 5000 1,917,019
142 5001 10000 1,061,593
55 10001 15000 682,862
36 15001 20000 650,553
22 20001 25000 502,730
17 25001 30000 478,976
4 30001 35000 127,525
5 35001 40000 193,449
4 40001 45000 165,940
6 45001 50000 288,073
2 50001 55000 106,579
6 55001 60000 349,322
4 60001 65000 245,234
2 65001 70000 134,000
1 70001 75000 70,001
1 75001 80000 77,000
2 80001 85000 168,000
1 85001 90000 85,074
2 90001 95000 186,827
9 95001 100000 895,088
1 100001 105000 103,500
2 105001 110000 215,085
2 110001 115000 224,600
1 130001 135000 133,817
1 135001 140000 137,500
1 145001 150000 150,000
2 150001 155000 307,500
Kohinoor Textile Mills Limited

1 155001 160000 155,203


1 160001 165000 160,085
1 165001 170000 169,838
1 180001 185000 182,000
1 195001 200000 196,000
1 200001 205000 201,156
1 215001 220000 218,000
2 250001 255000 501,629
1 275001 280000 275,302
1 280001 285000 283,312
70
1 295001 300000 300,000
2 300001 305000 605,291
ANNUAL REPORT 2009

1 305001 310000 306,900


1 310001 315000 312,000
1 315001 320000 315,847
Size of Holding
No. of Total
From To
Shareholders shares held
1 335001 340000 340,000
1 340001 345000 343,000
1 385001 390000 387,000
1 405001 410000 409,500
1 435001 440000 436,184
1 445001 450000 447,218
1 450001 455000 450,216
1 490001 495000 495,000
1 560001 565000 560,500
1 565001 570000 567,062
1 635001 640000 635,250
1 740001 745000 740,500
2 820001 825000 1,648,428
1 840001 845000 841,200
1 870001 875000 874,498
1 875001 880000 877,134
1 995001 1000000 1,000,000
2 1040001 1045000 2,086,768
1 1115001 1120000 1,116,000
1 1280001 1285000 1,283,007
1 2580001 2585000 2,583,652
1 2690001 2695000 2,690,371
1 2705001 2710000 2,705,062
1 2805001 2810000 2,807,384
1 3475001 3480000 3,477,237
1 6570001 6575000 6,573,181
1 7695001 7700000 7,700,000
1 8260001 8265000 8,261,366
1 10040001 10045000 10,040,331
1 10825001 10830000 10,827,332
1 22510001 22515000 22,510,635
1 35205001 35210000 35,205,888
5,354 TOTAL 145,526,216

Note : The Slabs not applicable above have not been shown.
5 Categories of Shareholders

Kohinoor Textile Mills Limited


5.1 Directors, CEO and their spouse & minor children
No. of Shares Percentage
Shareholders Held of Capital

Mr. Tariq Sayeed Saigol, Chairman/Director 10,040,331 6.8993


Mr. Taufique Sayeed Saigol, Chief Executive/Director 10,827,332 7.4401
Mr. Sayeed Tariq Saigol, Director 315,847 0.2170
Mr. Waleed Tariq Saigol, Director 20,937 0.0144
Mr. Kamil Taufique Saigol, Director 2,500 0.0018
Mr. Zamiruddin Azar, Director 5,930 0.0041 71
Mr. Abdul Hai Mehmood Bhaimia, Director 23,643 0.0162
ANNUAL REPORT 2009

Mrs. Shehla Tariq Saigol, spouse of Mr. Tariq Sayeed Saigol 450,216 0.3094
8 21,686,736 14.9023
No. of Shares Percentage
Shareholders Held of Capital
5.2. Associated Companies, undertakings
and related parties
Maple Leaf CementMaple
Factory
Leaf
Limited
CementMaple
FactoryLeaf
Limited
Cement Factory Limited
Zimpex (Private) Limited 1 22,510,635 15.4684
5.3 NIT and ICP
National Bank of Pakistan,Trustee Deptt. 6,573,181 4.5169
IDBP (ICP UNIT) 18,247 0.0125
2 6,591,428 4.5294

5.4 Banks, Development Financial Institutions,


Non-Banking Financial Institutions 21 3,503,483 2.4075
5.5 Insurance Companies 6 964,805 0.6630
5.6 Modarabas , Leasing and Mutual Funds 10 3,031,750 2.0833
5.7 Shareholders holding Ten Percent or
more voting interest in the Company
refer 5.2 & 5.8 b
5.8 General Public
a. Individuals 5,190 36,623,850 25.1665
b. Foreign Investor (s) 10 43,240,391 29.7131
5.9 Joint Stock Companies 89 6,987,860 4.8018
5.10 Public Sector Companies and Corporations 1 300,405 0.2064

5.11 Executives - - -

5.12 Others

Artal Restaurant Int Ltd Employees Provident Fund 1,815


Fikree Development Corporation Limited 2,794
Hussain Trustees Limited 260
International Brands (Pvt) Limited 256
Islamabad Stock Exchange (Guarantee) Limited 61
Managing Committee of Tameer-e-Millat Foundation 506
Securities & Exchange Commission of Pakistan 1
Kohinoor Textile Mills Limited

The Deputy Administrator Abandoned Properties 3,045


The Ida Rieu Poor Welfare Association 354
The Karachi Stock Exchange (Guarantee) Ltd-Future Cont. 61,425
The Okhai Memon Madressah Association 1
Trustees Al-Abbas Sugar Mills Ltd Employees Gratuity Fund 9,075
Trustees Artal Restaurants Intl Employees Provident Fund 760
Trustees Moosa Lawai Foundation 3,751
United Executers & Trustee Company Limited 173
University of Sindh 596
72 16 84,873 0.0583
ANNUAL REPORT 2009

Grand Total : 5,354 145,526,216 100.0000


Consolidated Financial Statements of
Kohinoor Textile Mills Limited

Kohinoor Textile Mills Limited


ANNUAL REPORT 2009
DIRECTORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

The Directors are pleased to present the audited consolidated financial statements of the group for the year
ended 30th June, 2009.

GROUP RESULTS

The Group during the period under review has shown a mammoth growth of 53.79% in its turn over as
compared to previous year. The Group has shown gross profit of Rs. 6,323 million as compared to Rs.
2,597 million of corresponding year. The finance cost has increased to Rs. 4,660 million as compared
to Rs. 2,695 million for the last year. The group has suffered pre-tax loss of Rs. 1,454 million this year
while it was Rs. 1,233 million for the last year.

The overall group financial results are as follows:

Gross sales 23,812,751 15,483,475


Gross profit 6,322,818 2,596,617
Profit from operations 3,206,130 1,461,564
Financial charges 4,660,471 2,695,142

Maple Leaf Cement Factory Limited

The subsidiary company of Kohinoor Textile Mills Limited has shown gross profit of 32.49% as compared
to 16.94% of previous year. High taxation on cement, substantial export expenses, increase in power tariff
and increase in financial charges due to induction of interest bearing finances, hike of base rate and
devaluation of Pak rupee have resulted in pre-tax loss of Rs. 917.651 million.

ACKNOWLEDGEMENT

The Directors are grateful to the Group's members, financial institutions, customers and employees for
their cooperation and support. They also appreciate the hard work and dedication of the employees working
at various divisions.
Kohinoor Textile Mills Limited

For and on behalf of the Board

Taufique Sayeed Saigol


Lahore September 26, 2009 Chief Executive

74
ANNUAL REPORT 2009
AUDITORS’ REPORT TO THE MEMBERS

We have audited the annexed consolidated financial statements comprising consolidated balance sheet
of Kohinoor Textile Mills Limited (the Holding Company) and its Subsidiary Company (together referred
to as Group) as at 30 June 2009 and the related consolidated profit and loss account, consolidated cash
flow statement and consolidated statement of changes in equity together with the notes forming part
thereof, for the year then ended. We have also expressed separate opinion on the financial statements of
Kohinoor Textile Mills Limited. The financial statements of the Subsidiary Company, Maple Leaf Cement
Factory Limited was audited by another firm of auditors, whose report has been furnished to us and our
opinion, in so far as it relates to the amounts included for such Company, is based solely on the report
of such other auditors. These financial statements are the responsibility of the Holding Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.

Our audit was conducted in accordance with the International Standards on Auditing and accordingly
included such tests of accounting records and such other auditing procedures as we considered necessary
in the circumstances.

In our opinion, the consolidated financial statements present fairly the financial position of Kohinoor Textile
Mills Limited and its Subsidiary Company as at 30 June 2009 and the results of their operations for the
year then ended.

RIAZ AHMAD & COMPANY


Chartered Accountants

Atif Bin Arshad

ISLAMABAD Kohinoor Textile Mills Limited

Date: September 26, 2009

75
ANNUAL REPORT 2009
Maple
Maple Leaf Cement Leaf Limited
Factory Cement Factory Limited

CONSOLIDATED BALANCE SHEET

Note
EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized share capital


170,000,000 ( 2008: 170,000,000)
ordinary shares of Rupees 10 each 1,700,000 1,700,000
30,000,000 ( 2008: 30,000,000)
preference shares of Rupees 10 each 300,000 300,000

2,000,000 2,000,000

Issued, subscribed and paid up share capital 3 1,455,262 1,455,262


Reserves 4 2,456,202 4,155,623

Shareholders' equity 3,911,464 5,610,885


Minority interest 5 3,669,866 4,488,988

Total equity 7,581,330 10,099,873

Surplus on revaluation of investment properties 1,263,592 1,263,592

NON-CURRENT LIABILITIES
Long term financing 6 2,745,185 3,727,793
Redeemable capital 7 7,200,000 8,000,000
Liabilities against assets subject to finance lease 8 963,133 1,091,633
Lease finance advances 9 35,922 -
Long term deposits 10 2,580 2,582
Employees' compensated absences 11 18,990 16,688
Deferred tax 12 204,422 621,640

11,170,232 13,460,336

CURRENT LIABILITIES
Trade and other payables 13 3,193,658 3,133,692
Accrued mark-up 14 626,453 430,964
Short term borrowings 15 9,192,793 7,364,262
Kohinoor Textile Mills Limited

Current portion of non-current liabilities 16 3,648,540 1,877,665

16,661,444 12,806,583

CONTINGENCIES AND COMMITMENTS 17

36,676,598 37,630,384

The annexed notes form an integral part of these financial statements.


76
ANNUAL REPORT 2009

Chief Executive
AS AT 30 JUNE 2009
Maple
Maple Leaf Cement Leaf Cement
Factory LimitedFactory Limited

Note
ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 18 24,521,559 24,053,849


Investment properties 19 1,720,835 1,720,835
Intangible assets 20 7,332 15,082
Long term loans to employees 21 5,666 6,121
Long term deposits and prepayments 22 85,102 82,838

26,340,494 25,878,725

CURRENT ASSETS
Stores, spares and loose tools 23 3,240,141 3,616,691
Stock -in- trade 24 2,430,740 2,107,014
Trade debts 25 1,732,345 2,083,826
Loans and advances 26 398,158 473,667
Derivative financial instruments 27 - 571,802
Due from gratuity fund trust 42 8,184 9,768
Security deposits and short term prepayments 28 171,689 78,406
Accrued interest 1,105 878
Other receivables 29 320,778 352,917
Short term investments 30 1,014,173 1,751,336
Taxation recoverable 31 236,900 97,591
Cash and bank balances 32 180,229 179,521

9,734,442 11,323,417

Non current assets classified as held for sale 33 601,662 428,242

10,336,104 11,751,659

Kohinoor Textile Mills Limited

36,676,598 37,630,384

77
ANNUAL REPORT 2009

Director
Maple
Maple Leaf Cement Leaf Limited
Factory Cement Factory Limited

Maple Leaf Cement Factory


Maple Leaf
Limited
Cement Factory Limited

CONSOLIDATED PROFIT AND LOSS ACCOUNT


FOR THE YEAR ENDED 30 JUNE 2009

Note

SALES 34 23,812,751 15,483,475


COST OF SALES 35 17,489,933 12,886,858

GROSS PROFIT 6,322,818 2,596,617

SELLING AND DISTRIBUTION EXPENSES 36 2,913,084 1,326,097


ADMINISTRATIVE EXPENSES 37 326,744 270,272
OTHER OPERATING EXPENSES 38 60,807 38,181

3,300,635 1,634,550

3,022,183 962,067
OTHER OPERATING INCOME 39 183,947 499,497

PROFIT FROM OPERATIONS 3,206,130 1,461,564


FINANCE COST 40 4,660,471 2,695,142

LOSS BEFORE TAXATION (1,454,341) (1,233,578)

TAXATION 41 (31,546) (553,784)

LOSS AFTER TAXATION (1,422,795) (679,794)


LESS: MINORITY INTEREST
Dividend on preference shares 52,794 52,794
Share in loss for the year (516,554) (363,530)

(463,760) (310,736)

LOSS AFTER TAXATION AND MINORITY INTEREST (959,035) (369,058)

LOSS PER SHARE - RUPEES 46 (6.59) (2.54)


Kohinoor Textile Mills Limited

The annexed notes form an integral part of these financial statements.

78
ANNUAL REPORT 2009

Chief Executive Director


Maple
Maple Leaf Cement Leaf Limited
Factory Cement Factory Limited

CONSOLIDATED CASH FLOW STATEMENT


FOR THE YEAR ENDED 30 JUNE 2009

Note

CASH FLOWS FROM OPERATING ACTIVITIES


Cash generated from operations 43 5,080,447 1,796,759
Finance cost paid (4,464,982) (2,702,072)
Vacation benefits paid (3,744) (3,641)
WPPF paid (25) (5)
Income taxes paid (259,384) (127,374)
Net cash generated from / (used in) operating activities 352,312 (1,036,333)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure on property, plant and equipment (1,840,294) (1,995,547)
Payment for land classified as held for sale (190,230) (428,242)
Long term deposits (2,264) (11,503)
Long term loans to employees 455 109
Purchase of investment (30,225) (451,344)
Return on bank deposits 12,079 6,917
Proceeds from sale of property, plant and equipment 10,143 15,981
Proceeds from sale of investments 13,792 653,469
Sale of land classified as held for sale 25,000 -
Dividend received 28,259 25,035
Net cash used in investing activities (1,973,285) (2,185,125)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Long term financing 913,964 4,328,256
Redeemable capital - 8,000,000
Lease finances advance received 35,922 197,758
Short term borrowing 1,828,531 3,791,172
Repayment of:
Long term financing (1,023,619) (12,863,752)
Finance leases (80,576) (100,669)
Term finance certificates - (71,250)
Long term deposits from stockist - net (2) (120)
Dividend paid (52,539) (52,746)
Net cash from financing activities 1,621,681 3,228,649 Kohinoor Textile Mills Limited

Net increase / (decrease) in cash and cash equivalents 708 7,191


Cash and cash equivalents at the beginning of the year 179,521 172,330
Cash and cash equivalents at the end of the year 32 180,229 179,521

The annexed notes form an integral part of these financial statements.


79
ANNUAL REPORT 2009

Chief Executive Director


ANNUAL REPORT 2009 Kohinoor Textile Mills Limited

80
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2009
(Rupees in thousand)
Share holders’ Equity
Reserves
Capital Reserves Revenue Reserves Total
Share Minority
Total Total Equity
Capital Dividend Un- Interest
Share Surplus on Hedging General Reserves
premium revaluation reserves Sub Total Reserve Equalization appropriated Sub Total
of investment Reserve Profit

Balance as at 30 June 2007 1,455,262 144,919 935,229 121,423 1,201,571 1,490,491 9,509 1,562,012 3,062,012 4,263,583 5,718,845 4,804,188 10,523,033
Revaluation of investments to fair value - - 65,244 - 65,244 - - - - 65,244 65,244 (13,336) 51,908
Transfer from dividend equalization reserve - - - - - - (9,509) 9,509 - - - - -
Net loss for the year - - - - - - - (369,058) (369,058) (369,058) (369,058) (310,736) (679,794)
Dividend paid to minority share holders - - - - - - - - - - - (52,731) (52,731)
Gain arising on derivative cross currency
interest rate swap - - - 195,854 195,854 - - - - 195,854 195,854 61,603 257,457

Balance as at 30 June 2008 1,455,262 144,919 1,000,473 317,277 1,462,669 1,490,491 - 1,202,463 2,692,954 4,155,623 5,610,885 4,488,988 10,099,873

Revaluation of investments to fair value - - (423,109) - (423,109) - - - - (423,109) (423,109) (120,478) (543,587)
Transfer from General reserve - - - - - (40,000) - 40,000 - - - - -
Net loss for the year - - - - - - - (959,035) (959,035) (959,035) (959,035) (463,760) (1,422,795)
Dividend paid to minority share holders - - - - - - - - - - - (52,478) (52,478)
Adjustment of derivative cross currency interest rate swap - - - (317,277) (317,277) - - - - (317,277) (317,277) (182,406) (499,683)

Balance as at 30 June 2009 1,455,262 144,919 577,364 - 722,283 1,450,491 - 283,428 1,733,919 2,456,202 3,911,464 3,669,866 7,581,330

The annexed notes form an integral part of these financial statements.

Chief Executive Director


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009

1. THE GROUP AND ITS OPERATIONS

1.1 Holding Company

Kohinoor Textile Mills Limited ("the Holding Company") is a public limited company incorporated
in Pakistan under the Companies Act, 1913 (now Companies Ordinance, 1984) and listed on
the Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Company is
situated at 42-Lawrence Road, Lahore. The Holding Company holds 50.13% (2008: 50.13%)
shares of the Subsidiary company. The principal activity of the Holding Company is manufacturing
of yarn and cloth, processing and stitching the cloth and trade of textile products.

1.2 Subsidiary Company

Maple Leaf Cement Factory Limited ("the Subsidiary") was incorporated in Pakistan on
13 April, 1960 under the Companies Act, 1913 (now the Companies Ordinance, 1984) as a
public company limited by shares and was listed on stock exchanges in Pakistan on
17 August, 1994. The registered office of the Subsidiary is situated at 42-Lawrence Road,
Lahore. The Subsidiary is engaged in production and sale of cement.

1.3 Basis of consolidation

The financial statements of the Subsidiary 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 have been consolidated on a line by line basis and
the carrying value of investment held by the Holding Company is eliminated against Holding
Company's share in paid up capital of the Subsidiary.

Material intra-group balances and transactions have been eliminated.

Minority interest is that part of net results of the operations and of net assets of the Subsidiary
attributable to interests which are not owned by the Holding Company. Minority interest is
presented as a separate item in the consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Kohinoor Textile Mills Limited

The significant accounting policies applied in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to all years presented, unless otherwise
stated:

2.1 Basis of Preparation


81
a) Statement of Compliance
ANNUAL REPORT 2009

These consolidated financial statements have been prepared in accordance with approved
accounting standards as applicable in Pakistan. Approved accounting standards comprise
of such International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board as are notified under the Companies Ordinance, 1984,
provisions of and directives issued under the Companies Ordinance, 1984. In case
requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall
prevail.

b) Accounting Convention

These consolidated financial statements have been prepared under the historical cost
convention, except for:

- modification of foreign currency translation adjustments;


- revaluation of investment properties at fair value;
- recognition of employee retirement benefits at present value;
- measurement at fair value of certain financial assets; and
- recognition of derivative financial instruments at fair value.

c) Critical accounting estimates and judgments

The preparation of consolidated financial statements in conformity with the approved


accounting standards require the use of certain critical accounting estimates. It also
requires the management to exercise its judgment in the process of applying the Group's
accounting policies. Estimates and judgments are continually evaluated and are based
on historical experience, including expectation of future events that are believed to be
reasonable under the circumstances. The areas where various assumptions and estimates
are significant to the Group's financial statements or where judgments were exercised
in application of accounting policies are as follows:

Financial instruments

The fair value of financial instruments that are not traded in an active market is determined
by using valuation techniques based on assumptions that are dependent on conditions
existing at balance sheet date.

Useful lives, patterns of economic benefits and impairments

Estimates with respect to residual values, depreciable lives and pattern of flow of economic
benefits are based on the analysis of the management of the Group. Further, the Group
reviews the value of assets for possible impairments on an annual basis. Any change in
Kohinoor Textile Mills Limited

the estimates in the future might affect the carrying amount of respective item of property,
plant and equipment, with a corresponding effect on the depreciation charge and impairment.

Taxation

In making the estimates for income tax currently payable by the Group, the management
takes into account the current income tax law and the decisions of appellate authorities
on certain issues in the past.
82
Provisions for doubtful debts
ANNUAL REPORT 2009

The Group reviews its receivable against any provision required for any doubtful balances
on an ongoing basis. The provision is made while taking into consideration expected
recoveries, if any.
Impairment of investments in associated companies

In making an estimate of future cash flows from the Group's investments in associated
companies, the management considers future dividend stream and an estimate of the
terminal value of these investments.

d) Standard that is effective in current year

IFRS 7 'Financial Instruments: Disclosures'. The Securities and Exchange Commission


of Pakistan (SECP) vide S.R.O 411(1) / 2008 dated 28 April 2008 notified the adoption
of IFRS 7. IFRS 7 is mandatory for Group's accounting periods beginning on or after the
date of notification i.e 28 April 2008. IFRS 7 has superseded IAS 30 and disclosure
requirements of IAS 32. Adoption of IFRS 7 has only impacted the format and extent of
disclosures presented in the consolidated financial statements.

e) Standards, interpretations and amendments to published approved accounting standards


that are effective in current year but not relevant

There are other new standards, interpretations and amendments to the published approved
accounting standards that are mandatory for accounting periods beginning on or after
01 July 2008 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.

f) Standards and amendments to published approved accounting standards that are not
yet effective but relevant

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 2009 or later
periods:

IAS 1 'Presentantion of Financial Statements' (effective for annual periods beginning on


or after 01 January 2009), issued in September 2007 revises the existing IAS 1 and
requires apart from changing the names of certain financial statements, presentation of
transactions with owners in statement of changes in equity and with non-owners in the
Comprehensive Income Statement. Adoption of the aforesaid standard will only impact

Kohinoor Textile Mills Limited


the presentation of the consolidated financial statements.

IAS 23 (Amendment) 'Borrowing Costs' (effective for annual periods beginning on or after
01 January 2009). It requires an entity to capitalize borrowing costs directly attributable
to the acquisition, construction or production of a qualifying asset (one that takes a
substantial period of time to get ready for use or sale) as part of the cost of that asset.
On adoption the option of immediately expensing those borrowing costs will be withdrawn.
This change will not affect the consolidated financial statemetns as the Group already
has the policy to capitalize its borrowing cost. 83
ANNUAL REPORT 2009

IFRS 7 (Amendment) 'Financial Instruments: Disclosures' (effective for annual periods


beginning on or after 01 January 2009). This amendment has expanded the disclosures
required in respect of fair value measurements recognized in the Statement of Financial
Position. Moreover, amendments have also been made to the liquidity risk disclosures.
Such amendments are not expected to have any significant impact on the Group's
consolidated financial statements other than increase in disclosures. IFRS 8 'Operating
Segments' (effective for annual periods beginning on or after 01 January 2009). It
introduces the "management approach" to segment reporting. IFRS 8 will require presentation
and disclosure of segment information based on the internal reports regularly reviewed
by the Group's chief operating decision makers in order to assess each segment's
performance and to allocate resources to them. Currently, the Group does not present
segment information as IAS 14 limited reportable segments to those that earn a majority
of their revenue from sales to external customers and therefore did not require the different
stages of vertically integrated operations to be identified as separate segments. Under
the management approach, the Group will present segment information in respect of each
reportable segment.

There are other amendments resulting from May 2008 and April 2009 Annual Improvements
to IFRSs, specifically in IFRS 8 'Operating Segments', IAS 1 'Presentation of Financial
Statements', IAS 7 'Statement of Cash Flows', IAS 19 'Employee Benefits', IAS 23 'Borrowing
Costs', IAS 28 'Investments in Associates', IAS 36 'Impairment of Assets' and IAS 39
'Financial Instruments: Recognition and Measurement' 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 accounting standards


that are not effective in current year and not considered relevant

There are other accounting standards, amendments to published approved accounting


standards and new interpretations that are mandatory for accounting periods beginning
on or after 01 July 2009 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.

2.2 Employee benefits

Holding Company
Kohinoor Textile Mills Limited

The Holding Company operates an approved funded contribution provident fund covering all
of its permanent employees. Equal monthly contributions are made both by the Holding Company
and employees at the rate of 8.33 percent of basic salary and cost of living allowance to the
fund. The Holding Company's contributions to the fund are charged to profit and loss account.

Subsidiary Company

84 (a) Defined contribution plan


ANNUAL REPORT 2009

The Subsidiary operates a defined contributory approved provident fund for all of its
employees. Equal monthly contributions are made both by the Subsidiary and employees
at the rate of 10% of the basic salary to the fund.
(b) Defined benefit plan

The Subsidiary also maintains an approved gratuity fund under which the gratuity is
payable on cessation of employment, subject to a minimum qualifying period of service.
The contributions are made to the fund in accordance with the actuary's recommendations
based on the actuarial valuation of the fund using projected unit credit method. Actuarial
gains / losses are recognized in accordance within the limits set-out by IAS 19 "Employee
Benefits".

(c) Liability for employees' compensated absences

The Subsidiary accounts for the liability in respect of employees' compensated absences
in the year in which these are earned. Provision to cover the obligations is made using
the current salary level of employees.

2.3 Taxation

Current

Provision for current tax is based on the taxable income for the year determined in accordance
with the prevailing law for taxation of income. The charge for current tax is calculated using
prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge
for current tax also includes adjustments, where considered necessary, to provision for tax
made in previous years arising from assessments framed during the year for such years.

Deferred

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary
timing differences arising from difference between the carrying amount of the assets and
liabilities in the consolidated financial statements and corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are recognized for all taxable temporary
differences and deferred tax assets are recognized for all deductible temporary differences to
the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, unused tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the
differences reverse, based on tax rates that have been enacted or substantively enacted by the
balance sheet date. Deferred tax is charged or credited in the profit and loss account, except Kohinoor Textile Mills Limited
where deferred tax arises on the items credited or charged to equity in which case it is included
in equity.

2.4 Trade and other payables

Liabilities for trade and other amounts payable are initially recognized at fair value which is
normally the transaction cost.
85
2.5 Provisions
ANNUAL REPORT 2009

Provisions are recognized when the Group has a legal or constructive obligation as a result of
past event, if it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate of the amount can be made. Provisions
are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.

2.6 Finance leases

Leases where the Group has substantially all the risks and rewards of ownership are classified
as finance leases. Assets subject to finance lease are stated at the lower of present value of

minimum lease payments under the lease agreements and the fair value of the assets. The
related rental obligations, net of finance charges, are included in liabilities against assets subject
to finance lease.

Each lease payment is allocated between the liability and finance charge so as to achieve a
constant rate on the balance outstanding. Finance charge of the rental is charged to profit and
loss account over the lease term.

2.7 Property, plant, equipment and depreciation

Holding Company

Owned

a) Cost

Property, plant and equipment except freehold land and capital work in progress are stated
at cost less accumulated depreciation and impairment losses, if any. Freehold land and
capital work in progress are stated at cost. Cost of tangible assets consists of historical
cost, borrowing cost pertaining to erection /construction period and other directly
attributable cost of bringing the asset to working condition.

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 Holding Company and the cost of the item can be measured
reliably. All other repair and maintenance costs are charged to profit and loss account
during the period in which they are incurred.

b) Depreciation
Kohinoor Textile Mills Limited

Depreciation on all operating property, plant and equipment is charged to profit and loss
account on reducing balance method after taking into account residual value, if any, so
as to write off the depreciable amount of an asset over its estimated useful life at the rates
given in Note 18.1. Depreciation on additions is charged from the month the assets are
available for use while no depreciation is charged in the month in which the assets are
disposed off. The residual values and useful lives of assets are reviewed by the management
at each financial year end and adjusted if impact on depreciation is significant.

86 c) Derecognition
ANNUAL REPORT 2009

An item of property, plant and equipment is derecognized on 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 profit and loss account in the year
the asset is derecognized.

Leased

Finance lease

Leases where the Holding Company has substantially all the risk and rewards of ownership are
classified as finance lease. Asset subject to finance lease are capitalized at the commencement
of the lease term at the lower of present value of minimum lease payments under the lease
agreements and the fair value of the leased assets, each determined at the inception of the
lease. The related rental obligation net of finance cost, is included in liabilities against assets
subject to finance lease. The liabilities are classified as current and long term depending upon
the timing of payments.

Each lease payment is allocated between the liability and finance cost so as to achieve a
constant rate on the balance outstanding. The finance cost is charged to profit and loss account
over the lease term.

Depreciation of assets subject to finance lease is recognized in the same manner as for owned
assets. Depreciation of the leased assets is charged to profit and loss account.

Subsidiary Company

Owned

Property, plant and equipment, except freehold land and capital work-in-progress, are stated
at cost less accumulated depreciation and impairment losses (if any). Freehold land and capital
work-in-progress are stated at cost. Cost in relation to certain plant and machinery represents
historical cost, exchange differences capitalized upto 30 June, 2004 and the cost of borrowings
during the construction period in respect of loans and finances taken for the specific projects.

Transactions relating to jointly owned assets with Pak American Fertilizers Limited (PAFL), as
stated in Note 18.1.6, are recorded on the basis of advices received from the housing colony.

Depreciation is calculated at the rates specified in Note 18.1 on reducing balance method except

Kohinoor Textile Mills Limited


that straight-line method is used for the plant and machinery and buildings relating to dry
process plant after deducting residual value. Depreciation on additions is charged from the
month in which the asset is put to use and on disposals upto the month of disposal. The assets'
residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet
date.

The carrying values of property, plant and equipment are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying value may not be recoverable.
If any such indication exists and where the carrying values exceed the estimated recoverable
amount, the assets or cash-generating units are written-down to their recoverable amount. 87
ANNUAL REPORT 2009

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 Subsidiary and the cost of the item can be measured reliably. All other
repair and maintenance costs are charged to profit and loss account during the period in which
these are incurred.

Gains / losses on disposal or retirement of property, plant and equipment, if any, are taken to
profit and loss account.

Leased

Finance lease

Assets held under finance lease arrangements are initially recorded at the lower of present value
of minimum lease payments under the lease agreements and the fair value of the leased assets.

The related obligations under the leases less financial charges allocated to future periods are
shown as a liability. Depreciation on leased assets is charged applying the reducing balance
method at the rates used for similar owned assets, so as to depreciate the assets over their
estimated useful lives in view of the certainty of ownership of the assets at the end of the lease
term. The financial charges are allocated to accounting periods in a manner so as to provide
a constant periodic rate of interest on the outstanding liability.

2.8 Un-allocated capital expenditure

All costs or expenditures attributable to work-in-progress are capitalized and apportioned to


buildings and plant and machinery at the time of commencement of commercial operations.

2.9 Investment Properties

Investment properties are carried at fair value which is based on active market prices, adjusted,
if necessary, for any difference in the nature, location or condition of the specific asset. The
valuation of the property is carried out with sufficient regularity.

Gain or losses arising from a change in the fair value of investment properties are included in
the profit and loss account currently.

2.10 Intangible assets

Intangible assets, which are non-monetary assets without physical substance, are recognized
Kohinoor Textile Mills Limited

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. The useful life and amortization method is reviewed and adjusted, if appropriate, at each
balance sheet date.

Currently, intangible asset (computer software) is amortised using the straight-line method over
a period of three years. Amortisation on additions to intangible assets is charged from the
month in which an asset is put to use and on disposal upto the month of disposal.
88
2.11 Goodwill
ANNUAL REPORT 2009

The Group recognises goodwill as an asset arising due to difference between purchase
consideration and the fair value of the assets and liabilities and tests its impairment annually
in accordance with IAS 36 "Impairment of Assets". Negative goodwill is recognized as income
for the period.

2.12 Investments

The Group's management determines the appropriate classification of its investments at the
time of purchase.

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 assesses at the end of each reporting period whether there is any objective evidence
that investments are impaired. If any such evidence exists, the Group applies the provisions
of IAS 39 'Financial Instruments: Recognition and Measurement' to all investments, except
investments in associates, which are tested for impairment in accordance with the provisions
of IAS 36 'Impairment of Assets'.

a) Investments at fair value through profit or loss

Investments classified as held-for-trading and those designated as such are included in


this category. Investments are classified as held-for-trading if they are acquired for the
purpose of selling in the short term. Subsequent to initial recognition, these investments
are re-measured at fair value. Gains or losses on investments held-for-trading are
recognised in profit and loss account.

b) 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.
Investments intended to be held for an undefined period are not included in this classification.
Other long term investments that are intended to be held to maturity are subsequently
measured at amortized cost. This cost is computed as the amount initially recognized
minus principal repayments, plus or minus the cumulative amortization using the effective
interest method of any difference between the initially recognized amount and the maturity
amount. For investments carried at amortized cost, gains and losses are recognized in

Kohinoor Textile Mills Limited


profit and loss account when the investments are derecognized or impaired, as well as
through the amortization process.

c) Available-for-sale

Investments intended to be held for an indefinite period of time, which may be sold in
response to need for liquidity, or changes to interest rates or equity prices are classified
as available-for-sale. After initial recognition, investments which are classified as available-
for-sale are measured at fair value. Gains or losses on available-for-sale investments are
89
recognized directly in equity until the investment is sold, de-recognized or is determined
to be impaired, at which time the cumulative gain or loss previously reported in equity
ANNUAL REPORT 2009

is included in profit and loss account. All purchases and sales of investments are recognized
on the trade date which is the date that the Group commits to purchase or sell the
investment. Available for sale investments 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

These are carried at fair value determined on the basis of appropriate valuation techniques
as allowed by IAS 39 "Financial Instruments: Recognition and Measurement".

Change in Accounting Estimate

During the year ended 30 June 2009 the Holding Company has changed the accounting
estimate for valuation of unquoted available for sale investments. Fair value of unquoted,
available for sale investment is now determined by using dividend stream method.

Previously, valuation was carried out using net asset based valuation model. Effect of this
change in estimate is recognized prospectively in accordance with the requirements of
International Accounting Standard (IAS) 8 "Accounting Policies, Changes in Accounting
Estimates and Errors". Had there been no change in this accounting estimate, short term
investments, fair value reserve and deferred taxation would have been lower by Rupees
95.978 million, Rupees 70.783 million and Rupees 25.194 million respectively with nil
effect on the loss for the year ended 30 June 2009.

d) Equity investment in associated companies

The investments in associates where control can be established and those where the Group
does not have significant influence are classified as "Available-for-Sale".

2.13 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, spares and loose tools


Kohinoor Textile Mills Limited

Useable 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 material is based on annual average cost.

Cost of work in process and finished goods comprises cost of direct material, labour and
90 appropriate manufacturing overheads. Cost of goods purchased for resale are based on weighted
average.
ANNUAL REPORT 2009

Materials in transit are valued at cost comprising invoice value 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
costs necessarily to be incurred in order to make a sale.

2.14 Trade and other receivables

Trade debts and other receivables are carried at original invoice amount less an estimate made
for doubtful debts and other receivables based on a review of all outstanding amounts at the
year end. Bad debts and other receivables are written off when identified.

2.15 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at book value which approximates
their fair value. For the purposes of the cash flow statement, cash equivalents comprise cash
in hand, cash at banks and other short term highly liquid instruments that are readily convertible
into known amounts of cash and which are subject to insignificant risk of changes in values.

2.16 Non current assets classified as held for sale

Non-current assets that are expected to be sold within a period of one year from the balance
sheet date are classified as held for sale and are measured at lower of carrying amount and
fair value less costs to sell.

2.17 Revenue recognition

a) Revenue from local sales is recognized on dispatch of goods to customers while in case
of export sales it is recognized on the date of bill of lading.

b) Dividend on equity investments is recognized as income when the Group's right to receive
payment is established.

c) Profit on deposits with banks is recognized on time proportion basis taking into account
the amounts outstanding and rates applicable thereon.

2.18 Borrowing costs

Borrowing costs are capitalized upto the date of commissioning of respective fixed asset
acquired out of the proceeds of such borrowings. All other mark up, interest and other charges
are charged to profit and loss account.

Kohinoor Textile Mills Limited


2.19 Foreign currencies

These consolidated financial statements are presented in Pak Rupees, which is the Group’s
functional currency. Transactions in foreign currency during the year are translated into Pak
Rupees at the rates of exchange prevailing on the date of transaction. All monetary assets and
liabilities in foreign currencies are translated into Pak Rupees at the rate of exchange prevailing
on the balance sheet date except where forward exchange contracts have been made, in which
case the contracted rates are applied. All exchange differences are charged to the profit and
loss account. 91
ANNUAL REPORT 2009

2.20 Financial instruments

Financial instruments are recognized at fair value when the Group becomes party to the
contractual provisions of the instrument by following trade date accounting. Any gain or loss
on the subsequent measurement is charged to the profit and loss account. The Group derecognizes
a financial asset or a portion of financial asset when, and only when, the entity loses the control
over contractual right that comprises the financial asset or a portion of financial asset. While
a financial liability or a part of financial liability is derecognized from the balance sheet when,
and only when, it is extinguished, i.e. when the obligation specified in contract is discharged,
cancelled or expired.

The particular measurement methods adopted are disclosed in the individual policy statements
associated with each item.

Financial assets are investments, deposits, trade debts, other receivables and cash and bank
balances.

Financial liabilities are classified according to the substance of the contractual agreements
entered into. Significant financial liabilities are long term financing, redeemable capital, liabilities
against assets subject to finance lease, lease finance advances, short term borrowings, accrued
mark up and trade and other payables.

2.21 Derivative financial instruments

Derivative financial instruments are initially recognized at fair value on the date a derivative
contract is entered into and are remeasured to fair value at subsequent reporting dates. The
method of recognizing the resulting gain or loss depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item being hedged. The Group designates
certain derivatives as cash flow hedges.

The Group documents at the inception of the transaction the relationship between the hedging
instruments and hedged items, as well as its risk management objective and strategy for
undertaking various hedge transactions. The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in cash flow of hedged items.

The effective portion of changes in the fair value of derivatives that are designated and qualify
as cash flow hedges are recognized in equity. The gain or loss relating to the ineffective portion
is recognized immediately in the profit and loss account.
Kohinoor Textile Mills Limited

Amounts accumulated in equity are recognized in profit and loss account in the periods when
the hedged item will affect profit or loss account.

2.22 Impairment

The carrying amounts of the Company's assets are reviewed at each balance sheet date to
determine whether there is any indication of impairment loss. If any such indication exists, the
recoverable amount of such assets is estimated. An impairment loss is recognized whenever
92 the carrying amount of the asset exceeds its recoverable amount. Impairment losses are
recognized in the profit and loss account. Where an impairment loss subsequently reverses,
ANNUAL REPORT 2009

the carrying amount of the asset is increased to the revised recoverable amount but limited to
the extent of the initial cost of the asset. A reversal of the impairment loss is recognized in the
profit and loss account.
2.23 Related party transactions

Transactions and contracts with related parties are carried out at an arm's length price determined
Maple
Maple Leaf Cement Leaf Cement
Factory in accordance
LimitedFactory Limited with comparable uncontrolled
Maple Leaf price
Cement Factory
Maple method.
Limited
Leaf Cement Factory Limited

2.24 Dividend and other appropriations

Dividend to the shareholders is recognized in the period in which it is declared and other
appropriations are recognized in the period in which these are approved by the Board of Directors.

2.25 Off setting of financial assets and liabilities

Financial assets and liabilities are set off and the net amount is reported in the financial statements
when there is legally enforceable right to set off and the Group intends either to settle on a net
basis, or to realize the asset and settle the liability simultaneously.

2.26 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 borrowing using the effective interest rate method.

2.27 Equity instruments

These are recorded at their face value.

3. ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL


2009 2008 2009 2008
Number of shares (Rupees in thousand)
1,596,672 1,596,672 Ordinary shares of Rupees 10 each 15,967 15,967
allotted on reorganization of
Kohinoor Industries Limited

26,156,000 26,156,000 Ordinary shares allotted under scheme 261,560 261,560


of arrangement of merger of Part II of
Maple Leaf Electric Company Limited

26,858,897 26,858,897 Ordinary shares allotted under scheme 268,589 268,589

Kohinoor Textile Mills Limited


of arrangement of merger of Kohinoor
Raiwind Mills Limited and Kohinoor
Gujar Khan Mills Limited.

38,673,628 38,673,628 Ordinary shares of Rupees 10 386,736 386,736


each issued as bonus shares

52,241,019 52,241,019 Ordinary shares of Rupees 10 each 522,410 522,410


issued for cash
93
145,526,216 145,526,216 1,455,262 1,455,262
ANNUAL REPORT 2009

3.1 Zimpex (Private) Limited which is an associated company, held 22,510,635 (2008: 22,510,635)
ordinary shares of Rupees 10 each at 30 June 2009.
Maple Leaf Cement Factory
MapleLimited
Leaf Cement Factory Limited

4. RESERVES
2009 2008
Note (Rupees in thousand)
Capital:

Share premium 4.1 144,919 144,919


Hedging reserves Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
- 317,277
Surplus on revaluation of investments
- net of deferred tax 4.2 577,364 1,000,473

722,283 1,462,669

Revenue:

General reserve 1,450,491 1,490,491


Unappropriated profit 283,428 1,202,463

1,733,919 2,692,954

2,456,202 4,155,623

4.1 This reserve can be utilized by the Group only for the purposes specified in section 83(2) of
the Companies Ordinance, 1984.

4.2 Surplus on revaluation of investments - net of deferred tax 2009 2008


(Rupees in thousand)

Balance as at 01 July 1,000,473 935,229


Add: Fair value adjustments on investments :
Security General Insurance Company Limited (573,706) 88,466

Less: Deferred tax liability


Security General Insurance Company Limited (150,597) (23,222)

(423,109) 65,244

Balance as at June 30 577,364 1,000,473


Kohinoor Textile Mills Limited

5. MINORITY INTEREST

Opening balance 4,488,988 4,804,188


Add: Share during the year
- Hedging reserve (182,406) 61,603
- Surplus on revaluation of investment to fair value (120,478) (13,336)
- Loss for the year (463,760) (310,736)

94 (766,644) (262,469)
ANNUAL REPORT 2009

Less: Dividend paid on preference shares (52,478) (52,731)

3,669,866 4,488,988
6. LONG TERM FINANCING
2009 2008
Note (Rupees in thousand)
From banking companies and other financial
institutions - Secured 6.1 2,737,708 3,685,092
From related parties - Secured 6.2 - 35,224
Other loans - Unsecured 6.3 7,477 7,477

2,745,185 3,727,793

6.1 From banking companies and other


financial institutions - Secured

Holding company

The Bank of Punjab (BOP - 1) 6.1.1 46,598 105,019


NIB Bank Limited (NIB - 1) 6.1.2 139,815 180,262
NIB Bank Limited (NIB - 2) 6.1.3 223,200 259,800
Albaraka Islamic Bank Limited (ABIB) 6.1.4 41,666 66,667
Faysal Bank Limited (FBL) 6.1.5 34,376 85,938
Allied Bank Limited (ABL) 6.1.6 113,067 164,709
Saudi Pak Industrial and Agricultural Investment
Company (Private) Limited (SPIAICPL-1) 6.1.7 21,666 28,889
Saudi Pak Industrial and Agricultural Investment
Company (Private) Limited (SPIAICPL-2) 6.1.8 20,000 30,000
Saudi Pak Industrial and Agricultural Investment
Company (Private)Limited (SPIAICPL-3) 6.1.9 187,500 250,000
Standard Chartered Bank (Pakistan) Limited
(SCB-1) 6.1.10 20,226 47,726
Standard Chartered Bank (Pakistan) Limited
(SCB-2) 6.1.11 175,000 -
Standard Chartered Bank (Pakistan) Limited
- Syndicated term finance 6.1.12 200,000 200,000
Allied Bank Limited - Syndicated term finance 6.1.12 568,750 568,750
The Bank of Khyber - Syndicated term finance 6.1.12 100,000 100,000
Pak Libya Holding Company - Syndicated
term finance 6.1.12 50,000 50,000

Kohinoor Textile Mills Limited


Bank Al Falah Limited - Syndicated term finance 6.1.12 500,000 500,000
Faysal Bank Limited - Syndicated term finance 6.1.12 300,000 300,000
United Bank Limited (UBL) 6.1.13 - 12,500

Subsidiary Company

Habib Bank Limited (HBL - 1) 6.1.14 955,503 241,539


Syndicated term finance 6.1.15 1,500,000 2,080,000

5,197,367 5,271,799 95
ANNUAL REPORT 2009

Less: Current portion 16 2,459,659 1,586,707

2,737,708 3,685,092
6.2 From related parties - Secured
2009 2008
Note (Rupees in thousand)

Directors 6.2.1 - 35,224

6.3 Other loans - Unsecured

Kohinoor Sugar Mills Limited (KSML) 6.3.1 4,794 4,794


Kohinoor Industries Limited (KIL) 6.3.2 2,683 2,683

7,477 7,477

2,745,185 3,727,793

6.1.1 The Bank of Punjab - (BOP-1)

This represents demand finance facility of Rupees 400 million, obtained for import of state of
art machinery and is allowed for a period of four years with a grace period of six months. The
loan is repayable in 7 equal half yearly installments commenced after conclusion of grace
period. It is secured by bank's exclusive hypothecation charge on machinery imported and
personal guarantees of sponsor directors. Facility amounting to Rupees 300 million carries
mark up at the rate of 6 months average KIBOR plus 100 basis points (bps) and additional
facility of Rupees 100 million carries mark up at the rate of 6 months average KIBOR plus 275
bps with a floor of 5% per annum, payable quarterly. On November 29, 2006 loans amounting
to Rupees. 150.431 million were converted to LTF-EOP consisting of Rupees 61.725 million
at 6 % per annum and Rupees 88.706 million at 7 % fixed rate of mark up.

6.1.2 NIB Bank Limited (NIB - 1)

This represents LTF-EOP facility obtained for import of textile machinery for a period of three
years including a grace period of six months. It is repayable in ten equal quarterly installments.
It is secured by first exclusive hypothecation charge on the imported machinery and allied
equipment, including installation and local component costs and personal guarantees of the
sponsor directors . It carries mark up at fixed rate of 6 % per annum.

6.1.3 NIB Bank Limited (NIB - 2)


Kohinoor Textile Mills Limited

This represents a term finance facility of Rupees 300 million under State Bank of Pakistan (LTF-
EOP) scheme for a period of five years with a grace period of one year. The financing is for
import of 72 Picanol Omni Plus wide width Air Jet Looms and Tying & Knotting machine plus
five (5) Gen Set gas generators being part of BMR. It is repayable in equal quarterly installments,
commencing after expiry of grace period. The facility is secured against first pari passu charge
over fixed assets of Raiwind Division and personal guarantees of the sponsor directors. It carries
fixed mark up at the rate of 7% per annum.

6.1.4 Albaraka Islamic Bank Limited (ABIB)


96
This represents Murabaha finance facility of Rupees 100 million, obtained for construction of
ANNUAL REPORT 2009

buildings. The facility is allowed for a period of four years including a grace period of one year.
The facility is repayable in sixteen equal quarterly installments commencing with first payment
being due at the end of 15th month from the date of disbursement. It is secured by pari passu
charge and hypothecation on fixed assets i.e. land and building constructed for ring spinning
and stitching. It carries mark up at the rate of 3-years KIBOR plus 2% per annum with floor of
12.75% per annum.

6.1.5 Faysal Bank Limited (FBL )

This represents a term finance facility of Rupees 137.50 million under State Bank of Pakistan
scheme for a period of three years with one year grace period, for import of 36 Picanol Omni
Plus wide width high speed looms and one warping machine being part of BMR, repayable in
equal quarterly installments. The facility is secured against exclusive charge on the aforesaid
imported machinery , first pari passu charge on the fixed assets of Raiwind Division to the
extent of Rupees 47.50 million to cover the margin element and personal guarantees of the
sponsor directors. The loan carries a fixed rate of mark-up of 6% per annum.

6.1.6 Allied Bank Limited (ABL)

This represents term finance facility of Rupees 300 million , obtained for import of state of art
machinery and is allowed for a period of five years with a grace period of one year. The facility
is repayable in sixteen (16) equal quarterly installments commencing after conclusion of grace
period. It is secured by first exclusive charge on machinery imported. Facility amounting to
Rupees 100 million carries mark up at the rate of 6 months KIBOR plus 1.25% per annum,
facility of Rupees 125 million carries mark up at the rate of 6 months KIBOR plus 1.75% per
annum and facility of Rupees 75 million carries mark up at the rate of 6 months KIBOR plus
2.50% per annum with no floor and cap. On December 28, 2006 loans amounting to Rupees
124.732 million were converted to LTF-EOP at 7% per annum fixed rate of mark up.

6.1.7 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited (SPIAICPL- 1)

This represents the LTF-EOP facility of Rupees 65 million for import of textile machinery and
is allowed for a period of five years with a grace period of six months. The facility is repayable
in eighteen (18) equal quarterly installments commencing from February 19, 2006. It is secured
by first exclusive charge on imported machinery. It carries mark up at a fixed rate of 7% per
annum.

6.1.8 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited (SPIAICPL- 2)

This represents a term finance of Rupees 40 million under State Bank of Pakistan (LTF-EOP)
scheme at subsidized and fixed rate of mark up of 7% per annum. The financing is for import
of warping and sizing machines being part of BMR. This facility for a period of five years with
Kohinoor Textile Mills Limited
a grace period of one year and is repayable in equal quarterly installments.

6.1.9 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited (SPIAICPL- 3)

This represents term finance facility of Rupees 250 million obtained for debt reprofiling for a
period of five years including grace period of one year. The facility is repayable in 8 equal six
monthly installments. It is secured by first pari passu charge by way of hypothecation on all
present and future plant and machinery of the Company and by way of mortgage on land
measuring 121 acres, 2 kanals and 1 marla, situated at main Peshawar Road, Rawalpindi with 97
25% margin. Initially ranking charge will be created which will be upgraded within 90 days from
ANNUAL REPORT 2009

the date of disbursement. The facility carries mark up at the rate of 3 months KIBOR plus 170
bps per annum with quarterly repricing effective from March 03, 2008.
6.1.10 Standard Chartered Bank (Pakistan) Limited (SCB-1)

This represents the term finance facility of Rupees 110 million, obtained for import of state of
art machinery and is allowed for a period of five years including a grace period of one year.
The facility is repayable in sixteen equal quarterly installments. It is secured by first exclusive
charge on machinery and personal guarantees of sponsor directors. It carries mark up at the
rate of 3-months KIBOR plus 2.25% per annum with no floor and cap.

6.1.11 Standard Chartered Bank (Pakistan) Limited (SCB-2)

This represents the term finance facility of Rupees 200 million, obtained for the purpose of
financing the unwinding cost of cross currency swap deal with the bank and is allowed for a
period of two years. The facility is payable in eight equal quarterly installments. It is secured
by ranking charge of Rupees 266.666 million on land of Kohinoor Textile Mills Limited situated
at Rawalpindi. It carries mark up at the rate of 3-months average KIBOR plus 2.75% per annum
with no floor and cap.

6.1.12 Syndicated Term Finance Facility

Syndicated Finance of Rupees 1.750 billion was arranged through Standard Chartered Bank
(Pakistan) limited (SCBL) to swap highly priced loans. Long term facility was arranged and
availed in Islamic and conventional mode of financing. Standard Chartered Bank (Pakistan)
Limited (Arranger), Allied Bank Limited and Bank of Khyber disbursed Rupees 868.750 million
under Islamic mode of financing whereas Bank Alfalah Limited, Faysal Bank Limited and Pak
Libya Holding Company disbursed Rupees 850 million under conventional means of financing.
Tenor of the loan is 5 years including one year grace period and will be repaid in 16 equal
quarterly installments. It is secured by first pari passu charge over the fixed assets of the
Company including surplus land and buildings at Peshawar Road, Rawalpindi. It carries mark-
up at 3 months average KIBOR plus 150 bps to be refixed at the end of each quarter.

6.1.13 United Bank Limited (UBL)

This represents the term Loan facility of Rs. 200 million, to finance BMR at Kohinoor Textile
Mills Limited (Rawalpindi and Gujar Khan Divisions) and to refinance loans of other banks. The
term loan facility was allowed for a period of five years with one year grace period and was
repayable in sixteen equal quarterly installments, commenced from December 31, 2004. It
carried mark up at the rate of 6 months treasury bills cut-off rate plus 225 basis points with a
floor of 4% per annum. It is secured by first pari passu charge for Rupees 266 million on all
existing and future fixed assets of Kohinoor Textile Mills Limited (Raiwind Division) and personal
Kohinoor Textile Mills Limited

guarantees of the sponsor directors. The loan has been fully repaid however, the charge has
not yet been vacated.

6.1.14 Habib Bank Limited (HBL - 1)

The Subsidiary, during the preceding financial year, has arranged a term finance facility of
Rupees 1.160 billion (equivalent to Japanese Yens 1.974 billion approximately) for financing
the Waste Heat Recovery Plant from HBL. The tenor of this finance facility is six years including
a grace period of two years. The principal balance of this finance facility is repayable in nine
98 equal semi-annual instalments commencing February, 2010. The finance facility upto 31 March
2009 carried mark-up at the rate of 6-months KIBOR plus 1.5% per annum whereas effective
ANNUAL REPORT 2009

from 01 April, 2009 it is carrying mark-up at the rate of 6-months KIBOR plus 2.5% per annum.
Mark-up is payable on quarterly basis. The effective mark-up rate charged by HBL during the
Maple Leaf Cement Factory
MapleLimited
Leaf Cement Factory Limited

current year ranged from 15.69% to 18.20% per annum (2008: at the rate of 14.47% per
annum). The finance facility is secured against first pari passu hypothecation charge of
Rupees 1.600 billion over plant & machinery, first pari passu equitable mortgage charge over
land and buildings of the Subsidiary and personal guarantees of some of the Subsidiary's
directors.

6.1.15 Syndicated Term Finance

The Subsidiary, during the preceeding financial year, arranged a syndicate term finance facility
of Rupees 2.000 billion with a Green Shoe Option of Rupees 500 million; the lead Arranger is
Allied Bank Limited. The purpose of this finance facility is to prepay the existing long term loans
of the Subsidiary. As per the original terms and conditions, tenor of this facility was two and
half years and carries profit at 3-months KIBOR plus 150 bps with no floor and cap. However,
the management has negotiated with the Syndicate for rescheduling of of repayment terms.
Current portion includes Rupees 500 million, which were repayable to the Syndicate on 15
May, 2009; however, the Company, the Syndicate and ABL (as Agent) have entered into first
addendum to the syndicated term finance agreement during August, 2009 whereby the year-
end balance is repayable in six equal quarterly instalments of Rupees 250 million commencing
01 June 2010. Mark-up rate on these finances has been increased by 50 bps. This finance
facility, during the year, carried mark-up at the rate ranging from 13.89% to 17.97%(2008:11.25%
to 14.57%) per annum. The finance facility is secured against first pari passu charge over all
present and future fixed assets of the Subsidiary with 25% margin. The following Institutions
have contributed amounts aggregating Rupees 2.500 billion against this finance facility:
2009 2008
(Rupees in thousand)
- Faysal Bank Limited (FBL) 360,000 480,000
- Pak Libya Holding Company (Private) Limited (PLHC) 240,000 400,000
- MCB Bank Limited (MCB) 150,000 200,000
- Askari Bank Limited (ACBL) 105,000 140,000
- Arif Habib Bank Limited (AHBL) 105,000 140,000
- Pak Brunei Investment Company Limited (PBICL) 90,000 120,000
- Soneri Bank Limited (SBL) 90,000 120,000
- HSBC Bank Middle East Limited
(formerly the Hongkong & Shanghai Banking Corporation Limited) 90,000 120,000
- The Bank of Khyber (BoK) 60,000 80,000
- Saudi Pak Industrial and Agricultural Investment
Company (Private) Limited (SPIAICPL) 60,000 80,000
- The Bank of Punjab (BoP) 60,000 80,000
- First Women Bank Limited (FWB) 60,000 80,000
Kohinoor Textile Mills Limited
- Atlas Bank Limited (ATBL) 30,000 40,000

1,500,000 2,080,000

6.2.1 Directors

The Subsidiary, during the financial year ended 30 June 2007, had obtained a loan of
Rupees 80 million for completion of the expansion project of 6,700 tpd clinker capacity. This
loan carried mark-up at the rate of 1-month KIBOR + 1.5%; the effective mark-up rate charged
during the year ranged between 14.03% to 16.10% (2008:10.89% to 14.06%) per annum. The 99
loan was secured against demand promissory note and was repayable in lump sum after five
ANNUAL REPORT 2009

years or earlier with mutual consent of the parties. The Company had repaid loan balance to
the tune of Rupees 44.776 million during the preceding year whereas the remaining balance
was fully repaid during the current year.
6.3.1 Kohinoor Sugar Mills Limited (KSML)

A civil suit has been filed by KSML for recovery of disputed liability which is being contested
by the Holding Company.

6.3.2 Kohinoor Industries Limited (KIL)

The balance is an old one, un-reconciled, unconfirmed and disputed.

7. REDEEMABLE CAPITAL - Secured


2009 2008
Note (Rupees in thousand)

Islamic Sukuk Certificates under Musharakah Agreement


Opening balance 8,000,000 -
Sukuk certificates issued during the year - 8,000,000

8,000,000 8,000,000

Less : current portion grouped under current liabilities 16 800,000 -

7,200,000 8,000,000

Islamic Sukuk Certificates under Musharakah Agreement

The salient terms and conditions of secured Sukuk issue of Rs. 8.000 billion made by the Subsidiary
during the current financial year are detailed below:

- Lead Arranger Allied Bank Limited (ABL)

- Shariah Advisor Meezan Bank Limited

- Purpose Balance sheet reprofiling and replacement of conventional debts


with Shariah Compliant Financing.

- Investors Banks, DFIs, NBFIs and any other persons.

- Tenor Six years with two years grace period.

- Rental Benchmark Base rate plus 170 bps.


Kohinoor Textile Mills Limited

- Base Rate Base rate is average 6 - months KIBOR prevailing on the base
rate setting date. The base rate has been set for the first time on
the issue date and then on immediately preceding date before the
start of each six months periods.

- Musharakah Investment Musharakah Investment share of the Investors will be repurchased


Repurchase by the Company in eight semi-annual installments; first four
installments are of Rupees 800 million each whereas the last four
instalments are of Rupees 1.200 billion each. The first of such
100 Musharakah Investment Repurchase will be due on 30 June 2010.

- Rental Payments Rentals are payable semi-annually in arrears calculated on a 365


ANNUAL REPORT 2009

days year basis on the outstanding Musharakah Investment of


the Investors. The first such rental payment fell due six months
from the date of first Contribution and subsequently after every
six months. Rentals, during the year, have been calculated at
mark-up rates ranging from 14.85% to 17.37% (2008: 11.65%
to 14.85%) per annum.
- Form & Delivery of Sukuk The Sukuk Certificates have been issued under section 120 (Issue
of securities and redeemable capital not based on interest) of the
Companies Ordinance, 1984. The Sukuk Certificates have been
registered and induced into the Central Depository System of the
Central Depository Company of Pakistan Limited (CDC).
- Security First pari passu charge over all present and future fixed assets
of the Subsidiary with 25% margin.
- Trustee / Investors' Agent Allied Bank Limited
- Transaction Structure The Facility Structure as approved by Meezan Bank Limited,
Shariah Advisor of the Issue, is as follows:
a) Investors (as Investor Co-owners) and the Subsidiary
(as Managing Co-owner) have entered into a Musharakah
Agreement as Partners for the purpose of acquiring
Musharakah Assets from the Subsidiary (acting as Seller)
and jointly own these Musharakah Assets.
b) Investors have appointed ABL to act as Investors' Agent
for the Sukuk Issue.
c) Investor Co-owners have contributed their share in the
Musharakah in cash that has been utilised by Managing
Co-owner for acquiring Musharakah Assets. Managing
Co-owner has contributed its musharakah share in kind.
d) Upon acquisition of Musharakah Assets, Investors' Agent
and Managing Co-owner have executed Assets Purchase
Agreement with the Subsidiary (acting as Seller).

e) The Subsidiary (as Issuer) has issued Sukuk Certificates


to Investors that represent latter's undivided share in the
Musharakah Assets.

f) The Subsidiary will purchase Musharakah share of


Investors on semi-annual basis after expiry of two years

Kohinoor Textile Mills Limited


from the first Contribution date.

- Early Repurchase Option The Subsidiary has an option for early Repurchase (Call Option)
of partial or full Musharakah Investment from Investors. Musharakah
Investment Repurchase will be allowed on Rental Payment dates
falling due after expiry of twelve months from the date of Last
Contribution and will be made through thirty days prior notice to
the Trustee, in a minimum of Rupees 100 million or multiples
thereof. Early Repurchase will be applicable for upcoming
installment as per the Musharakah Investment Repurchase
schedule. 101
ANNUAL REPORT 2009

- Sell Down / Transferability In case of Sukuks induced into CDC, transfer will be in accordance
with the Central Depository Act, 1997 and other applicable CDC
regulations.
The following is a list of Banks / Financial Institutions / Funds / Others holding sukuk certificates at the
year-end having denomination of Rupees 5,000 per certificate:
2009 2008
(Number of Sukuk Certificates)

- Allied Bank Limited 638,000 638,000


- Faysal Bank Limited 60,000 60,000
- MCB Bank Limited 75,000 75,000
- Dawood Money Market Fund - 37,000
- Meezan Bank Limited 40,000 30,000
- IGI Investment Bank Limited 12,000 6,000
- Invest & Finance Securities Limited 5,000 5,000
- CDC - Trustee United Growth & Income Fund 76,000 76,000
- CDC -Trustee Alfalah GHP Value Fund 15,000 10,000
- Saudi Pak Investment Company Limited 30,000 30,000
- Asian Stock Fund Limited 2,000 2,000
- Safeway Mutual Fund Limited 2,000 2,000
- CDC - Trustee Askari Income Fund 35,000 35,000
- CDC - Trustee AMZ Plus Income Fund - 45,000
- CDC - Trustee NAFA Cash Fund 80,000 80,000
- CDC - Trustee KASB Liquid Fund 47,600 43,000
- CDC - Trustee Meezan Islamic Income Fund 64,000 64,000
- CDC - Trustee United Composite Islamic Fund - 10,000
- CDC - Trustee NAFA Multi Asset Fund 3,000 3,000
- CDC - Trustee HBL Income Fund 7,000 7,000
- CDC - Trustee MCB Dynamic Cash Fund 71,000 71,000
- CDC - Trustee AKD Income Fund 2,000 12,000
- CDC - Trustee IGI Income Fund - 6,000
- CDC - Trustee Alfalah GHP Income Multiplier Fund 15,000 20,000
- Dawood Islamic Bank Ltd. 10,000 10,000
- Trustee BMA Chundrigar Road Savings Fund 24,000 24,000
- CDC - Trustee Meezan Tahaffuz Pension Fund 1,000 1,000
- CDC - Trustee Dawood Islamic Fund 9,815 7,000
- CDC - Trustee Alfalah GHP Islamic Fund 5,000 5,000
- CDC - Trustee POBOP Advantage Plus Fund - 12,000
- CDC - Trustee NAFA Islamic Fund 20,000 20,000
- CDC - Trustee NAFA Islamic Multi Asset Fund 10,000 10,000
Kohinoor Textile Mills Limited

- Pak Brunei Investment Company Limited 45,200 25,000


- CDC - Trustee United Islamic Income Fund 35,000 25,000
- MCFSL - Trustee JS Income Fund 55,049 80,000
- CDC - Trustee KASB Islamic Income Fund 7,400 14,000
- KASB Modaraba 2,000 -
- Mr. Danish Ali Lakhani 19,022 -
- Pak Qatar Family Takaful Limited 4,000 -
- Mr. Arif Ebrahim 1,000 -
102 - The Bank of Punjab 23,951 -
- CDC - Trustee First Dawood Mutual Fund 12,110 -
ANNUAL REPORT 2009

- House Building Finance Corporation Limited 15,000 -


- Trustee - First Dawood Investment Bank Limited
& other- Employees P. Fund 50 -
2009 2008
(Number of Sukuk Certificates)

- CDC - Trustee Pak Oman Advantage Fund 5,700 -


- CDC - Trustee Pak Oman Advantage Islamic Fund 4,000 -
- CDC - Trustee Pak Oman Advantage Stock Fund 2,300 -
- First Dawood Investment Bank Limited 3,003 -
- CDC - Trustee AMZ Plus Stock Fund 5,800 -

1,600,000 1,600,000

8. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE


2009 2008
Note (Rupees in thousand)

Minimum lease payments 1,601,249 1,700,846


Less: Un-amortized finance charges 214,505 283,525
Less: Security deposits of Subsidiary 34,730 34,730

Present value of minimum lease payments 1,352,014 1,382,591


Less: Current portion 16 388,881 290,958

963,133 1,091,633

8.1 The present value of minimum lease payments has been discounted at an implicit interest rate
ranges from 4.72% to 18.18% (2008: from 6.00% to 15.06%) per annum to arrive at their
present value.

8.2 The lease rentals are payable in monthly, quarterly and half yearly installments. In case of any
default an additional charge at the rate of 0.1 percent per day shall be payable. Taxes, repairs,
replacements and insurance costs are to be borne by the Group. The lease agreements carry
renewal and purchase option at the end of the lease term. There are no financial restrictions
in lease agreements. These are secured by deposit of Rupees 59.571 million (2008:
Rupees 53.988 million) included in long term security deposits, demand promissory notes,
personal guarantees and pledge of sponsors' shares in public limited companies.

Kohinoor Textile Mills Limited


8.3 Minimum lease payments and present value of minimum lease payments are regrouped as
under:
2009 2008
Minimum lease Present value Minimum lease Present value
payments of minimum payments of minimum
lease payments lease payments
........................(Rupees in thousand)........................

Due not later than one year 483,973 388,881 393,223 290,958
103
Due later than one year but
ANNUAL REPORT 2009

not later than five years 1,117,276 963,133 1,307,623 1,091,633

1,601,249 1,352,014 1,700,846 1,382,591


9. LEASE FINANCE ADVANCES
9.1 This represents advance against sanctioned direct finance lease agreement of Rupees 42,102
thousand. The lease arrangement is for a period of three years. The lease term will start on 11
July 2009 and first rental will be due on 11 August 2009 whereas the final lease rental will be
due on 11 July 2012. The lease finance facility carries interest rate of 3 months KIBOR plus
spread of 400 bps with quarterly reset/ re-fixation and is secured against the first exclusive
charge on compact spinning devices. The rate of interest on the principal amount outstanding
as at 30 June 2009 is 15.86 % and this advance will be grouped under liabilites against assets
subject to finance lease in the next financial year.
10. LONG TERM DEPOSITS
These represent interest-free security deposits from stockists and are repayable on cancellation or
withdrawal of the dealerships. These are being utilized by the Subsidiary company in accordance with
the terms of dealership agreements.
11. EMPLOYEES' COMPENSATED ABSENCES
These represent amounts payable against un-availed leaves of employees.
12. DEFERRED TAX LIABILITY
The liability for deferred taxation comprises timing differences relating to:
2009 2008
Note (Rupees in thousand)
Taxable temporary difference
Accelerated tax depreciation allowance 2,927,122 3,328,669
Surplus on revaluation of investments 254,708 448,187
Un-realized gain on derivative financial instruments - 72,119
3,181,830 3,848,975
Deductible temporary differences
Lease finances 63,826 132,131
Tax losses carry forward 2,818,229 2,976,535
Employees compensated absences 4,547 4,536
Minimum tax available for carry forward 90,806 114,133
2,977,408 3,227,335
204,422 621,640
12.1 The movement in deferred tax assets and liabilities during the year without taking into consideration
the off setting balances within the same tax jurisdiction is as follows :
Kohinoor Textile Mills Limited

Deferred tax liability Deferred tax assets


Accelerated Surplus/ Deficit Unrealized gain Net liability
Minimum tax Employees tax available
on revaluation onfinancial
derivative Lease (asset)
tax Total losses compensated for carry Total
Finances
depreciation of investment instruments carry forward absences forward

Balance as at July 01, 2007 1,645,243 429,712 - 2,074,955 47,167 785,091 4,749 69,953 906,960 1,167,995
Charged to equity - 18,475 72,119 90,594 - - - - - 90,594
Charged to profit and
loss account 1,683,426 - - 1,683,426 84,964 2,191,444 (213) 44,180 2,320,375 (636,949)
104 Balance as at June 30, 2008 3,328,669 448,187 72,119 3,848,975 132,131 2,976,535 4,536 114,133 3,227,335 621,640
Charged to equity - (193,479) (72,119) (265,598) - - - - - (265,598)
ANNUAL REPORT 2009

Charged to profit and


loss account (401,547) - - (401,547) (68,305) (158,306) 11 (23,327) (249,927) (151,620)
Balance as at June 30, 2009 2,927,122 254,708 - 3,181,830 63,826 2,818,229 4,547 90,806 2,977,408 204,422
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

13. TRADE AND OTHER PAYABLES


2009 2008
Note (Rupees in thousand)
Creditors 1,272,913 986,199
Bills payable - secured 837,321 1,505,980
Accrued liabilities Maple Leaf Cement Factory
Maple Leaf Cement Factory311,536
Limited Limited 275,823
Customers deposit -interest free repayable on demand 33,153 33,193
Advances from customers 170,392 120,962
Contractors' retention money 10,376 22,962
Royalty and excise duty payable 11,345 7,136
Workers' profit participation fund 13.1 1,254 1,279
Excise duty payable 442,106 157,404
Provident fund payable 7,856 1,702
Unclaimed dividend 4,214 4,275
Withholding tax payable 5,163 4,289
Sales tax payable 71,512 -
Others 14,517 12,488

3,193,658 3,133,692

13.1 Workers' profit participation fund


Balance at the beginning of the year 1,279 1,223
Add: Interest on funds utilized by the Group's business 164 61
Less: Payment to the fund (189) (5)

1,254 1,279

13.2 The Group retains workers’ profit participation fund for its business operations till the date of
allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers
Participation Act, 1968) on funds utilized by the Group till the date of allocation to workers.

14. ACCRUED MARK UP


2009 2008
Note (Rupees in thousand)
Long term financing 104,617 189,236
Loan from related parties - 1,148
Redeemable capital 237,007 91,134

Kohinoor Textile Mills Limited


Short term borrowings 240,698 134,278
Liabilities against assets subject to finance lease 44,131 15,168

626,453 430,964

15 SHORT TERM BORROWINGS

From banking companies:


Short term running finance 15.1 5,244,278 4,628,354
Other short term finances 15.1 1,968,863 1,196,839 105
State Bank of Pakistan (SBP) refinances 15.2 1,580,000 1,370,000
Temporary bank overdrafts 15.3 399,652 169,069
ANNUAL REPORT 2009

9,192,793 7,364,262
15.1 These finance facilities are sanctioned by various banks aggregate to Rupees 8,061 million
(2008: Rupees 8,796 million). The rates of mark-up range from 7.50% to 18.50% (2008 from
3.62% to 16.10%). These arrangements are secured by pledge of raw material, charge on
current assets of the Group including hypothecation of work-in-process, stores and spares,
letters of credit, firm contracts, book debts and personal guarantees of the sponsor directors.

15.2 The export refinance facilities sanctioned by various banks aggregate to Rupees 2,950 million
(2008: Rupees 1,580 million). The rate of mark-up was 7.50%(2008: from 7.50%). These
arrangements are secured by way of charge on current assets of the Holding Company and
personal guarantees of the sponsor directors.

15.3 These have arisen due to issuance of cheques for amounts in excess of the balance in bank
accounts.

16. CURRENT PORTION OF NON CURRENT LIABILITIES


2009 2008
Note (Rupees in thousand)
Long term financing 6.1 2,459,659 1,586,707
Redeemable capital 800,000 -
Liabilities against assets subject to finance leases 8 388,881 290,958

3,648,540 1,877,665

17. CONTINGENCIES AND COMMITMENTS

17.1 Contingencies

Holding company

a) In framing the assessment for the assessment year 2002-03, the tax authorities has
assessed loss for the year at Rupees 16.486 million by charging to tax the dividend
income separately against the declared income of Rupees 5.101 million in addition to
disallowing profit and loss expenses previously accepted by them. The Holding Company
has disputed the contention of the tax authorities for these demands and has filed appeal
with the Income Tax Appellate Tribunal against the order of the tax authorities. Pending
the outcome of the appeal no provision has been made in these financial statements for
the additional demand for the assessment year 2002-03, which on the basis adopted by
the authorities would amount to Rupees 2.541 million, since the Holding Company has
strong grounds against the assessment framed by the tax authorities.

b) The Holding Company and the tax authorities has filed appeals before different appellate
Kohinoor Textile Mills Limited

authorities regarding sales tax matters. Pending the outcome of appeals filed by the
Holding Company and tax authorities, no provision has been made in these financial
statements which on the basis adopted by the authorities would amount to Rupees 33.473
million, since the Holding Company has strong grounds against the assessments framed
by the tax authorities.

c) The Holding Company has filed recovery suits in civil courts of Rupees 3.322 million
against various suppliers and customers for goods supplied by/to them. Pending the
outcome of the cases, no provision there against has been made in the financial statements
106 since the Holding Company is confident about favorable outcome of the cases.
ANNUAL REPORT 2009

d) Guarantees issued by various commercial banks, in respect of financial and operational


obligations of the Holding Company, to various institutions and corporate bodies aggregate
Rupees 319.430 million as at 30 June, 2009 (2008: Rs. 286.531 million).
Subsidiary company
a) The Subsidiary has filed writ petitions before the Lahore High Court (LHC) against the
legality of judgment passed by the Customs, Excise & Sales Tax Appellate Tribunal whereby
the Subsidiary was held liable on account of wrongful adjustment of input sales tax on
raw materials and electricity bills; the amount involved pending adjudication before the
LHC aggregate Rupees 13.252 million.
b) The Subsidiary has filed an appeal before the Customs, Central Excise and Sales Tax
Appellate Tribunal, Karachi against the order of the Deputy Collector Customs whereby
the refund claim of the Subsidiary amounting to Rupees 12.350 million was rejected and
the Subsidiary was held liable to pay an amount of Rupees 37.051 million by way of 10%
customs duty allegedly leviable in terms of SRO 584(I) / 95 and 585(I) / 95 dated 01
July, 1995. The impugned demand was raised by the Department on the alleged ground
that the Subsidiary was not entitled to exemption from payment of customs duty and
sales tax in terms of SRO 279(I) / 94 dated 02 April 1994.
The LHC, upon the Subsidiary's appeal, vide its order dated 06 November 2001 has
decided the matter in favour of the Subsidiary; however, the Collector of Customs has
preferred a petition before the Supreme Court of Pakistan, which is pending adjudication.
c) The Additional Collector of Sales Tax, Faisalabad had preferred a petition before the
Supreme Court of Pakistan against the judgment dated 07 December 1999 delivered by
the LHC in favour of the Subsidiary in a Customs Appeal. The Subsidiary, through the
said appeal, had challenged the finding given by the Tribunal that the Subsidiary had
wrongly adjusted input tax amounting Rupees 88.490 million for the period from July,
1996 to June 1997 involved in import of cement plant for the purpose of Phase-II of the
Subsidiary against the supply of cement manufactured by Phase-I of the Subsidiary. Levy
of penalty of Rupees 10 million along with additional tax as well as rejection of the refund
claim of Rupees 2.245 million were also challenged. The Supreme Court of Pakistan,
vide its order dated 07 January 2000, had directed that status quo be maintained.
The Subsidiary has filed an application with the Fedral Board of Revenue (FBR) under
section 47A of the Sales Tax Act, 1990 for appointment of an Alternate Dispute Resolution
Committee (ADRC), which decided the case in favour of the Subsidiary. The Department
has issued the refund cheque amounting Rupees 19 million on 31 January 2006 and is
also in the process of withdrawing its appeal filed before the Supreme Court of Pakistan.
d) The FBR has filed an appeal before the Supreme Court of Pakistan against the judgment
delivered by the LHC in favour of the Subsidiary in a writ petition. The Subsidiary, through
the said writ petition, had challenged the demand raised by the FBR for payment of duties
and taxes on the plant & machinery imported by the Subsidiary pursuant to the exemption
granted in terms of SRO 484 (I) / 92 dated 14 May 1992. The FBR, however, alleged that
the said plant and machinery could be locally manufactured and duties and taxes were

Kohinoor Textile Mills Limited


therefore not exempt. A total demand of Rupees 1.387 billion was raised by the FBR out
of which an amount of Rupees 269.328 million was deposited by the Subsidiary as
undisputed liability.
As regards the balance disputed amount, the matter was decided in favour of the Subsidiary
as per the judgment of the LHC. After preferring the appeal before the Supreme Court of
Pakistan, the matter has been referred to ADRC, Islamabad. No provision has been made
in these financial statements in respect of the aforementioned disputed demands aggregating
Rupees 1.118 billion as the management is confident that the ultimate outcome of this
case will be in favour of the Subsidiary.
107
e) The Customs Department has filed an appeal before the Supreme Court of Pakistan
against the judgment of Sindh High Court, which held that dump trucks were part of plant
ANNUAL REPORT 2009

& machinery and the Tribunal had rightly subjected them to concessionary rate of duty.
The Subsidiary had paid excess customs duties amounting Rupees 7.347 million on these
trucks. The appeal is pending adjudication before the Supreme Court of Pakistan.
f) The Company has filed an appeal before the Supreme Court of Pakistan against the
judgment of the Division Bench of the High Court of Sindh at Karachi. The Division Bench,
by judgment dated 15 September 2008, has partly accepted the appeal by declaring that
the levy and collection of infrastructure cess / fee prior to 28 December 2006 was illegal
and ultra vires and after 28 December 2006, it was legal and the same was collected by
the Excise Department in accordance with law. The appeal has been filed against the
declaration that after 28 December 2006, the Excise Department has collected the
infrastructure cess / Maple
fee inLeaf Cement Factory
accordance withLimited
Maple Leaf
law. Cement Factory Limited
The total financial exposure of the Company involved in the case amounts to
Rupees 59.556 million against which provision has not been made in these financial
statements as the Company's management expects a favourable outcome. In the event
of an adverse decision in appeal, the guarantees aggregating Rupees 135.700 million
furnished by the Company will be encashed by the Government of Sindh.
g) Competition Commission of Pakistan (the Commission), vide order dated 27 August
2009, has imposed penalty on 20 cement factories of Pakistan at the rate of 7.5% of the
turnover value as disclosed in the last annual financial statements. The Commission has
imposed penalty amounting Rupees 586.187 million on the Company. The Commission
has alleged that provisions of section 4(1) of the Competition Commission Ordinance,
2007 have been violated. The Lahore High Court, Lahore has restrained the Commission
from taking adverse action pursuant to this order till the next date of hearing i.e. 29
September 2009.
h) The Additional Collector, Karachi has issued show cause notice alleging therein that the
Company has wrongly claimed the benefits of SRO No. 575(I)/2006 dated 05 June, 2006
on the import of pre-fabricated buildings structure. Consequently, the Company is liable
to pay Government dues amounting Rupees 5.552 million. The Company has submitted
reply to the show cause notice and currently proceedings are pending before the Additional
Collector.
i) Guarantees issued by various commercial banks, in respect of financial and operational
obligations of the Subsidiary, to various institutions and corporate bodies aggregate
Rupees 3332.363 million as at 30 June 2008 (2008: Rupees 434.370 million).
Claims
j) Claims against the Company not acknowledged as debt aggregated Rupees 3.750 million
as at 30 June 2009 (2008: Rupees 3.750 million).
17.2 Commitments in respect of
a) Commitments for capital expenditure other than letter of credit amount to Rupees 340.973
million (2008: Rupees 168.949 million).
Kohinoor Textile Mills Limited

b) Letters of credit for capital expenditure amount to Rupees 678.346 million (2008: Rupees
1,142.482 million).
c) Letters of credit other than for capital expenditure amount to Rupees 367.146 million
(2008: Rupees 841.370 million).
d) Post dated cheques issued to suppliers amount to Rupees 212.902 million (2008:
Rupees 107.925 million).
18. PROPERTY, PLANT AND EQUIPMENT
2009 2008
108 Note (Rupees in thousand)
ANNUAL REPORT 2009

Operating fixed assets 18.1 22,875,159 23,676,688


Capital work in progress 18.2 1,646,400 377,161
24,521,559 24,053,849
18.1 CONSOLIDATED OPERATING FIXED ASSETS
(Rupees in thousand)
AS AT 30 JUNE 2008 MOVEMENT DURING THE YEAR AS AT 30 JUNE 2009
Description Accumulated Net Book Disposal Cost / Transfer Cost / Depreciation Accumulated Net Book Rates
Cost Additions Accumulated Accumulated Cost
Depreciation Value charge Depreciation Value
Depreciation Depreciation
Owned %
Freehold land 68,546 - 68,546 - - - - 68,546 - 68,546 -
Office buildings 12,272 4,673 7,599 462 - - 405 12,734 5,078 7,656 5-10
Factory buildings 4,634,760 881,107 3,753,653 115,360 - - 201,985 4,750,120 1,083,092 3,667,028 5-10
Other buildings 134,360 57,343 77,017 12,249 - - 6,103 146,609 63,446 83,163 5-10
Residential buildings 69,260 31,529 37,731 25,838 - - 2,543 95,098 34,072 61,026 5-10
School and hospital 3,710 892 2,818 - - - 138 3,710 1,030 2,680 5-10
Plant and machinery 24,563,212 6,362,864 18,200,348 318,547 7,443 (4,868) 1,076,136 24,869,448 7,429,203 17,440,245 5-20
(6,410) 3,387
Service and other equipment 30,582 20,095 10,487 271 - - 1,046 30,853 21,141 9,712 10-30
- -
Computer and IT installations 54,133 34,087 20,046 1,776 - - 6,047 55,909 40,134 15,775 30
- -
Furniture and fixture 202,655 106,326 96,329 25,214 158 (669) 17,734 227,042 123,789 103,253 10-30
(90) 181
Office equipment 21,176 10,519 10,657 2,430 121 - 1,042 23,485 11,486 11,999 10
(75) -
Vehicles 180,772 92,383 88,389 14,580 14,107 - 16,187 181,245 98,601 82,644 20
(9,969) -
Quarry equipment 143,337 120,562 22,775 33,387 - - 7,158 176,724 127,720 49,004 10
Share of joint assets (Note 18.1.6) 4,395 3,226 1,169 1,471 - - 129 5,866 3,355 2,511 20
30,123,170 7,725,606 22,397,564 551,585 21,829 (5,537) 1,336,653 30,647,389 9,042,147 21,605,242
(16,544) 3,568
Leased
Plant and machinery 1,367,925 125,533 1,242,392 71,441 - - 73,546 1,439,366 199,079 1,240,287 10-20
Vehicles 7,660 1,779 5,881 - - - 932 7,660 2,711 4,949 20
Quarry equipment 47,315 16,464 30,851 - - - 6,170 47,315 22,634 24,681 20
1,422,900 143,776 1,279,124 71,441 - - 80,648 1,494,341 224,424 1,269,917
31,546,070 7,869,382 23,676,688 623,026 21,829 (5,537) 1,417,301 32,141,730 9,266,571 22,875,159
(16,544) 3,568
18.1.1 Addition to plant and machinery include mark up amounting to Rupees Nil (2008: Rs. 1,740.316 million)
18.1.2 Depreciation charge for the year has been allocated as follows:
2009 2008
Note (Rupees in thousand)
Cost of sales 35 1,382,070 1,182,806
Administrative expenses 37 35,102 34,224
Trial run operations - 12,266
Other manufacturing expenses 129 103
1,417,301 1,229,399

109
ANNUAL REPORT 2009 Kohinoor Textile Mills Limited
ANNUAL REPORT 2009 Kohinoor Textile Mills Limited

110
18.1.3 CONSOLIDATED OPERATING FIXED ASSETS
AS AT 01 JULY 2007 MOVEMENT DURING THE YEAR AS AT 30 JUNE 2008
Description Accumulated Net Book Disposal Cost / Transfer Cost / Depreciation Accumulated Net Book Rates
Cost Depreciation Value Additions Accumulated Accumulated charge Cost Depreciation Value
Depreciation Depreciation
.............................(R u p e e s i n t h o u s a n d )............................. %

Owned %
Freehold land 68,546 - 68,546 - - - - 68,546 - 68,546 -
Office buildings 11,861 4,260 7,601 411 - - 413 12,272 4,673 7,599 5-10

Factory buildings 1,878,333 723,683 1,154,650 2,756,427 - - 157,424 4,634,760 881,107 3,753,653 5-10
Other buildings 111,596 51,643 59,953 22,764 - - 5,700 134,360 57,343 77,017 5-10
Residential buildings 67,582 29,045 38,537 1,678 - - 2,484 69,260 31,529 37,731 5-10
School and hospital 2,494 796 1,698 1,216 - - 96 3,710 892 2,818 5-10
Plant and machinery 13,926,871 5,458,266 8,468,605 10,666,048 29,707 - 930,673 24,563,212 6,362,864 18,200,348 5-20
(26,075) -
Service and other equipment 29,834 19,023 10,811 5,102 4,354 - 1,084 30,582 20,095 10,487 10-30
(12) -
Computer and IT installations 52,590 30,331 22,259 5,420 3,877 - 6,964 54,133 34,087 20,046 30
(3,208) -
Furniture and fixture 183,500 88,217 95,283 19,740 560 (25) 18,368 202,655 106,326 96,329 10-30
(255) 4
Office equipment 20,548 9,905 10,643 1,072 444 - 1,000 21,176 10,519 10,657 10
(386) -
Vehicles 174,342 82,910 91,432 19,999 13,569 - 17,949 180,772 92,383 88,389 20
(8,476) -
Quarry equipment 131,524 115,929 15,595 11,813 - - 4,633 143,337 120,562 22,775 10

Share of joint assets (Note 18.1.6) 4,120 3,124 996 275 - - 102 4,395 3,226 1,169 20

16,663,741 6,617,132 10,046,609 13,511,965 52,511 (25) 1,146,890 30,123,170 7,725,606 22,397,564
(38,412) 4
Leased
Plant and machinery 1,318,650 52,059 1,266,591 49,275 - - 73,474 1,367,925 125,533 1,242,392 10-20
Vehicles 14,620 3,465 11,155 - 6,960 - 1,323 7,660 1,779 5,881 20
(3,009)
Quarry equipment 47,315 8,752 38,563 - - - 7,712 47,315 16,464 30,851 20

1,380,585 64,276 1,316,309 49,275 6,960 - 82,509 1,422,900 143,776 1,279,124


(3,009)

18,044,326 6,681,408 11,362,918 13,561,240 59,471 (25) 1,229,399 31,546,070 7,869,382 23,676,688
(41,421) 4
18.1.4 DETAIL OF DISPOSAL OF ASSETS

Description Accumulated Net Book Mode of


Cost Sale Proceed Gain / (Loss) Particulars of purchaser
Depreciation Value Disposal
.............................(R u p e e s i n t h o u s a n d ).............................
6- Comber CM-10 W/LAP FORMER 7,443 6,410 1,033 1,035 2 Negotiation Ali Asghar Textile Mills Ltd, Karachi, 306-8, Unitower, I.I.Chandrigar Road, Karachi
Suzuki Mehran RIW-9820 338 284 54 181 127 Negotiation Muhammad Aslam, Rawalpindi
Honda Civic EXI RLA-6975 584 103 481 517 36 Negotiation Raja Muhammad Akram, Rawalpindi
Suzuki Khyber RIW-4721 393 341 52 228 176 Negotiation Mr . Rehmat Jalil s/o Abdul Jalil
Honda Civic AJS-262 1,328 473 855 820 (35) Negotiation Muhammad Amin Rajanpur
Toyota Corolla LOW - 3064 349 300 49 474 425 Negotiation Muhammad Zafar H. # 551, St # 68 Sector I-8/3 Islamabad.
Suzuki Van LRU-1215 373 229 144 299 155 Negotiation Muhammad Rafi-u-Zaman, 26-A Green land street, Ali park, Samanabad, Lahore
Pajero LOY - 6000 1,282 1,117 165 1,150 985 Negotiation Mr. Ghulam Abbas 57-G Sher Shah Road Multan Cantt.
Suzuki Baleno 757 408 349 435 86 Auction Malik Muhammad Nazir, Mianwali.
Suzuki Mehran 353 299 54 176 122 Auction Malik Muhammad Nazir, Mianwali.
Suzuki Baleno 774 423 351 532 181 Auction Muhammad Rafique, Iskanderabad
Toyota Corolla 1,132 654 478 812 334 Auction Mr. Tayyab Tahir Shah - Employee
Toyota Corolla 858 800 58 575 517 Auction Mr. Tayyab Tahir Shah - Employee
Toyota Corolla 1,316 557 759 1,017 258 Auction Mr. Fazal-ur-Rehman, Iskanderabad
Toyota Corolla 967 819 148 540 392 Auction Mr. Shah Jahan Khan - Employee
Mitsubishi Pajero 2,755 2,646 109 1,005 896 Auction Swift Transport, Lahore.
Suzuki Jeep 548 514 34 252 218 Auction Mr. Mumtaz Ahmad, Mianwali.
Items of Net book Value below
Rupees 50,000 each 279 167 112 95 (17) Negotiation Various Parties

2009 21,829 16,544 5,285 10,143 4,858

2008 52,511 38,412 14,099 15,981 1,882

111
ANNUAL REPORT 2009 Kohinoor Textile Mills Limited
18.1.5 The Subsidiary has given on lease, land measuring 8 Kanals and 16 Marlas (2008: 6 Kanals
and 18 Marlas) to Sui Maple
Northern Gas Pipelines
Leaf Cement Factory Ltd.
Maple Limited
Leaf at an Factory
Cement annual Limited
rent of Rupees 4,267
(2008: Rupees 2,500).
18.1.6 Ownership of the housing colony assets included in the operating fixed assets is shared by
the Subsidiary jointly with Pak American Fertilizer Limited in the ratio of 101:245 since the
time when both the companies were managed by Pakistan Industrial Development Corporation
(PIDC). These assets are in possession of the housing colony establishment for mutual
benefits. The cost of these assets at the year-end were as follows:
2009 2008
Note (Rupees in thousand)
- buildings 3,990 2,646
- roads and bridge 202 202
- air strip 16 16
- plant and machinery 273 271
- furniture, fixtures and equipment 1,219 1,096
- vehicles 166 164
5,866 4,395
18.2 CAPITAL WORK IN PROGRESS
Civil works 17,897 46,419
Plant and machinery 1,250,009 59,622
Un-allocated capital expenditure 18.2.1 59,581 3,367
Computer software and consultancy cost 26,384 -

Advances to suppliers against:


Plant and machinery 286,080 261,875
Purchase of land 2,000 2,000
Vehicles 2,944 1,571
Civil works 1,505 2,307
1,646,400 377,161
18.2.1 Un-allocated capital expenditure - net
Opening balance 3,367 1,569,449
Salaries and wages 2,899 425
Travelling 1,615 358
Vehicles' running and maintenance 16 -
Financial expenses 51,639 1,724
Legal and professional - 225
Consultancy - 635
Communication 45 -
Kohinoor Textile Mills Limited

Loss on trial run operations 18.2.2 - 265,444


59,581 1,838,260
Less: Allocated during the year
Building on freehold land - 381,237
Plant and machinery - 1,453,656
- 1,834,893
59,581 3,367
112
18.2.2 Operations of the expansion project for new production line of 6,700 tpd clinker capacity of
grey cement plant (the project) for the period from 01 March 2007 to 31 October 2007 were
ANNUAL REPORT 2009

treated as trial run operations due to intermittent plant & machinery shut downs. Trial run net
loss aggregating Rupees 617.020 million incurred upto 31 October 2007 was capitalised
and allocated to buildings and plant & machinery during the preceding financial year.
Maple Leaf Cement Factory
MapleLimited
Leaf Cement Factory Limited

19. INVESTMENT PROPERTIES


2009 2008
(Rupees in thousand)
Balance as on July 01 1,720,835 1,384,577
Net gain from fair value adjustment - 336,258
Balance as on June 30 1,720,835 1,720,835

The fair value of the investment property situated at Lahore has been determined by Messers Hasib
Associates (Private) Limited at Rupees 769,192 thousand as at 26 June 2008. Land situated at
Rawalpindi has been determined by Messers Asrem (Private) Limited at Rupees 951,643 thousand
as at 20 May 2008. The fair value was determined on the basis of professional assessment of the
current prices in an active market for similar properties in the same location and condition. The valuers
have certified that there is no material change in fair value during the current financial year and as on
the balance sheet date.

20. INTANGIBLE ASSETS (Computer Software)


2009 2008
Note (Rupees in thousand)
Opening balance 15,082 4,578
Add: Addition during the year - 16,481
15,082 21,059
Less: Amortization charged for the year 35 (7,750) (5,977)
Book value as at 30 June 7,332 15,082
Gross carrying value
Cost 23,250 23,250
Accumulated amortization 15,918 8,168
Book value 7,332 15,082
Amortization rate 33.33% 33.33%
21. LONG TERM LOANS TO EMPLOYEES - Secured
House building 5,926 6,750
Vehicles 2,860 2,576
Others 301 401
9,087 9,727
Kohinoor Textile Mills Limited
Less : Current portion of long term loans to employees 26 3,421 3,606
5,666 6,121
21.1 These loans are secured against charge / lien on employees' retirement benefits and carry
interest at the rates ranging from 6% to 12% per annum (2008: 6% to 15% per annum). These
loans are recoverable in monthly instalments ranging from 30 to 120.
21.2 No amount was due from directors and chief executive at the year-end (2008: Rupees Nil).
21.3 Receivable balance from executives as at 30 June 2008 amounting Rupees 597 thousand was 113
fully received-back during the current financial year. No further loans were advanced to executives
during the current financial year.
ANNUAL REPORT 2009

21.4 Maximum amount of loans due from executives at the end of any month during the year was
Rupees 514 thousand (2008: Rupees 599 thousand).
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

22. LONG TERM DEPOSITS AND PREPAYMENTS


2009 2008
Note (Rupees in thousand)
Security deposits 96,339 83,984
Prepayments 1,333 2,500
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
97,672 86,484
Less: current portion 28 12,570 3,646

85,102 82,838

23. STORES, SPARES AND LOOSE TOOLS

Stores including in transit Rupees. 234.884 million


(2008: Rupees 388.440 million) 1,509,872 2,122,947
Spares including in transit Rupees 22.045 million
(2008: Rupees 78.863 million) 1,697,133 1,465,394
Tools 33,136 28,350

3,240,141 3,616,691

24 STOCK-IN-TRADE

Raw material including in transit Rupees 60.232 million


(2008: Rupees 108.212 million)" 641,577 592,298
Packing material 70,614 81,254
Work in process 915,368 687,683
Finished goods 803,181 745,779

2,430,740 2,107,014

25. TRADE DEBTS

Considered good:

Secured (against letter of credit) 986,420 1,384,160


Unsecured 745,925 699,666
Kohinoor Textile Mills Limited

1,732,345 2,083,826

As at 30 June 2009, trade debts of Rupees 653.568 million (30 June 2008 : Rupees 690.303 million)
were past due but not impaired. These relate to a number of independent customers from whom there
is no recent history of default. The ageing analysis of these trade debts is as follows:
2009 2008
(Rupees in thousand)
114 Upto 1 month 531,245 523,171
1 to 6 months 33,795 149,442
ANNUAL REPORT 2009

More than 6 months 88,528 17,690

653,568 690,303
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

26. LOANS AND ADVANCES


2009 2008
Note (Rupees in thousand)

Current portion of long term loans to employees 21 3,421 3,606


Advances to : Maple Leaf Cement Factory
Maple Leaf
Limited
Cement Factory Limited
- Executives 2,255 3,227
- Other employees 6,161 13,237
- Suppliers 368,157 412,032

376,573 428,496
Letters of credit 18,164 41,565
398,158 473,667

27. DERIVATIVE FINANCIAL INSTRUMENT


Holding Company
During the period under review, the Company has derecognized the derivative financial instrument
pursuant to the termination of cross currency swap agreement with the financial institution. The related
costs amounting to Rupees 196.057 million have been charged to finance cost.
Subsidiary Company
Cross currency swap agreements entered into between the Subsidiary and Standard Chartered Bank
(Pakistan) Ltd. have been wound-up and no such agreement was outstanding as at 30 June, 2009.
The resultant loss upon premature winding-up has been charged to the current year's profit and loss
account.
The Subsidiary, during the current financial year, has entered into an interest rate swap agreement
with Standard Chartered Bank (Pakistan) Limited to hedge for the possible adverse interest rate
movements on lease finances obtained from Islamic Corporation for Development of the Private Sector,
Jeddah (note 13.4). As per the agreement terms, the Company will pay interest at fixed rate of 2.45%
per annum whereas Standard Chartered Bank (Pakistan) Limited will be liable to pay interest at 6-
months US$-LIBOR. The agreement will terminate on 16 June 2014.
As the aforementioned hedging relationship is effective and meets the criteria of cash flow hedge, this
arrangement qualifies for hedge accounting as specified in IAS 39 (Financial Instruments: Recognition
and Measurement). However, the resultant unrealised gain as at 30 June 2009 amounting
Rupees 1.884 million has not been recognised in these financial statements on grounds of immateriality.

28. SECURITY DEPOSITS AND SHORT TERM PREPAYMENTS


2009 2008
Note (Rupees in thousand)
Current portion of security deposits 23 12,570 3,646
Kohinoor Textile Mills Limited
Margin against letter of credit 68,163 24,834
Margin against bank guarantee 27,376 14,760
Prepayments 63,580 35,166
171,689 78,406
29. OTHER RECEIVABLES
Sales tax refundable 29.1 232,674 272,140
Custom duty receivable 3,642 3,642
Export rebate 32,302 25,547
Insurance claims 181 537 115
Research and development support 25,735 42,957
Others 26,244 8,094
ANNUAL REPORT 2009

320,778 352,917

29.1 The balance includes various cases as detailed in the contingencies note.
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

30. SHORT TERM INVESTMENTS


2009 2008
Note (Rupees in thousand)
Holding company
Held for trading
Investment in quoted companies 13,611 6,545
Loss on remeasurement of fair value during the year (7,464) (1,037)

6,147 5,508
Available for sale
Unquoted - Related party

Security General Insurance Company Limited 30.1 1,010,969 904,327


6,398,541 (2008: 6,398,541)
Ordinary shares of Rupees 10
each fully paid.
Equity held 9.40% (2008 : 9.40%)
Chief executive officer - Ms. Nabiha Samad
Surplus on revaluation of investment (409,506) 106,642

601,463 1,010,969
Subsidiary company
Investments at fair value through profit and loss account
Quoted
Purchase cost of investment 12,115 12,115
Deficit on revaluation of investment (7,736) (4,205)

4,379 7,910
Investments in mutual funds
Purchase cost of investment 25,000 20,000
Deficit on revaluation of investment (3,666) (1,461)

21,334 18,539
Available for sale
Unquoted
Security General Insurance Company Limited 30.2 708,410 744,669
4,570,389 (2008 : 4,570,389) Ordinary shares
of Rupees. 10 each fully paid.
Kohinoor Textile Mills Limited

Equity held: 6.71% (2008: 6.71%)


Deficit on revaluation of investment (327,560) (36,259)

380,850 708,410

1,014,173 1,751,336

30.1 During the year ended 30 June 2009, the Holding Company has changed the accounting
estimate for valuation of unquoted available for sale investments. Fair value of unquoted, available
116 for sale investment is now determined by using dividend stream method. Previously, valuation
was carried out using net assets based valuation model. Fair value of Rupees 94 per share
ANNUAL REPORT 2009

was calculated using present value dividend stream method based upon dividend yield in the
expected cash flow from the investment as per unaudited accounts for the period ended
30 June 2009.
30.2 (a) The fair value of investments has been determined based on the valuation report prepared
by independent Valuers M/s Maqbool Haroon & Co., Chartered Accountants 47-C-3,
Gulberg III, Lahore.

(b) These shares are piedged


Maplewith
Leaf Allied
CementBank Limited
Factory
Maple as collateral
Limited
Leaf Cement against
Factory short term finance
Limited
facility of Rupees 400 million.

31. TAXATION RECOVERABLE


2009 2008
(Rupees in thousand)

Opening balance 97,591 53,385


Add: provision / (write back) made for:
Current year (120,563) (83,631)
Prior years 488 466

(120,075) (83,165)
Less: tax deducted at source / advance tax 259,384 127,371

Taxation recoverable (236,900) (97,591)

Income tax assessments of the Subsidiary are complete upto the Tax Year 2008 except for the Tax
Year 2006, which has been selected for tax audit and proceedings are pending.

In consequence of tax audit conducted by the Income Tax Department (the Department) for tax year
2003, the Department, vide order dated 31 December, 2008, has amended the deemed assessment
in respect of tax year 2003 under section 122(5) of the Ordinance and the Subsidiary's taxable income
has been enhanced by Rs.177.750 million. The Subsidiary has preferred an appeal against the aforesaid
amendment order before the Commissioner of Income Tax (Appeals), which is pending adjudication.

The Department has initiated proceedings under sections 161 and 205 of the Ordinance against the
Subsidiary in respect of tax years 2003 to 2007. The Subsidiary has challenged the initiation of the
aforementioned proceedings by filing a writ petition before the Lahore High Court, which, vide order
dated 30 December, 2008, has granted stay of proceedings in respect of tax year 2003. The main
petition is pending adjudication before the court.

32. CASH AND BANK BALANCES


2009 2008
Kohinoor Textile Mills Limited
Note (Rupees in thousand)
Cash in hand including in transit Rupees Nil
(2008: Rs. 0.262 million) 5,710 3,153
Cash at bank:
- On current accounts 95,262 69,079
- On deposit accounts 32.2 13,891 37,552
- On Profit and loss accounts 32.3 65,366 69,737

174,519 176,368 117


ANNUAL REPORT 2009

180,229 179,521

32.1 The balances in current and deposit accounts include US $ 72,465 (2008: US $ 329,290).
32.2 The balances in deposit accounts carry interest ranging from 0.20% to 12% (2008: from
0.10% to 6.50%) per annum.
32.3(a) These accounts bear profit at the rates ranging from of 1% to 5% (2008: 1% to 5%)
per annum.
(b) 30 June, 2009 balance includes an account, which is under a bank's lien as a security of
guarantee amounting Rupees 30 million issued in favour of Excise & Taxation Department,
Karachi.
33. NON CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
2009 2008
(Rupees in thousand)
Land 551,662 392,242
Advance against land 50,000 36,000
601,662 428,242

The management intends to dispose off this land located at Raiwind Road, after negotiating with its
intended buyer. Land is expected to be sold in next financial year. The proceeds of the disposal are
expected to exceed the cost of land. Accordingly, no impairment loss has been recognized on the
asset classified as held for sale.
34. SALES
2009 2008
Note (Rupees in thousand)
Export 11,937,475 6,200,768
Local - net of sales tax and excise duty 34.1 11,840,054 9,261,949
Rebate 35,222 20,758
23,812,751 15,483,475

34.1 Local sales are exclusive of sales tax amounting to Rsupees 1,708.158 million
(2008: Rupees. 1,061.681 million) and excise duty amounting to Rupees 1,901.663 million
(2008: Rupees. 1,564.801 million).
35. COST OF SALES
2009 2008
Note (Rupees in thousand)
Raw materials consumed 35.1 3,657,167 3,111,146
Kohinoor Textile Mills Limited

Cloth and yarn procured and consumed 1,405,218 1,278,889


Salaries, wages and other benefits 967,534 736,032
Provident fund contributions 24,351 21,092
Dyes and chemicals consumed 505,493 336,530
Processing charges 22,452 2,710
Stores and spares consumed 696,619 620,921
Packing materials 1,364,752 869,792
Fuel and power 7,402,291 4,142,255
Repair and maintenance 123,841 109,877
Insurance 57,897 45,422
118 Other factory overheads 157,585 137,911
Depreciation 18.1.2 1,382,070 1,182,806
ANNUAL REPORT 2009

Amotization 20 7,750 5,977


17,775,020 12,601,360
2009 2008
(Rupees in thousand)
Work-in-process Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited
Opening stock 687,683 549,177
Transfer from Trial run operations - 331,228
Closing stock (915,368) (687,683)

(227,685) 192,722

Cost of goods manufactured 17,547,335 12,794,082

Finished goods
Opening stock 745,779 651,925
Transfer from Trial run operations - 186,630
Closing stock (803,181) (745,779)

(57,402) 92,776

Cost of sales - own manufactured goods 17,489,933 12,886,858

35.1 Raw material consumed

Opening stock 484,086 691,233


Add: Purchases 3,754,426 2,903,999

4,238,512 3,595,232
Less: Closing stock 581,345 484,086

3,657,167 3,111,146

36. SELLING AND DISTRIBUTION EXPENSES

Salaries, wages, allowances and other benefits 60,512 44,187


Provident fund contributions 2,053 1,771
Outward freight and handling 2,299,401 837,669
Clearing and forwarding 160,317 137,092
Travelling and conveyance 24,460 13,949

Kohinoor Textile Mills Limited


Insurance 405 701
Vehicles' running 7,795 6,282
Electricity, gas and water 679 419
Postage, telephone and telex 5,267 4,404
Legal and professional - 4
Sales promotion and advertisement 24,308 1,361
Commission to selling agents 299,280 261,130
Miscellaneous expenses 28,607 17,128
119
2,913,084 1,326,097
ANNUAL REPORT 2009
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

37. ADMINISTRATIVE EXPENSES


2009 2008
Note (Rupees in thousand)
Salaries, wages, allowances and other benefits 148,883 116,290
Provident fund contributions Maple Leaf Cement Factory
Maple Leaf
Limited
Cement Factory Limited
4,545 3,892
Travelling and conveyance 16,617 19,190
Repairs and maintenance 13,734 10,856
Rent, rates and taxes 3,049 3,471
Insurance 4,483 2,338
Vehicles' running 17,216 11,905
Printing, stationery and periodicals 11,503 8,577
Electricity, gas and water 1,175 788
Postage, telephone and telex 10,824 7,796
Legal and professional 12,437 16,514
Research and development 37.1 - 4
Security, gardening and sanitation 18,915 14,264
Depreciation 18.1.2 35,102 34,224
Miscellaneous expenses 28,261 20,163

326,744 270,272
37.1 Research and development
Support on account of research and development 37.1.1 - 108,302
Less : Utilization
Product development - 86,685
Professional consultancy - 2,499
Participation in exhibition - 19,122
- 108,306
- 4
37.1.1 The research and development support has been given by Ministry of Commerce, Government
of Pakistan vide SRO 803(1)/2006 dated 04 August 2006 in order to encourage and regulate
the research and development in textile sector.
38. OTHER OPERATING EXPENSES
2009 2008
Note (Rupees in thousand)
Auditors' remuneration 38.1 1,850 1,383
Donations 43,543 26,211
Kohinoor Textile Mills Limited

Stores and spares written-off - 10,587


Miscellaneous 15,414 -
60,807 38,181
38.1 Auditors' remuneration
Statutory audit fee 1,300 825
Certification including half yearly review 420 530
Out of pocket expenses 130 167
120 1,850 1,522
Less : Grouped under unallocated capital expenditure - (139)
ANNUAL REPORT 2009

1,850 1,383
38.2 None of the directors and their spouses have any interest in the donees' fund.
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

39. OTHER OPERATING INCOME


2009 2008
(Rupees in thousand)
Income from financial assets: Maple Leaf Cement Factory
Maple Leaf
Limited
Cement Factory Limited
Exchange gain 78,350 22,781
Gain on disposal of investments (3,330) 40,785
Loss on remeasurement of investment (13,200) (6,703)
Dividend income 837 217
Return on bank deposits 12,306 7,007
74,963 64,087
Income from related parties:
Dividend income : Security General Insurance Company Limited 27,422 24,818
Income from non-financial assets:
Scrap sales 41,523 66,434
Gain on disposal of property, plant and equipment 4,858 1,882
Gain on sale of land classified as hled for sale 8,190 -
Gain on remeasurement of investment property - 336,258
Miscellaneous 26,991 6,018
81,562 410,592
183,947 499,497
40. FINANCE COST
Mark-up/finance charges/ interest on:
Long term financing 668,611 750,699
Redeemable capital 1,311,908 502,217
Term finance certificates - 3,611
Short term borrowings 1,134,648 521,645
Liabilities against assets subject to finance lease 119,445 110,972
Provident fund 322 -
Workers' profit participation fund 164 61
3,235,098 1,889,205
Bank charges and commission 115,208 99,914
Loss on cross currency swap 830,747 413,515
Exchange loss 479,418 292,508
4,660,471 2,695,142
41. TAXATION Kohinoor Textile Mills Limited

Current year
Current 120,563 83,631
Deferred (151,621) (636,949)
(31,058) (553,318)
Prior year
Current (488) (466)
121
(31,546) (553,784)
ANNUAL REPORT 2009

Provision of income tax has been made according to the provisions of Income Tax Ordinance, 2001.
Numeric tax reconciliation is not given as the Company falls under the ambit of persumptive tax regime
under section 169 of Income Tax Ordinance, 2001 due to available tax losses.
Maple Leaf Cement Factory
Maple Limited
Leaf Cement Factory Limited

42. EMPLOYEE BENEFITS - Gratuity

The future contribution rates of this scheme include allowance for deficit and surplus. Projected unit
credit method, based on the following significant assumptions, is used for valuation of this plan:
Maple Leaf Cement Factory
Maple Leaf
Limited 2009
Cement Factory Limited 2008
- discount rate 12% 12%
- expected return on plan assets 12% 12%
- expected rate of growth per annum in future salaries 11% 11%
- average expected remaining working life time of employees 10 years 11 years

The amounts recognized in the balance sheet are as follows:


2009 2008
(Rupees in thousand)

Fair value of plan assets 47,997 61,382


Present value of defined benefit obligation (60,082) (50,663)
Benefits payable to outgoing Members - (864)

(Deficit)/ surplus (12,085) 9,855


Unrecognized actuarial gain 20,269 (87)

Net asset as at 30 June, 8,184 9,768

Net asset/ (liability) as at 01 July, 9,768 8,539


Charge to profit and loss account (2,042) (1,744)
Payment to fund during the year 458 2,973

Net asset as at 30 June, 8,184 9,768

Movement in the present value of defined


benefit obligation is as follows:

Present value of defined benefit obligation 50,663 46,512


Current service cost 3,328 4,387
Interest cost 6,080 4,651
Benefits paid (3,205) (2,370)
Benefits payable to outgoing Members - (864)
Actuarial gain 3,216 (1,653)

Present value of defined benefit obligation 60,082 50,663


Kohinoor Textile Mills Limited

Movement in the fair value of plan assets is as follows:

Fair value of plan assets as at 01 July, 61,382 60,785


Expected return on plan assets 7,366 7,294
Contributions 458 2,973
Benefits paid (3,205) (2,973)
Payment to outgoing members (864) -
Actuarial loss (17,140) (6,697)
122
Fair value of plan assets as at 30 June, 47,997 61,382
ANNUAL REPORT 2009

Actual return on plan assets (9,774) 597


2009 2008
(Rupees in thousand)
Plan assets comprise of:

Defence Saving Certificates 24,778 20,605


(including accrued interest less zakat)
National Investment Trust Units Maple Leaf Cement Factory
Maple Limited 20,777
Leaf Cement Factory Limited 35,961
Cash at bank 2,442 241
UBL Deposits (including accrued interest) - 4,574

47,997 61,381
Charged to profit and loss are as follows:

Current service cost 3,328 4,387


Interest cost 6,080 4,651
Expected return on plan assets (7,366) (7,294)

2,042 1,744

Comparison of present value of defined benefit obligation


The fair value of plan assets and the surplus or deficit of gratuity fund for five years is as follows:
2009 2008 2007 2006 2005
---------------- Rupees in thousand ---------------
Present value of defined benefit obligation (60,082) (50,663) (46,512) (45,937) (74,066)
Fair value of plan assets 47,997 61,381 60,785 100,830 147,812
(Deficit)/ surplus (12,085) 10,718 14,273 54,893 73,746
Experience adjustment on obligation 3,216 (1,653) (3,825) 12,381 1,519
Experience adjustment on plan assets (17,140) (6,697) 2,603 7,007 5,122

The Subsidiary company's policy with regard to actuarial gains / losses is to follow the minimum
recommended approach under IAS 19:"Employee Benefits".

The latest actuarial valuation of the gratuity scheme has been carried out on 30 June 2009.

43. CASH GENERATED FROM OPERATIONS


2009 2008
Note (Rupees in thousand)
Loss before taxation (1,454,341) (1,233,578)

Adjustment for non-cash charges and other items:

Depreciation 1,417,301 1,229,399 Kohinoor Textile Mills Limited


Amortization of intangible assets 7,750 5,977
Finance cost 4,660,471 2,695,142
Gain on sale of fixed assets (4,858) (1,882)
Loss on sale of investments 3,330 (40,785)
Loss on remeasurement of investment 13,200 6,703
Gain on remeasurement of investment property - (336,258)
Gain on sale of land classified as held for sale (8,190) -
Employees' compensated absences 6,046 7,137
Dividend income (28,259) (25,035) 123
Return on bank deposits (12,306) (7,007)
ANNUAL REPORT 2009

Working capital changes 43.1 480,303 (503,054)

5,080,447 1,796,759
2009 2008
(Rupees in thousand)
43.1 Working capital changes
(Increase)/ decrease in current assets:

Stores and spares 376,550 (1,317,883)


Stock-in-trade (323,726) 17,792
Trade debts 351,481 (826,919)
Loans and advances 71,620 (229,773)
Gratuity fund trust 1,584 (1,229)
Security deposits and short term prepayments (93,283) (33,810)
Other receivables 25,829 (49,484)
410,055 (2,441,306)
Increase/ (decrease) in current liabilities
Trade and other payables 70,248 1,938,252

480,303 (503,054)

44. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amount charged in the financial statements for the year for remuneration including
certain benefits to the chief executive, directors and executives of the Group is as follows:

Chief Executive Directors Executives


2009 2008 2009 2008 2009 2008
Number of persons 2 2 5 5 63 56
..............(R u p e e s i n t h o u s a n d )..............

Managerial remuneration 9,337 8,107 9,791 9,061 64,113 55,320


Contribution to provident fund 691 626 262 251 4,608 3,376
Housing and utilities 466 423 1,701 2,024 24,170 20,645
Medical 383 613 1,258 1,285 2,441 1,980
Group insurance 185 146 59 15 122 20
Club subscription 73 60 - 10 - -
Others - - - - 4,132 4,900

11,135 9,975 13,071 12,646 99,586 86,241

The Chief Executive Officer and directors are provided with free transport, residential telephone facilities
Kohinoor Textile Mills Limited

for both business and personal use and free medical facilities. Chief Executive is also provided with
free furnished accommodation.

Executives are provided with free use of company maintained vehicles in accordance with the Group
policy.

The aggregate amount charged in the financial statements in respect of directors' fee paid to 4
(2008: 5) directors was Rupees. 190 thousand (2008: Rupees 70 thousand).
124 45. TRANSACTIONS WITH RELATED PARTIES
ANNUAL REPORT 2009

Transactions and contracts with the related parties are carried out at arm's length prices determined
in accordance with comparable uncontrolled price method except in circumstances where it is in the
interest of the Group to do so with prior approval of the board of directors.
The related parties comprise of subsidiary, associated companies, directors of the Group, key
management personnel and staff retirement fund. Detail of transactions with related parties, other than
those which have been specifically disclosed elsewhere in these financial statements are as follows:
2009 2008
(Rupees in thousand)
Associated company
Dividend income 27,422 24,818

Post employment benefits plan


Contribution to provident fund 30,949 25,996
Inrerest on provident fund 322 -
Contribution to gratuity fund 2,042 1,744

45.1 Contributions to the provident fund are in accordance with the terms of the entitlement of
employees.

46. LOSS PER SHARE - BASIC AND DILUTED


2009 2008
(Rupees in thousand)

Loss for the year Rupees in thousand (959,035) (369,058)


Weighted average ordinary shares in issue Numbers 145,526,216 145,526,216
Basic loss per share Rupees (6.59) (2.54)

No figure for diluted earnings per share has been presented as the Group has not issued any instrument
carrying options which would have an impact on the basic earnings per share, when exercised.

47. PLANT CAPACITY AND ACTUAL PRODUCTION


2009 2008
(Rupees in thousand)
SPINNING:
- Rawalpindi Division (Numbers)
Spindles (average) installed / worked; 85,834 84,672
(Kilograms in thousand)

Kohinoor Textile Mills Limited


100% Plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2008: 1,098 shifts). 37,945 38,892
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2008:1,098 shifts). 35,298 36,605

- Gujar Khan Division (Numbers)


Spindles (average) installed / worked; 66,068 66,996
(Kilograms in thousand)
100% Plant capacity converted into 20s count based on 125
3 shifts per day for 1,095 shifts (2008: 1,098 shifts). 27,732 30,763
ANNUAL REPORT 2009

Actual production converted into 20s count based on


3 shifts per day for 1,095 shifts (2008: 1,098 shifts). 26,318 28,899
2009 2008
(Rupees in thousand)
WEAVING:
- Raiwind Division (Numbers)
Looms installed / worked 204 204
(Square meters in thousand)

100% Plant capacity at 60 picks based on 3 shifts


per day for 1,093 shifts (2008: 1,096 shifts). 84,875 84,875
Actual production converted to 60 picks based on 3 shifts
per day for 1,093 shifts (2008: 1,096 shifts). 68,271 70,050

PROCESSING OF CLOTH :
- Rawalpindi Division (Meters in thousand)
Capacity at 3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 54,750 54,900
Actual at 3 shifts per day for 1,095 shifts (2008: 1,098 shifts) 30,626 22,988

POWER PLANT:
- Rawalpindi Division (Mega Watts)
Annual rated capacity (based on 365 days)(2008: 366 days) 207,787 199,027
Actual generation
Main engines 7,124 15,773
Gas engines 64,663 51,927

- Raiwind Division
Annual rated capacity (based on 365 days)(2008: 366 days) 54,312 54,460
Actual generation
Gas engines 28,166 29,732
Standby generators 50 50

CEMENT: (Metric tons in thousand)


Clinker:
Kohinoor Textile Mills Limited

Grey
Annual rated capacity (Based on 300 days) 3,510 2,840
Annual production for the year 3,046 2,062

White
Annual rated capacity (Based on 300 days) 150 180
Annual production for the year 85 72

126 Oil well


Annual rated capacity (Based on 300 days) 30 -
ANNUAL REPORT 2009

Annual production for the year 6 -


REASONS FOR LOW PRODUCTION
- Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality, interruption
in gas/ electricity supply.
- Cloth processing units working capacity was limited to actual export / local orders in hand.
- The generation of power was limited to actual demand.
- The Subsidiary, during the current year, has converted its white cement plant having capacity of
30,000 M.Tons into oil well cement plant.
- Shortfall in production of grey cement was mainly due to break-down in cement mills and market
constraints.
- Shortfall in production of white cement was mainly due to market constraints.
48. FINANCIAL RISK MANAGEMENT
48.1 Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk (including currency
risk, other price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk
management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance.
Risk management is carried out by the Board of Directors (the Board). The Board provides
principles for overall risk management, as well as policies covering specific areas such as
currency risk, other price risk, interest rate risk, credit risk and liquidity risk.
(a) Market risk
(i) 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. Currency
risk arises mainly from future commercial transactions or receivables and payables
that exist due to transactions in foreign currencies.

The Group is exposed to currency risk arising from various currency exposures,
primarily with respect to the United States Dollar (USD), Euro, GBP and Yen. Currently,
the Group's foreign exchange risk exposure is restricted to bank balances, the
amounts receivable / payable from / to the foreign entities. The Group uses forward
exchange contracts to hedge its foreign currency risk, when considered appropriate.
The Group's exposure to currency risk was as follows:

Kohinoor Textile Mills Limited


2009 2008
(Rupees in thousand)
Cash at banks - USD 72 329
Trade debts - USD 15,388 20,748
Trade debts - Euro 245 913
Trade debts - GBP 18 44
Trade and other payable - USD 11,163 23,110
Trade and other payable - Euro 1,168 1,777
Trade and other payable - yen 17,200 -
Finance lease liability - USD 11,879 12,800 127
Net exposure - USD 7,582 14,833
ANNUAL REPORT 2009

Net exposure - Euro 923 264


Net exposure - GBP 18 44
Net exposure - yen 17,200 -
2009 2008
(Rupees in thousand)

The following significant exchange rates


were applied during the year:

Rupees per US Dollar


Average rate 78.81 62.61
Reporting date rate 81.10 68.00

Rupees per Euro


Average rate 107.87 97.315
Reporting date rate 114.54 107.33

Rupees per GBP


Average rate 126.45 124.30
Reporting date rate 135.05 135.54

Rupees per Yen


Average rate 0.7867 0.5758
Reporting date rate 0.8475 0.6498

Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5%


against the USD, Euro, GBP and Yen with all other variables held constant, the
impact on loss after taxation for the year would have been Rupees 30.745 million,
Rupees 5.286 million, Rupees 0.122 million and Rupees .729 million (30 June
2008: Rupees 50.432 million, Rupees 1.417 million and Rupees 0.298 million)
respectively higher / lower, mainly as a result of exchange gains / losses on
translation of foreign exchange denominated financial instruments. Currency risk
sensitivity to foreign exchange movements has been calculated on a symmetric
basis. 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


Kohinoor Textile Mills Limited

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), whether those changes are
caused by factors specific to the individual financial instrument or its issuer, or
factors affecting all similar financial instrument traded in the market. The Group is
not exposed to commodity price risk.

128 Sensitivity analysis


ANNUAL REPORT 2009

The table below summarises the impact of increase / decrease in the Karachi Stock
Exchange (KSE) Index on the Group's profit after taxation for the year and on equity
(fair value reserve). The analysis is based on the assumption that the equity index
had increased / decreased by 5% with all other variables held constant and all the
Group's equity instruments moved according to the historical correlation with the
index:
Impact on profit Impact on other
Index after taxation components of equity (Fair)
2009 2008 2009 2008
.............. (Rupees in thousand) ..............

KSE 100 (5% increase) 1,593 1,598 - -


KSE 100 (5% decrease) (1,593) (1,598) - -

Equity (fair value reserve) would increase / decrease as a result of gains / losses
on equity investments classified as available for sale.

(iii) Interest rate risk

This represents the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates.

The Group has no significant long-term interest-bearing assets. The Group's interest
rate risk arises from long term financing, redeemable capital, liabilites against assets
subject to finance lease, lease finance advance and short term borrowings.
Borrowings obtained at variable rates expose the Group to cash flow interest rate
risk. Borrowings obtained at fixed rate expose the Group to fair value interest rate
risk.

At the balance sheet date the interest rate profile of the Group’s interest bearing
financial instruments was:
2009 2008
(Rupees in thousand)
Fixed rate instruments

Financial liabilities
Long term financing 549,141 738,329
Short term borrowings 2,942,000 1,370,000
Liabilities against assets subject to finance lease 8,017 16,033

Kohinoor Textile Mills Limited


Floating rate instruments

Financial assets
Bank balances- saving accounts 79,275 107,289

Financial liabilities
Long term financing 4,655,703 4,576,171
Redeemable capital 8,000,000 8,000,000 129
Short term borrowings 6,250,793 5,994,262
ANNUAL REPORT 2009

Liabilities against assets subject to finance lease 1,343,997 1,366,558


Lease finance advance 35,922 -
Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair
value through profit or loss. Therefore, a change in interest rate at the balance sheet
date would not affect profit or loss of the Group.

Cash flow sensitivity analysis for variable rate instruments

If interest rate at the year end date, fluctuates by 1% higher / lower with all other
variables held constant, loss after taxation for the year would have been Rupees
202.864 million (30 June 2008: Rupees 199.937 million) lower / higher, mainly as
a result of higher / lower interest expense on floating rate borrowings. This analysis
is prepared assuming the amounts of liabilities outstanding at balance sheet dates
were outstanding for the whole year.

(b) Credit risk

Credit risk represents the risk that one party to a financial instrument will cause a financial
loss for the other party by failing to discharge an obligation. The carrying amount of
financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was as follows:
2009 2008
(Rupees in thousand)

Investments 1,014,173 1,751,336


Deposits 98,874 79,486
Trade debts 1,732,345 2,083,826
Other receivables 37,082 9,089
Loans and advances 5,695 12,747
Bank balances 174,519 176,368

3,062,688 4,112,852

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:
.
Holding Company
Kohinoor Textile Mills Limited

Rating 2009 2008


Short term Long term Agency (Rupees in thousand)
Banks
National Bank of Pakistan A-1+ AAA JCR-VIS 4,656 9,110
Allied Bank Limited A1+ AA PACRA 31,292 10,731
Askari Bank Limited A1+ AA PACRA 5,703 5,587
Bank Alfalah Limited A1+ AA PACRA 2,536 3,197
Faysal Bank Limited A1+ AA PACRA 1,872 5,320
130 Habib Bank Limited A-1+ AA+ JCR-VIS 103 86
MCB Bank Limited A1+ AA+ PACRA 12,611 14,655
ANNUAL REPORT 2009

NIB Bank Limited A1+ AA- PACRA 11,106 9,425


The Royal Bank of Scotland
Limited A1+ AA PACRA 76 227
Rating 2009 2008
Short term Long term Agency (Rupees in thousand)

My Bank Limited A2 A- PACRA 30 30


The Bank of Punjab A1+ AA- PACRA 1,763 536
Meezan Bank Limited A-1 A+ JCR-VIS - 2,355
Silkbank Limited A-3 A- JCR-VIS 30 43
Standard Chartered Bank
(Pakistan) Limited A1+ AAA PACRA 837 1,744
United Bank Limited A-1+ AA+ JCR-VIS 2,611 580
Al-Baraka Islamic Bank Limited A-1 A JCR-VIS 4,350 9,413

79,576 73,039
Subsidiary Company

Total bank balance of Rupees 94.943 million placed with banks have a short term credit
rating of at least A1+.
2009 2008
(Rupees in thousand)

Group's investments Rating

Security General Insurance Company


Limited A-2 982,313 1,719,379
United Composite Islamic Fund AM-2 2,800 13,904
United Growth and Income Fund A - 1,854
MCB Dynamic Cash Fnd AM 3+ - 2,781
Faysal Saving Growth Fund A 4,267 -
NAFA Government Securities Liquid Fund AA+ 4,267 -

1,003,647 1,737,918

The Group's exposure to credit risk and impairment losses related to trade debts is
disclosed in Note 25.

Due to the Group's long standing business relationships with these counterparties and

Kohinoor Textile Mills Limited


after giving due consideration to their strong financial standing, management does not
expect non-performance by these counter parties on their obligations to the Group.
Accordingly the credit risk is minimal.

(c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities.

The Group manages liquidity risk by maintaining sufficient cash and the availability of 131
funding through an adequate amount of committed credit facilities. At 30 June 2009, the
ANNUAL REPORT 2009

Group had Rupees 26,092.41 million available borrowing limits from financial institutions
and Rupees 180.229 million cash and bank balances. Inspite the fact that the Group is
in a negative working capital position at the year end, management believes the liquidity
risk to be low. Following are the contractual maturities of financial liabilities, including
interest payments. The amount disclosed in the table are undiscounted cash flows:

Maple Leaf Cement Contractual


Maple Factory
Leaf Cement
Maple
Limited maturities
Factory
Leaf Cement
Maple LeafofCement
Limited
Factoryfinancial
Maple Leaf liabilities
Limited
Factory
Cement
Limited
Maple as Cement
Factory
Leaf atLimited
30 June 2009:
Factory Limited

Holidng Company
Carrying Contractual 6 months 6 - 12 1-2 More than
Amount cash flows or less months years 2 years
..............(R u p e e s i n t h o u s a n d )..............

Long term financing 2,749,341 3,413,720 506,992 606,169 1,031,773 1,268,786


Liabilities against assets
subject to finance lease 187,191 207,348 35,963 52,959 50,812 67,614
Lease finance advance 35,922 36,460 36,460 - - -
Trade and other payables 808,136 808,136 808,136 - - -
Accrued mark-up 185,259 185,259 185,259 - - -
Short term borrowings 4,810,471 4,991,732 4,438,253 553,479 - -

8,776,320 9,642,655 6,011,063 1,212,607 1,082,585 1,336,400

Subsidiary Company
Carrying Contractual Less than 1-5 More than
Amount cash flows one year years 5 years
..............(Rupees in thousand)............. .

Long term financing 2,455,503 3,365,222 662,012 2,703,210 -


Redeemable capital 8,000,000 11,646,716 2,035,200 9,611,516 -
Liabilities against assets
subject to finance lease 1,164,823 1,359,171 390,321 968,850 -
Long term deposits 2,580 2,580 - 2,580 -
Trade and other payables 1,675,984 1,675,984 1,675,984 - -
Accrued mark-up 441,194 441,194 441,194 - -
Short term borrowings 4,382,322 4,831,813 4,831,813 - -

18,122,406 23,322,680 10,036,524 13,286,156 -

Contractual maturities of financial liabilities as at 30 June 2008

Holidng Company
Kohinoor Textile Mills Limited

Carrying Contractual 6 months 6 - 12 1-2 More than


Amount cash flows or less months years 2 years
..............(R u p e e s i n t h o u s a n d )..............

Long term financing 2,957,737 4,191,145 423,556 358,190 1,234,256 2,175,143


Liabilities against assets
subject to finance lease 237,146 270,833 67,400 56,010 59,091 88,332
Trade and other payables 623,570 623,570 623,570 - - -
Accrued mark-up 236,396 236,396 236,396 - - -
Short term borrowings 3,994,524 4,126,163 3,781,560 344,603 - -
132
8,049,373 9,448,107 5,132,482 758,803 1,293,347 2,263,475
ANNUAL REPORT 2009
Maple Leaf Cement
Maple
Factory
Leaf Limited
CementMaple
Factory
Leaf Limited
Cement Factory
Maple LeafLimited
Cement Factory Limited

Subsidiary Company
Carrying Contractual Less than 1-5 More than
Amount cash flows one year years 5 years
..............(Rupees in thousand)............. .

Long term financing 2,356,763 2,798,150 1,357,145 1,381,516 59,489


Redeemable capital 8,000,000 12,695,367 1,188,000 10,218,023 1,289,344
Maple Leaf Cement Factory Limited
Liabilities against assets
subject to finance lease 1,145,445 1,395,283 269,813 1,125,470 -
Long term deposits 2,582 2,582 - 2,582 -
Trade and other payables 2,217,351 2,217,351 2,217,351 - -
Accrued mark-up 194,568 194,568 194,568 - -
Short term borrowings 3,369,738 3,928,529 3,928,529 - -

17,286,447 23,231,830 9,155,406 12,727,591 1,348,833

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 2009. The rates of interest / mark
up have been disclosed in note 6, note 7, note 8, note 9 and note 15 to these financial statements.

48.2 Fair values of financial assets and liabilities

The carrying values of all financial assets and liabilities reflected in financial statements approximate their
fair values. Fair value is determined on the basis of objective evidence at each reporting date.

48.3 Financial instruments by categories


Loans and Throug profit Available Total
receivables and loss for sale
.....................(Rupees in thousand).....................
As at 30 June 2009
Assets as per balance sheet

Investments - 31,860 982,313 1,014,173


Deposits 98,874 - - 98,874
Trade debts 1,732,345 - - 1,732,345
Other receivables 37,082 - - 37,082
Loans and advances 5,695 - - 5,695
Cash and bank balances 180,229 - - 180,229

2,054,225 31,860 982,313 3,068,398

Kohinoor Textile Mills Limited


Financial liabilities
at amortized cost
(Rupees in thousand)
Liabilities as per balance sheet
Long term financing 5,204,844
Redeemable capital 8,000,000
Liabilities against assets subject
to finance lease 1,352,014
Lease finance advance 35,922
Short term borrowings 9,192,793 133
Trade and other payables 2,484,030
ANNUAL REPORT 2009

Accrued mark-up 626,453

26,896,056
Loans and Throug profit Available Total
receivables and loss for sale
.....................(Rupees in thousand).....................

As at 30 June 2008 Maple Leaf Cement Factory


Maple Limited
Leaf Cement Factory Limited
Assets as per balance sheet

Investments - 31,957 1,719,379 1,751,336


Deposits 79,486 - - 79,486
Trade debts 2,083,826 - - 2,083,826
Other receivables 9,089 - - 9,089
Loans and advances 12,747 - - 12,747
Cash and bank balances 179,521 - - 179,521

2,364,669 31,957 1,719,379 4,116,005

Financial liabilities
at amortized cost
(Rupees in thousand)
Liabilities as per balance sheet
Long term financing 5,314,500
Redeemable capital 8,000,000
Liabilities against assets subject
to finance lease 1,382,591
Short term borrowings 7,364,262
Trade and other payables 2,840,921
Accrued mark-up 430,964

25,333,238

48.3 a) 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. In order to maintain
or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders through repurchase of shares, issue new shares or sell assets
to reduce debt. Consistent with others in the industry and the requirements of the lenders, the
Group monitors the capital structure on the basis of gearing ratio. This ratio is calculated as
Kohinoor Textile Mills Limited

borrowings divided by total capital employed. Borrowings represent long-term financing,


redeemable capital, liabilities against assets subject to finance lease, lease finance advance
and short-term borrowings obtained by the Group as referred to in note 6, note 7, note 8, note
9 and note 15 respectively. Total capital employed includes ‘total equity’ as shown in the balance
sheet plus ‘borrowings’. The gearing ratio as at year ended 30 June 2009 and 30 June 2008
is as follows:
2009 2008
(Rupees in thousand)
Borrowings 23,785,573 22,026,129
134 Total equity 7,581,330 10,099,873
ANNUAL REPORT 2009

Total capital employed 31,366,903 32,126,002

Gearing Ratio 75.83% 68.56%


49. DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorised for issue on September 26, 2009 by the Board of Directors
of the Group.

50. CORRESPONDING FIGURES

No significant reclassification/ rearrangement of corresponding figures has been made except following:

Margins against bank guarantees amounting Rupees 14.760 million of Subsidiary have been shown
under deposits and short term prepayments instead of cash and bank balances; and

Vehicles' running and maintenance expenses of Subsidiary, which were grouped under other expenses
of cost of sales, have been shown as a separate line item of cost of sales.

51. GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.

Chief Executive Director

Kohinoor Textile Mills Limited

135
ANNUAL REPORT 2009
KOHINOOR TEXTILE MILLS LIMITED
42-LAWRENCE ROAD, LAHORE

PROXY FORM

I/We

of

being a member of KOHINOOR TEXTILE MILLS LIMITED hereby appoint

(Name)

of another member of the Company

or failing him/her
(Name)

of another member of the Company

(being a member of the Company) as my/our proxy to attend and vote for and on my/our behalf, at the Annual
General Meeting of the Company to be held at its Registered Office, 42-Lawrence Road, Lahore on Thursday,
October 29, 2009 at 3:00 p.m. and any adjournment thereof.

As witnessed given under my/our hand(s) day of , 2009.

1) Witness:
Affix
Revenue
Signature Stamp of Rs. 5/-

Name

Address Signature of Member

2) Witness:

Signature Shares Held Kohinoor Textile Mills Limited

Name Shareholder’s Folio No.

Address CDC A/c No.

CNIC No.
Notes:
1. Proxies, in order to be effective, must be reached at the Company’s Registered Office, not less
than 48 hours before the time for holding the meeting and must be duly stamped, signed and
ANNUAL REPORT 2009

witnessed.
2. CDC Shareholders, entitled to attend and vote at this meeting, must bring with them their National
Identity Cards/Passports in original to prove his/her identity, and in case of Proxy, must enclose
an attested copy of his/her NIC or Passport. Representatives of corporate members should bring
the usual documents required for such purpose.
Fold Here

AFFIX
CORRECT
POSTAGE

The Company Secretary


KOHINOOR TEXTILE MILLS LIMITED
42-Lawrence Road, Lahore.
Phone Nos: (042) 36302261 - 62

Fold Here
Fold Here Fold Here