ABC AUTOMOBILE INDUSTRIES (PVT) LIMITED

STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)

BALANCE SHEET AS AT JUNE 30, 2012

2012 2011
NOTE RUPEES RUPEES

PROPERTY & ASSETS

NON CURRENT ASSETS

Property, plant & equipments 4 98,397,855 98,442,283
###
Deferred cost 5 26,321,859 4,000,900
###
124,719,714 102,443,183
###
CURRENT ASSETS

Stocks in trade 6 16,951,022 17,486,109

###
Advances & receivable 7 18,569,134 3,839,944
###
Trade and Debors 1,229,427 -
Cash & bank balances 8 907,505 11,140,562
###
37,657,088 32,466,615
###

162,376,802 134,909,798
###

CAPITAL & LIABILITIES

SHARE CAPITAL & RESERVES

Share capital
Authoriezed
500,000 Ordinary shares of Rs. 100/- each 50,000,000 50,000,000
###
Issued, subscribed & paid up
500,000 Ordinary shares of Rs. 100/- each 50,000,000 50,000,000
###
Retained surplus 4,149,057 3,195,503
###
Revaluation reserve 9 59,614,540 59,614,540
###
113,763,597 112,810,043
###

CURRENT LIABILITIES
MCB (Overdraft facility) 10 39,130,806 -
Short term borrowing 11 - 4,500,000
Creditors, accrued & other liabilities 12 9,482,399 17,599,755
###
48,613,205 22,099,755
###

162,376,802 134,909,798
###

The annexed notes form an integral part of these accounts.

Auditors' report is annexed. (0) -###

###

PESHAWAR
DIRECTOR CHIEF EXECUTIVE
ABC AUTOMOBILE INDUSTRIES (PVT) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED FROM JULY 01, 2011 TO JUNE 30, 2012

2012 2011
NOTE RUPEES RUPEES

Sales 59,705,138 27,439,996

Cost of sales 13 46,953,635 21,419,876
###
Gross profit 12,751,503 6,020,120
###

Administrative 14 5,990,695 1,666,619

###
Selling & distribution 15 2,343,951 774,498
###
Financial cost 16 3,463,303 383,500
###
11,797,949 2,824,617
###

Net profit before taxation 953,554 3,195,503

###

Provision for taxation - -###

Net profit after taxation 953,554 3,195,503

###

Adjustment Accumulated Profit Brought Farward 3,195,503 -

Accumulated Profit Carried Faward to Balance sheet 4,149,057 3,195,503

The annexed notes form an integral part of these accounts.

Auditors' report is annexed.

PESHAWAR
DIRECTOR CHIEF EXECUTIVE
ABC AUTOMOBILE INDUSTRIES (PVT) LIMITED [1]
NOTES TO THE ACCOUNTS
FOR THE PERIOD ENDED FROM JULY 01, 2011 TO JUNE 30, 2012

1. STATUS & NATURE OF BUSINESS:

Osaka Automobile Industries (Pvt) Limited (The "company") was incorporated on February 07, 2011 as a Private
Limited Company under the relevant provisions of the Companies Ordinance, 1984. The main objectives of the
company are manufacturing , assembling & selling of different kind of motorcycles & related tools, equipments and
spare parts.
In accordance with clause III (i) of the Memorandum of Association of the company. The company has taken over
the entire assets & liabilities as on February 28, 2011, including business set up of OSAKA CORPORATION, a sole
proprietorship concern owned by one of the promoting members under National Tax Number 0333430-9 and Sales
Tax Registration Number 05-01-8708-357-64, carrying business of manufacturing , assembling and marketing of
motorcycles of all types & features & spare parts related thereto.

The company has commenced business activities w.e.f March 01, 2011.

2. BASIS FOR PREPARATION:

2.1 Statement of compliance:
These financial statements have been prepared in accordance with the approved accounting standards as
applicable in Pakistan. Approved accounting standards comprise of Accounting and Financial Reporting
Standards for Small & Medium Sized Entities (SMSEs) issued by the Institute of Chartered Accountants of
Pakistan and provisions of and directives issued under the Companies Ordinance, 1984. In case requirements
differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

2.2 Basis of accounting:

These financial statements have been prepared under the historical cost convention except as otherwise
stated in the respective policies and notes given hereunder.

2.3 Use of estimates & judgments:

The preparation of financial statements in conformity with the approved accounting standards requires
management to make judgments, estimates and assumptions that affect the application of policies and
reported amount of assets and liabilities, income & expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgment about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Significant areas requiring the use of management estimates in these financial statements related to the useful
life of depreciable assets, provision for the doubtful receivables and slow moving inventory.

2.4 Property, plant & equipment:

The company reviews the useful lives and residual value of property, plant & equipment on a regular basis. Any
change in the estimates in future years might affect the carrying amounts of the respective items of property,
plant & equipments with a corresponding effect on the depreciation charge and the impairment.

2.5 Provision for inventory & obsolescence and doubtful receivables:

The company reviews the carrying amount of stores & spares on a regular basis and provision is made for
obsolescence if there is any change in usage pattern and physical form of related stores & spares. Further the
carrying amounts of trade & other receivables are assessed on a regular basis and if there is any doubt about
the realizability of these receivables, appropriate amount of provision is made.

Cont'd...P/2
Cont'd...P/2
 [2]
3. SIGNIFICANT ACCOUNTING POLICIES:
3.1 Property, plant & equipment
These are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation charge is
based on the written down valve method at rates disclosed in note 4 whereby the cost of an asset is written off
to profit & loss account over its estimated useful life. Depreciation on addition is charged from the day on
which the asset is put to use and on disposal, up to the day the asset has been in use.

Maintenance and normal repairs are charged to income as and when incurred. Major renewals and
improvements are capitalized when it is probable that respective future economic benefits will flow to the
company and cost of the item can be measured reliably, and the assets so replaced, if any, are carried. Gains or
losses on disposal of fixed assets, if any, are included in the profit & loss account currently.

3.2 Impairment:
The carrying amounts of the company's assets are analyzed at each balance sheet date to determine whether
there is any indication of impairment loss. If any such indication exists, the recoverable amount of assets are
estimated in order to determine the extent of the impairment loss if any. Impairment losses are recognized as
expense in the profit & loss account.

3.3 Stores ,spares and stock in trade

These are valued at lower of cost and net realizable value. The cost is determined as follows:

Stores and spares Average cost

Stock in trade
Raw material Average cost
Goods in transit Cost comprising invoice plus other charges incurred
thereon.

Work in process Prime cost plus appropriate portion of manufacturing

overheads.

Finished goods Average cost

Net realizable value signifies the estimated selling price in ordinary course of business less cost necessary to be
incurred to make the sale.

3.4 Trade & other receivables:

These are originated by the company and are stated at cost less provisions for any uncollectible amount. An
estimate is made for doubtful receivables when collection of the amount is no longer probable. Debts
considered irrecoverable are written off.

3.5 Revenue recognition:

Revenue from sales is recognized when the goods are delivered and significant risks and rewards of ownership
are transferred to the buyer.

3.6 Provisions:
A provision is recognized in the balance sheet when the company has a legal or constructive obligation as a
result of past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Cont'd …. P/3
 [4]
2012 2011 ###
RUPEES RUPEES
5. DEFERRED COST 3,200,720 4,000,900 ###
This represents cost incurred in connection with molds and prototypes of the spare-parts being imported
from China, specifically designed and manufactured for OSAKA brand motorcycles (AF-70 and AF-125). The life of
the said molds and prototypes is estimated to five (05) years or the manufacturing of related spare-parts for around
500,000 units, whichever is less. On this analogy the aforesaid expenditure which has been capitalized as deferred
cost amortizable in five years in equal installments, commencing from July 01, 2011.

5.1 ADDITION IN DEFERRED COST 23,121,139

This Addition cost incurred in connection with molds and prototypes of the spare-parts being imported
from China, specifically designed and manufactured for OSAKA brand motorcycles (EURO-ll). The life of the said
molds and prototypes is estimated to five (05) years or the manufacturing of related spare-parts for around
1,000,000 units, whichever is less. On this analogy the aforesaid expenditure which has been capitalized as
deferred cost amortizable in five years in equal installments, commencing from July 01, 2012.

6. STOCKS IN TRADE
Raw material 5,463,022 8,764,809
###
Finished goods 11,488,000 8,721,300
###
16,951,022 17,486,109
###

7. ADVANCES & RECEIVABLES

Advances :
Staff - 62,000
###
Advance to Suppliers 153,937 -
Income tax 238,616 78,106
###
Sales tax 1,422,154 -
Receivable from OSAKA Corporation against sales tax 2,443,676 3,699,838
###
4,258,383 3,839,944
###
DUE FROM ASSOCIATED UNDERTAKINGS 14,310,751 -###
18,569,134 3,839,944
###

8. CASH & BANK BALANCES

In hand 861,835 2,043,380
###
With banks 45,671 9,097,182
###
907,505 11,140,562
###

9. REVALUATION RESERVE 59,614,540 59,614,540###

The land, building and plant & machinery were revalued on February 22, 2011by independent valuers - M/s Tajik
Builders. The revaluation resulted in a net surplus of Rs. 59,614,540/-.

10. RUNNING FINANCE FACILITIES: 39,130,806 -

MCB Bank Limited has sanctioned a running finance facility of Rs. 40 Million (2011 Rs. 40.00 million) to the
company. The facility is secured against hypothecation of stocks of Moter cycle & Spare Parts. RM & EM of
Industrial Project. . The facility carries mark-up @ average 3 months of KIBOR + 5%.

11. SHORT TERM BORROWING - 4,500,000

###
Al-Zaamin Invest Bank (Invest Capital Investment Bank Limited) extended Musharakah facility to the concern to
meet out import requirements as per following details/terms:

Sanction date Jan 20, 2011

Maturity date May 20, 2011
Period 04 months
IRR 20%
Payment cycle Arrear
Profit on maturity 376,000
 [5]
2012 2011 ###
12. CREDITORS, ACCRUALS & OTHER LIABILITIES RUPEES RUPEES RUPEES
Creditors 6,989,630 3,985,726
###
Accured expenses & Other liabilities ###
- ###
Utilities Payable 77,516 -
Markup Payable 1,490,419 -
Salaries payables 626,874 -
Audit fee Payable 50,000 -
W.Holding Tax Payable 95,164 -
Sales Tax Payable 152,796 24,031
2,492,769 24,031
###

Customers' advances - 10,468,749

Shortterm loans - 800,000
Due To Associate undertaking - 2,321,249
- 13,589,998
###
9,482,399 17,599,755
###

13. COST OF SALES

Raw material consumed 13.1 36,458,291 13,958,648
###
Stores & spares consumed 800,940 249,647
###
Carriege Outward 1,559,700 448,167
###
Salaries & wages 4,091,189 1,520,085
###
Utilities 648,653 247,779
###
Godown rent 264,000 126,000
###
Repair & maintenance 19,240 3,000
###
Depreciation 2,701,071 747,850
###
Fright Inward 809,681 -
Medical Expenses 375,295 -
Deffered Cost Amortized 800,180 -
Clearing Charges 1,192,095 -

Cost of goods manufactured 49,720,335 17,301,176

###

Adjustment of Finished Goods

Opening stock 8,721,300 12,840,000

###
Closing stock (11,488,000) (8,721,300)
###
(2,766,700) 4,118,700
###

Cost of Sale 46,953,635 21,419,876

###

13.1 Raw material consumed

Opening stock 8,764,809 22,723,457
###
Purchases during the year: ###
Import 10,190,254 -###
Local purchases 22,966,250 -
33,156,504 -

41,921,313 22,723,457
Closing stock (5,463,022) (8,764,809)
36,458,291 13,958,648

Cont'd…P/6
 [6]
2012 2011 ###
14. ADMINISTRATIVE RUPEES RUPEES
Salaries, wages & benefits 2,871,000 124,660
###
Traveling & conveyance 333,144 263,286
###
Postage, telephone & telegram 62,004 16,750
###
Printing & stationery 75,040 33,690
###
Entertainment 335,975 124,598
###
Repair & maintenance 86,916 30,070
###
Insurance charges 338,252 100,000
###
Utilities 461,291 124,472
###
Legal & professional 81,035 274,269
###
Audit fee 50,000 150,000
Depreciation 360,143 99,713
###
Freight Inward 38,815 -
Office Rent 60,000 -
POL 635,070 -
Newspaper and periodicals 1,580 -
Duty and Tax on export 30,136 -
Sales Tax Panality 6,500 -
Misc expenses 163,794 325,111
###
5,990,695 1,666,619
###

15. SELLING & DISTRIBUTION

Salaries, wages & benefits 533,250 248,005
###
Advertisment & marketing 524,161 134,225
###
After sale services 492,415 92,698
###
Show room rent 210,000 150,000
###
Accoumodation 43,910 -
Depreciation 540,214 149,570
###
2,343,951 774,498
###

16. FINANCIAL COSTS

Mark up on loan 3,432,217 376,000
###
Bank charges 31,086 7,500
###
3,463,303 383,500
###
17. GENERAL
17.3 Figures have been rounded off to the nearest rupee.
17.3 In accordance with the provisions of Clause 126(F) to the second schedule of the Income Tax Ordinance, 2001,
"the profits and gains derived by a taxpayer located in most affected and partly affected areas of Khyber
Pakhtunkhwa, FATA and PATA, are exempt from income tax for a period of three (03) years starting from the
tax year 2010". Since Peshawar is located in most affected area (as per Para (a) of the said schedule), hence is
exempt from income tax.

PESHAWAR
DIRECTOR CHIEF EXECUTIVE
 [3]
4. PROPERTY, PLANT & EQUIPMENTS - AT COST LESS ACCUMULATED DEPRECIATION
PLANT & ELECTRIC OFFICE COMPUER &
LAND FURNITURE
PARTICULARS BUILDING MACHINER INSTALLATI EQUIPMENT ACCESSORI TOTAL
Lease hold & FIXTURE
Y ON S ES
RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES RUPEES
C O S T:

Balance as at July 01, 2009 - - - - - - - -

Additions during the year - - - - - - -

Balance as at June 30, 2010 - - - - - - - -

Balance as at July 01, 2010 - - - - - - - -

Additions during the year - - - - - -

Balance as at June 30, 2011 - - - - - - - -

ACCUMULATED DEPRECIATION:
Balance as at July 01, 2009 - - - - - - - -

Depreciation for the year - - - - - - - -

Balance as at June 30, 2010 - - - - - - - -

Balance as at July 01, 2010 - - - - - - - -

Depreciation for the year - - - - - - - -

Balance as at June 30, 2011 - - - - - - - -

W.D.V:

As at June 30, 2010 - - ### - - ### - - - 0

As at June 30, 2011 - - - - - - - -

RATE OF DEPRECIATION - 10% 10% 10% 10% 10% 30% Cont'd…P/4

The depreciation for the year has been allocated as under:
2011 2010
RUPEES RUPEES
Cost of sales - -
Administrative - -
Selling & distribution - -
- - Cont…p/4
ABC AUTOMOBILE INDUSTRIES (PVT) LIMITED
CASH FLOW STATEMENT
FOR THE YEAR END JUNE 30, 2012

2012 2011
CASH FLOW FROM OPERATING ACTIVITIES RUPEES RUPEES

Net profit before taxation 953,554 3,195,503

Adjustment for:
3,601,428 997,133
Depreciation
4,554,982 4,192,636
Cash flow before working capital changes

Increase/decrease in current assets

535,087 ###
Stocks in trade
(1,229,427) -
Trade & Debtors
(14,729,190) (3,839,944)
Advances & receivable
(15,423,530) ###
Increase/(decrease) in current liabilities
(8,117,356) 17,599,755
Creditors, accrued & other liabilities
(18,985,904) 466,338
Cash generated from operations

(18,985,904) 466,338
Net cash flow from operating activities

CASH FLOW FROM INVESTING ACTIVITIES

Increase in property, plant & equipments (3,557,000) ###
Increase in deferred cost (22,320,959) (4,000,900)
(25,877,959) ###
Net cash used in investing activities

CASH FLOW FROM FINANCING ACTIVITIES

Increase in paid up capital - 50,000,000
Increase in short term borrowing (4,500,000) 4,500,000
Increase in Long term loan 39,130,806 -
34,630,806 54,500,000
Net cash used in financing activities
(10,233,057) 6,816,773
Net increase/(decrease) in cash & cash equivalents

Cash & cash equivalents at the beginning of the year 11,140,562 -

Cash & cash equivalents at the end of the year 907,505 6,816,773

The annexed notes form an integral part of these financial statements. 0 (4,323,789)
Auditors' report is annexed.

PESHAWAR 0
0 DIRECTOR CHIEF EXECUTIVE
 [3]
4. PROPERTY, PLANT & EQUIPMENTS - AT COST LESS ACCUMULATED DEPRECIATION

C O S T RATE DEPRECIATION W.D.V

PARTICULARS As at As at (%) As at For the As at As at
01-07-2011 Additions 30-06-2012 01-07-2011 period 30-06-2012 30-06-2012
(----------------------- (------------------------- (--
Land RUPEES-----------------------) RUPEES-------------------------) RUPEES--)
Cost 3,309,861 - 3,309,861 - - - - 3,309,861
Revaluation 36,690,139 - 36,690,139 - - - - 36,690,139
40,000,000 - 40,000,000 - - - 40,000,000
Building
Cost 17,023,684 - 17,023,684 1,650,825 768,643 2,419,468 14,604,216
5%
Revaluation 7,987,925 - 7,987,925 - - - 7,987,925
25,011,609 - 25,011,609 1,650,825 768,643 2,419,468 22,592,141
Plant & machinery
Cost 20,706,724 - 20,706,724 3,883,842 1,682,288 5,566,131 15,140,593
10%
Revaluation 14,936,476 - 14,936,476 - - - 14,936,476
35,643,200 - 35,643,200 3,883,842 1,682,288 5,566,131 30,077,069
Electric & gas installation 2,334,037 8,600 2,342,637 10% 434,932 190,770 625,703 1,716,934
Furniture & fixtures 180,879 - 180,879 10% 34,006 14,687 48,693 132,186
Office equipments 78,853 - 78,853 10% 14,824 6,403 21,227 57,626
Vehicles 1,753,378 3,285,000 5,038,378 20% 618,748 883,926 1,502,674 3,535,704
Computers - 206,200 206,200 20% - 41,240 41,240 164,960
Generator 95,449 57,200 152,649 10% 17,945 13,470 31,415 121,234
JUNE 30, 2012 ### 3,557,000 ### 6,655,122 3,601,428 ### 98,397,855
JUNE 30, 2011 105,072,405 25,000 105,097,405 5,657,989 997,133 6,655,122 98,442,283
The depreciation for the year has been allocated as under:
2012 2011
RUPEES RUPEES
Cost of sales 2,701,071 747,850
Administrative 360,143 99,713
Selling & distribution 540,214 149,570
3,601,428 997,133
Cont'd…P/4
 ABC AUTOMOBILE INDUSTRIES (PVT) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2012

RETAINED
PARTICULARS SHARE CAPITAL TOTAL
SURPLUS
RUPEES RUPEES RUPEES

Balance as at July 01, 2009 50,000,000 - 50,000,000

Profit for the year - - -

Balance as at June 30, 2010 50,000,000 - 50,000,000

Balance as at July 01, 2010 50,000,000 - 50,000,000

Profit for the year 3,195,503 3,195,503

Balance as at June 30, 2011 50,000,000 3,195,503 53,195,503

Balance as at July 01, 2011 50,000,000 3,195,503 53,195,503

Profit for the year - 953,554 953,554

Balance as at June 30, 2012 50,000,000 4,149,057 54,149,057

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

Auditors' report is annexed.

PESHAWAR
### DIRECTOR CHIEF EXECUTIVE