Sitara Chemical

Industries Limited

HAJI BASHIR AHMED (CHAIRMAN SITARA GROUP OF INDUSTRIES) IS RECEIVING SITARA-I-IMTIAZ FROM GOVERNOR PUNJAB FOR EXCELLENCE IN SOCIO-ECONOMIC ACTIVITIES

Sitara Chemical

Industries Limited

CONTENTS
Company Information Vision, Mission and Code of Ethics and Business Practices Notice of Meeting Chairman's Review Directors' Report Corporate Governance Pattern of Shareholding Key Financial Data Statement of Compliance with Code of Corporate Governance Review Report of Code of Corporate Governance Auditors’ Report Balance Sheet Profit & Loss Account Cash Flow Statement Statement of Changes in Equity Notes to the Accounts Form of Proxy 6 7 8 9 13 16 17 19 22 24 25 26 28 29 31 32

) Ltd. Javed Iqbal Mr. Rashid Zahir (Nominee Director of Saudi Pak Industrial and Agricultural Investment Co. M. Mazhar Ali Khan Mr. Faisalabad.Sheikhupura Road. Muhammad Anis Haji Bashir Ahmed Mrs. Karachi-74000 28/32 K.Yousuf Adil Saleem & Co.S. Rukhsana Adrees Mr. Haseeb Ahmed Mrs.) Askari Commercial Bank Limited Faysal Bank Limited KASB Bank Limited Habib Bank Limited Union Bank Limited 601-602. (E. Muhammad Safdar Butt M/S. (Pvt. Chartered Accountants Mr.M. Muhammad Adrees Mr.C. Muhammad Anis Mr. (Pvt.) Mr.) Limited Saudi Pak Commercial Bank Limited First National Bank Modaraba Al-Baraka Islamic Bank B. Sahibzada Muhammad Arif Meezan Bank Limited National Bank of Pakistan Allied Bank Limited United Bank Limited Bank Alfalah Limited Dubai Islamic Bank Pakistan Limited The Bank of Punjab MCB Bank Limited Standard Chartered Bank First Habib Bank Modaraba Saudi Pak Industrial and Agricultural Investment Co. Business Centre. Anwar-ul-Haq (ACA) Mr. Rukhsana Adrees Mr.. Mumtaz Hasan Road.C. Imran Ghafoor Mr. 6 Company Secretary Chief Financial Officer Audit Committee Chairman Members Head of Internal Audit Auditors Legal Advisor Bankers Registered Office Factories . Faisalabad .Sitara Chemical Industries Limited COMPANY INFORMATION Board of Directors Chairman Chief Executive Directors Haji Bashir Ahmed Mr.

develops and rewards excellence and diligently serve communities. 7 .Sitara Chemical Industries Limited VISION Strive to develop and employ innovative technological solutions to add value to business with progressive and proactive approach. CODE OF ETHICS AND BUSINESS PRACTICES We believe in stimulating and challenging team oriented work environment that encourages. maintaining high standards of moral and ethical values. MISSION Continuing growth and diversification for bottom line results with risks well contained.

To receive. Karachi. 2007 and to fix their remuneration. Aiwan-e-Sadr. A member entitled to attend and vote at this meeting may appoint another member as his/her proxy to attend and vote instead of him/her. iii. 2. Shareholders are advised to notify any change in their addresses. 2006 MAZHAR ALI KHAN Company Secretary NOTES: i. 4. Haji Abdullah Haroon Muslim Gymkhana. 3. on Tuesday. October 31. By order of the Board Karachi: September 29. 2006 (both days inclusive). 2006 together with the Reports of the Auditors and Directors. ii. To appoint auditors for the year ending June 30. to transact the following business: Ordinary Business 1. The share transfer books of the Company will remain closed from October 21. Shareholders who have deposited their shares into Central Depository Company are advised to bring their Computerized National Identity Card alongwith their CDC account number at the meeting venue.m. Near Shaheen Complex. 5. To transact any other ordinary business of the Company with the permission of the Chair. Proxies in order to be effective must be received at the Registered Office of the Company not less than 48 hours before the time of meeting. To confirm the minutes of Twinty Fourth Annual General Meeting held on October 31. 2006 at 3:00 p. 2005. 2006 will be entitled to cash dividend.00 per share) as recommended by the Directors. 2006 to October 31.Sitara Chemical Industries Limited NOTICE OF MEETING Notice is hereby given that the Twenty Fifth Annual General Meeting of Sitara Chemical Industries Limited will be held at Dr. To approve the payment of cash dividend at the rate of 60% (Rs. consider and adopt the audited accounts of the Company for the year ended June 30. 6. 8 . The member whose name appears on the register at the close of business on October 20. Abdul Qadeer Khan Auditorium. iv. v.

14. Profitability has been effected due to certain factors. 1. (Million) % Caustic soda Sodium hypochlorite Bleaching powder Hydrochloric acid Yarn Others 2.606 Million and Rs. 714. By the grace of All Mighty Allah. 2006 Sales for the year at Rs. 192 Million and Rs.900 49 23 3 4 1 5 1 2 3 5 4 100 9 . 2006 OPERATING RESULTS FOR THE YEAR ENDED JUNE 30. Your company has already started setting up 22 MW power plant and inshallah it will commission its production in February 2007.893 908 117 148 41 195 44 92 111 195 156 3. Based on these factors. your Company has achived capacity of 540 Metric ton per day and we hope that future of your Company is very promising SOURCES OF REVENUE Rs. Further. Hyper prices of furnace oil.900 Million against Rs. Further. 266. all expenses especially man power cost. Earning per share was calculated at Rs. 29 Million respectively from preceding year.513 Million respectively which are lower by Rs.020 Million of preceding year recording decrease 120 Million mainly attributable towards Textile Division. fuel and gas inflated not only the cost of electricity but also freight and transportation cost remained high that ultimately effected operating profits for the year. 4. raw material and prices of store items increased and are responsible for higher cost of production. Operating Profits and Net Profit after Taxation remained at Rs. 3.900 67 6 2 4 17 4 100 APPLICATION OF REVENUE Fuel & power Raw materials Salaries & wages Depreciation Factory Overhead Admin & selling expenses Profit on TFC Income tax Dividend Others Retained 1. it is anticipated that cost of electricity will decrease considerably. due to inflationary trend in Pakistan economy.36 for year 2006 and was lower by Rs.616 228 72 142 664 178 3.57 from last year.Sitara Chemical Industries Limited CHAIRMAN'S REVIEW It is occasion of great pleasure for me to present this review on the operations and accounts for the year ended June 30. furnace oil prices have shown constant decline worldwide.

TON YEARS BLEACHING POWDER NON-TRADITIONAL EXPORT SALE QUANTITY IN M. TON YEARS SODIUM HYPOCHLORITE AMMONIUM CHLORIDE QUANTITY IN M.Sitara Chemical Industries Limited PRODUCTION AND SALES ANALYSIS CAUSTIC SODA HYDROCHLORIC ACID QUANTITY IN M. TON YEARS QUANTITY IN M. TON YEARS QUANTITY IN M. TON YEARS MILLION RUPEES YEARS LIQUID CHLORINE RING SPINNING QUANTITY IN M. TON YEARS QUANTITY (000) KG YEARS 10 .

The delivery of these sets is expected by the end of December 2006 and the plant is expected to commission its production by the start of March 2006. These engines would provide more cost effective and stable power supply. The profits are lower from preceding year because of unstable textile spinning market conditions. Haji Bashir Ahmed (Chairman) addressing at inauguration ceremony of BMR-II A view of new plant The Company is also in the process of setting up a 21. 11 . Stability in the power supply is so vital for Membrane technology. 97 Million. This new plant has replaced the high energy consuming Mercury and old technology having capacity of 105 Metric Tons per day with most power efficient Membrane technology and has added capacity of Caustic Soda 105 Metric ton per day. 134 Million to Rs. Civil work of this plant is under progress.76 MW co-generation power plant based on natural gas fired generating sets.Sitara Chemical Industries Limited CHEMICAL DIVISION Your Company has successfully commissioned new Caustic Soda plant BMR II with a capacity of 210 Metric Ton per day in June 2006. TEXTILE DIVISION Operating profits of Textile Division of your Company has decreased from Rs.

000 Metric Tons and product shape and quality is entended to be export quality. Date: September 29. Initial feasibility studies has been carried out and details are being sorted out with potential machinery suppliers. at different levels remaioned at hight priority. Both of these plants are expected to be constructed and installed in next two years. This will enhance current capacity of 5000 Metric Tons to 21. In house training session on Human Resource Management FUTURE OUT-LOOK Your Company has signed a contract with M/S TCC. Employees and management relations remained excellent and I am pleased to record appreciation for devotion. Your Company is also planning to set up a new Calcium Chloride plant with a capacity of 16. China for the supply of technical know how and other engineering services for 90.000 Metric Tons/ per year for Calcium Carbide and 60. computer literacy of company employees.000 Metric Tons per year for PVC plant. hard work and committment shown at all levels of Company employees. Tianjun.Sitara Chemical HUMAN RESOURCES Industries Limited This year also. 2006 Faisalabad HAJI BASHIR AHMED CHAIRMAN 12 .500 Metric Tons per year for export purposes. Company recognizes information technology as the most efficient tool for sustaining the current business status and future progress.

000 411.288 14.061.549.755.218 447.882 Un-appropriated profit carried forward Earnings per share .749) 266.413 (18.000.594 35.Basic 13 .664 180. PROFIT AND LOSS ACCOUNT Net profit for the year after tax before WPPF Workers’ Profit Participation Fund Net profit for the year Un-appropriated profit brought forward Amount available for appropriation Appropriations: Proposed cash dividend @ Rs.740.594 300.Sitara Chemical Industries Limited DIRECTORS’ REPORT Gentlemen. The Directors have pleasure in submitting their report and audited accounts of the Company for the year ended June 30.00 per share Transferred to general reserve 111. 6.242.512.321.36 Rupees 284. 2006.321.

14 .554/-. Haseeb Ahmed was appointed as Director. Imran Ghafoor Mr. Javed Iqbal Mr. 21. BOARD OF DIRECTORS The Board comprises of three executive and five non-executive directors. BOARD OF DIRECTORS’ MEETING During the year five board meetings were held and attended as follows: Name of Director 1. CORPORATE GOVERNANCE Statement on Compliance of Corporate Governance is annexed. Naziran Begum (Director) expired and in his place Mr. Employees of Textile Division are entitled to gratuity as per law and appropriate provision has been made in accordance with IAS-19 in the accounts. 6. Value of investment thereof was Rs. Rashid Zahir Meetings Attended 5 5 5 5 5 1 2 4 0 Leave of absence was granted to directors. Haji Bashir Ahmed Mr. Muhammad Adrees Mr. Naziran Begum (Ex-Director) Mrs. The Board has delegated day-to-day operations of the Company to the Chief Executive. 9.Sitara Chemical STAFF RETIREMENT BENEFITS Industries Limited Company has maintained recognized provident fund. I would like to place on record my appreciation and gratitude to the Board of Directors. PATTERN OF SHAREHOLDING The pattern of shareholding of the Company is annexed along with trading in shares of the Company by its Directors. for guidance and support to the management. 3. CEO. 7. CFO and Company Secretary. 5. Haseeb Ahmed (Newly appointed Director) Mrs.218. The non-executive directors are independent to management. based on audited accounts as at June30. 8. 2. 2006. 4. Mrs. Muhammad Anis Mr. who could not attend one of the Board meetings. Rukhsana Adrees Mr. During the year under review.

withholding tax deductedby the company from employees. dedicated employees and dynamic manangement for their excellent support. Being elegible. which is key to the success of the Company. Chartered Accountants. For and on behalf of the BOARD OF DIRECTORS Date: September 29. despite heavy odds.461 million in respect of payments toward sales tax and income tax. ACKNOWLEDGMENT On behalf of Board. Our thanks also go to the financial institutions and shareholders for their continued support. they have offered themselves for re-appointment as Auditors of the Company to hold office from conclusion of the 25th Annual General Meeting until the conclusion of 26th Annual General Meeting. shall retire on the conclusion of 25th Annual General Meeting.609. as adopted by the ICAP. the Company's contribution to the national exchequer amounted to Rs. I would like to express profound gratitude to our customers (business partners). CONTRIBUTION TO NATIONAL EXCHEQUER During the year. . Yousuf Adil Saleem & Company. which have enabled Sitara to achieve decent results for the year 2005. 2007. The external auditors have been given a satisfactory rating under the Quality Control Review Program of the Institute of Chartered Accountants of Pakistan (ICAP) and the firm and all its partners are in compliance with the International Fedration of Accountants' Guidelines on Code of Ethics. The Audit Committee has recommended the appointment of aforesaid M/s M. 2006 Faisalabad MUHAMMAD ADREES Chief Executive 15 . Yousuf Adil Saleem & Company.Sitara Chemical AUDITORS Industries Limited The existing auditors M/s M. as external auditors for the year ending June 30. suppliers and contractors and deposited into the treasury. This does not include the import duties. committed efforts and strong leadership.

Accounting Policies Appropriate accounting policies have been consistently applied. have been followed in preparation of financial statements and any departure there from has been adequately disclosed.15 and 2. the results of its operations. Internal Control System System of internal control is sound in design and has been effectively implemented and monitored. Presentation of Financial Statements The financial statements prepared by the management of the Company. The Board defines and establishes Company’s overall objectives and directions and monitors status thereof. as detailed in the Listing Regulations. as applicable in Pakistan. with the exception of accounting policies on investment made in associated undertaking and other investment as disclosed at Note No. fairly present its state of affairs. in preparation statements and accounting estimates are based on reasonable and prudent judgment. The Committee consists of three members. Books of Account Company has maintained proper books of account. Financial Reporting and Corporate Control. Going Concern There is no doubt about the Company’s ability to continue as a going concern. 2.Sitara Chemical Industries Limited CORPORATE GOVERNANCE Statement of Directors’ Responsibilities Board of Directors is mindful of its responsibilities and duties under legal and corporate framework. Application of International Accounting Standards International Accounting Standards. cash flows and changes in equity. Audit Committee Audit Committee was established to assist Board in discharging its responsibilities for Corporate Governance. Short term and long term plans and business performance targets are set by Chief Executive under overall policy framework of the Board. There has been non-material departure from the best practices of the Corporate Governance. 16 .24 to the financial statements.

Rukhasna Adrees W/o Muhammad Adrees Executives Public Sector Companies and Corporations Banks. Undertakings and Related Parties NIT & ICP Nationa Bank of Pakistan-Trustee Department Investment Corporation of Pakistan Directors. Chief Financial Officer. Company Secretary.833 24 1.887 3. Development Finance Institutions.553.654 0. and their spouses / minor children during 2005-2006. Modarabas & Mutal Funds Shareholders holding ten Percent or more voting interest in the Company Individuals Joint Stock Compnies.32 0.01 0. Haseeb Ahmed Purchased 4.00 Detail of purchase / sale of shares by Directors.02 2. Javed Iqbal Mr.90 - 1 1 1. Name Mr. Haji Bashir Ahmed Mr.114.01 21 2.000 4. 2006 Number Shares Held % Associated Companies. Haseeb Ahmed Mrs.169 11.000 538.304.000 2. Non -Banking Finance Institutions.00 61.169.03 0. 1 1 1 1 1 1 1 500 11.08 0.01 0. Imran Ghafoor Mr. etc.08 100.40 1. CEO & their Spouse and Minor Children Mr.853 997 7. Muhammad Adrees Mr.599 17. Head of Internal Audit Department.000 2.14 0. Muhammad Anis Mr.678 18. Others.246 14. Insurance Companies.502 25.377.Sitara Chemical Industries Limited PATTERN OF SHAREHOLDING AS AT JUNE 30.000 Sold - 17 .

500 387.377.553.000 175.001 1.000 145.254.073 97.000 25.001 55.000 15.001 10.001 100 500 1.787 93.328 271.380.001 5.000 271.000 10.000 11.019 1.325 30.375.654 700.001 780.887 1 101 501 1.705 538.978 186.599 18 .001 25.000 200.000 105.001 105.001 535.300 175.001 175.600 111.001 15.250.000 1.000 60.000 25.000 180.001 20.942 175.799 103.000 20.000 85.001 695.001 270.000 783.000 700.Sitara Chemical Industries Limited PATTERN OF SHAREHOLDING AS AT JUNE 30.502 18.000 785.001 170.001 11.001 100.315 160.000 110.000 120.000 65.000 5.000 40.001 115.780 235.345 118.001 35.001 140.100 81.001 50.255.000 35.000 540.928 109. 2006 Number of Shareholders Shareholding From To Total Shares Held 772 701 124 196 32 12 9 4 4 1 7 2 3 6 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1.000 30.000 55.706 481.001 30.812 159.001 80.100 200.000 275.000 177.894 143.001 195.001 60.196 11.911 101.

'000’) 2006 2005 2004 2003 2002 2001 2000 Sales Gross profit Operating profit Profit before tax 3.50 46 1.07 6.93 10.95 12.37 15.84 20 34:66 19.18:1 1.14:1 2.08 18.Sitara Chemical Industries Limited KEY FINANCIAL DATA SALES DIVIDEND RUPEES IN MILLIONS YEARS RUPEES YEARS Operating results (Rs.50 7.53 7.59 11.97 13.28 37 20:80 19 .(Rs.009 285.01:1 2.144 2.97 32.07 3.40 14.50 13.952 2.) Book value per share .) Cash dividend per share -Final .03 10.93 79.018 488.52 8.(Rs.) Cash dividend per share -Interim .86 60.148 630.58 15.00 16 1.50 4.) Cash dividend per share -Total .222 3.) Inventory turn over (times) Current ratio Fixed assets turn over (times) Price earning ratio Return to capital employed % Debt equity 18.16 12.00 24 1.50 5.01:1 2.130 435.829.74:1 2.391 900.40 2.37 9.30 52.82 12.12 14.51 5.49 3.50 5.16 20 37:63 17.25 9.62 21 29:71 16.528 554.54 13.37 12.908 511.501 2.405 3.52 40.40 3.811.06:1 1.57 12.611.87 6.50 25 1.167.977 344.561 487.50 5.299 370.50 5.50 42 0.875 556.12:1 2.649 3.727 490.01 10 51:49 22.025 346.00 43 1.943 388.80 15.942.75 33 1.00 6.75 4.814 576.98 5.912.(Rs.865 Financial ratios Gross profit % Operating profit % Profit before tax % Earnings per share .00 5.Basic (Rs.36 89.21 5.(Rs.387 707.878 424.613 358.118 509.36 6.929 405.506.26 26.38 16 32:68 19.32 4.890 705.90 27 18:82 22.84 17.25 11.

107.933 3.807.854 1.689.441 717.190) 1.282 491.146 (1.883.668 1.083 738.497.657.241.038 325.536 1.046.259.262.113 1.472.217 (764.144 (967.536 785.038 360.423 290.825 2.579 1.494 185.536 1.452 32.228 1.985 1.419.356 1.668 185.564 489.892 1.113 185.083 962.564 15.825.203.850 692.747) 1.536 306.144.057 172.882 54.839 (953.110 185.365 4.088 20 .045.767 6.906.339 611.802 116.332 185.287.563 9.290 239.Sitara Chemical Industries Limited FIXED ASSETS SHAREHOLDERS EQUITY RUPEES IN MILLIONS YEARS RUPEES IN MILLIONS YEARS Assets employed 2006 2005 2004 2003 (Rupees in thousands) 2002 2001 2000 Fixed assets Capital Work-in-progress Long term investments.270.631 36.394 580.906.839.232) 1.405 (1.332 1.606 5.906 1.689.995 1.536 1.650) 3.038 647.219.262.098) 2.232 1.873 1.473. advances and deposits Current assets Current liabilities 3.115 106.142.297 32.887 751.215.110 1.180 945.224 23.536 565.825.266 970.107.875 290.026 (1.825 185.525 (1.755 1.496) 1.536 426.173.851) 1.033.871 1.497.818 290.930 2.784.494 1.419.328 1.339.872.088 Financed by Ordinary share capital Reserves Shareholders' equity Surplus on revaluation Long term and deferred liabilities 185.644 1.

Sitara Chemical Industries Limited CURRENT ASSETS VS CURRENT LIABILITIES PROFITABILITY SHARE MARKET PRICE TREND PRICE EARNING RATIO 21 .

A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. The company encourages representation of independent non-executive directors and director representing minority interests on its Board of Directors. All the directors of the company are registered as tax payers and none of them has defaulted in payment of any loan to a banking company. which has been signed by all directors and employees of the company. 3. The Board arranged an orientation course for its directors to apprise them of their duties and responsibilities. along with agenda were circulated at least seven days before the meetings. 4. The Company has prepared a ‘Statement of Ethics and Business Practices’. including this company. 8. 6. All the powers of the Board have been duly exercised and decisions on material transactions. including their remuneration and terms and conditions of employment. 10. However. have been taken by the Board. overall corporate strategy and significant policies of the company. If a casual vacancy occurs in the Board that will be filled up by the directors within 15 days thereof. including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors. The Board has approved appointment of CFO. 2. Company has applied the principles contained in the Code in the following manner: 1. being a member of a stock exchange. The working papers were circulated seven days before the meeting. The minutes of the meetings were appropriately recorded and circulated. 11. Written notices of the Board meetings. or a DFI or an NBFC or.Sitara Chemical Industries Limited STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE The statement is being presented to comply with the Code of Corporate Governance as contained in the listing regulations of Stock Exchanges. The director’s report has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. has been declared as a defaulter by that stock exchange. 5. 7. The directors have confirmed that none of them is serving as a director in more than ten listed companies. The Board has developed a vision / mission statement. at present the Board includes three executive and five non-executive directors and no directors representing minority shareholder. The meetings of the Board were presided over by the Chairman or CEO (in case of absence of Chairman) and the Board met at least once in every quarter. 22 . as determined by the CEO. 9. Company Secretary and Head of Internal Audit.

We confirm that all other material principles contained in the Code have been complied with.The statutory auditors or the person 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 regards.The Company has complied with all the corporate and financial reporting requirement of the Code.The meetings of the audit committee held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code.The Board has set-up an effective internal audit function. 20. 15. 16. 18. The terms of reference of the committee have been formed and advised to the committee for compliance. 13. CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding. that they or any of the partners of the firm. 17. HAJI BASHIR AHMED Chairman MUAHAMMAD ADREES Chief Executive Officer 23 . 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.Sitara Chemical Industries Limited 12. 14. It comprises three members. majority of them are nonexecutive directors.The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.The directors.The Board has formed an audit committee. 19.The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan.

Based on our review. whether the Statement of Compliance reflects the status of the Company’s compliance with the provision of the Code of Corporate Governance and report if it does not. Lahore and Islamabad Stock Exchanges respectively where the Company is listed. CHARTERED ACCOUNTANTS 24 . 2006 Multan M. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code. with the best practices contained in the Code of Corporate Governance. nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company’s compliance. 36 of the Karachi. Date: September 29. Chapter No. Our responsibility is to review. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board’s statement on internal control covers all control and the effectiveness of such internal controls. in all material respects. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. to the extent where such compliance can be objectively verified. YOUSUF ADIL SALEEM & CO.Sitara Chemical Industries Limited 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 Sitara Chemical Industries Limited to comply with the Listing Regulation No. 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.37. XIII and Section No.

We believe that our audit provides a reasonable basis for our opinion and. Date: September 29. the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance. as well as. and iii. YOUSUF ADIL SALEEM & CO. were necessary for the purposes of our audit. ii. was deducted by the Company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance. 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. in the manner so required and respectively give a true and fair view of the state of the Company’s affairs as at June 30. evidence supporting the amounts and disclosures in the above said statements. we report that: (a) in our opinion. Zakat deductible at source under the Zakat and Ushr Ordinance. An audit includes examining. 1984. 2006 and of the profit. and (d) in our opinion. (c) in our opinion and to the best of our information and according to the explanations given to us. to the best of our knowledge and belief. and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance. evaluating the overall presentation of the above said statements. the expenditure incurred during the year was for the purpose of the Company’s business. profit and loss account. and. 2006 Multan M. for the year then ended and we state that we have obtained all the information and explanations which. its cash flows and changes in equity for the year then ended. 1984. on a test basis. 1980. and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for the change referred to in note 2. An audit also includes assessing the accounting policies and significant estimates made by management. cash flow statement and statement of changes in equity together with the notes forming part thereof. CHARTERED ACCOUNTANTS 25 . the balance sheet. after due verification.Sitara Chemical Industries Limited AUDITORS’ REPORT TO THE MEMBERS We have audited the annexed balance sheet of Sitara Chemical Industries Limited as at June 30. 2006 and the related profit and loss account. Our responsibility is to express an opinion on these statements based on our audit. proper books of account have been kept by the Company as required by the Companies Ordinance. investments made and the expenditure incurred during the year were in accordance with the objects of the Company.2 with which we concur. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement.the business conducted. 1984. (b) in our opinion: i. 1984. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. give the information required by the Companies Ordinance. It is the responsibility of the Company’s management to establish and maintain a system of internal control.

000 185.226.824 1.603.687 268.876.314.699 97.558 232.353.Sitara Chemical Industries Limited BALANCE SHEET AS AT JUNE 30.179. 2006 2006 Rupees 2005 Rupees Note SHARE CAPITAL AND RESERVES Authorised 30.322.657.139.535.535.370.530 43.000.990 100.005.748 666. 10/.293 355.663.666.402 38.956.543 1.207 588.000.650.657 416.185 20 5.869.164 264.131 16.882 50.211 35.574 677.829 25.536 14 15 3.000 185.100.139.360 1. subscribed and paid up Capital reserves Revenue reserves Takaful reserve 3 4 5 6 300.125.840.098.706.475.990 98.067 300.473.568.000.657.443.400.890.195 1.961.872.409 5.215 13.479. CHIEF EXECUTIVE 26 7 8 9 10 11 12 13 8.000.862.362.087.392.042 330.540 360.918.622.892.000 13.151 1.each Issued.000 ordinary shares of Rs.084 331.795 58.438.000.873.949 122.294.037 19.581.213.494 The annexed notes form an integral part of these financial statements.203.040.414 50.328.000.565 184.061.000 296.562.019 14.000 1.748 NON-CURRENT LIABILITIES Redeemable capital Term Finance Certificates (TFCs) Cotnribution to takaful reserve by TFC holders Islamic Sukuk Certificates Long term financing Liability against asset subject to finance lease (Ijara) Long term morabaha Long term deposits DEFERRED LIABILITIES Deferred taxation Staff retirement gratuity CURRENT LIABILITIES Trade and other payables Profit/financial charges payable Short term financing Current portion of non-current liabilities long term morabaha Taxation Income tax Sales tax CONTINGENCIES AND COMMITMENTS 16 17 18 19 542.204 34.190.344 1.520 3.208.000 1.655 .

152 11.407 1.693 2.133.243.199 2.487.655 DIRECTOR 27 .699 247.622.070.368 319.222 495.at cost Long term investment Long term loans and advances Long term deposits 21 22 23 24 25 2006 Rupees 2005 Rupees 2.338 713.527 712.837 81.932 761.050.078.786.883.Sitara Chemical Industries Limited Note NON-CURRENT ASSETS Property.042.869 1. spares and loose tools Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Investments Sales tax refundable Cash and bank balances 26 27 28 29 30 31 32 33 210.370.979 3.050 3.313.142.289 1.494 182.279 4.623 1.525.405.880.447.740.956.104.304 7.625 5.985.213 3.864 407.807.404.363.729.145.794 15.679.515 20.397 20.685 4.406.475.442 CURRENT ASSETS Stores.142.205 5.683.479.981. plant and equipment Non-operating land .255 300.022.814 1.203.779.475 400.325.456.180.208.247 353.

CHIEF EXECUTIVE 28 DIRECTOR .544) (23.117.605.981.563 9.182 900.890.488.799 Distribution cost Administrative expenses Other operating expenses Finance cost Share of profit/(loss) of associated company Profit before taxation 37 38 39 40 Provision for taxation Profit for the year after taxation 41 Loss on disposal of assets of discontinued operations - (50.207 907.799 (63.491) (129.141.664 2005 Rupees 3.36 15.551.873) (140.942.512.004. 2006 Note Sales Cost of goods sold Gross profit Other operating income 36 34 35 2006 Rupees 3.811.390.465 358.774 3.785.798) Profit for the year 266.961.813.744.480 705.755.098 714.925) 487.989) (95.043 3.709.Sitara Chemical Industries Limited PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30.522.583 345.772.412) (137.386.548.080.695 91.400) (129.664 295.602) 359.106.031 266.373.067.661 (54.001 Earnings per share-Basic 43 14.612) (1.042.453.93 The annexed notes form an integral part of these financial statements.221.615.512.592 6.382 141.167.

373.081.333 487.496) (87.818.691.648) (388.922.540 (15.523 52.130.410) 51.net Provision for gratuity Profit on deposits Dividends / profits Bad debts Exchange loss 358.958.419) (1.651.761) 26.193 (1.434.609 241.714) - (43.493 (25.497 4. plant and equipment Impairment loss on investment in associated company Finance cost Share of (profit)/loss of associated company Loss on disposal of property.570.836.202 926.612 1.037.785.991.791 50.097.251.802) (76.787) (196.457 (Increase) / decrease in current assets Stores.949. spares and loose tools Stock in trade Trade debts Loans and advances Deposits and prepayments Other receivables Tax refunds due from government . plant and equipment.177 129.721 832.043.690.263 (3.348 (99.331.896.896.541.167.139 (167.067.949 2.265.816 12.221.600 - Operating cash flows before movements in working capital 656.602 (359.854 2.695 156.382 147.566) 416.970.893.025) (2.476 137.465) 427.963.140 29 .303 750.548) (105.247) (2.404.Sitara Chemical Industries Limited CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30.929.849) 5.730.197 (19.576) 968.961.795) (431.709) 250.143) 19.sales tax Increase / (decrease) in current liabilities Trade and other payable Cash generated from operations Finance cost paid Income tax paid Gratuity paid Net cash from operating activities (27.698. 2006 2006 Rupees a) CASH FLOWS FROM OPERATING ACTIVITIES 2005 Rupees Profit before taxation Adjustments for: Depreciation of property.886) 28.925 51.356.487.

153 388.054 46.570.758) 3.032.323.141.000) 329.257 (50.724 The annexed notes form an integral part of these financial statements.417.000.807 (35.154.320.959.Islamic sukuk certificates Repayment of redeemable capital Musharika term finance certificates Term finance certificates MTFC holders’ contribution to takaful reserves Repayment of long term financing Repayment of long term morabaha Repayment of principal portion of finance lease .Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees b) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property.648 2.000 (118.000.450.100.880) 242.438.000) (72.000) (118.849) 631.724 400.474) (175.991 (181.339) (1. CHIEF EXECUTIVE 30 DIRECTOR .912 93.476.118 2.042) (18.696.490.423) Proceeds from long term financing Proceeds from long term morabaha Proceeds from redeemable capital .289) 470.632) (19.000) (832.800.163.494.810) 372.476) 116.939.541. plant and equipment Investments Long term loans and advances-net Profit on deposits Dividends received from associated company Dividends received from available for sale investments Long term deposits Net cash used in investing activities c) CASH FLOWS FROM FINANCING ACTIVITIES (1.911.223) (39.149 (1.Ijara Net increase/(decrease) in short term financing Long term deposits Dividends paid 1.875.616 (144.965.369) Net cash from financing activities Net increase / (decrease) in cash and cach equivalents (a+b+c) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year (Note 48) 1.628.334.800.490.146 320.689 25.849 (5.050 (175.475.165.145.200 80.000) (13.000 116.638.989 2.330 80.000.286. plant and equipment Proceeds from disposal of property.148.873) 316.969 (86.695.967.873.

664 (175.000) 266. 2006 185.748 - 1.258 295.998) 1. 2006 Issued.Sitara Chemical Industries Limited STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30.000.676 98.000 295.603.657. 2005 @ Rs. 2004 as restated Transferred to unappropriated profit Surplus realised on disposal of Property.044.000) 295.196) 447.000. subscribed and paid up capital Rupees Capital Reserves (Note 4) Rupees Revenue Reserves Unappropriated Profit Rupees Takaful Reserves Rupees Total General Reserve Rupees Total Rupees Rupees Balance as at July 01.106) 845.403.000. 2004 Effect of change in accounting policies Unrealised gains on available for sale investments (IAS 39) Company’s share of profit from associate.000 146.512.838.241.491.219.115.241.061.838.net of deferred tax Unrealised gains on avaliable for sale investments Profit for the year Transferred to general reserve Final dividend for the year ended June 30.795) 185.000 266.838.179.690.882 50.088 90.369) 13.882 (83.50 per share Interim dividend for the year ended June 30.106) 1. 2005 @ Rs.512.412 (9.414 (46.000 (9.000.000.548.089.794 106.196) 1.892.000.795) (102.061.001 (140.000.990 100.383.000 285.535. 2.195 875.106) 140.965.383.527. plant and equipment . 5.527. CHIEF EXECUTIVE 31 DIRECTOR .196) 1.393.383.799 (3.664 - - 1.990 98.000 (83.535.000.000 (46.490.535.412 90.044.344 700.50 per share Balance as at June 30.001 - - - - (102.664 - 185.040.965.690.052.851 - 175.000.794 - 551.393.548. 2004 @ Rs. 4.040.488 - - - 40.998) 1.000) 560.000. net of dividend (IAS 28) Impairment loss on investment in associated company Appropriations of profits Balance as at July 01.799 (3.369) 13.795) - (102.000.089.241.000.067 The annexed notes form an integral part of these financial statements.512.000 (83.000 40.693) 13.258 - 140.491.086 (140.000.488 185.998) 439.000.000 (40.000.491.000 (9.799 (3.294.990 97.088 846.322.50 per share Balance as at June 30.115.001 - - 551.000) - - - - 106.410 700.473.000 1.044.000 (46.139.851 266.535.000. 2005 Unrealised gains on available for sale investments Profit for the year Transferred to general reserve Final dividend for the year ended June 30.000.548.219.414 50.990 561.794 - 106.393.

1 Basis of preparation These financial statements have been prepared under the historical cost convention except that: Available for sale investments are valued at fair value Investment in associates are accounted for using equity method Certain staff retirement benefits are carried at present value 32 (152. 2006 1. cash flows of Spinning Unit II were as follows: 2005 Rupees (Million) Cash used in operating activities Cash from investing activities Cash from financing activities 2. Pursuant to which the Company disposed of its operating assets of Textile Division .990 116. During the period . GENERAL INFORMATION Sitara Chemical Industries Limited (The Company) is limited by shares. 9. SIGNIFICANT ACCOUNTING POLICIES 2. 254.531 million with related tax expense of Rs. plant and equipment of Spinning Unit II of its Textile Division.306 million. 2004. The business of the Company is operation of a Chlor Alkali plant and spinning unit. The Company is currently organised into two operating divisions and these divisions are the basis on which the Company reports its primary segment information. Uptil its disposal Spinning Unit II earned revenue of Rs. 1984 on July 29.775 million and earned a pre-tax net profit of Rs. Disposal was completed in last year. incorporated in Pakistan and quoted on all Stock Exchanges in Pakistan.Sitara Chemical Industries Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30.Spinning Unit II comprising 22. which is the Company's functional and presentation currency. These units are located at Faisalabad-Sheikhupura Road. incurred expenses of Rs.603 million. Last year Board of Directors passed a special resolution under Section 196(3)(a) of the Companies Ordinance. Business Centre. Mumtaz Hasan Road. 283. The registered office of the Company is situated at 601-602. Principal activities are as follows: Chemical Division Textile Division Manufacturing of caustic soda and allied products Manufacturing of yarn The financial statements are presented in Pak Rupee. 28.425) 115. 2004 to dispose of property. The Company also passed a special resolution in this regard in Extra-ordinary General meeting held on September 04. Karachi. in the Province of Punjab.080 spindles.590 .

The amount recognised in the balance sheet represents the present value of defined benefit obligations as adjusted for unrecognized actuarial gains and losses and as reduced by the fair value of plan assets. The most recent valuation was carried out as at June 30. Following amendments to existing standards applicable to the Company have been published that are mandatory for the Company's accounting periods beginning on or after the following dates: IAS .2 Statement of compliance Industries Limited These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan and requirements of Companies Ordinance. Cumulative net unrecognized actuarial gains and losses which exceeds 10% of the present value of the gratuity is amortised over the average expected remaining working lives of the participating employees. 2006 Adoption of the above amendments may only impact the extent of disclosures presented in the financial statements.1 Presentation of Financial Statements . 2005 using the "Project Unit Credit Method". Equal monthly contributions are made both by the Company and the employees at the rate from 6.5 Provisions Provisions are recognised when the Company has a present. However. 2006 Effective from January 1.19 (Amendments) .4 Trade and other payable Liabilities for trade and other amounts payable are measured at cost which is the fair value of the consideration to be paid in future for goods and services received whether billed to the Company or not. 2.Employee Benefits Effective from January 1. Approved accounting standards comprise of such International Accounting Standards (IAS) as notified under the provisions of the Companies Ordinance. 1984 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards. Wherever. the requirements of the Companies Ordinance. provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 1984.50% to 8. Contributions are made to cover the obligations under the schemes on the basis of actuarial valuation and are charged to income. 33 . legal or constructive obligation as a result of past event.3 Employee Benefit Costs Defined contribution plan The Company operates approved funded contributory provident fund for all its employees of Chemical Division. 1984 or the requirements of the said directives take precedence.Sitara Chemical 2. 1984. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. 2.33% of monthly salary depending upon the length of service of an employee. the requirements of the Companies Ordinance.Capital disclosure IAS . 2. Defined benefit plan The Company operates unfunded gratuity scheme for all its employees of Textile Division who have completed the minimum qualifying period of service as defined under the respective scheme.

plant and equipment Property. 2. Deferred income tax asset is recognized for all deductible temporary differences and carry forward of unused tax losses. Gains and losses on disposal of property. plant and equipment note. for income covered under final tax regime. Cost includes borrowing cost as described in policy for borrowing cost. Major renewals and improvements are capitalised. When parts of an item of Property. if any. 2. incurred during installation and construction period. the effects on deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the requirement of Technical Release – 27 of Institute of Chartered Accountants of Pakistan. These are transferred to specific assets as and when these assets are available for intended use. Deferred Deferred income tax is provided using the liability method for all temporary differences at the balance sheet date between tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. to the extent that it is probable that taxable profit will be available against which such temporary differences and tax losses can be utilized. 34 . plant and equipment are included in current income. Maintenance and normal repairs are charged to income as and when incurred. All costs / expenditure connected with specific assets. However. if any. if appropriate. if significant and their useful lives are reviewed and adjusted. Appropriations of profits are reflected in the statement of changes in equity in the period in which such appropriations are made. Depreciation is charged to income applying the reducing balance method at the rates specified in property. Assets' residual values.7 Dividend and other appropriations Dividend is recognised as a liability in the period in which it is approved.Sitara Chemical 2.6 Taxation Current Industries Limited The charge for current taxation is based on taxable income at the current rate of taxation after taking into account applicable tax credits. In this regard. based on tax rates that have been enacted or substantively enacted at the balance sheet date. they are recognised as a separate items of Property Plant and Equipment. plant and equipment except freehold land and capital work in progress are stated at cost less accumulated depreciation and impairment in value. are carried under this head. Depreciation on additions and deletions during the year is charged on the basis of proportionate period of use. at each balance sheet date. Deferred income tax assets and liabilities are measured at the tax rate that are expected to apply to the period when the asset is realized or the liability is settled. rebates and exemptions available if any. taxation is based on applicable tax rates under such regime. plant and equipment have different useful lives.8 Property.

For the purpose of cash flow statement. which are assets that necessarily take a substantial period of time to get ready for their intended use or sale. until such time as the assets are substantially ready for their intended use or sale. and short-term running finance under mark-up arrangements. 2. less estimated cost of completion and estimated cost to make the sales. 2. Other receivables are recognised at nominal amount which is fair value of the consideration to be received in future. spares and loose tools These are valued at moving average cost.10 Borrowing costs Industries Limited Borrowing costs directly attributable to the acquisition. Balances considered bad and irrecoverable are written off when identified. 2. 2.Sitara Chemical 2. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.12 Stock in trade These are valued at lower of cost and net realisable value. are added to the cost of those assets. Net realisable value represents estimated selling price in the ordinary course of business.11 Stores.13 Trade debts and other receivables Trade debts are carried at original invoice amount less an estimate made for doubtful receivables based on review of outstanding amounts at the year end. Items in transit are valued at cost comprising invoice value and other charges incurred thereon. cash and cash equivalents consist of cash in hand. Cost is determined as follows: Raw and packing materials Average cost except items in transit which are valued at cost accumulated up to the balance sheet date Work in process Chemical Products Textile Product Finished goods - Prime cost Average manufacturing cost Average manufacturing cost Wastes are valued at net realisable value. 35 .9 Non-operating land Non operating land is stated at cost. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. 2. construction or production of qualifying assets. balances with banks.14 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. highly liquid short-term investments that are convertible to known amount of cash and are subject to insignificant risk of change in value.

The investments for which quoted market price is not available. or otherwise disposed off at which time. are measured at costs as it is not possible to apply any other valuation methodology. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. These investments are initially recognised at fair value plus transaction cost and subsequently remeasured at fair value. Derecognition All investments are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Gains and losses arising on retranslation are included in net profit or loss for the period. assets are written down to their recoverable amounts and the resulting impairment loss is recognised in profit and loss account. 2. 36 . The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. At each balance sheet date.17 Foreign currency translation Transactions in currencies other than Pakistani Rupee are recorded at the rates of exchange prevailing on the dates of the transactions. Where impairment loss subsequently reverses. Where carrying values exceed the respective recoverable amount. Trade date is the date that the Company commits to purchase or sell the investment.16 Impairment The company assesses at each balance sheet date whether there is any indication that assets except deferred tax assets may be impaired. the rates contracted for are used. if any. If such indication exists.15 Investments Regular way purchase or sale of investments Industries Limited All purchases and sales of investments are recognised using trade date accounting. in that case. Investments in equity instruments of associated companies These investments are initially recognised at cost and subsequently accounted for using equity method of accounting less accumulated impairment in value. Gains and losses arising from remeasurement at fair value is recognised directly in the equity under fair value reserve until sold. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognised as an income or expense. the carrying amount of the asset is increased to the revised recoverable amount but limited to the extent of initial cost of the asset. the cumulative gain or loss previously recognised in equity is included in profit and loss account. Reversal of impairment loss is recognised as income. monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date except where forward exchange contracts have been entered into for repayment of liabilities. collected. 2.Sitara Chemical 2. Available for sale Investment securities held by the Company which may be sold in response to needs for liquidity or changes in interest rates or equity prices are classified as available for sale.

Other particular recognition methods adopted by the Company are disclosed in the individual policy statements associated with each item of financial instruments. or in providing products within a particular economic environment (geographical segment). which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities. Interest income is accrued on a time basis. Export rebate is recognised on accrual basis at the time of making the export sale. incomes and expenses. Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.18 Financial instruments Industries Limited Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument and derecognised when the Company loses control of the contractual rights that comprise the financial asset and in case of financial liability when the obligation specified in the contract is discharged. which is subject to risks and rewards that are different from those of other segments.Sitara Chemical 2. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. which sets the price by reference to comparable goods and services sold in an economically comparable market to a buyer unrelated to the seller.23 Critical accounting estimates and judgments The preparation of financial statements in conformity with IASs requires management to make judgments. 2. 2. 2. if the Company has a legally enforceable right to set-off the recognised amount and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.19 Off-setting of financial assets and liabilities A financial asset and a financial liability is off-set and net amount is reported in the balance sheet.22 Segment (division) A segment is a distinguishable component of the company that is engaged either in providing products (business segment). Sales of goods are recognised when goods are delivered and title has passed. Prices for these transactions are determined on the basis of comparable uncontrolled price method.20 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business. 2. by reference to the principal outstanding and at the effective interest rate applicable.21 Related party transactions Transactions with related parties are priced on arm’s length basis. the results 37 . cancelled or expired. 2.

38 . Appropriations of profits (Fourth schedule to the Companies Ordinance. provision for doubtful receivables and slow moving inventory.308/(2005 : Rs.09 (2005 : Rs.606. the Company has changed its policy.258/-) and earning per share would have been higher by Rs 0. 1. 2005. Prior to adoption of the revised standard. Had there been no change in accounting policy. However. The adoption of these revised Standards and Interpretations has resulted in changes to the Company's accounting policies in the following areas that have affected the amounts reported for the current or prior years: Unrealised gains and losses arising from changes in fair value of available for sale investments (IAS 39 (Revised)). long term investment in associate was carried at "cost" and any distribution of profit was included in profit and loss account for the year / period. during the current year. to account for its investment in associate under the equity method. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. assumptions and judgments made by management in the application of accounting policies that have significant effect on the financial statements are not expected to result in material adjustment to the carrying amounts of assets and liabilities in the next year. net profit for the year after taxation would have been higher by Rs. there is no effect on shareholders' equity for the current or prior years. However. 2. Unrealised gains and losses on available for sale investments IAS 39 (as revised in 2003) requires unrealised gains and losses arising from changes in the fair value of available for sale investments to be recognised directly in equity in the period in which these arise. Significant areas requiring the use of management estimates in these financial statements relate to the useful life of depreciable assets. b. in accordance with change in International Accounting Standard (IAS) 28 "Investment In Associates". Investment in associate accounted for using equity method In the previous period/year. the Company has adopted all of revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting period beginning on or after January 01. 0.03) per share. the Company included such unrealised gains and losses in the net profit or loss for the period in which these arise. Measurement of investment in associates (IAS 28 (Revised)). The change in accounting policy has been applied retrospectively in accordance with the treatment specified in IAS-39 "Financial Instruments: Recognition and Measurement". 551. 1984) - The impact of changes in accounting policies is discussed in details as follows: a. Cumulative gains and losses arising from changes in fair value are included in net profit or loss for the period in which an investment is derecognised. However.Sitara Chemical Industries Limited of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Revisions to accounting estimates are recognised in the period in which the estimates are revised.24 Adoption of revised International Accounting Standards In the current year.

10/.551.785 100.410 1.each fully paid in cash Ordinary shares of Rs.000 62.850. c.939.599 4.090 185.285.175 million (2005. 3. transfers between reserves made subsequent to the balance sheet date are considered as non adjusting events and are not recognised in the financial statements.million). 1984 and the new policy is in accordance with the requirements of IAS-10 Events After the Balance Sheet Date.175/. The change in accounting policy has been applied retrospectively in accordance with the treatment specified in IAS-8 "Accounting Policies.599 18.900 79.590 7.000 7.553.551.990 19. Previously such transfers between reserves were being treated as adjusting events in the financial statements of the Company.803.934 98. 175/.million) and general reserves would have been lower by Rs.009 1.928.535.990 18.195 34.900 1.000 62.Sitara Chemical Industries Limited The change in accounting policy has been applied retrospectively in accordance with the treatment specified in IAS-8 "Accounting Policies.939.850.400.553. The change has been made consequent to the amendment made by the Securities and Exchange Commission of Pakistan in the fourth schedule to the Companies Ordinance.294.112. Changes in Accounting Estimates and Errors". 10/. As per the new policy.each issued as fully paid bonus shares Ordinary shares of Rs. the unappropriate profit would have been higher by Rs.985.each issued as fully paid under scheme of arrangement for amalgamation 2005 Rupees 8. there is no change in profit for the year and shareholders' equity.985.344 39 . Capital reserves Share premium Book difference of capital under scheme of arrangement for amalgamation Effect of change in accounting policy Fair value reserves on available for sale investments 34. Had this policy not been changed. Appropriations of profits During the current year the Company has changed its accounting policy pertaining to transfers between reserves made subsequent to year end.000 8.410 2.000 86. 10/.009 19.640.higher by Rs.090 185. there is no effect of change in accounting policy on carrying amount of investment because of the recognition of impairment loss.590 79. hence.603. 175/. Change in Accounting Estimates and Errors".million (2005.000 86. SUBSCRIBED AND PAID UP CAPITAL 2006 2005 2006 Rupees Ordinary shares of Rs.928.285.400.640.535. However. ISSUED.lower by Rs.

400.491.000) 560.527.061.000 (102.000 40 .50) per share Transferred to general reserve (175.882 6.088 (9.000.000) 241.838.799 (3.241.000.548.998) (140.000 140.040.664 Transferred from takaful reserves Final dividend of 2005 Rs.000 (140.Secured (Participatory) Opening balance Redeemed during the year 241.800.000. 4.369) 13.800. Revenue reserves General reserrve Opening balance Effects of change in accounting policy relating to appropriations of profits Opening balance as restated Transferred from profit and loss appropriation account Unappropriated profit Opening balance Effects of change in accounting policies Unrealised gains on value of available for sale investments Company’s share of profit from associate.000.000) Incremental depreciation on revalued assets for the year .089.393.000) - (118.106) 140.000 50.882 1.400.965. Term Finance Certificates (TFCs) .414 439.000 360.000.000 875.000 146.414 1. 5. net of dividend Impairment loss Appropriations of profits Opening balance as restated 700.412 295.50 per share) (83.000 7.061.net of defered tax 447.200.000.000.000) 122.414 Net profit for the year 266.044.000.000.000 439.040.000 (118.000.000.383. Takaful reserve Term finance certificates (TFCs) 50.196) Interim dividend Rs.322.040.00.000.000) 122.000.000 (118.000 700.000 Redeemable within one year shown under current liabilities (122.000 175.040. 2.000) 106.512.400.001 40.000.414 700.000 285.139.000 700.200.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 5. Nil (2005: Rs.795) (46.50 per share (2004: Rs.800.000.794 439.

Sitara Chemical

Industries Limited

These represent amount received against 72,000 certificates of Rs. 5,000/- each, issued for cash on July 01, 2002. Rs. 255 Million were subscribed by private investors and balance by general public. These are redeemable in three parts i.e., Rs. 1,650/- each at the end of 3rd and 4th year and Rs. 1,700/- each at the end of 5th year from the date of issue. On any redemption date, if the issuer suffers from cash flow constraints, due to any unfavourable business cycle, it shall have the right for postponement of the redemption dates of any series of the TFCs for the period of six months. 7.1 Profit and loss sharing TFC holders are entitled to two level share in the profits of Chemical Division of the Company in the following manner: 1. On first Rs.100 million of yearly operating profit @ 12% per annum of the face value of outstanding TFCs, payable on six monthly basis – Level One Profit, to be paid, on account, even in case of loss or lesser profit and is deductible from principal at the time of redemption in case these payments do not correspond with sufficient profit in respective years. 2. 2% per annum of the face value of outstanding TFCs for each Rs. 100 million additional operating profit (proportion to apply on profit not in multiple of Rs.100 million) – Level Two Profit, 75% of such profit shall be paid along with next six monthly payment of Level One Profit and the remaining 25% shall be retained on account of takaful arrangement. 3. Sharing of profit is on the basis of operating profit of financial year. 4. Loss if any, shall be shared in proportions of equity of both parties subject to takaful arrangement. 7.2 Takaful arrangement 1. In order to mitigate risk of loss to the TFC holders, a shariah compliant takaful arrangement has been made, to which the Company has contributed its share of Rs.50 Million. 2. 25% of Level-Two Profit shall be allocated to Takaful Reserve. 3. In case of loss, TFC holder's share of loss shall be first applied against Takaful Reserve and in case the same is insufficient, excessive share of loss shall be deductible from TFC principal amount, on redemption. 4. As each part of TFC series matures, the proportionate balance of Takaful Reserve of TFC holders relating to that series, if positive, will be paid out to them. 7.3 Security These are secured by way of a charge of Rs. 360 million as an equitable mortgage of land and building and first hypothecation charge over plant and machinery and other present and future fixed assets of Chemical Division of the Company in favour of the Trustee acting on trust for TFC holders. The Trustee has the right to nominate one representative as a director on the Board of Directors of the Company.
41

Sitara Chemical

Industries Limited
2006 Rupees 2005 Rupees

8.

Contribution to takaful reserve by TFC holders Opening balance Contribution for the year 20,384,563 3,829,050 24,213,613 (6,726,960) 17,486,653 12,059,563 8,325,000 20,384,563 20,384,563

Paid during the year

Due with in one year shown under current liabilities

(8,612,829) 8,873,824

(6,726,906) 13,657,657

9.

Islamic Sukuk Certificates

1,100,000,000

-

9.1 These represent amount received against 220,000 certificates of Rs. 5,000/- each issued on June 30, 2006. Rs. 1,100 million were subscribed by private investors as their respective share towards the Musharika. During the musharika, the legal title to the musharika assets will remain with the Company, however, a trustee will hold the beneficial title on behalf of the investors. These are redeemable in twelve equal quarterly instalments commencing from September 30, 2008 and ending on June 30, 2011. The certificate holders are entitled to rental payments for use of musharika assets. Rental payments shall be calculated to provide return equivalent to bench mark plus incremental rental plus service agency charges incurred by the trustee during the previous quarter. Bench mark is defined as 3 months KIBOR and incremental rental is defined as margin of 1.65% plus a production link factor based on following schedule of capacity utilisation: Capacity utilisation 100% 80% to 100% 60% to 80% 40% to 60% 20% to 40% Production link factor 5 bps 4 bps 3 bps 2 bps 1 bps

Effective yield rate of rental for the current year is 10.89% per annum.

42

Sitara Chemical

Industries Limited
2006 Rupees 2005 Rupees

10. Long term financing Sacured From banking companies Diminishing musharika Diminishing musharika Shown under current liabilities Instalment due Payable within one year 10.1 10.2 306,742,050 91,219,318 397,961,368 101,568,573 101,568,573 296,392,795 360,873,000 110,000,000 470,873,000 2,750,000 52,117,981 54,867,981 416,005,019

10.1 The facility is repayable in 20 equal quarterly instalments commenced from January 01, 2006 and ending on October 01, 2010. This is secured by way of first pari passu charge of Rs. 494 million over fixed assets of Chemical Division. It carries profit at average six months KIBOR plus 150 basis points payable on quarterly basis. KIBOR will be set three working days prior to each quarterly period. Effective rate of profit for the year was from 10.26% per annum to 10.85% per annum (2005 : from 5.50% to 8.14% per annum). 10.2 The facility is repayable in 21 quarterly instalments commenced from April 18, 2005 and ending on April 17, 2010. This is secured by way of exclusive charge over imported plant of Chemical Division purchased through this facility. It carries profit at six months KIBOR plus 200 basis points payable on quarterly basis. Effective rate of profit for the year was from 8.23% per annum to 11.55% per annum (2005 : 8.23% per annum). 2006 2005 Rupees Rupees 11. Liability against asset subject to finance lease (Ijara) Opening balance Paid during the year Due with in one year shown under current liabilities 18,286,849 (18,286,849) 58,226,323 (39,939,474) 18,286,849 (3,933,150) 14,353,699

The Company has terminated its sales and lease back arrangement for plant and machinery by exercising its option to purchase these assets. All the amounts payable to leasing company on premature termination were settled.

43

154.25%.455.139. This is further secured against personal guarantee of directors.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 12.992 95. Deferred taxation 14.215 (38.790.543 1.520 14.000 13. 2008.409 939. At Six months KIBOR plus 4.520 44 .190.069 6.520 90.443.711.443. 153 million over plant and machinery imported through this facility.042) 97.25% per annum) 2006 Rupees 13. 2006 and ending on October 29.1 The facility is repayable in 12 equal quarterly instalments commenced form January 29.215 12.069 851.889 355.041) 70. Long term deposits From sustomers From transporters 14.1) 13.527 939.5% per annum with cap of 9.540 8.2 This comprises of following Deferred tax liability Difference of tax and accounting bases of assets Deferred tax asset Provision for doubtful debts Liability against asset subject to finance lease Provision for gratuity Unused tax losses / credits 452.25%.000 16.574 2005 Rupees (13.311. Long term morabaha Secured From banking company Morabaha term finance Due within one year shown under current liabilities 97.543 12.314.190.5% per annum with cap of 10.125.443.929.666.695.670.999. This is secured by way of first exclusive hypothecation charge of Rs.084) 58. 14.525 264.036 (70.876.139. It is subject to profit at the following rates payable on quarterly basis: First 18 months Next 12 months Next 12 months At Six months KIBOR plus 3.476 97.25%.1 Opening balance Adjustment due to discontinuance of operations Provided during the year 264.291.1 These represent interest free security deposits received from transporters and are repayable on cancellation or withdrawal of contracts.537 355.257 (19.5% per annum with cap of 8.398 1.409 264.438.574 1.534.670.961.131 116.946 273.25% per annum (2005: 8.007 264.371.628. At Six months KIBOR plus 5. Effective rate of profit for the year was 8.400.

138.410) 5.263 2.088.4 Charge for the year Current service cost Interest cost Net acturial loss recognised during the year 1.687 2005 Rupees 15.929 5.687 2.5 Principal actuarial assumptions used Expected rate of increase in salaries (% per annum) Discount factor used (% per annum) Expected average remaining working lives of participating employees 8 9 4 Years 2005 8 9 4 Years 45 . Staff retirement gratuity 15.918.834.911 65.417) 3.918.Sitara Chemical 15.246 417.951.157.265.3 Balance sheet reconciliation as at June 30 Present value of obligations Unrecognised actuarial losses 5.434.087. Annual charge is based on actuarial valuation using Projected Unit Credit Method.463.203 517.263 (1. 2006 Rupees 15.918.205 (659.081 2.4) Paid during the year 3.1General description Industries Limited The scheme provides terminal benefits for all employees of Textile Division who attain the minimum qualifying period.965.138.434.2 Movement in the liability Opening liability Liabilities of employees of discontinued operation transferred Charge for the year (15.771) 3.106 2.141 (5.540 5.458 (724.213 2006 15.540 4.213 (1.643.687 15.747.665) 5.250) 5.087.

592.592 1.242.585 12.204 251.751 34.201 43.022.130 542. 41.129 23.204.886 1.749 17.242.Rs.287.979/.877/-) due to an associated undertaking.545.917 17.025 328.2 16.150 2. 16.749 19.480.832 Allocation for the year 17.627.738. Trade and other payables Creditors Bills payable Accrued liabilities Advances from customers Provident fund Unclaimed dividend Retentions / security deposits Withholding tax Workers’ profit participation fund Workers’ welfare fund Unclaimed workers’ profit participation fund Due to associated undertaking 16.508 74.749 18.832 17.855. 81.663.029 19.3 It includes Rs.000 16.506.387.1 16.396/.021.863 13.467.479.484.592 924.832 23.505.129 7. Nil) due to an associated undertaking.840. 16.985.060.(2005 .Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 16.666.755 18.507 23.930 1.242.985.011 6.531. 158.530 16.467.392 66.627.932.649 192.130 377.832 23. 16.178.562.Rs.305 19.745 171. 102.349 3.(2005 . 217.4 16.961/-) due to associated undertakings.748 66.582.769.(2005 .398 14.1 It includes Rs.369/.569.832 18.192 3.001 206.Rs.832 6.919.467.525.239 25.100 12.501.638 588.654.885. Profit / financial charges payable on: Secured Musharika term finance certificates Term finance certificates Islamic sukuk certificates Long term financing Liability against asset subject to finance lease Short term financing 59.211 46 .3 208.2 It includes Rs.812 826.467.569.4 Workers’ profit participation fund Balance as at July 01 Less: Amount paid to workers on behalf of the fund Amount deposited in workers’ welfare fund 23.770.192 13.774.667 27.467.062.

000 956.under mark up arrangements From banking companies Morabaha finance (18.000.829 101.867.136 889.558 35.933.875.398.726. Current portion of non-current liabilities Term finance certificates (TFCs) TFC holders contribution to takaful reserve Long term financing Liability against asset subject to finance lease (Ijara) (Note 7) (Note 8) (Note 10) (Note 11) 122.740.1 These are secured against first pari passu charge over present and future current assets of the Chemical Division and pledge of stocks and charge over present and future current assets of the Textile Division.000 8.568.783. These are subject to profit margin ranging from @ 8.981 3.150 184.85% per annum).070.452.890.800.943 1.729.527 . Property.906 54.136 889. plant and equipment Operating assets Chemical Division Textile Division Capital work in progress 620.170.581.96% to 11.402 118. Short term financing Secured .302.565 18.650 666.1) Unsecured Books overdrawn Limit Million 1.400.773 10.569 666.433.336 2.460 254.573 232.989 14.867 97.807.804.612.310 134.404 245.328.438.188.171 331.919.338 1.658 3.607 (21.000 6.956.956.6) 47 2.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 18.2) (21.939.679 3.831 239.500.630. Contingencies and commitments Contingencies Sales tax demand not acknowledged in view of pending appeals Suppliers’ claim not acknowledged in view of pending case in Civil Court Guarantees issued by banks on behalf of the Company Commitments Capital expenditure Outstanding letters of credit for: Raw material and spares 21.988.20% per annum (2005: from 2.398.037 20.1) (21.565 35.5% to 10.124 172.867 111. 19.

300.170.in respect of specific borrowings obtained carrying profit at the rate from 10.429. 2006 At July 01.028 1.780 100.455.627.051 9.402.400 5.460 21.328.625 (132.950.070 18.839.908.095 119.760.599 36.049 (251.120 148.637.302.322 15.457 (103.580 5.875.995.959.535 23.663 7.80% per annum.Sitara Chemical Industries Limited 21.724.098.740.132 94.213 8.570) 11.879.478 7.137 31.308. 2005 Additions/ (deletions)/ transfers Rate % Company owned Freehold land 30.372 50.645.192 3.003.640 9.677.944) 2.085.936.089.471.736.435.1 Property.904 (2.059.813.624.378.772.223) 1.084.610 8.069.467.676 5.951 14.100.164 11.171 2005 Rupees 2.550 (88.065 184.724.133 41.165.710. plant and equipment (Chemical Division) Written down value at June 30.617.582) 34.995.249) 561.984.129.225 (188.931.566.445.493.667.1 Additions to plant and machinery include borrowing cost capitalised amounting to Rs.620.214.811 10 5 10 41.648 1.470.812/.328.064 (364.725.876 2.289.516 10 20 Rupees 2.686.654.740.745 955.703.462 6.133 872.534) 3.285 772.349.748.1.213 134.034.075 1.720) 8.173.727) 133. 2006 Accumulated at July 01.654) 1.652 121.241) 14.218 (2.064.568 (2.667.694 1.007 49.259.735 794.656.000) 25.460 Containers and cylinders 34.254.372 6.550 68.123.252 55.988.108 953.240 10 318.120 1.648 (3.663 (895.789 13.502 382.876 1.287 8.829.780.820 10 Office equipment 21.456. 17.238.336.619.497 54.025.460) 522.498 10 Furniture and fittings Vehicles 7.059.557 4.01% to 10.301 10 Electric equipment 10.980 19.544 860.499 61.951 32.357.995.814.433.762.664.155.656.546 (7.944.108 1.611.009.114.039 9. Adjustments 2005 For the Year Accumulated at June 30.809 (368.687.652 (170.119.309.906.970) Grid station and electric installation 92.493 (64. 48 .991 23.119 10 Factory equipment 18.350.852) 23.947 (105.900) 1.309 15.025.840) Building on freehold land Mills Head Office Plant and machinery 264.575 54.232 3.911.699.325.293 1.645. 2006 COST Particulars DEPRECIATION At June 30.949 2.020.635 1.

349.721.252.417 4.305.949.349.602 10.725 26.508 139.000) - 579.207.077.050 (263.185.820.818.968.612.267 331.856.208.000 139.523 248.802 9.870 2.579) 22.101 964.374 51.789 286.254 118.357/-.000) - 23.000.783 412.640 221.070.569.800 1.788.482) 1.028 21. 3.850) 100.885.242 3. Previously.750.671 479.056 133.399 6.970. Had there been no change in accounting estimate.652 7.508 3.836.949.322.328 375. 5.853 (27.972 7.831 254.000.188.022.928. This change has been applied as change in accounting estimate following which depreciation on additions and deletions during the year is charged on the basis of proportionate period of use.111 787.879 579.517. 2006 UNIT-I Company owned Freehold land Building on freehold land Plant and machinery Electric installation Factory equipment Electric appliances Office equipment Furniture and fittings Vehicles Rupees 22.106 12. the basis for charge of deprecation has been changed during the current year. 2006 Written down Rate value % at June 30.977 4.114.340 779.281 147.046 147.750 42.583.816 Administrative expenses (38) Rupees 125.479 6.2 Property.612 248.232. 2005 Additions/ (deletions) / transfers Transfers from/(to) lease assets At June 30.314 139.124 10 UNIT-II Rupees 2005 Rupees 611.102 4.960.415 (6.000.907 23.293 2005 25.789 264.120 1. 2006 Industries Limited DEPRECIATION Accumulated Adjustments at July 01. written down value of operating assets and net profit after tax would have been decreased by Rs.180.070.935) (831.361 156.689 7.410.273 (1.482.738.067.469 Total 2006 147.121.254 16.547) (803.469 90.120 1.500 6.770 9.1) Textile Division 2006 22.853 331.974 2.509.497 2005 113.939.246.275.180.173 (1.840 49.382. the Company charged depreciation on additions during the year on the basis of whole year.301.500 (44.Sitara Chemical 21.498.418.647.130.341.831 10 10 10 10 10 10 10 20 Assets held under finance lease Plant and Machinery 22.377 673.820.697.000 5.000 225.523 (692.491.970.3 Depreciation for the year has been allocated as under: Chemical Division 2006 Cost of goods manufactured (35.372 1.183.129.401 81.579) 40.000 4.556 457.566.091.180.297 41.033 371.252.185.075.000 120.509.697.356 12.127 2.697.164 1.840 225.245.469 26.000 Rupees 479.123.272.4 In accordance with IAS 16 (Revised).373.569.427.000.702) - 21.369 460.924) 255. whereas no depreciation was charged on deletions during the year. except major project cost capitalised during the year on which depreciation was charged on proportionate period of use.220.321 121.814.050 36.729) 7.192 3.939.136 9.180.527) (22.972 8.886.573.000 22.498.980.135.305 23.558. plant and equipment (Textile Division) COST Particulars At July 01.538. 49 .513.210 553. respectively.482) 4.593.153 164.697 1.947.866 (14.523 2005 138.845) (4.470.751 725.064.273 (1.508 3.067.482.977 155.977 2005 Rupees 453.314 120.798 1.760 (831.314 98.322.328.853 204.502/and Rs.329.274.820.638 100.381 1.117.671 84. 2005 Transfers from/(to) lease assets For the Year Accumulated at June 30.173 202.

Factory equipment Electrical equipment Office equipment Note 21. Nil (2005 .691 21.928 40.401. Faisalabad.1 Vehicle Vehicle 850.097 3. Faisalabad. have been cannibalised and dismantled.064.454.000 188.959. International General Insurance Company of Pakistan Limited.000 3.321 112.915 53.550 37.053 172.777 85.5. A Satellite Town.5.Rs.000 685. P-165.241 27.654 64. C-495 Khiaban -e-Sir Syyed.060 236.260 3.1 This plant and machinery.482 4. P22/1.223 103. Karachi Sui Northen Gas Pipelines Faisalabad.000 498.000 Negotiation Negotiation Negotiation Negotiation 2. Street #2 Khalsa College.5.380 37.904 418. Karachi Insurance claim Adamjee Insurance Company Limited.035.780 168.Sitara Chemical 21.050 44.182 218.067.438 687.000 363.256 218.743 35.1 Note 21.1 Insurance claim Adamjee Insurance Company Limited.840 2.568. Vehicle Vehicle Vehicle Vehicle 417.604 34. Chack # 187 RB.791 144.676 19.000 500.163 103.000 Negotiation Insurance claim Muhammad Iqbal Athar.000 242.840 2. Karachi Insurance claim Adamjee Insurance Company Limited. Batala Colony.676 556.209 303. The disposal value of Rs. Mehdi Abbas.729 1.000 755.900 368.137.744 299. 276. Faisalabad Khawaja Waqas Javaid. Park View Aparment Soldier Bazar-2.952 55.928 27.000 376.582 105.720 7.366.935 17.852 895.947 203.5.380 47.249 251.662 4. Rawalpindi Muhammad Saleem.141.I Office Equipment Vehicle 2. Karachi. Faisalabad Sayyed Safder Ali.050 316.568/-) represents the fair value of components taken out for future use and scrap. 567.928 41. Chack # 222.729 6. 50 .911.676 6. having lost their economically viable life. Rupees Rupees 2005 Rupees 1.1 Note 21.M.5 The following assets were disposed off during the year: Description Industries Limited Cost Accumulated depreciation Written down value Net disposal value Mode of disposal Particulars of purchaser Chemical Division Operating land Plant and machinery Containers and cylinders Containers and cylinders Containers and cylinders Containers and cylinders 368. electric equipment and office equipment. factory equipment.5.969 170.568.544 68.547 803.500 2.022.405 39.069.837 259.970 34.807 2.000 198.736. Chack Jhumra.915 2.460 3. Karachi Insurance claim Adamjee Insurance Company Limited. Sargudha Muhammad Arshad.220 781.850 27.332.604 61.500 Negotiation Negotiation Faiz ul Hasaan.570 364.579 8.055 132.914 37.709 5.534 Textile Division .500 150.836.460 45.230.000 135. Faisalabad.498 831.289.727 622.000 Negotiation Note 21.085 701.113 721. G.

Impairment loss has been recognised to carry the investment at fair value.119 172.288 1.777.752.943 4.924 6.452.690 (16.880.952.204.616 239.660.932.811 47.336 1.030.291.661) fully paid ordinary shares of Rs.322 7.128.203.951. Long term investment Associate .502 163.095.342.89% 23.154.277 480.525/.975.474.272.403.747. 23.911) 967.479.206.747. 10/.274.933.794 20.each Share of post acquisition profit.283) 15.274. the Company exercises significant influence by virtue of common directorship with the associate.using equity method Listed Company Sitara Energy Limited Ownership interest Cost of 933.464 25.340.284.965. 4.831.328 (787.528 340.786.249 32.398) 2.442 9.(2005: Rs.346.187 116.248 32.932 4.612.6 Capital work in progress Civil work Plant and machinery including in transit Rs.630.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 21.152 115.725 713.801.691 (21.89% 23.546.266 1.722 (1.976.405.761. net of dividend received 595. plant and equipment 22.283 46. 45.759) 11. Summarised financial information in respect of the Company’s associate is set out below: 2006 Rupees Total assets Total liabilities Net assets Company’s share of net assets Revenue Profit/(loss) for the year Company’s share of associate’s profit/(loss) for the year 51 2005 Rupees 1.963 92.164.915.442 8.043) Advance for property.661 (2005 .311 168.436 (40.394.146.977.045) 960. however.006) (1. Non-operating land-at cost Opening balance Purchased during the year Advance for purchase Fair value of land approximates its cost.943.001 .330 712.316.407 Accumulated impairment loss The Company holds less than 20 per cent of the voting power in Sitara Energy Limited.409 50.

309.615 1.267 802. 2006 2005 Rupees Rupees 25. Long term deposits Security deposits Electricity 20.396) 1.1 These are secured by way of registration of vehicles in the name of the Company and lien on Provident Fund balances.1) (24.681.290 Current portion included in note 29 (310.279 1.397 1.050 20. Long terrm loans and advances Considered good Secured Executives Staff Unsecured Staff Due within one year shown under current assets (24.966.369 115.599 Other 53.980 The maximum aggregate amount due from at the end of any month during the year was Rs.296 (926.394.095.952 Repayments during the year (293.952/(2005: Rs.290 704.563 149.600 20.600 53.450 20.199 26. 24.515 24.406. Stores.300 (680.2) 690.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 24.368 Stores and spares include items that may result in fixed capital expenditue but are not distinguishable. Nil).237.546.359 1.330.919.552) 761.2 Loans and advances to executives represent car loans given as per the Company’s policy.426. spares and loose tools Stores Spares In hand In transit Loose tools 59.649 47.684.640 126.133.131.363.716 22. 52 . Reconciliation of carrying amount for current year is as under: Rupees Opening balance Effect of promotions to executives during the year 983.746 127.966.310) 379.864 54.839 210.104.402.627 11.456.615 93.732 182.662) 690. 983.

431 300.646 11.225.253 5.534 680.881.683.000 264.274.186.796.807 335.859 407.500 264.157.185.315 10.157.450 11.025.181.164. 238.693 9.040 222.415.(2005: Rs.407.524 7.215 266.218.822.699 Stock in trade includes pledged stock of Rs.685 10.807 29.057 (2.050.775. Nil) 28.683.683.413 12.581.588.683.979 .643 19.537 2.385 462.057) 247.151 17.612 2.1) Others 2.779. Stock in trade Raw and packing material Work in proces Finished goods Waste 114.297 926.492 5.550 22.798.090.588.679.460 1.181.676.415.013.057) 353.994 12.492 10.192 112.396 1.550 216. Trade debts Considered good Secured Foreign Local Unsecured Related parties (28.347 13.586 9.119.432. margin and expenses Income tax Suppliers and Contractors 53 1.213/.643 13.145.1 It includes the following balances due from related parties:Sitara Fabrics Limited Sitara International (Private) Limited Sitara Textile Industries Limited 2.371 495.056.222 12.020 14.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 27.730 345.376.247 190.255 Considered doubtful Less: Provision for doubtful debts 28.042.161 5.089.195.701.078. Loans and advances Considered good Loans Executive Employees other than executives Current portion of long term loans and advances (Note 24) Advances For expenses Letters of credit fee.057 (2.705 272.552 967.205 100.950 8.290.586.062 229.027 319.

711.803.880 1.369 (2005 .880 1.523 444. Trade deposits and short term prepayments Trade deposits Short term prepayments 4.473 4.112.637.325.988 666.1) 2.435.117.318.693 31.785 4.901 328.025 38.901 2.685 328.985.117.650 2.364.291 3.726.313. Other receivables Considered good Related parties Export rebate Insurance claim Other 3.464 169.188 16.910) fully paid ordinary shares of Rs.30.490.334 197.569 365.814 Surplus in value of investments 33.856 215.690 2.243.981. 10/.656.each Al-Meezan Investment Bank Limited 122.127.854.988 1. 10/.376.510 2.000 (2005 .304 31.180.363.202.334 93.736.047 1.279 (Note 31.934 2.623 54 64. Investments Available for sale .047 3.200.447.523 197.723 1.264 81. Cash and bank balances Cash in hand Cash at banks On current accounts On deposit accounts 12.690 1.022.640 67.475 756.295 64.831 218.275 16.738 388.491 2.251.969 73.000 932.000 444.289 .each 406.87.000) fully paid ordinary shares of Rs.1 It includes the following balances due from related parties:Aziz Fatima Trust Hospital Sitara Spinning Mills Limited Sitara Fabrics Limited Sitara Peroxide Limited Sitara Textile Industries Limited Sitara Trade and Services 32.581 7.at fair value Listed Companies Ittehad Chemicals Limited 30.697 350.435 400.735 5.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 30.

480) (3.1 Segment assets Segment liabilities Segment fixed assets employed (%) 35.755.141.951.266.014.314.534.376 23.734) 3.051.111 3.315 198.232 2.662 Other operating income (Note36) Operating expenses Distribution (Note 37) Administrative expenses (Note 38) Other operating expenses (Note 39) 2.505.790 1.648.364 3.009 115.866 19.479.805.356.134 107.899) 3.316.685 20.457 422.200.676.875.678 262.380 4.204) (3.995 6.672.647.330 398.520 Liquid chlorine 9.678 Sodium hypochlorite 262.156.533 Sales tax Cost of goods sold (Note 35) (2.502.086.400 288.958 77.130.862.992.999. 35.004.266.630 (406.448 80.890.384.413.353.534.088) 112.293.349.812 692.857 50.607.992.502.716 450.829 495.105 15.252 6.903) 20.231 4.250.275.811.880 2.046 1.175.235 39.453.218 Others 9.042.648 101.902.551.241 29.947.772.953) 101.377.723 2.738 265.603.005 64.499 96.526.252.212.886 789.373.268.756.349.057.130.238.821.989.273.302.906 Bleaching powder 73.524 4.874 733.856.555 5.869 22.487 12.594.534.596 (461.718.2 Inter-segment pricing/sales 87 84 13 16 - - There is no purchase and sale between the segments.047) 391. Cost of goods sold Finished goods .411 (58.224 248.218 9.676.051.547 942.714.043 2.816.295.886.922.072.022.902.417.566.590.584.533.756.234 19.398) 4.691.344.412 218.147.051.510 668.289) 2.145 3.491 129.551.583.590 (78.886.714.143.018 26.1) 17.813. OPERATING RESULTS Continuing operations (Chemical Division) (Textile Division-I) 2005 Rupees 2006 Rupees 2005 Rupees Discontinued operations (Textile Division-II) 2006 Rupees 2005 Rupees Total 2006 Rupees 2005 Rupees 2006 Rupees Sale Own products Local Caustic soda 3.397.685 71.985.326.642.214 3.647.674.981 3.925.554.014.904.925.880.381.880 618.071.043 1.888.910 50.554.009 115.685 20.307 17.176.293.208 8.182 55 .231 4.383.498.832 4.307.630) 2.025 96.805.185) 449.647.380 3.698 (233.559.817.247.379 (273.386.965) 3.688.125.845 603.821.544 23.975 4.353.708 2.004.592 3.799 63.109 (98.774 Commission and discount (87.168 (450.381.583.150 (563.638.453.487) 3.752.539.113.981 9.506.234.182) 67.457.498 87.417.308.267.533 14.207 907.957.978 48.036.563 900.947.204 323.488.453.978 48.690.328.209.705.981.307.328.624 117.473 2.832.548) 3.873 140.392) (2.238.200.000 663.241 Hydrated lime and others 29.777 (483.476.390.734) 3.812) 588.208 Bleaching powder 8.238 614.837 25.345.824.141 789.018 Ammonium chloride 26.284.919 2.629.712 24.117.754.017.259 2.627.238) 278.298.958 Liquid chlorine 77.647.703 Yarn Waste Export Hydrochloric acid 24.352.479.444 17.942.481.420 84.698.245 62.008 995.647.235 Agri chemicals 39.175 (87.377.919.352 1.685 670.868.474 597.738 265.788.721.610) 555.613.744.772.989 95.106.432.856.080.893.316.681 Finished goods .192.277.536.712 668.closing stock (39.433) 668.806 484.510 (555.861.084.690.422 4.675 2.772.555.761 5.245 62.910 1.866 19.661.204 114.047.108.042.849 61.534.088 65.805 (5.191 90.766.261 (323.615 52.906 73.765 (96.267 (483.772.542.125.230.064 58.837 25.196.734 787.591.438.295 - 447.672.703 663.591.524 3.072.654 49.818.186 136.699) 689.675) 2.953 51.386 34.723 2.984 2.044.106.766 685.520 9.308.231.159.643.141 731.700 (17.314.160 705.771.214 3.669 (114.098 714.791.440)) 4.747 2.225.410 (588.005 64.Sitara Chemical Industries Limited 34.707) 788.480 138.opening stock Inter unit transfer Purchase of finished goods Cost of goods manufactured (35.639 121.186 Hydrochloric acid 136.943 (442.084.392 22.589.393.457.992 2.105 1.522.379.934.747 3.379.178 (76.594.769.917.376) 3.816 (1.283.566.637 323.956.025) 592.986.491.605.113.862.647.489 346.558 3.444 17.981 Ammonium chloride 3.438.709.675 12.285 3.284.598.672.661 54.

571.087 271.360.246) 525.233.111 Vehicle running & maintenance 10.269. Distribution cost Staff salaries and benefits Retirement benefits Freight.954.028 1.559.956 86.032.799 891.514 61.254 2.642 1.143) 622.755.988 954.337 (6.172.536.057.612.763.837 (114.467 17.496 30.607 4.122 (11.317 388.470 80.676.230) (146.774 (147.353.571.476.577) (1.406.288) 2.855 2.874.811) 1.767.194.302 1.781.359.817 1.582.412 674.639 7.636.560.417 3.368 1.621 8.267.810.080.891 1.570.3) Other Work in process Opening stock Sold Closing stock 7.716 3.718.1 Cost of goods manufactured Continuing operations (Chemical Division) (Textile Division-I) 2006 Rupees Raw material consumed Operning stock Purchases .194 1.783 91.731 61.096 14.175.935 28.231.563.474 1.892.849 1.257. wages and benefits Retirement benefits Overheads Stores and spares Repair and maintenance 115.895.285.491 56 .439.073.820 169.998.006.207 37.951.773 1.297.664 61.307 18.705) (5.383 99.296.236.119.619 14.513 Travelling and conveyance 7.948.384 1.182.212 581.436 966.726 2.305.363 318.760.000 66.922 125.252 11.699.625.565 22.302.400 4.020. octrol and insurance Advertisement Bank charges Vehicles running and maintenance Travelling and conveyance Postage and telephone Printing and stationery Other 11.650.773.183 4.020) 1.243 142.671.432.015 15.863 1.406 6.825.400 422.259 6.271.179.418 Insurance Depreciation (21.427 517.022.416 223.682 122.413 (6.432.708 27.760.277 3.113.017.397) 381.795 7.561 54.088.570.891.767 147.420.981 372.538.098 1.496 31.742 46.473 28.Sitara Chemical 35.231.683 4.617 11.938 (190.952.111 6.748 (42.938.163.704 (6.980.545.919 1.212.683 145.726 2.828 307.125.487 147.096 5.299.including purchase expenses Sales 397.593 433.182 4.134 901.873 7.607 60.834.515.210.935 91.321.643) 907.519 1.444 279.234 904.126 25.192 (19.656.760) 329.968 Fuel and power Salaries.555.098 2.245.975 1.260 Industries Limited Discontinued operations (Textile Division-II) 2006 Rupees 2005 Rupees 2006 Rupees Total 2005 Rupees 2005 Rupees 2006 Rupees 2005 Rupees 98.865 2.130 3.275.343 23.307.919.415.670 200.658 14.577) (14.357 9.947.872 307.205.070 (8.122) (1.753.886.611.827 63.096 531.119.886 78.621 113.972 3.136 4.522.416 29.218.264 781.025 11.240) 278.164 107.225) 692.953 25.472 (55.682.213.898.826.616 12.020 831.605 440.079 1.418) 614.532.128.559 95.429 858.642 363.179.821.042 590.507.163 696.282 41.395 34.070) (521.849 658.519 1.244.785.847.576.510 7.648 3.581.860.088.010 131.163 318.760.648 639.956 1.911 3.365 Closing stock (59.226 81.345.874 408.358) (999.764.464.180 331.351 42.558.998 19.729 3.143 3.613.927.272.184 5.885.698) 2.343 2.828 3.488.454.257.912.441.760 40.837.027.707.799 978.134 1.249 145.060.192) (3.668) 223.393 8.043 22.685.912 39.632.839 53.026 251.660 8.766 - 51.263 620.326 4.648 3.674.671.691 388.918 1.006.439.631.315.359.150.125.513) 3.298.877 4.986.637 190.636.881.248 14.345.389.058 (80.798 186.549.166 6.708 2.356) 3.578.105 529.207 603.148.116.547 36.828.358.922.396.108.352.685 1.519 1.443.467.857 11.359.624 408.849 25.846 2.603.121.145 191.972 4.252.698 52.726 589.815.864 181.600.301 628.742 45.726 138.531 113.760.183.550.670 200.905.736.988 1.347) (4.882.770 4.157.140.439 615.400 6.152 110.242 5.695.260) 474.578.199.890.706. Other operating income Sale of scrap and waste Income from investment in available for sale investment Profit on deposits Rent income Other 1.641.328 506.097 3.323.921.299.191 (65.582 9.826.916 195.061.488 1.516 2.087 271.979 18.372 (7.

759.108.975 3.192 44.502.869 2.773 23.547.725 39.177 95.500 133.166.749 4.544 2005 Rupees 16.002. 878.578 1.000 23.321 5.318 2.709.500 12.599.529 7.000 125.206.759.500 332.500 Industries Limited Discontinued operations (Textile Division-II) 2006 Rupees - Total 2006 Rupees 22.362.119 2.065 19.885 179.500 38.940 4.305 13.530 190.338.258 609.168 2005 Rupees 3.333 18.000 385.320 420.200 47.992 76.000 1.950 4.749 4. 6.758 (450.832 8.064.166 1.998 279.832 8.500 440.448 2006 Rupees 4.161 172.456 9.341 3.620.295.497.913 1.821 17.547.353.304 7.192 44.002 1.189 133. including Chief Executive.231 652.556 5.251.222 35.629 2.929 107.757 10.604.871 3.002.376 38.813.712 76.522.1 Auditors’ remuneration Statutory audit Tax advisory services Consultany and sundry services 307.161 35. Rukhsana Adrees are the trustees of Aziz Fatima Trust.276 173.323.602.926 4.422 129.572.242.056 19.237 543.260 165.297 2.730. 7.008 2005 Rupees 1.903) 414.909 892.998 1.545 1.002 1.877 2.500 1.605.380 995.914 3.500 12.499 78.574 1.333 18.117 7.302 1.027.869 14.216 1.462.010 793.082.603 4.000 78.391.174 3.122.765 Retirement benefits 1.981.780 12.251.570 327.806.500 Staff salaries and benefits 43.086 958.643.000 23.609 2.778 399.650 4.333 658.139.695 222.181.571.242.000 78.081.087 1.643.775 6.622 137.361 19.325.407 14.690 4.467.490 432. except Mr.035.177 80.798.295.224 7.600 3.315 328.482.572 1.741 129.707.260.162.127 10.913 9.001 490.307 6.364.636.485 Postage.321.656.060 171.966.000 385.709.174 2.076.877 3.373.076.864. Finance costs Islamic sukuk certificate MTFC holders’ profit share TFC holders’ profit share Proft on Long term financing Long term morabaha Libilities against assets subject to finance lease Short term bank borrowings Bank charges and commission 57 .114.600 3.000 119.221 1. plant and equipment Exchange loss Workers’ profit participation fund Workers’ welfare fund Impairment loss on investment in accociated Co.989 - 66.858 34.495 3.130.506 248.963.442 12.518.165.797 3.400.000 1.251 859.869 140. Continuing operations (Chemical Division) (Textile Division-I) 2006 Rupees 2005 Rupees 2006 Rupees 2005 Rupees Discontinued operations (Textile Division-II) 2006 Rupees 2005 Rupees Total 2006 Rupees 2005 Rupees 39.500 130.541.089 32.583 1.464 2.699.858 3.191.821 11.506.1) Entertainment Donations (38.500.385 1.000 430.062.364.395 3.854 241.555 Vehicles running and maintenance 5.513.297 2.500 54.307 1.000 173.000 307.541.382.918.785.050.3) Bad debts Other 4.599.320.934.171 2.854 136.2) Insurance Depreciation (21.129.618.958.926 148.330 7.453.Sitara Chemical 38.602 51.000 1. Haseeb Ahmed and Mrs.130.354.412 328.407 105. Other operating expense Loss on disposal of property.467.666 4.486.122.161.476 23.035.350 427.805.Rs.103 254.720 305.016.659.260.200 47.800.000 1.661.213.176.877 2.623 8. telephone and telex 2.903) (450.963.930.990.308.208.180.495 424.381 111.601 340.629 2.166.876.400 7.628.464.856.442 12.904.584 10.653 2.200 80. Administrative expenses Continuing operations (Chemical Division) (Textile Division-I) 2006 Rupees Directors’ remuneration 18.046 5.214 389. rates and taxes Travelling and conveyance Advertisement Books and periodicals Fees and subscription Legal and professional Repairs and maintenance Auditors’ remuneration (38.307 995.712 Printing and stationery Electricity Rent.865.514 192.(2005 .383/-) have been donated.207.829 76.000 1.594 8.347 8.000 1.610 126.000 440.757 241.587.539 6.719 78.174/.657.201 248.502 5.153.425.869 204.511.609 2.094 51.582.017.230.000 40.270.744.804 121.031 1.436 85.251 3.949 23.456 9.476 23.383.186 15.518.429.602.327 8.230.308.103.433 4.363.904 430.612 40.314 25.500 106.480 7.821 1.479.327.606 3.031 941.500 1.482.119 2.797 9.800.504 14.272 30.994.400 44.462 4.000 66.176 37.533 2005 Rupees 20.000 470.000 1.086.051 271.500.829 76.238.272 414.000 124. Faisalabad to whom Rs.313 8.2 All the directors of the Company.000 1.109.

227 (126.583 41.999.792 7.099.583 In respect of current year.168) 141.984.594/.041) (222.695 35 125.774.265) 13. This dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting and has not been included as a liability in these financial statements.889 90.013.00 per ordinary share of Rs.035.678) 179.099 70.553.835 (95.003.464 1.223.512.473 (12.854 6.919.453. Earnings per share .584 91.321.142 90.516) 141.551.419.377. 58 266.534.709.678 19.695.584 35 152. This will be accounted for subsequently in the year of payment 2006 2005 43.525 (70.1 Reconciliation between tax expense and accounting profit Accounting profit before tax Tax rate % Tax on accounting profit Tax effect of: expenses that are inadmissible in determining taxable profits Income chargeable to tax at special rate Dividend Export sales Income subject to minimum tax change in tax WDV taxable losses Other Tax expense for the year 42.001 18.93 .669 13. the directors propose to pay cash dividend of Rs. 111. 6.031 132.@ Rs.097) (4.946 2.675.695.599 14.551.055.36 295.Sitara Chemical Industries Limited 2006 Rupees 2005 Rupees 41. Dividend 358.049.221.889 91.Basic Profit for the year (Rs) Weighted average number of ordinary shares outstanding Earnings per shares (Rs) There is no dilutive effect on the basic earnings per share of the Company.709.165 2.553.531.593 437.473 141.599 15.311. Taxation Current Continued operations Discontinued operations Gain on discontinuance Company’s share of associates tax Deferred Continuing operation Reversal of deferred tax relating to discontinued operations 993.786 (136.548.664 18.476) 321.031 5.each. 10/.

121 8.000 129.665.698.080 3 10.496 382.842.472.166 10.643 8.458 42.497 2.042.846.715 All transactions with related parties and associated undertakings are carried out at arm’s length determined in accordance with comparable uncontrolled price method.678 43.143.532 2.512.855.158.838 26. directors and executives.743. 46. The monetary value of these benefits approximate Rs.352 6 Number of persons The Directors have waived their meeting fee. 45.107. CAPACITY AND PRODUCTION (CHEMICAL DIVISION) Designed capacity Tons 2006 2005 2006 Acutal production Tons 2005 Reason for short fall Caustic soda Sodium hypochlorite Bleaching powder Liquid chlorine Ammonium chloride Hydrochloric acid 178. under the terms of their employment are as follows: 2006 2005 Rupees Rupees Sales Purchases Dividend received Organizational expenses recovered Organizational expenses paid Power charges paid 35.721 62.110.764 874.374 28.882. Chief Executive and two Directors are entitled to free use of the Company maintained car and telephone.850.000 2.925/-). disclosed in note 44.000 129.000 3.298 382.086 206.489.Sitara Chemical Industries Limited 44.408 45.659.912 21.791. REMUNERATION TO CHIEF EXECUTIVE. DIRECTORS AND EXECUTIVES 2006 Rupees Chief Executive Directors Executives Chief Executive 2005 Rupees Directors Executives Remuneration Retirement benefits House rent Utilities Conveyance allowance Special allowance Income tax Reimbursement of expenses 5.249 10.000 1.334.974 946. The Chairman.033 1.000 456.) Actual production of yarn after conversion into 20/s count (Kgs. The power is purchased from associated undertaking at NEPRA power tariff.223.096 465.) 59 22.400 2. 1.180 10.991.000 143.560.494 969.849.500 8.786.307.000 110.538 109.000 3.200 49.649.594 3.776 14. Transactions with related parties other than remuneration and benefits to directors and executives.373.740 115.523 2 8.500 8.410 4.771 385.000 2.428. 1.552 636.192 360.488.470 2.707 4.000 1.500 36.691 11.951 1 4.600 54.723 13.(2005 .200 3.619 435.403.129 2.007 2.449 2 4.800 547.552 1.152 914.180 56.571 1 4.962/.681.427 806.042.188.620 .174 45.824. AGGREGATE TRANSACTIONS WITH RELATED PARTIES The related parties comprise of local associates.500 7.183 2.000 7.880 122.120 2006 Due to BMR conducted during the year 2005 (TEXTILE DIVISION) Ring Spinning Number of spindles installed Number of spindles worked Number of shifts per day Installed capacity after conversion into 20/s count (Kgs.202.408 3 20.500 7.468.897 10.832 124.448 12 4. trusts.Rs.080 22.070 107.

961.050.607 243.817 436.728.882.490.614.363.289 375.565 1. Sub total 2006 Total 2005 Total Rs.400.574 - - - 436.380.215 1.050.140) - - 39.932 452.720 136.873.835) (243.563 122.200.000 101.482.118.653 20.078.021.779.873.619 353.100.000 Long term financing 296.840.160 15.835) 2.961. Investments Lons and advances Security doposits Trade debts Other receivables Cash and bank balances - - - 4.543 - 16.486.583 1.221 2.902 1.738. 60 .100.845) - 11.376.802) (978.384.614.717.738 50.086.748 666.368 97.384.475 967.738 350.131 1.259.737 27.020.431.653 17.849 13.983 25.737 1.867.000 241.835 1.586 4.000.376.435 (107.165 (978.149. Rs.835 9.043)(2.748 666.000 122.297.704 - 39.255 3.222 6.734 827.125.051.853.297.222 6.407 1.100.257 8.551.700.738 350.747 1.276 Financial liabilities: Term finance certificates Contrubution to takaful reserves by TFC holders Islamic sukuk cerfificates 1. Financial assets: Sub total maturity upto one year Rs.190.658 978.558 34.820 - - 34.203.747 (1.407 369.569 353.443 111.187 247.014 81. Rs.500.019.443 111.000 397.319 2.536.490.775.885 413.109.106.203.596) 47.612.829 17.619 353.320.490. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 47.489.128.562.562.178.154 3.000 122.327.404.060.259.000.297.368 97.558 - 34.397 20.882. Non profit / mark up bearing maturity after maturity after one year but five years before five years Rs.719.876.717.400.141) (1.482.376.1 Financial assets and financial liabilities of the company are as follows: Interest/mark-up rate risk arise from the possibility that changes interest/mark-up rates will affect the value of financial instruments.674.543 18.573 58.392.084 - - - 16.125.482.656.728.817 469.490.118.037 11.658 978.160 11.297.704) (1.438.738 - 350.879 Off balance sheet items: Commitments (other than letter of credit) Letter of credit Bank guarantees Total On balances sheets gap Onbanance sheet gap 457.211 35.824 8.443 111.572 1.208 23. Rs.088.438.407 1.543 16.019.286.222 - 761.981. Rs.551.436.055.160 17.125.596 1.961.203.180.050 6.288.2 The effective interest / mark up rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.890.839 1.050.668.171. Rs.983 25.490.583 43.345.297.795 Long term morabaha Liability against assets subject to finance lease (Ijra) Lont term deposits Trade and other payables Profit on financing payable Short term financing 457.000.748 666.932 - 15.668.932 (719.890.Sitara Chemical Industries Limited 47.885 400.190.100.877 350.623 802.562.568.889.658 978.835) (978.909.486.607 - 50.259.890. Profit / mark up bearing maturity upto maturity after one year one year but before five years Rs.424.882.269 97.835 39.489.614.384.489.088.879 38.447.490.734 827.367.734.628.267.297.888) (1.558 43.555.255.000 397.704 1.000 116.400.734 827.889.438.314.817 - 436.128.215 470.956.

The company is exposed to credit risk on loans. 47. As at June 30. the total foreign currency risk exposure was Rs.457 (2005: Rs. trade debts and other receivables. 377.056 (2005: Rs.700) million.834) million. Management closely monitors the company’s liquidity and cash flow position. The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values.623 400.Sitara Chemical 47.724 2005 Rupees 61 . advances.289 80. 2006 Rupees 48. 375. The yield rates are disclosed in respective notes. c) Foreign exchange risk management Foreign currency risk arises mainly where receivables and payables exist due to transactions with foreign undertakings. 2006. CASH AND CASH EQUIVALENTS Books overdrawn Cash and bank balances (14. However. b) Liquidity risk Liquidity risk reflects the company’s inability in raising funds to meet commitments.3Risk Management a) Credit risk and concentration of credit risk Industries Limited Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail to perform as contracted.967. Out of the total financial assets of Rs. This includes maintenance of balance sheet liquidity ratios.490.447.779 (2005: Rs. 229. the company is not exposed to any significant foreign currency risk. The company seeks to minimize the credit risk exposure through dealings with customers considered credit worthy and obtaining securities where applicable.4Fair value of financial assets and liabilities Fair value is the amount for which an asset could be exchanged.054 (956. . 2.676) million in respect of trade debts.569) 400. 802.565) 81. 12. or a liability settled. deposits. the financial assets which are subject to credit risk amounted to Rs. The company manages credit risk in trade receivables by limiting significant exposure to any individual customers by obtaining advance against sales. d) Yield rate risk Yield rate risk arises from the possibility that changes in yield rates will affect the value of financial instruments. debtors and creditors concentration both in terms of the overall funding mix and avoidance of undue reliance on large individual customer. The Company is exposed to yield rate risk as discussed in the respective notes. between knowledgeable willing parties in an arms length transaction.981.

plant and equipment appearing under the same head. GENERAL Figures have been rounded off to nearest Rupee. RECLASSIFICATION 50.2Nomenclature of following accounts have been changed: Previous financial statement Provision for taxation Security deposit Selling and distribution expenses 51. Investments in Associates. Previously.Sitara Chemical 49. Significant reclassifications made are as follows: Investment in associate amounting to Rs. it was grouped with other receivables.has been regrouped in plant and machinery in transit appearing under the head of capital work in progress to reflect more appropriate presentation.142.is reclassified in financial statements as long term investment to incorporate change as per IAS 28 (revised).405. Previously this investment was classified under current asssets. Sales tax refundable amounting to Rs.837/.is presented on the face of balance sheet.043/. - 50. 15. Current financial statements Taxation Trade deposit Distribution cost CHIEF EXECUTIVE 62 DIRECTOR . Previously this amount was grouped in advances for property.747. DATE OF AUTHORISATION FOR ISSUE Industries Limited The financial statements were authorised for issue on September 29.407/. 2006 by the Board of Directors of the Company. Amount of Rs. 4.1Corresponding figures have been rearranged and reclassified to reflect more appropriate presentation of events and transactions for the purposes of comparison. 50. 1.

Haji Abdullah Haroon Muslim Gymkhana.Sitara Chemical Industries Limited FORM OF PROXY IMPORTANT This form of Proxy. As witness my/our hand this day of 2006 Signed by the said Affix Rs. hereby appoint of who is also a member of Company.m. A Proxy must be a member of the Company. Abdul Qadeer Khan Auditorium. Near Shaheen Complex. Signature should agree with the specimen registered with the company. October 31. Business Centre. 5/- (Member’s Signature) Revenue Stamp which must be cancelled either by signature over it or by some othe means Place Date (Witness’s Signature) . 2006 at 3:00 p. on Tuesday. must be deposited duly completed. Aiwan-e-Sadr. at the Company’s Registered Office at 601-602. Karachi. Please quote Registered Folio Number I/We of being a member of Sitara Chemical Industries Limited entitled to vote and holder of ordinary shares. as my/our proxy in my/our absence to attend and vote for me/us on my/our behalf at the Twenty Fifth Annual General Meeting of the Company to be held at Dr. in order to be effective. Mumtaz Hassan Road. Karachi not less than 48 hours before the time of holding the meeting. and at any adjournment thereof.

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