Annual Report 2007 - Nishat Group · 0 Annual Report 2007 paid up capitaL of investee company, numBer of present sharehoLders and capitaL heLd (%age Wise), (Based on Latest annuaL

Annual Report 2007Nishat Mills Limited

N I S H A T

Nishat Mills Limited

�Annual Report 2007


2 Annual Report 2007


�Annual Report 2007

Company Information 4

Mission Statement 5

Vision Statement 6

Notice of Annual General Meeting 7-�0

Directors’ Report ��-�8

Financial Highlights �9

Pattern of Holding of the Shares 20-2�

Statement of Compliance With The Code of Corporate Governance 24-25

Statement of Compliance With The Best Practiceson Transfer Pricing 25

Review Report to the Members onStatement of Compliance With BestPractices of Code of Corporate Governance 26

Auditors’ Report To The Members 27

Balance Sheet 28-29

Profit and Loss Account 30

Cash Flow Statement ��-�2

Statement of Changes in Equity ��

Notes To The Financial Statements �4-7�

Form of Proxy

contents



Board of directors: Mrs. Naz Mansha Chief Executive/Chairperson Mian Raza Mansha Mian Hassan Mansha Mr. Muhammad Nawaz Tishna (NIT) Mr. Khalid Qadeer Qureshi Chief Financial Officer Mr. Muhammad Azam Rana Muhammad Mushtaq Ms. Nabiha Shahnawaz Cheema

audit committee: Mian Hassan Mansha Member Mr. Muhammad Azam Member Ms. Nabiha Shahnawaz Cheema Chairperson/Member

company secretary: Mr. Khalid Mahmood Chohan

auditors: Riaz Ahmad & Company Chartered Accountants

LegaL advisor: Mr. M. Aurangzeb Khan, Advocate, Chamber No. 6, District Court, Faisalabad.

Bankers to the company: ABN Amro Bank KASB Bank Limited Albaraka Islamic Bank B.S.C (E.C) Meezan Bank Limited Allied Bank of Pakistan Limited National Bank of Pakistan Askari Commercial Bank Limited NIB Bank Limited Bank Alfalah Limited PICIC Commercial Bank Limited Citibank N.A. Standard Chartered Bank Crescent Commercial Bank Limited (Pakistan) Limited Deutsche Bank The Hong Kong & Shangai Faysal Bank Limited Banking Corporation Limited Habib Bank Limited United Bank Limited Habib Metropolitan Bank Limited

miLLs: Nishatabad, Faisalabad (Spinning and Stitching units & Power Plant) �2 K.M. Faisalabad Road, (Weaving units & Power Plant) Sheikhupura.

21 K.M. Ferozepur Road, Lahore. (Stitching unit)

5 K.M. Nishat Avenue (Weaving, Dyeing & Finishing unit, Off 22 K.M. Ferozepur Road, Lahore. Processing unit and Power Plant) 20 K.M. Sheikhupura Faisalabad (Spinning unit) Road, Feroze Watwan

registered office & Nishat House,shares department 53 - A, Lawrence Road, Lahore. Tel: 042-6�678�2-�6, 042-�� Fax: 042-6�674�4

head office: 7, Main Gulberg, Lahore. Tel: 042-57�6�5�-9, 042-�� 2 200 Fax: 042-57�6�49-50 E-mail: [email protected] Website: www.nishatmills.com

Liaison office: Ist Floor, Karachi Chambers, Hasrat Mohani Road, Karachi. Tel: 02�-24�472�-2� Fax: 02�-24�29�6

company information


5Annual Report 2007

Mission Statement

To provide quality products to customers and explore new markets to promote/

expand sales of the Company through good governance and foster a sound and

dynamic team, so as to achieve optimum prices of products of the Company for

sustainable and equitable growth and prosperity of the Company.



Vision Statement

To transform the Company into a modern and dynamic yarn, cloth and

processed cloth and finished product manufacturing Company with highly

professionals and fully equipped to play a meaningful role on sustainable basis

in the economy of Pakistan.

To transform the Company into a modern and dynamic power generating

Company with highly professionals and fully equipped to play a meaningful

role on sustainable basis in the economy of Pakistan.


7Annual Report 2007

notice of annuaL generaL meeting

notice is hereby given that Annual General Meeting of the members of Nishat Mills Limited ( the Company ) will be held on October 01, 2007 ( Monday ) at 11 :00 a.m. at Nishat House, 53 – A, Lawrence Road, Lahore, to transact the following business:-

1. To confirm minutes of the last Meeting.

2. To receive and adopt the Audited Accounts of the Company for the year ended June �0, 2007 together with Directors’ and Auditors’ reports thereon.

�. To approve Final Cash Dividend @ 25% (i.e. Rs. 2.50 per share) as recommended by the Board of Directors.

4. To approve re-appointment of M/s Riaz Ahmad & Company, Chartered Accountants, as external auditors of the Company for the year 2007-2008 and fix their remuneration, as recommended by the Audit Committee and Board of Directors.

5. speciaL Business:

To approve the following Special Resolution pursuant to Section 208 of the Companies Ordinance 1984, with or without modification:-

resoLved unanimousLy:

A. that pursuant to requirements of Section 208 of the Companies Ordinance �984, the Company be and is hereby authorized to make investment up to 5,000,000 Ordinary Shares of Adamjee Insurance Company Limited (AICL) through open stock market at the prevailing market rate.

B. that the Chief Executive of the Company be and is hereby empowered and authorized to make the said investment in the shares of AICL from any of the recognized registered stock exchange member, as and when deemed appropriate in the best interest of the Company and its shareholders and empowered and authorized to sale out subsequently any or all of the shares purchased by the Company.

C. that each of Mrs. Naz Mansha, Chief Executive and Mr. Khalid Mahmood Chohan,

Company Secretary be and is hereby singly authorized and empowered to act on behalf of the Company in doing and performing all acts, matters, things and deeds to implement and or give effect to the above resolutions.

6. Any other matter with the permission of the chair.

By order of the Board

Lahore (khaLid mahmood chohan)august 20, 2007 Company Secretary



notes: -

�. Book cLosure notice for entitLement of finaL 25% cash dividend for the year ended June 30, 2007:-

The Share Transfer Books of the Company will remain closed for entitlement of Cash Dividend @ Rupees 2.50 per share i.e. ( 25% ), from 24-09-2007 to 0�-�0 -2007 ( both days inclusive ). Physical transfers / CDS transactions / IDs. received in order at Nishat House, 53-A, Lawrence Road, Lahore upto 1:00 p.m. on 22-09-2007, will be considered in time for the entitlement of said dividend and attending of meeting.

2. A member eligible to attend and vote at this meeting may appoint another member as his/her proxy to attend and vote instead of him/her. Proxies in order to be effective must reach the Company’s Registered Office not later than 48 hours before the time for holding the meeting. Proxies of the Members through CDS shall be accompanied with attested copies of their CNIC. The shareholders through CDC are requested to bring original CNIC, Account Number and Participant Account Number to produce at the time of attending the meeting.

�. Shareholders are requested to immediately notify the change of address, if any.

4. Members who have not yet submitted photocopies of their Computerized National Identification Cards to the Company are requested to send them at the earliest.

statement under section 160(1)(b) of the companies ordinance, 1984

This statement sets out the material facts pertaining to the special business to be transacted at the forthcoming Annual General Meeting of the Company to be held on October 0�, 2007.

Adamjee Insurance Company Limited (AICL) was incorporated as a public limited company on September 28, 1960 and is listed on Karachi and Lahore Stock Exchanges of the Country. AICL is involved in general insurance business, enjoying a competitive edge in the insurance industry due to its strong assets base, paid up capital, huge reserves, balance portfolio mix, steady growth in gross premium and one of the blue chip at the stock market.

The Board of Directors of Nishat Mills Limited at their meeting held on August 20, 2007 have recommended and approved the special resolution as set out in the notice of AGM.

The Company already has shareholding of 30,031 ordinary shares in the share capital of AICL. The Memorandum and Articles of Association of AICL has been kept at registered office of the Company which can be inspected at any time during working hours up to September 29, 2007.

Other information as required under notification NO. SRO 865(1)/2000 dated December 06, 2000 issued by Securities and Exchange Commission of Pakistan is given hereunder: -

i) Name of investee Company or : Adamjee Insurance Company Ltd, an Associated undertakings: associated Company.

ii) Nature, amount and extent of investment : Not over 5,000,000 Ordinary shares, through Stock Market.


9Annual Report 2007

iii) Average market price of the shares Intended : Rs.246/- to be purchased during preceding six months in case of listed companies

iv) Break-up value of shares intended to be : Rs.�7.05 (��-�2-2006) Audited Accounts purchased on the basis of last published financial statements

v) Price at which shares will be purchased : At the prevailing market rate.

vi) Earning per share of investee company in : year 2006 2005 2004 last three years rs. �5.42 ��.�8 �.96

vii) Source of funds from where shares will : Surplus funds / reserves of the Company be purchased

viii) Period for which investment will be made : Long Term Investment

ix) Purpose of investment : The Company expects dividend income, which would further augment the cash flow.

x) Benefits likely to accrue to the Company : Price appreciation of Companies’ share and the shareholders from the and better profit distribution to the proposed investment; and valued shareholders of the Company. xi) Interest of Directors and their relatives in : Two Directors are common in both the investee Company companies and they have no special interest except to the extent of their shareholding.


�0 Annual Report 2007

paid up capitaL of investee company, numBer of present sharehoLders and capitaL heLd (%age Wise), (Based on Latest annuaL audited accounts, 31-12-2006

Paid up Capital: �02 2�5 �60 Ordinary shares of Rs.�0 eachNo of shareholders: 5 �2�

categories of members shares held percentage

Directors /Chief Executive and their spouses 2 56� 875 2.509

Associated Companies, Undertakings & related Parties 39 829 669 38.959

NIT and ICP �5 848 0.0�6

Banks, DFLs and NBFLs 5 867 337 5.739

Insurance Companies 7 0�9 896 6.866

Modaraba and Mutual Funds 4 55� 092 4.454

General Public:

Local (Individuals) 28 783 367 28.153

Foreign Companies / organization/individuals

(on repatriable basis) �� 6 0.�28

Others �� 470 740 ��.�76

totaL: 102 235 160 100.000

financial projections of investee company for the next three years.

future three years financial projection (rs. in million)

2007 2008 2009

Gross Premium 9 �2� �0 485 �2 052

Net Premium 6 548 7 525 8 647

Underwriting Results 897 1 099 1 341

Investment Income � 858 � �7� � 44�

Profit before Tax 2 637 2 332 2 621

Profit after Tax � 7�4 � 5�6 � 704


��Annual Report 2007

directors’ report

Your directors are pleased to present you the 59th annual report and audited accounts for the year ended June �0, 2007.

Operating financial results highlights 2007 2006 variance ‘000’ rs. ‘000’ rs. %

Sales �7 �80 �92 �6 659 607 �.�2

Gross Profit 2 844 938 2 957 981 (3.82)

Operating Profit 2 066 910 1 986 526 4.05

Profit Before Tax 1 819 170 1 758 866 3.43

Profit After Tax 1 674 170 1 632 866 2.53

EPS �0.48 �0.22 2.54

Our company has earned an after tax profit of Rs �,674.�70 Million in this year thus showing an increase of 2.5� % as compared to Rs. �,6�2.866 Million for the previous period. However, gross profit has decreased by 3.82% in spite of increase in sales. This decrease in gross profit is due to increase in local cotton rate by 6.�8% (2007: Rs. 2,485/maund, 2006: Rs. 2,��6/maund), increase in imported cotton rate by 7.24% (2007: Rs. �,450/maund, 2006: Rs. �,2�7/maund), increase in gas rates by ��.69% (2007: Rs. 8��/HM�, 2006: Rs. 744/HM�) and increase in minimum wage rate by 25 %. Despite of decrease in gross profit and increase in finance cost by 8.50 % (Rs. 64.213 Million), net profit has increased due to increase in dividend income by Rs. �6�.778 Million and gain on sale of investment by Rs. �07.��9

Million resulting from profit of Rs. 155.943 Million on sale of shares of Adamjee Insurance Company Limited.

The Board of Directors of the company has recommended 25 % cash dividend (2006: �5 % cash dividend and �0 % bonus share) and recommends transferring Rs. �,244 Million (2006: Rs. �,269 Million) to general reserve.



marketing strategy & future prospects

spinning section

The financial year 2007 ended with stability for spinning section. Cotton prices kept swinging and spackled between Rs.2,400/mound to Rs.2,850/mound. The year started with rumors of not achieving target cotton crop thus resulting in raise in price. This raise gained continuity as spinners kept buying on demanded price to fulfill their export orders. By the end of fourth quarter, cotton prices remain perched to record levels for the season 2007.

At Nishat, the demand of �00% grey cotton yarn remained steady and we tried to uphold the prices along with market and to keep the spinning section in profits. However, swell in cotton prices and unwillingness of buyers to pay good prices for the cotton yarn was the big restrain during this year. However, by the end of the year, Far East market showed good response in terms

of demand and prices of carded & combed both yarns. Far East remained our main selling market of cotton yarn. Development was made in Malaysian market in terms of orders & prices. Although achievements were not remarkable, we also tried to develop some new products of organic cotton & compact yarn in Far East market specially. Demand from Europe and USA kept reducing during this year.

Weaving section

The year 2007 was a difficult year for weaving section. This was mainly triggered by the bullish cotton market. Profit margins in weaving were difficult to sustain as increase in cotton yarn price was not absorbed by the customers’ end and there remained a price pressure and competition in our key markets. Moreover, extreme shortage of Lycra and Spandex fibers resulted in an increase of 20% in stretch yarn prices. Requirements of reduction in lead time by our European customers, collapse of Far



East grey fabric market, limited shipment options and sharp decline in volume and prices in wider width and home textiles greige fabrics were the major constraints during the year.

Despite all challenges and difficulties, weaving section of Nishat ended the year 2007 on a high note as far as profits were concerned. There has been an increase in the volume of industrial plus technical fabrics mainly to Germany, U.K, Netherlands and Belgium. An increase in customer base and volume was observed in Italy, France, Spain, Denmark and Mexico. There was also an increase in high end fashion business. This was because of a wide range of customers, diversified product mix and addition of few customers in the EU. There were new developments in special fabrics for sports wear (thermolite, coolmax, cotton linen Lycra, polyamide, cotton Lycra, bamboo and cotton wool) and specialized industrial use fabrics (Bekinox, Resistate Anti-Static, Carbon Black and Cotton Filaments).

As far as marketing strategy is concerned, we stressed product diversification with new fashion items, customer diversification, participation in the textile fairs and Exhibitions (Texworld & PV Paris for Fashion). We keep our customer by committing longer validity of prices, quick deliveries and keeping stocks of specialized fibers which have to be imported from USA, Belgium, South Africa and UK for better lead time for customer and giving all grey customers an option of pfd.

We expect further increase of greige business for sports wear, industrial and technical fabrics in the European markets. Future prospects are mainly dependent on the cotton outlook for the coming season which seems bullish for the time being and due to this Far East market doesn’t sound good in the future. Therefore, we need to explore new markets and customers.



processing and stitching section

The year 2007 can be said as the most challenging year for companies operating in Home Textiles Industry. There was an increase in cost of inputs that is cotton, power, utilities and labour. The power shortage was an alarming aspect that has effected directly and indirectly by halting production thus resulting in delays of final product. At international front, the competitor countries are enjoying the duty free access for big markets like US and EU, GSP qualifications, lowest interest rates offered by their governments, abundance of skilled labour pool at cheap price and subsidies for different cost inputs. The imposition of anti dumping on Pakistan products are making them uncompetitive and resulting in shift of customer base to competitors. Further the recent collapse of housing market at US has also made a hit on the home textile sales.

Despite of all these adverse factors, Nishat Home Textile Section succeeded in obtaining good results. The customer base was enhanced and the new products were added successfully. Further to enhance the output and to cut the operations time and costs in sewing, the automation policy was opted in cutting department by adding new automatic Gerber Cutting equipment. Moreover, foreign experts were hired to have transfer of knowledge to achieve the maximum output.

For this year we have entered into the business of slip covers which has a huge growth prospect in the market. Besides this, the filled items business, bed in a bag, decorative pillows were also added by using market facilities. Company has further introduced new finishes like fragrance, easy care, cool max and nano care for which we got ourselves registered with Nanotex. The more emphasis was given to value addition, therefore for the first time double side printing was done which is a new kind of experience that company has done successfully. Company has further introduced new fiber based fabrics by using Bamboo and Organic Cotton, which is a new trend and is gaining more popularity among the US and European consumers.

The Expansion and modernization phase has been completed as well as processing facilities of the division have been completely shifted from Faisalabad to the new set up at Lahore. This has brought all processing operations under one roof that will improve lead times, minimize excessive handling of fabric and shall result into lower costs


�5Annual Report 2007

and hence adding into the bottom line.

In pre quota period, the business was predominantly done through importers / distributors for US and European Market. Due to recent change in business model, company has focused towards direct retailers to gain more share of business and it has also helped in utilizing the capacities in optimum manner and attaining the economies of scale. Further, we opted for two pronged strategies: one for commodity items to gain production efficiencies and the other to work for branded products to fetch maximum profits.

Company has further made its presence in different international textile fairs to keep informed of the market and to maintain a continuous contact with its customers. Further the customer specific visits are always undertaken to service the customers after sales. Future plans are to open own offices at major markets of US and Europe to establish direct contact with customers.

Company has recently completed expansion plans of its processing by enhancing capacities in Bleaching, Dyeing and Printing by installing brand new Bleaching, Dyeing and Printing Range. Considering the market growth in the next year, company has the plans to enhance its capacities where required. Further, the plans are to have in house product manufacturing, quilting and wadding plant for complete bed in a bag product.

nishat dyeing & finishing – (ndf)

Year 2007 proved to be the most successful year

since the inception of this plant. The year showed a record sale figures. Total plant capacity which was increased to 4 Million meters per month last year, was also quickly and consistently filled up this year. During the year, special emphasis was laid on product development. A new R&D department was set up during this time. The target was innovation in terms of weave as well as finishing range. As a result, a total of 360 new qualities, in terms of weave, were added to the existing product range. Further, new finishing techniques were added and perfected in the finishing capabilities including blotch printing as well as knife coating. Market response to these innovations has been quite positive.

Although the performance of the plant remained very good, market situation changed to worse during this year. Most retailers and chain stores in US and Europe have recently restructured their sourcing models due to increased competition. New emerging shape of the market revolves around fast speed and reduced lead times for production. This poses a considerable challenge to our plant in terms of drastically reduced lead times from customers.



As a response to these fresh challenges, Nishat Dyeing & Finishing has responded successfully. Our customer base was increased this year. New business has been established with many new retailers and renowned labels as part of the marketing strategy of NDF. New fiscal year has started with our plant packed to the capacities in terms of production. On the outlet, prospects of next year look quite promising.

power generation

During the Year 2007, most modern dual fuel fired generators were installed based on co-generation and tri-generation principles i.e. beside power, waste heat is utilized to produce steam and conditioning the air. Nishat was the first private concern to introduce such modern and economical gas fired generator in the country.

power diesel / gas gas plants furnace engines turbines oil engines Faisalabad 4 4 -Bhikki � 4 �Lahore 7 2 4Feroze-watwan 2 4 -

On shifting of processing unit, steam generated from waste heat was rendered surplus. To utilize this surplus steam, �.2 MW steam turbine is being purchased and is expected to arrive in October 2007.

information technology

During the year 2007, our in-house developed system was improved by laying maximum emphasis on inter linking of related modules for having better internal control and using human resources more effectively. Moreover, most modern equipments were installed and developments carried out for better efficiency and data security.

earning per share

The earning per share of the company stood at Rs �0.48 (2006: Rs �0.22).



related parties

The transactions between the related parties were carried out at arm’s length prices determined in accordance with the comparable uncontrolled prices method. The Company has fully complied with the best practices on Transfer Pricing as contained in the Listing Regulations of Stock Exchanges in Pakistan. The Statement of Compliance with the best practice on Transfer Pricing is annexed.

corporate governance

The Statement of Compliance with the best practices of Code of Corporate Governance is annexed.

corporate and financial frame Work

In compliance of the Code of Corporate Governance, we give below statements on Corporate and Financial Reporting frame work:

1. The financial statements, prepared by the management of the Company, present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

2. Proper books of account of the Company have been maintained.

�. Appropriate accounting policies have been consistently applied in preparation of financial statements except for the change stated in note 4.5.2 to the financial statements that has been duly approved and adjusted in current year. Accounting estimates are based on reasonable and prudent judgment.

4. International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed.

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

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

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

8. Value of investments in respect of retirement benefits fund: Provident Fund: 30th June, 2007: Rs. 237.301 Million Un-audited (2006: Rs. 2�9.7�9 Million-Audited)

9. During the year under review, Six Meetings were held, attendance position was as under:-

sr. name of director no. of no. meetings attended � Mrs. Naz Mansha 2 (Chief Executive / Chairperson) 2 Mian Raza Mansha 4� Mian Hassan Mansha 44 Mr. Muhammad Nawaz Tishna 5 (Nominee NIT) 5 Mr. Faisal Ehsan Ellahi (Resigned) �6 Mr. Khalid Qadeer Qureshi 57 Mr. Muhammad Azam 68 Rana Muhammad Mushtaq �9 Ms. Nabiha Shahnawaz Cheema 2 (Appointed in place of Mr. Faisal Ehsan Ellahi)

audit committee

The board of directors in compliance with the Code of Corporate Governance has established an Audit committee. The names of its members are given in the company profile.

change in Board of directors and audit committee

Mr. Faisal Ehsan Ellahi has resigned from the Board of Directors and Audit Committee and Ms. Nabiha Shahnawaz Cheema has been appointed in his place to fill the casual vacancy.



auditors

The present auditors M/s Riaz Ahmad & Company, Chartered Accountants, retire and being eligible, offer themselves for re-appointment.

pattern of share holding and information under clause XiX (i) and (j) of the code of corporate governance

The information under this head as on June �0, 2007 is annexed.

Key operating and financial data

The key operating and financial data for the last six years is annexed.

acknowledgement

The Board is pleased for continued dedication and loyalty of the employees of the company.

for and on behalf of Board of directors

Lahore: (mrs. naZ mansha)August 20, 2007 chief executive/chairperson



financiaL highLights

2002 2003 2004 2005 2006 2007

(rupees in thousands)

Profit and loss Net sales �� 947 78� �� 209 299 �4 875 877 �� 74 6�0 �6 659 607 �7 �80 �92Gross Profit 2 027 947 1 887 991 1 933 924 2 134 899 2 957 981 2 844 938Profit before tax 333 530 544 135 905 502 2 033 354 1 758 866 1 819 170Profit after tax 201 511 410 579 751 060 1 867 354 1 632 866 1 674 170 Cash outflows Taxes paid �7 569 �24 9�8 �4� 850 ��6 675 �96 772 �46 75�Financial Charges Paid � 096 59� 687 7�2 44� 665 �5� 094 692 267 8�8 759Fixed capital expenditures � 064 749 � 247 �4� � 70� 27� � 74� 5�5 2 �� 5�9 � 076 49� Balance sheet Current assets 5 006 405 5 804 8�5 8 074 �4� 7 746 4�7 9 74� 720 �� 09 087Current liabilities 6 060 99� 6 58� ��5 7 456 6�0 6 25� �� 7 05� 5�� 7 649 �7�Operating fixed assets 6 327 546 6 911 233 7 631 620 7 926 838 8 398 310 10 309 611Total assets �2 795 822 �5 454 628 �9 58� 627 2� 9�7 602 �0 66� �26 �9 �80 6�7Long term loans and finances 2 467 484 2 753 389 2 622 873 2 858 155 3 015 384 1 773 820Shareholders’ Equity 4 255 227 6 ��8 �24 9 502 �44 �2 806 ��4 20 594 409 29 957 424 ratios Current ratio �.04:� �.0�:� �.22:� �.40:� �.�8:� �.74:� Gearing ratio 0.47:� 0.�8:� 0.27:� 0.22:� 0.��:� 0.06:� Gross profit % 16.97 14.29 13.00 18.77 17.76 16.56 Net profit % (before tax) 2.79 4.12 6.09 17.88 10.56 10.59 Earning per share �.65 �.�5 5.�7 �2.86 �0.22 �0.48 Proposed dividend % - �5 20 25 �5 25 Bonus % �0 - - - �0 - production machines No. of Spindles �72 8�2 �8� �84 �82 568 �8� 4�6 �8� 576 �89 960No. of Sulzar Looms 284 202 114 108 108 108No. of Airjet Looms 252 362 472 482 484 532No. of Thermosole Dyeing machines � � � 4 4 5No. of Rotary Printing machines � � � � � �



pattern of hoLding of the shares heLd Bythe sharehoLders of nishat miLLs Limited

as at 30/06/2007

4 509 � �00 �59 058 4 �04 �0� 500 � 050 477 � 088 50� �000 776 7�2 � 0�4 �00� 5000 2 27� �45 222 500� �0000 � 6�4 294 72 �000� �5000 896 806 4� �500� 20000 724 949 2� 2000� 25000 5�� 84� �8 2500� �0000 5�� 22 �7 �000� �5000 555 44� �� 500� 40000 4�� 05 4 4000� 45000 �70 8�0 �5 4500� 50000 72� 045 �7 5000� 55000 892 97� �0 5500� 60000 570 078 5 6000� 65000 ��4 062 2 6500� 70000 ��5 �00 4 7000� 75000 294 420 � 7500� 80000 80 000 � 8000� 85000 249 895 � 8500� 90000 26� �00 6 9000� 95000 560 595 5 9500� �00000 496 662 � �0000� �05000 �02 800 � �0500� ��0000 �25 �� 000� ��5000 ��6 552 � ��500� �20000 �20 000 4 �2000� �25000 496 264 � �2500� ��0000 �87 945 � �4000� �45000 429 �80 4 �4500� �50000 589 68� 2 �5000� �55000 �05 099 2 �5500� �60000 ��0 �50 � �6500� �70000 �67 905 2 �7000� �75000 �47 000 � �7500� �80000 �76 900 � �8000� �85000 �82 400 2 �8500� �90000 �77 400 4 �9500� 200000 800 000 � 22500� 2�0000 228 �00 � 2�000� 2�5000 2�2 000 � 24500� 250000 245 800 � 26500� 270000 266 800 � 27000� 275000 275 000 2 28500� 290000 575 224 � �0000� �05000 �00 �00 2 �0500� ��0000 6�5 800 � ��000� ��5000 �� 70 2 �2500� ��0000 657 ��0 � �4500� �50000 �46 480 � �5000� �55000 �52 500 � �5500� �60000 �58 �50

numBer of sharehoLding totaL shares sharehoLders from to heLd


2�Annual Report 2007

2 �6500� �70000 7�4 0�9 � �7500� �80000 �78 �00 � �8000� �85000 �8� 400 � �9500� 400000 400 000 � 4�500� 420000 4�8 650 2 42000� 425000 84� 880 2 42500� 4�0000 85� 600 � 4�000� 4�5000 4�� 500 � 44500� 450000 � �50 000 � 45000� 455000 450 400 � 48000� 485000 484 500 � 49500� 500000 500 000 � 5�500� 520000 5�9 6�0 � 54000� 545000 542 000 � 56500� 570000 566 200 � 57000� 575000 570 �00 2 57500� 580000 � �56 �00 � 58500� 590000 588 400 � 59000� 595000 594 070 � 59500� 600000 600 000 � 64000� 645000 64� �20 � 64500� 650000 � 944 700 � 65500� 660000 657 �00 2 69500� 700000 � �97 470 � 75000� 755000 75� 700 � 77500� 780000 779 202 � 78000� 785000 782 500 � 79000� 795000 792 7�� 79500� 800000 800 000 � 82000� 825000 824 5�8 � 86000� 865000 862 400 � 86500� 870000 868 0�5 � 92500� 9�0000 926 800 � 99500� �000000 � 000 000 � �02000� �025000 � 020 8�0 � �08000� �085000 � 080 890 � �09500� ��00000 � �00 000 � ��4000� ��45000 � �44 500 � ��9500� �200000 � �95 500 � �20500� �2�0000 � 206 �00 � �2�500� �220000 � 2�5 500 � �5�500� �540000 � 5�5 700 � �65000� �655000 � 650 200 � �78500� �790000 � 786 �2� � 208000� 2085000 2 082 400 � 26�500� 2640000 2 6�8 6�9 � 264000� 2645000 2 64� 8�� 272500� 27�0000 2 728 525 � �29500� ��00000 � �00 000 � 4�9500� 4200000 4 �99 929 � 457500� 4580000 4 579 740 � �097500� �0980000 �0 975 0�2





� �289500� �2900000 �2 895 4�9 � �484500� �4850000 �4 848 0�4 � �59�000� �59�5000 �5 9�2 0�8 � 20�5500� 20�60000 20 �57 �9�

11 512 totaL 159 785 717 categories of members number shares held percentage Individuals �� 74 60� 9�� 46.69 Investment Companies 24 �94 458 0.25 Insurance Companies �9 7 8�� 4�8 4.89 Joint Stock Companies �55 26 8�5 497 �6.79 Financial Institutions 60 �4 ��0 497 8.8� Modaraba Companies 69 �9 6�� 78� �2.27 Foreign Investors 26 �� 96 9�6 7.0� Miscellaneous 26 5 2�9 2�7 �.27

Grand Total �� 5�2 �59 785 7�7 �00.00



information under cLause XiX ( i ) of the code of corporate governance as on June 30, 2007

shares heLd percentage ( a ) associated companies, undertakings and reLated parties

1. D. G. KHAN CEMENT CO. LTD. 20 157 391 12.62 2 ADAMJEE INSURANCE COMPANY LTD 868 035 0.54

( B ) nit and icp 1. NATIONAL BANK OF PAKISTAN - TRUSTEE DEPTT. 5 514 225 3.45 2. INVESTMENT CORPORATION OF PAKISTAN NIL - ( c ) directors, ceo, their spouse and minor chiLdren 1. MRS. NAZ MANSHA CHIEF EXECUTIVE / CHAIRPERSON 10 975 032 6.87 2. MIAN RAZA MANSHA DIRECTOR �4 848 0�4 9.29 3. MRS. AMMIL RAZA MANSHA (SPOUSE MIAN RAZA MANSHA) 3 300 000 2.07 4. MIAN HASSAN MANSHA DIRECTOR �2 895 4�9 8.07 ( d ) eXecutives NIL - ( e ) puBLic sector companies and corporations Joint stock companies 26 8�4 205 �6.79 ( f ) Banks, deveLopment finance institutions, non-Banking finance institutions, insurance companies, modaraBas and mutuaL funds

�. INVESTMENT COMPANIES �94 458 0.25 2. INSURANCE COMPANIES 7 813 438 4.89 3. FINANCIAL INSTITUTIONS 14 110 497 8.83 4. MODARABAS, MUTUAL FUNDS & LEASING COMPANIES, ETC., 19 611 783 12.27 ( g ) sharehoLders hoLding ten percent or more voting interest in the Listed company

D. G. KHAN CEMENT CO. LTD. 20 157 391 12.62 information under cLause XiX ( j ) of the code of corporate governance name of ceo/director/cfo/company secretary no. of shares date rateand their spouse and minor chiLdren purchased (rs.)

nil nil - -



statement of compLiance With the code of corporate governance

Year Ended : June 30, 2007

This statement is being presented to comply with the Code of Corporate Governance contained in Regulation No. 37, 43 & 36 of listing regulations of Karachi, Lahore & Islamabad Stock Exchanges respectively for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.

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

�. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. At present the Board includes independent non-executive directors.

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

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

4. A casual vacancy occurred in the Board on March 27, 2007 was filled up same day by the directors.

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

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

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

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

9. No new orientation course has been arranged during the year.

�0. The appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment have been duly approved by the Board.

��. The Directors’ Report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed.


25Annual Report 2007

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

��. The directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code.

�5. The audit committee is continued and it comprises � members, of whom, two are non-executive directors including the Chairperson of the committee.

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

17. The Board has set-up an effective internal audit function who are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Company and they are involved in the internal audit function on a full time basis.

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

�9. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.

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

Lahore: august 20, 2007 ( mrs. naZ mansha ) CHIEF EXECUTIVE / CHAIRPERSON NIC Number : �5202-285��-6

statement of compLiance With the Best practices ontransfer pricing for the year ended June 30, 2007

The Company has fully complied with the best practices on Transfer Pricing as contained in the related Listing Regulations of the Karachi, Lahore and Islamabad Stock Exchanges.

Lahore: august 20, 2007 ( mrs. naZ mansha ) CHIEF EXECUTIVE / CHAIRPERSON NIC Number : �5202-285��-6



We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of Nishat Mills Limited to comply with the Listing Regulations of the respective stock exchanges, where the Company is listed.

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

As part of our audit of financial statements, we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We 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 controls and the effectiveness of such internal controls.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company’s compliance, in all material respects, with the best practices contained in the Code of Corporate Governance.

faisalabad: august 20, 2007 riaz ahmad and company chartered accountants

revieW report to the memBers on statement of compLiance With Best practices of code of corporate governance



We have audited the annexed balance sheet of nishat miLLs Limited as at �0 June 2007 and the related profit and loss account, cash flow statement and statement of changes in equity, together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the company’s management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, �984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

a) in our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, �984;

b) in our opinion:

i) the balance sheet and profit and loss account, together with the notes thereon, have been drawn up in conformity with the Companies Ordinance, �984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for the change stated in Note 4.5.2 to the financial statements with which we concur;

ii) the expenditure incurred during the year was for the purpose of the company’s business; and

iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company;

c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, cash flow statement and statement of changes in equity, together with the notes forming part thereof, conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, �984, in the manner so required and respectively give a true and fair view of the state of the company’s affairs as at 30 June 2007 and of the profit, its cash flows and changes in equity for the year then ended; and

d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII

of �980), was deducted by the company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

faisalabad: august 20, 2007 riaZ ahmad and company chartered accountants

auditors’ report to the memBers



(rupees in thousand) note 2007 2006 (Restated)equity and LiaBiLities

share capitaL and reserves Authorized share capital �78 470 000 (2006: �78 470 000) ordinary shares of Rupees �0 each 1 784 700 � 784 700 Issued, subscribed and paid up share capital �59 785 7�7 (2006: �45 259 74�) ordinary sharesof Rupees �0 each 5 1 597 857 � 452 597 Reserves 6 28 359 567 �9 �4� 8�2 total equity 29 957 424 20 594 409 non-current LiaBiLities Long term financing 7 1 773 820 2 982 �5� Liabilities against assets subject to finance lease 8 - �� 0�� 1 773 820 � 0�5 �84 current LiaBiLities Trade and other payables 9 926 593 960 4�6 Accrued markup �0 131 744 �5� 2�6 Short term finances 11 5 018 664 4 ��5 708 Current portion of long term liabilities �2 1 341 565 � �42 77� Provision for taxation 230 807 28� �82 7 649 373 7 05� 5�� total Liabilities 9 423 193 �0 066 9�7 contingencies and commitments �� totaL equity and LiaBiLities 39 380 617 �0 66� �26 The annexed notes form an integral part of these financial statements.

BaLance sheet as at 30 June 2007

chief eXecutive officer



(rupees in thousand) note 2007 2006 (Restated)assets

non-current assets Property, plant and equipment �4 10 586 159 �0 6�� 5� Long term investments 15 15 466 506 �0 289 746 Long term loans 16 9 523 6 �77 Long term deposits, prepayments and deferred cost 17 9 342 �0 ��0 26 071 530 20 9�7 606 current assets Stores, spare parts and loose tools �8 422 428 47� 520 Stock-in-trade �9 3 106 436 � 00� �74 Trade debts 20 831 653 � 026 884 Short term investments 2� 8 118 459 4 ��5 426 Loans and advances 22 411 270 4�8 794 Short term deposits and prepayments 2� 26 395 �0 525 Other receivables 24 322 839 407 �47 Cash and bank balances 25 69 607 50 250

13 309 087 9 74� 720

totaL assets 39 380 617 �0 66� �26

director



(rupees in thousand) note 2007 2006

saLes 26 17 180 192 �6 659 607 cost of saLes 27 14 335 254 �� 70� 626 gross profit 2 844 938 2 957 98� distriBution and seLLing cost 28 928 778 905 920 administrative and generaL eXpenses 29 320 202 264 807 other operating eXpenses �0 91 758 78 689 1 340 738 � 249 4�6 1 504 200 � 708 565 other operating income �� 562 710 277 96� operating profit 2 066 910 � 986 526 finance cost �2 819 267 755 054 1 247 643 � 2�� 472 share of profit in associated companies 571 527 527 �94 profit Before taXation 1 819 170 � 758 866 provision for taXation �� 145 000 �26 000 profit after taXation 1 674 170 � 6�2 866 earnings per share- Basic and diLuted (rupees) �4 10.48 �0.22

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

profit and Loss accountfor the year ended 30 June 2007

chief eXecutive officer director



(rupees in thousand) 2007 2006

cash fLoWs from operating activities

Profit before taxation 1 819 170 � 758 866 adjustments for non-cash charges and other items Depreciation 982 768 797 88� Gain on disposal of operating fixed assets (21 081) (9 458)Gain on sale of investment (155 943) (48 824)Share of profit in associated companies (571 527) (527 �94)Amortization of deferred cost 630 � 065 Finance cost 819 267 755 054 cash fLoWs from operating activities Before Working capitaL changes 2 873 284 2 727 �90 cash fLoWs from Working capitaL changes (increase)/decrease in current assets Stores, spare parts and loose tools 49 092 (46 69�)Stock-in-trade (103 262) (�05 782)Trade debts 195 231 (�49 526)Loans and advances (40 837) 2 9�0 Short term deposits and prepayments 1 897 8 784 Other receivables 84 308 (�8 549) increase/(decrease) in current liabilities Trade and other payables (32 961) �4� 876 Short term finances 702 956 �0 89� net cash fLoWs from / (used in) Working capitaL changes 856 424 (��4 067) cash generated from operating activities 3 729 708 2 59� �2� Finance cost paid (838 759) (692 267)Income tax paid (146 751) (�96 772) net cash generated from operating activities 2 744 198 � 704 084

cash fLoW statementfor the year ended 30 June 2007




cash fLoWs from investing activities

Long term loans (3 610) (� 2��)Long term deposits, prepayments and deferred cost 2 391 698 Proceeds from disposal of operating fixed assets 140 000 82 8�9 Proceeds from sale of investment 231 712 67 59� Proceeds from redemption of preference shares 131 594 - Dividend from associated companies 108 565 86 852 Investment made (797 458) (508 ��4)Fixed capital expenditure (1 076 493) (2 �� 5�9) net cash used in investing activities (1 263 299) (2 604 864) cash fLoWs from financing activities Long term financing - � 650 000 Repayment of long term financing (1 214 158) (8�9 64�)Repayment of finance lease liabilities (28 612) (4� 52�)Dividend paid (218 772) (�58 805) net cash (used in)/ fLoWs from financing activities (1 461 542) 4�0 0�� net increase/ (decrease) in cash and cash equivaLents 19 357 (470 749) cash and cash equivaLents at the Beginning of the year 50 250 520 999 cash and cash equivaLents at the end of the year (note 25) 69 607 50 250

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




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notes to the financiaL statementsfor the year ended 30 June 2007

1. the company and its operations

Nishat Mills Limited is a public company incorporated in Pakistan under the Companies Act, �9�� (Now Companies Ordinance, �984) and listed on Stock Exchanges in Pakistan. Its registered office is situated at 53-A Lawrence Road, Lahore. The company is engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching, buying, selling and otherwise dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fibre and cloth, and to generate, accumulate, distribute and supply electricity.

2. statement of compLiance

2.1 These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of The Companies Ordinance �984. Approved accounting standards comprise of such International Accounting Standards (IASs) as notified under the provisions of the Companies Ordinance, �984. Wherever, the requirements of the Companies Ordinance, �984 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) differ with the requirements of these standards, the requirements of The Companies Ordinance, �984 or the requirements of the said directives take precedence.

2.2 standards, interpretations and amendments to published approved accounting standards that are not yet effective

The following standards, amendments and interpretations of approved accounting standards effective for annual periods beginning on or after 0� July 2007 are either not relevant to the Company’s operations or are not expected to have significant impact on the Company’s financial statements other than certain increased disclosures in certain cases:

l IFRS 7 ‘Financial Instruments: Disclosures’ (effective for annual periods beginning on or after 0� January 2007)

l IAS � ‘Presentation of Financial Statements – Amendments relating to Capital Disclosures’ (effective for annual periods beginning on or after 0� January 2007)

l IAS 2� ‘Borrowing Costs’ (effective in case of borrowing costs relating to qualifying asset for which the commencement date for capitalization is on or after 0� January 2009)

l IFRIC �0 ‘Interim Financial Reporting and Impairment’ (effective for annual periods beginning on or after 0� November 2006)

l IFRIC �� ‘IFRS 2: Group and Treasury Share Transactions’ (effective for annual periods beginning on or after 0� March 2007)

l IFRIC �2 ‘Service Concession Arrangements’ (effective for annual periods beginning on or after 0� January 2008)



l IFRIC 13 ‘Customer Loyalty Programme’ (effective for annual periods beginning on or after 0� July 2008)

l IFRIC 14 ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’ (effective for annual periods beginning on or after 0� January 2008)

3. Basis of preparation

3.1 These financial statements have been prepared under the historical cost convention except for the investments in associates stated under equity method and certain financial instruments carried at fair value as stated in note 4.5, 4.10 and 4.13 to the financial statements.

3.2 critical accounting estimates and judgments

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

- Property, plant and equipment – useful lives and residual value (Note �4); - Provision for doubtful loans and advances (Note 22); - Taxation (Note ��).

4. summary of significant accounting poLicies

4.1 Staff retirement benefits

The company operates an approved funded provident fund scheme covering all permanent employees. Equal monthly contributions are made both by the company and employees at the rate of 9.5 percent of the basic salary to the fund.

4.2 taxation

current

The company falls in the ambit of presumptive tax regime under section �69 of the Income Tax Ordinance, 200�. Provision for income tax is made in the accounts accordingly. However, provision for tax on other income is based on taxable income at the current rates after considering the rebates and tax credits available, if any.

deferred

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of the assets and liabilities in the financial statements and the corresponding tax base.



Deferred tax liabilities are recognized for all taxable temporary differences. The company recognizes deferred tax assets on all deductible temporary differences to the extent that it is probable that future taxable profits will be available against which these deductible temporary differences, unused tax losses and tax credits can be utilized.

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

4.3 foreign currencies

These financial statements are presented in Pak Rupees, which is the Company’s functional currency. All monetary assets and liabilities denominated in foreign currencies are translated into Pak Rupees at the rates of exchange prevailing at the balance sheet date or at the contracted rates, while the transactions in foreign currency during the year are initially recorded in functional currency at the rates of exchange prevailing at the transaction date or at the contracted rates. Exchange risk fee is charged to profit and loss account. The company charges all the exchange differences to profit and loss account.

4.4 property, plant, equipment and depreciation

owned

Property, plant and equipment except freehold land and capital work-in-progress are stated at cost less accumulated depreciation and accumulated impairment losses (if any). Cost in relation to certain property, plant and equipment signifies historical cost, applicable exchange differences on foreign currency loans (upto �0 September 2004) and directly attributable cost of bringing the assets to working condition. Borrowing cost pertaining to the construction / erection period is also capitalized as part of historical cost. Freehold land and capital work in progress are stated at cost.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit and loss account during the year in which they are incurred.

Subject to finance lease

These are stated at lower of present value of minimum lease payments under the lease agreements and the fair value of the assets acquired on lease. Aggregate amount of obligation relating to assets subject to finance lease is accounted for at net present value of liabilities. Assets so acquired are depreciated over their expected useful life at the rates mentioned in Note �4.2.



depreciation

Depreciation on property, plant and equipment is charged to profit and loss account applying the reducing balance method so as to write off the cost / depreciable amount of the assets over their estimated useful lives at the rates given in Note �4.�. The company charges the depreciation on additions from the date when the asset is available for use and on deletions upto the date when the asset is de-recognized. The residual values and useful lives are reviewed by the management, at each financial year-end and adjusted if impact on depreciation is significant.

de-recognition

An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in the profit and loss account in the year the asset is de-recognized.

4.5 investments 4.5.1 investments in associates

Associates are the entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in these associates are accounted for using the equity method of accounting and are initially recognized at cost. The Company’s investment in associate includes goodwill identified on acquisition, net of any accumulated impairment loss.

The Company’s share of its associate’s post-acquisition profits or losses is recognized

in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Distributions received from an associate reduce the carrying amount of the investment.

4.5.2 other investments Classification of an investment is made on the basis of intended purpose for holding such

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

Investments other than stated in Note 4.5.� are initially measured at fair value plus transaction costs directly attributable to acquisition, except for “Investment at fair value through profit or loss” which is measured initially at fair value.

Investment at fair value through profit or loss

Investment classified as held-for-trading and those designated as such are included in this category. Investments are classified as held-for-trading if these are acquired for the purpose of selling in the short term. Gains or losses on investments held-for-trading are recognized in profit and loss account.



held-to-maturity investments

Investments with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long-term investments that are intended to be held to maturity are subsequently measured at amortized cost. This cost is computed as the amount initially recognized minus principal repayments, plus or minus the cumulative amortization, using the effective interest method, of any difference between the initially recognized amount and the maturity amount. For investments carried at amortized cost, gains and losses are recognized in profit and loss account when the investments are de-recognized or impaired, as well as through the amortization process.

available-for-sale

Investments intended to be held for an indefinite period of time, which may be sold in response to need for liquidity, or changes to interest rates or equity prices are classified as available-for-sale. These are sub-categorized as under:

Quoted

After initial recognition, investments which are classified as available-for-sale are measured at fair value. Gains or losses on available-for-sale investments are recognized directly in equity until the investment is sold, de-recognized or is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in profit and loss account. For investments that are actively traded in organized financial markets, fair value is determined by reference to stock exchange quoted market bids at the close of business on the balance sheet date.

Un-Quoted From the current year the company has changed its accounting policy regarding the

measurement of unquoted equity instruments. Now investments in equity instruments that do not have a quoted market price in an active market and whose fair value can not be reliably measured are carried at cost. Previously, these investments were measured at their break-up value considering it to be the fair value of such investments. After the recent changes in International Accounting Standard (IAS) �9 ‘Financial Instruments: Recognition and Measurement’, the management does not feel the break-up value to be reliable measure of the fair value. This change in accounting policy has been applied retrospectively and the comparative information has been restated in accordance with treatment specified in International Accounting Standard (IAS) 8 ‘Accounting Policies, Change in Accounting Estimates and Errors’. Had there been no change in this accounting policy, the carrying values of long term investments and short term investments would have been higher by Rupees �6.822 million and Rupees 24.44� million respectively and shareholders’ equity would have been higher by Rupees 4�.26� million.



4.6 inventories

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

stores, spare parts and loose tools

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

stock-in-trade

Cost of raw material, work-in-process and finished goods is determined as follows:

i ) For raw materials - Annual average basis. ii) For work-in-process - Average manufacturing cost including a and finished goods portion of production overheads. Materials in transit are valued at cost comprising invoice value plus other charges paid

thereon. Waste stock/rags are valued at net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less costs necessarily to be incurred in order to make a sale.

4.7 deferred costs

Deferred costs already recognized are being amortized over a period of five years from the year of occurrence. From the year 2005, the company has not deferred any cost to comply with Circular No. � of 2005 dated �9 January 2005 issued by SECP.

4.8 Borrowing cost

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

4.9 revenue recognition

Revenue from different sources is recognized as under:

- Revenue from sales is recognized on delivery of goods to customers.

- The Company’s share of profits or losses of the associated companies after tax is included in the profit and loss account to recognize the post acquisition changes in the share of net assets of the investees. Dividend from associated companies is recognized as reduction in cost of investments as prescribed by International Accounting Standard (IAS) 28.



- Dividend on other investments is recognized when right to receive the dividend is established.

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

4.10 financial instruments

Financial instruments carried on the balance sheet include investments, long-term and short-term deposits, trade debts, loans and advances, other receivables, cash and bank balances, long-term financing, liabilities against assets subject to finance lease, short-term finances, accrued mark-up and trade and other payables etc. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of instrument. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition, except for “financial instrument at fair value through profit or loss” which is measured initially at fair value.

Financial assets are de-recognized when the Company loses control of the contractual rights that comprise the financial asset. The Company loses such control if it realizes the rights to benefits specified in contract, the rights expire or the Company surrenders those rights. Financial liabilities are de-recognized when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on subsequent measurement (except available for sale investments) and de-recognition is charged to the profit and loss account currently. The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy stated in note 4.5.2.

trade and other receivables

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

Borrowings

Borrowings are recognized initially at fair value and are subsequently stated at amortized cost. Any difference between the proceeds and the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest method.

trade and other payables Liabilities for trade and other amounts payable are initially recognized at fair value,

which is normally the transaction cost.

4.11 provisions

Provisions are recognized when the company has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and a reliable estimate of the amount can be made.



4.12 impairment

The carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of such asset is estimated. An impairment loss is recognized wherever the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss account. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit and loss account.

4.13 Derivative financial instruments

Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and subsequently re-measured at fair value. All derivative financial instruments are carried as assets when fair value is positive and liabilities when fair value is negative. Any change in the fair value of the derivative financial instruments is taken to the profit and loss account.

4.14 off setting

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

4.15 cash and cash equivalents

Cash and cash equivalents comprise of cash and bank balances.

4.16 related party transactions and transfer pricing

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

4.17 dividend and transfer of reserve.

Dividend and transfers among reserves are treated as post balance sheet non-adjusting events hence do not qualify for provision in the financial statements as per the requirements of IAS-10 “Events after the balance sheet date”. These transfers are, therefore, recorded in the next year’s financial statements.




5. issued, suBscriBed and paid up share capitaL 67 762 264 (2006: 67 762 264) ordinary shares of Rupees �0 each fully paid up in cash 677 623 677 62� �7 252 280 (2006: �7 252 280) fully paid ordinary shares of Rupees �0 each issued for consideration other than cash 372 522 �72 522 54 77� �7� (2006: 40 245 �99) ordinary shares of Rupees �0 each issued as fully paid bonus shares 547 712 402 452 1 597 857 � 452 597

5.1 Ordinary shares of the company held by associated undertakings are as follows:

(numBer of shares) 2007 2006 D.G. Khan Cement Company Limited 20 157 391 �8 �24 90� Adamjee Insurance Company Limited 868 035 -

21 025 426 �8 �24 90�

(rupees in thousand) 2007 2006 (Restated)6. reserves Composition of reserves is as follows: capital Premium on issue of right shares 1 027 622 � 027 622 Capital redemption reserve fund 110 214 82 �� Fair value reserve 18 173 948 �0 �94 8�9

19 311 784 �� 04 792 revenue General 7 404 132 6 ��5 ��2 Un appropriated profit 1 643 651 � 70� 888

9 047 783 7 8�7 020

28 359 567 �9 �4� 8�2




7. Long term financing-secured Long term financing utilized under markup arrangements are as under: National Bank of Pakistan - 45 000 United Bank Limited (Note 7.1) 75 000 �50 000 Habib Bank Limited - 75 000 Habib Bank Limited (Note 7.2) 11 875 59 �75 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited (Note 7.3) 8 334 4� 667 Term Finance Certificates (Note 7.4) 599 400 999 000 Citibank N.A. (Note 7.5) 312 500 4�7 500 Standard Chartered Bank (Pakistan) Limited (Note 7.6) 133 333 200 000 ABN Amro Bank (Note 7.7) 129 412 �76 470 United Bank Limited (Note 7.8) 187 500 262 500 Allied Bank Limited (Note 7.9) 100 000 200 000 Allied Bank Limited (Note 7.10) 525 000 600 000 Habib Bank Limited (Note 7.11) 800 000 800 000 Hongkong Shangai Banking Corporation (Note 7.�2) 200 000 250 000

3 082 354 4 296 5�2 Less: Current Portion (Note 12) 1 308 534 � ��4 �59 1 773 820 2 982 �5�

7.1 This is secured against first pari passu charge on all present and future fixed assets of the company, including land, building and machinery and personal guarantee of the chief executive officer. It carries markup @ 6 percent, payable quarterly. The finance is repayable in eight equal semi annual installments commenced from �� December 2004.

7.2 This is secured against first exclusive charge on fixed assets of the company. It carries

markup @ 50 bps above six months KIBOR, payable on quarterly basis. The finance is repayable in sixteen equal quarterly installments commenced from �0 November 200�.

7.3 This is secured against ranking hypothecation charge on plant and machinery and

personal guarantee of chief executive officer. It carries mark up equal to State Bank of Pakistan discount rate with 7.50 percent floor, payable on quarterly basis. The finance is repayable in twelve equal quarterly installments commenced from 25 December 2004.

7.4 These are issued to a consortium of banks and secured against first pari passu

hypothecation charge on fixed assets of the company excluding land and building with 25 % margin. It carries profit @ 1.70 percent above weighted average market



yield of the last three auctions of 6 months Treasury Bills, payable semi annually. The finance is redeemable in ten semi annual installments commenced from 16 March 2004. The first five installments are of Rupees 0.200 million each and the remaining five installments are of Rupees 199.800 million each.

7.5 This is secured against first ranking pari passu charge on all present and future fixed

assets, excluding land and building, with 25 % margin on facility amount. It carries markup @ 6 percent, payable on semi annual basis. The finance is repayable in eight equal semi annual installments commenced from 25 March 2006.

7.6 This is secured against first exclusive hypothecation charge on plant, machinery and

equipments installed at Sheikhupura (Bhikki). It carries markup @ 6 percent, payable on quarterly basis. The finance is repayable in six equal semi annual installments commenced from �0 September 2006.

7.7 This is secured against first pari passu charge on the present and future fixed assets

of the company excluding land and building. It carries markup @ 7 percent, payable on quarterly basis. The finance is repayable in seventeen equal quarterly installments commenced from �5 February 2006.

7.8 This is secured against mortgage charge or charge on the immovable property and

machinery of the company. It carries markup @ 7 percent, payable at quarterly basis. The finance is repayable in eight equal semi annual installments commenced from �0 June 2006.

7.9 This is secured against first exclusive charge on unencumbered specific machinery

for Rupees 267 million. It carries markup @75 bps above six months KIBOR, payable on quarterly basis. The finance is repayable in four semi annual equal installments commenced from 24 November 2006.

7.10 This is secured against first Joint pari passu hypothecation charge on plant and

machinery of the company for an amount of Rupees 800 million. Facility will be available against registered ranking charge on fixed assets of the company. It carries markup @ 7 percent, payable on quarterly basis. The finance is repayable in sixteen quarterly installments commenced from 24 January 2007.

7.11 This is secured against first pari passu hypothecation charge of Rupees 1,067 million

on plant and machinery of the company excluding specific and exclusive charges . It carries markup @ 7 percent, payable on quarterly basis. The finance is repayable in eight equal semi annual installments commencing from 07 July 2007.

7.12 This is secured against registered ranking charge on plant and machinery of the

company. It carries markup @ 7 percent, payable on semi annual basis. The finance is repayable in ten equal semi annual installments commenced from 0� December 2006.



8. LiaBiLities against assets suBJect to finance Lease The rate of interest used as the discounting factor, implicit in leases is ��.75 percent per

annum (2006: 8.50 to ��.75 percent per annum). The amount of future payments and periods during which they fall due are:

(rupees in thousand) 2007 2006 year ended on 30 June 2007 - �4 �46 2008 35 217 �5 2�7

35 217 69 56� Less: Un-amortized finance charges 2 186 7 920

33 031 6� 64� Less: Current portion (Note 12) 33 031 28 6�2 - �� 0��

8.1 Rentals are paid in monthly/quarterly equal installments. Taxes, repairs and insurance costs are to be borne by the company. The company shall have no right to terminate the lease agreements and if the lease agreements are terminated, the company shall pay entire amount of rentals for un-expired period of lease agreements. Lease agreements are renewable at the option of lessors on such terms as may be agreed upon. Liabilities are secured against personal guarantee of directors and demand promissory notes.

8.2 Reconciliation of minimum lease payments and their present value is given below:

(rupees in thousand) 2007 2006 minimum present value Minimum Present value lease of minimum lease of minimum payments lease Payments lease payments Payments Due within one year 35 217 33 031 �4 �46 28 6�2 Due after one year but not later than five years - - �5 2�7 �� 0�� 35 217 33 031 69 56� 6� 64�




9. trade and other payaBLes

Creditors (Note 9.�) 386 481 485 9�� Advances from customers 36 028 �0 802 Securities from contractors – Interest free, repayable on completion of contracts 9 659 6 204 Income tax deducted at source 3 547 � 689 Workers’ welfare fund 25 462 - Other accrued liabilities 382 207 �49 �5� Dividend payable 18 591 �9 47� Workers’ participation fund (Note 9.2) 64 618 67 006 926 593 960 4�6

9.1 Creditors include an amount of Rupees 4.79� million (2006: Rupees 9.520 million) payable to the related parties.

9.2 Workers’ participation fund Balance as at 0� July 67 006 65 675 Interest accrued thereon (Note �2) 2 003 � 620 Add: Profit allocated for the year (Note 30) 64 618 67 006 133 627 ��6 �0� Less: Payments made to trust 69 006 67 ��0 Payments made to Government 3 2 �85

69 009 69 295

64 618 67 006

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

9.2.2 Provision for workers’ participation fund against share of profit in associated companies has been made to the extent of dividend received from these associated companies.

10. accrued mark-up

Mark-up accrued on long term financing 79 456 8� 07� Markup accrued on short term finances 52 288 70 �6� 131 744 �5� 2�6



(rupees in thousand) 2007 200611. short term finances from banking companies Secured (Note ��.�) 4 852 084 4 206 525 Temporary bank overdraft (Note ��.2) 166 580 �09 �8� 5 018 664 4 ��5 708

11.1 These are secured against joint pari passu hypothecation charge on all present and future current assets, all marketable securities, instruments, personal guarantees of directors and a second charge on fixed assets of the company. These form part of total credit facility of Rupees �4 285 million (2006: Rupees �4 �25 million). Mark-up is charged at the rate of Paisas �5.59 to �6.74 per Rupees � 000 per day (2006: 8.4� to 26.47 per Rupees 1 000 per day) and mark-up/profit on export refinance at the rate of 6.90 to 7 percent (2006: 7.90 to 8 percent) per annum.

11.2 This represents the unsecured overdrawn bank balances from banking companies and carries mark-up at the rate of paisas 26.�2 to �6.74 per Rupees � 000 per day (2006: Paisas 2�.86 to ��.�4 per Rupees � 000 per day).

12. current portion of Long term LiaBiLities

Long term financing (Note 7) 1 308 534 � ��4 �59 Liabilities against assets subject to finance lease (Note 8) 33 031 28 6�2 1 341 565 � �42 77�

13. contingencies and commitments

contingencies i) The company is contingently liable for Rupees 6�.89� million (2006: Rupees 6�.89�

million) on account of central excise duty not acknowledged as debt as the cases are pending before Court.

ii) Guarantees of Rupees 669.944 million (2006: Rupees ��.��9 million) have been given by the banks of the Company to Sui Northern Gas Pipelines Company Limited against gas connections, Shell Pakistan Limited against purchase of furnace oil, Wartsila Finland for power project and collector of customs.

iii) Company’s share in contingencies of associated companies is Rupees 249.4�0 million (2006: Rupees 2�4.942 million).

commitments i) Contracts for capital expenditure are approximately amounting to Rupees �7.882

million (2006: Rupees 77.967 million).

ii) Letters of credit other than for capital expenditure are amounting to Rupees 458.158 million (2006: Rupees �84.8�4 million).




14. property, pLant and equipment

Operating fixed assets (Note 14.1) 10 309 611 8 �98 ��0 Assets subject to finance lease (Note 14.2) 71 019 78 624 Capital work in progress (Note �4.�) 205 529 2 ��4 4�9

10 586 159 �0 6�� 5�

14.1 operating fiXed assets (rupees in thousand) freehold Buildings on plant and electric factory furniture, vehicles total Land freehold machinery installations equipment fixtures Land and Office equipment cost As at 0� July 2005 209 728 2 058 8�8 �0 044 62� 455 48� 9� 955 220 4�2 �67 804 �� 250 82� Additions �52 5�5 �9� 922 844 007 �5 58� �4 988 �2 020 60 874 � �� 909 Deletions - - (245 544) (580) (�6) (2) (22 9�0) (269 092) As at �0 June 2006 �62 24� 2 250 740 �0 64� 084 490 486 �08 907 252 4�0 205 748 �4 �� 6�8 Additions 8 54� 667 997 2 �0� 92� 75 96� 28 587 �5 697 84 675 � 005 �8� Deletions - (2 886) (�44 �00) (784) (46�) (282) (46 �69) (�95 082) As at �0 June 2007 �70 784 2 9�5 85� �2 402 707 565 665 ��7 0�� 287 845 244 054 �6 92� 9�9 accumulated depreciation As at 0� July 2005 - 980 802 � 888 �67 2�9 546 5� 98� 99 478 84 009 5 �2� 98� Charge for the year - �20 892 60� �2� 25 902 4 906 �� 94 2� 0�9 787 056 Adjustments - - (�8� 2�6) (�87) (�) (�) (�4 �04) (�95 7��) As at �0 June 2006 - � �0� 694 4 �08 074 245 06� 56 884 ��2 67� 90 944 5 9�5 �28 Charge for the year - �44 284 752 288 29 4�� 6 785 �5 79� 26 602 975 �6� Adjustments - (2 �62) (242 5��) (647) (�85) (�24) (�0 ��4) (276 �6�) As at �0 June 2007 - � 24� 6�6 4 8�7 8�� 27� 827 6� 284 �28 ��8 87 4�2 6 6�4 �28 net Book value At �0 June 2007 �70 784 � 672 2�5 7 584 876 29� 8�8 7� 749 �59 507 �56 622 �0 �09 6�� At �0 June 2006 �62 24� � �49 046 6 ��5 0�0 245 425 52 02� ��9 759 ��4 804 8 �98 ��0 Depreciation rate (%age) - �0 �0 �0 �0 �0 20

14.1.1 Depreciation charge for the year has been allocated as follows:


Cost of sales (Note 27.2) 932 770 752 822 Distribution and selling cost (Note 28) 2 943 2 542 Administrative and general expenses (Note 29) 39 450 �� 692 975 163 787 056



14.1.2 disposaL of operating fiXed assets (rupees in thousand)

description qty. cost accumulated Book sale mode of particulars of purchaser depreciation value proceeds disposal

nos. Building Building Material Lot 2 886 2 362 524 550 Negotiation Mr. Muhammad Din Contractor S/O

Aashiq Hussain, Faisalabad. plant and machinery Ring frames 4 8 296 5 832 2 464 2 600 Negotiation Colony Textile Mills Ltd, Bhakkar.Cards 2 65� 2�8 4�5 450 Negotiation Arshaq Trading Corporation,

Basement Shadab Plaza, Chiniot Bazar, Faisalabad.

Ring frames 10 20 451 14 694 5 757 6 500 Negotiation Manzoor Textile Mills Limited, Manzoor Hytes, 6-Street, Merry Park, Gulberg-III, Lahore.

Shearing and cropping machine � 7 �5� 5 984 � �67 525 Negotiation Arshaq Trading Corporation, Basement Shadab Plaza, Chiniot Bazar, Faisalabad.

Ramisch calender machine 1 15 844 10 199 5 645 7 252 Negotiation Liberty Mills Limited, A/51-A, SITE Karachi.

Rolling machines 2 2 721 2 401 320 320 Negotiation Universal Textiles, Karachi.Zimmer rotary machine 1 48 751 39 140 9 611 7 350 Negotiation Millinnium Textile (Pvt) Limited,

5 K.M Off, Ferozpur Road, Near Kahna Kacha, Railway Station, Lahore.

Benninger bleaching plant � �9 688 �2 498 7 �90 6 �00 Negotiation Husnain Textile House # �006, Block-D, Ghulam Muhammad Abad, Faisalabad.

Mercerizing plant 1 21 461 17 839 3 622 5 880 Negotiation Gul Ahmed Textile Mills Limited, Plot #3/A, Landhi Industrial Area, Karachi.

Lab equipments Lot 1 655 1 258 397 1 600 Negotiation Chem Tech International, 9-Chenab Market, Susan Road, Madina Town, Faisalabad.

Mak engine � ��4 545 74 904 �9 64� 62 0�6 Negotiation Surya Chakra Power Corporation Limited, Plot # 1115, Road # 54, Jubilee Hills, Hyderabad, India.

Mak engine 1 57 702 34 917 22 785 7 367 Negotiation Usha Daya Energy & Project Consultants (Pvt) Ltd, 3-5-944/ A,G-5, Kubera Towers, Hyderabad-500029, India.

Boiler 1 3 812 1 586 2 226 2 500 Negotiation Gulf Nishat Apparel Limited, 7.K.M. Nishat Avenue Off 22.K.M. Ferozepur Road, Lahore.

Knotting machine � 724 540 �84 450 Negotiation Mr. Sanaullah, Ferozwala, Sheikhupura.

Furnace oil tank 1 472 220 252 275 Negotiation Hira Terry Mills Limited, 44-E/1, Gulberg III, Lahore.

electric installation Cables 5 065 450 �86 64 64 Negotiation Mr. Mohammad Amjad, Factory (Meters) Area, Faisalabad. factory equipment Cloth trolleys �� 46� �85 76 76 Negotiation Mr. Farrukh Altaf, Bismillah Market,

Samundri Road, Faisalabad. vehicles Suzuki Baleno FDX-7820 � 709 505 204 4�0 Negotiation Mr. Zahid Rashid,House # P -287,

Street # 9, Naseerabad Nishtaabad, Faisalabad.

Toyota Corolla LRB-2078 1 1 150 742 408 639 Negotiation Argon Enterprises, House # 7-B III, Gulberg III, Lahore.



Suzuki Baleno LXW-5607 1 709 506 203 421 Negotiation Mr. Gul Perviz Tarrad,Kohlo Tarrad, Tehsil & Distt Hafizabad.

Suzuki Baleno FDX-87�7 � 704 50� 20� �90 Negotiation Mr. Nauman Anwar Khan, House # 6-C,Shami Road, Civil Lines, Sheikhupura.

Toyota Hi Ace Van LXP-7679 1 1 867 1 333 534 890 Negotiation Mr. Mohammad Qasim, House # 104, New Officer Colony, Sadar Bazar, Lahore.

Suzuki Alto LRA-9635 1 479 312 167 315 Negotiation Mr. Mohammad Naeem, House 280-A, Street # �, Near Munshi Quarter, Metropolitan Road, Lahore.

Suzuki Bolan Van LRD-8224 1 464 302 162 340 Negotiation Mr. Mohammad Imran Khan, House # �4�-D, Satelite Town, Gujranwala.

Suzuki Alto LXW-8329 1 480 347 133 315 Negotiation Mr. Azhar Munawar Khan, House # �6�, Block # 4, Karim Park, Ravi Road, Lahore.

Suzuki Alto LRB-9217 1 478 319 159 288 Negotiation Mr. Adil Butt,House # 385, Wapda Town, Block-C-2, Gujranwala.

Toyota Corolla FS-�045 � 992 587 405 648 Negotiation Mr. Khalid Javaid, House # P-2065, Mansoor Abad, Faisalabad.

Suzuki Alto LRE-2428 1 475 319 156 335 Negotiation Mr. Sheraz Hussain, House # 19, Army Housing Scheme, Defence, Lahore.

Suzuki Baleno LRA-9175 1 713 478 235 476 Negotiation Mian Mohammad Hanif, House # 549-E, Punjab Housing Society, Lahore.

Suzuki Baleno FDV-9260 � 6�2 522 ��0 �50 Negotiation Syed Shahid Raza Zaidi,House # 174, Mohallah Lahori Gate, Chiniot.

Toyota Corolla FS-�044 � 99� 59� 400 644 Negotiation Mr. Naeem Siddiqui, House # ��/H, Siddiqui Canal Road Link Society, New Campus, Lahore.

Suzuki Cultus LZV-0220 1 610 186 424 465 Negotiation Gulf Nishat Apparel Limited, 7.K.M. Nishat Avenue Off 22.K.M. Ferozepur Road, Lahore.

Toyota Corolla LRE-8151 1 1 025 696 329 336 Negotiation Mr. Maqsood Ahmed, House # 44/�, Satelite Town, Block Z-Chiniot, Distt. Jhang.

Honda Civic LXV-4877 1 1 168 870 298 470 Negotiation Syed Shehzada Khurram, House # �4 G -�, Block B, Rehman Garden, Lahore.

Suzuki Khyber LXN-1057 1 480 360 120 301 Negotiation Mr. Zahid Ali Khan, House # 34, Main Road, Samanabad, Lahore.

Suzuki Baleno LXZ-8391 1 708 528 180 304 Negotiation Mr. Khalid Chohan, House # 667, Street # �, Mughal Pura, Haji Abad, Faisalabad.

Toyota Corolla FDW-�550 � 9�0 760 �50 �86 Negotiation Mr. Mohammad Afzal, House # 472-A Mohallah Mehr Fiaz Mughal Pura Fateh Gar Lahore.

Suzuki Alto LRH-3510 1 507 320 187 264 Negotiation Mr. Kamran Shafiq Hashmi, House # LDA-48, Begum Pura, Lahore.

Toyota Corolla LZX-1943 1 998 757 241 378 Negotiation Mr. Khurram Farooq,House # 112, Ravi Park, Ravi Road, Lahore.

Suzuki Baleno FS-90�2 � 796 4�6 �60 400 Negotiation Mr. Junaid Ihsan, House # ��, C-Block, Gulshane-E-Ravi, Lahore.

Honda Civic LRS-0500 1 1 277 684 593 753 Negotiation Argosy Enterprises,House # 18 K, Gulberg, Lahore.

Suzuki Baleno LRH-3577 1 797 505 292 398 Negotiation Mr. Mushtaq Ahmed,House # 32-B, Punjab Housing Society, Lahore.

Toyota Corolla LXZ-2778 1 988 738 250 487 Negotiation Mr. Sharif Hussain, Coat Lahmal, Post Office Farook, Tehsil Sahiwal, Distt. Sargodha.

(rupees in thousand) description qty. cost accumulated Book sale mode of particulars of purchaser depreciation value proceeds disposal

nos.



Suzuki Baleno FS-�5�� 795 494 �0� �90 Negotiation Mr. Mohammad Iqbal,House 620/20, Janjua Street, Block # 4, Sahiwal, Distt. Sargodha.

Honda City LZX-4538 1 891 255 636 650 Negotiation Mr. Attat Elahi Malik, House # 87/A, Circular Road, Lahore.

Suzuki Cultus LXW-4831 1 589 429 160 265 Negotiation Mr. Zahid Ali Khan, House # 34, Main Road Samanabad, Lahore.

Suzuki Cultus LXW-4692 1 583 427 156 302 Negotiation Mr. Saqib Wasim Jaffar, House # 90, Punjab Govt.Society, Sector A-II, Lahore.

Suzuki Baleno LXZ-1426 1 709 506 203 445 Negotiation Mian Muhammad Saeed, 319 Raza Block, Allama Iqbal Town, Lahore.

Toyota Corolla LRL-1926 1 1 236 689 547 760 Negotiation Mr. Qader Khan, Mohallah Sokna, Khan Pur Post Office, Tehsil Tangqi, District Charsada.

Suzuki Alto LRB-9216 1 505 323 182 317 Negotiation Syed Abid Abbas,House # 69, Jafaria Colony, Multan Road, Lahore.

Suzuki Bolan LRE-1868 1 488 335 153 328 Negotiation Mr. Javaid Hussain Bukhtiari, House # 493 X, DHA, Lahore.

Toyota Hi Lux LXC-1490 1 722 640 82 565 Negotiation Mr. Arshad Muneer, House # 7�5, Mohala Maqam-e-Hayat, Sarghodha.

Suzuki Cultus LRD-7125 1 593 403 190 288 Negotiation Mr. Tahir Zaib, House No.240-B, Church Kahna Nao, Lahore.

Toyota Corolla 2 O.D LRR-538 1 1 261 588 673 702 Negotiation Syed Mustehsan Abbas, House# �20, Judiciall Colony, Block- B, Lahore.

Toyota Corolla LRH-4949 1 1 030 591 439 458 Negotiation Mr Khawaja Shafaqat, House# 9, Durand Road, Allama Iqbal Road, Lahore.

Suzuki Cultus LRD-7384 1 594 379 215 410 Negotiation Mr. Ali Asghar, Chak # 106, North Post Office Sargodha, Distt. Sargodha.

Suzuki Cultus LXW-4833 1 589 408 181 350 Negotiation Mr. Zubair Ahmad Abbasi, House # 488, Amin Town, Faisalabad.

Suzuki Alto LRA-7806 1 479 319 160 326 Negotiation Mr. Muhammad Atif,Chohan Park, Islam Pura, Lahore.

Suzuki Alto LRA-9718 1 501 319 182 285 Negotiation Mr. Kashif Naeem, House# 156-C, Tech Society, Canal Bank, Lahore.

Suzuki Baleno LXV-9326 1 702 516 186 350 Negotiation Muhammad Najum-ul-Saqib,House# 49, Mahalah Iqbal Nagar, Toba Tek singh.

Suzuki Alto LRF-2791 1 503 340 163 335 Negotiation Mr. Muhammad Aslam, Nisaht Dyeing & Finishing, 5 K.M. Off 22 K.M., Ferozpur Road, Lahore.

Toyota Corolla FDY-70�2 � 99� 74� 252 �85 Negotiation Sheikh Naseer Ahmad, House # 199 /17, Aziz Bhatti Road, Lahore.

Suzuki Baleno LXW-1728 1 742 521 221 460 Negotiation Mr. Akbar Ali House# 358, Block-B, Faisal Town, Lahore.

Suzuki Bolan LRM -7362 1 459 277 182 270 Negotiation Mr. Qamar Laqman, House # 22/10, Mohalah Dar-Ul-Alloom, Chanab Nagar, Chiniot.

Suzuki Alto LXZ-1485 1 509 358 151 315 Negotiation Mr. Muhammad Usman Anwar Khan, House # 6 C,Shami Road, Civil Line, Sheikhupura.

Toyota Corolla 2.O.D-LXW-9487 1 996 743 253 490 Negotiation Mr. Sartaz Khan, House # 786/ 2, M.B. Check Post Mangla Cantt Distt & Tehsil Jehlam.

Honda City LRW-3943 1 821 429 392 625 Negotiation Mr. Shahid Irshad, House # 325, Karim Block, Allama Iqbal Town, Lahore.


nos.



Suzuki Cultus LRX-4872 1 603 318 285 439 Negotiation Mr. Naveed Mumtaz, Garden Street # 2, Lala Zar Road, Gujranwala.

Toyota Hi Lux SingleCabin LRX-5545 1 868 652 216 635 Negotiation Mr. Muhammad Faryad, House #

229, E Block, PIA Society, Lahore.Toyota Hi Ace Van LXP-5236 1 1 489 1 190 299 818 Negotiation Mr. Gul Akbar Khan, House #

6, Street # �7, Al Qadus Road, Badami Bagh, Lahore.

Honda City LZV-3009 1 1 171 361 810 868 Negotiation Mr. Muhammad Nasir, House # ��/ 5. Johar Town Sadiqabad Distt Rahimyar Khan.

Suzuki Cultus LZX-2186 1 589 430 159 336 Negotiation Mr. Faisal Mahmood Butt, House # 451 / G-1, Johar Town, Lahore.

Toyota Corolla LWL-5534 1 948 118 830 900 Negotiation Mr. Mudaser Ali Jaura,House # 39-A3, Gulberg III, Lahore.

Honda City EXI LRH-1287 1 789 463 326 482 Negotiation Mr. Khalid Javaid, House # 2065, Street # 20, Mohala Monsorabad, Faisalabad

Office equipment Laptop computer P-111 1 173 79 94 33 Insurance Security General Insurance Co. Claim Ltd., 53-A, Lawrance Road,

Lahore. This includes the disposal of only those operating fixed assets where book value was more than Rupees 50,000.

(rupees in thousand) 14.2 assets suBJect to finance Lease plant and machinery: cost As at 0� July 2005 �85 096 Deletions (98 000) As at �0 June 2006 87 096 Deletions - As at �0 June 2007 87 096 accumulated depreciation As at 0� July 2005 25 026 Charge for the year �0 825 Adjustment (27 �79) As at �0 June 2006 8 472 Charge for the year (Note 27.2) 7 605 As at �0 June 2007 �6 077


nos.



(rupees in thousand) 2007 2006 (Restated)15. Long term investments

reLated parties: associated companies - under equity method quoted d.g. khan cement company Limited 79 6�4 700 (2006: 57 90� 600) fully paid ordinary shares of Rupees �0 each. Equity held ��.40% (2006: ��.40%) (Note �5.� and Note �5.2) 9 091 321 6 99� 482 un-quoted nishat shuaiba paper products company Limited �� 6�4 �99 (2006: 5 500 000) fully paid ordinary shares of Rupees �0 each. Equity held 25% (2006: 24.87%) (Note �5.�) 93 659 49 5�4 add: Advance for purchase of shares 598 6� 940

94 257 �� 454 9 185 578 7 �02 9�6

(rupees in thousand) net Book value At �0 June 2007 7� 0�9 At �0 June 2006 78 624 Depreciation rate (%age) �0 (rupees in thousand) 2007 2006 14.3 capitaL Work-in-progress

This comprises of:

Building on freehold land 89 878 4�2 286 Plant and machinery 96 918 � 598 49� Electric installation - 7 09� Unallocated capital expenditure 8 425 78 486 Letter of credit against machinery 22 �2 ��9 Letter of credit against building material - 499 Letter of credit against furniture and office equipment 3 271 � 976 Advances against vehicles 7 015 2� 249

205 529 2 ��4 4�9



(rupees in thousand) 2007 2006 (Restated) associated companies - avaiLaBLe for saLe quoted adamjee insurance company Limited �0 0�� (2006: �82 690) fully paid ordinary shares of Rupees �0 each. Equity held 0.0�% (2006: 0.58%) (Note �5.4) 3 725 4� 822 d.g. khan cement company Limited Nil (2006: �� 59 454) fully paid redeemable cumulative preference shares of Rupees �0 each (Note �5.�). Extent of investments held Nil (2006: �7.2�%) - �� 594 un-quoted gulf nishat apparel Limited 9 0�6 000 (2006: 6 225 000) fully paid ordinary shares of Rupees �0 each. Equity held �9.05% (2006: 24.94%) (Note �5.4) 90 360 62 250 add: Advance for purchase of shares - �0 �64 90 360 72 6�4 security general insurance company Limited � 279 709 (2006: 85� ��9) fully paid ordinary shares of Rupees �0 each. Equity held �5.02% (2006: �5.02%) (Note �5.4) 5 250 5 250 99 335 25� 280

Fair Value Surplus 9 122 28 060 Fair value surplus realized/adjusted (3 058) - 6 064 28 060 105 399 28� �40 others – avaiLaBLe for saLe quoted mcB Bank Limited �6 9�9 258 (2006: �� 8�5 842) fully paid ordinary shares of Rupees �0 each. Equity held 6.04% (2006: 6.28%) 906 353 659 605 Fair Value Surplus 5 269 176 2 245 865 6 175 529 2 905 470 15 466 506 �0 289 746



15.1 Reconciliation of investments in associated companies under equity method:

(rupees in thousand) d g khan cement nishat shuaiba paper total company Limited products company Limited

2007 2006 2007 2006 2007 2006 cost: As at 0� July 2 258 955 � 752 ��7 116 342 55 000 2 375 297 � 807 ��7 share of post acquisition reserves: As at 0� July 5 239 165 � 856 59� (5 486) - 5 233 679 � 856 59� Share of profit after income tax 588 724 5�2 880 (17 197) (5 486) 571 527 527 �94 Share of direct movement in equity 1 113 042 2 9�6 546 - - 1 113 042 2 9�6 546 Dividend received (108 565) (86 852) - - (108 565) (86 852)

As at �0 June 1 593 201 � �82 574 (17 197) (5 486) 1 576 004 � �77 088 6 832 366 5 2�9 �65 (22 683) (5 486) 6 809 683 5 2�� 679 advance for purchase of shares - - 598 6� 940 598 6� 940 net book amount: As at �0 June 9 091 321 6 99� 482 94 257 �� 454 9 185 578 7 �02 9�6

15.2 The company has recorded the post acquisition change in reserves as at �0 June 2006 in respect of its investment in D.G. Khan Cement Company Limited resulting in overstatement of premium on issue of shares and investment in associated company. The error has been corrected retrospectively in accordance with International Accounting Standards (IAS 8) “Accounting Policies, Changes in Accounting Estimates and Errors”. Consequently the premium on issue of shares and value of investment in associated company decreased by the same amount.

15.3 The company redeemed preference shares during the current year.

15.4 These are the associated companies by virtue of the Companies Ordinance, �984. The company has no significant influence over these companies as prescribed in International Accounting Standard (IAS) 28 ‘Investments in Associates’.

15.5 Aggregate market value of investment in quoted associated companies was Rupees 9 285 million (2006: Rupees 5 2�� million).



15.6 Summarized financial information of Associated Companies:

(rupees in thousand)

Name of associated companies Audited/ Assets Liabilities Net assets Revenues Profit/ un-audited (loss) march 2007 D.G.Khan Cement Company Limited Un-audited 44 043 453 17 037 504 27 005 949 4 801 143 1 153 533 Nishat Shuaiba Paper Products Company Limited Un-audited 1 443 357 1 069 477 373 880 362 914 (52 882) march 2006 D.G.Khan Cement Company Limited Un-audited 34 229 547 14 139 011 20 090 536 5 580 590 1 697 071 Nishat Shuaiba Paper Products Company Limited Un-audited 963 535 686 280 277 255 99 601 (22 059)


16. Long term Loans Loans to employees – Considered good (Note �6.� and Note �6.2) 15 395 �� 785 Less: Current portion 5 872 5 408 9 523 6 �77 16.1 These are unsecured and interest free loans to company’s employees which include

loan amounting to Rupees 9.294 million (2006: Rupees 6.626 million) given to executives of the company for house building. Loan is recoverable in equal monthly installments. Maximum debit balance due from executives at the end of any month during the year was Rupees �0.5�6 million (2006: Rupees 9.4�5 million).

16.2 Reconciliation of loans given to executives is given below: Balance as at 0� July 6 626 4 698 Add: Disbursements made 7 618 5 292

14 244 9 990 Less: Repayments received 4 950 � �64 Balance as at �0 June 9 294 6 626



(rupees in thousand) 2007 200617. Long term deposits, prepayments and deferred cost deposits Other securities 9 184 9 0�9 prepayments Office and shop rent - 2 556 deferred cost (note 17.1) TFC Issuance charges 158 788 9 342 �2 �6� Less: current portion Office and shop rent - 2 2�� 9 342 �0 ��0 17.1 Reconciliation of deferred cost is given below: Balance as at 0� July 788 � 85� Less: Amortized during the year (Note 30) 630 � 065 158 788 18. stores, spare parts and Loose tooLs Stores including in transit Rupees 29.766 million (2006: Rupees ��.�5� million) 269 114 �40 �59 Spare parts 152 798 ��0 75� Loose tools 516 408 422 428 47� 520 19. stock-in-trade Raw materials 1 264 787 � 268 886 Work-in-process 942 753 896 854 Finished goods - including in transit Rupees �07.657 million (2006: Rupees 84.440 million) (Note �9.�) 898 896 8�7 4�4 3 106 436 � 00� �74 19.1 It includes goods valued at NRV amounting to Rupees 8�.500 million (2006: Rupees

55.97� million).




20. trade deBts Considered good: Unsecured 581 266 648 7�4 Secured (Against letters of credit) 250 387 �78 �50 831 653 � 026 884 20.1 Trade debts include an amount of Rupees 24.��0 million (2006: Rupees Nil) receivable

from related parties.

21. short term investments available for sale reLated parties: quoted nishat (chunian) Limited �0 2�� 29 (2006: �0 2�� 29) fully paid ordinary shares of Rupees �0 each. Equity held ��.6�% (2006: ��.6�%) 109 931 �09 9�� mcB Bank Limited 2� 057 999 (2006: �8 �� 04) fully paid ordinary shares of Rupees �0 each. Equity held 6.04% (2006: 6.28%) 254 780 254 780 adamjee insurance company Limited Nil (2006: �46 227) fully paid ordinary shares of Rupees �0 each. Equity held 0.0�% (2006: 0.58%) - 9 �45 unquoted security general insurance company Limited � 447 290 (2006: 964 860) fully paid ordinary shares of Rupees �0 each. Equity held �5.02% (2006: �5.02%) 5 938 5 9�8




others: quoted pakistan strategic allocation fund 500 000 (2006: 500 000) fully paid certificates of Rupees �0 each 5 000 5 000 375 649 �84 994 Fair value surplus 7 751 377 � 99� 072 Fair value surplus realized/adjusted (8 567) (40 640)

7 742 810 � 950 4�2 8 118 459 4 ��5 426

22. Loans and advances considered good: Employees – Interest free 8 215 7 458 Suppliers 45 930 57 927 Letters of credit 18 023 2 62� Employees’ provident fund trust 6 406 � 2�9 Income tax 279 316 �28 �40 Other advances 53 380 2� 407

411 270 4�8 794 considered doubtful: Others 108 �08 Less: Provision for doubtful 108 �08 - -

411 270 4�8 794 23. short term deposits and prepayments deposits Other securities 994 772 Central excise duty 23 285 22 856

24 279 2� 628 short term prepayments 2 116 6 897

26 395 �0 525



(rupees in thousand) 2007 200624. other receivaBLes These are made up as under: considered good Export rebate and claims 163 555 98 289 Sales tax receivable 144 116 �0� �97 Profit receivable on bank deposits - �� Derivative financial instrument (Note 24.1) 14 015 949 Miscellaneous receivables 1 153 6 �79

322 839 407 �47 24.1 Derivative financial instrument Markup gain on interest rate swap 14 348 2 042 Loss on foreign currency fluctuation (333) (� 09�)

14 015 949 24.2 The Company entered into a Pak Rupees to US Dollars cross currency swap to

counter its under lying Pak Rupees floating rate liability into a US Dollars floating rate liability with Standard Chartered Bank for a notional amount of US Dollars 7.286 million commenced from 10 May 2006. Under the arrangement, the company would receive/pay the difference of 6 months KIBOR and 6 month LIBOR plus one percent semi annually and the difference of US Dollar / Pak Rupee spot rate prevailing at commencement date and installment repayment date.

25. cash and Bank BaLances cash with banks in: Current accounts 60 708 4� �97 Fixed deposit accounts - ��7

60 708 4� ��4 cash in hand 8 899 6 9�6

69 607 50 250 26. saLes Export 14 387 133 �� 9�9 79� Local (Note 26.1) 2 766 129 2 69� 472 Processing income 26 930 26 �42

17 180 192 �6 659 607




26.1 LocaL saLes Sales 2 770 959 2 695 299 Less: Sales tax 4 830 � 827

2 766 129 2 69� 472 26.2 Exchange gain due to currency rate fluctuation relating to export sale amounting to

Rupees 2.296 million (2006: 9.448 million) has been included in export sales. 27. cost of saLes Raw materials consumed (Note 27.�) 4 763 180 4 4�2 7�2 Cloth and yarn purchased/used 4 102 826 4 290 ��8 Processing charges 94 523 255 �77 Salaries, wages and other benefits 1 125 956 988 656 Staff retirement benefits 34 921 28 88� Stores, spare parts and loose tools 1 337 211 � 208 ��7 Packing materials 365 155 �4� 676 Repair and maintenance 118 589 �65 59� Fuel and power 1 395 790 � 09� 20� Insurance 22 877 2� 297 Other factory overheads 141 212 �62 694 Depreciation (Note 27.2) 940 375 76� 647

14 442 615 �� 7�� 989 Work-in-process Opening stock 896 854 877 560 Closing stock (942 753) (896 854)

(45 899) (�9 294)

Cost of goods manufactured 14 396 716 �� 7�2 695 Finished goods Opening stock 837 434 826 �65 Closing stock (898 896) (8�7 4�4)

(61 462) (�� 069) 14 335 254 �� 70� 626




27.1 raW materiaLs consumed Opening stock 1 268 886 � �9� 467 Add: Purchases 4 759 081 4 488 ��

6 027 967 5 68� 598 Less: Closing stock 1 264 787 � 268 886 4 763 180 4 4�2 7�2 27.2 depreciation Owned assets (Note �4.�.�) 932 770 752 822 Leased assets (Note 14.2) 7 605 �0 825 940 375 76� 647 28. distriBution and seLLing cost Salaries, wages and other benefits 52 547 5� 027 Staff retirement benefits 3 264 � 072 Outward freight and distribution 553 329 5�2 0�� Commission to selling agents 254 490 242 249 Rent, rates and taxes 2 811 2 6�6 Insurance 2 841 974 Traveling and conveyance 27 767 �6 �68 Vehicles’ running 1 382 296 Entertainment 696 55� Advertisement 8 664 4 207 Postage, telephone and telegram 16 107 28 86� Electricity and sui gas 354 �9� Printing and stationery 890 675 Repair and maintenance 173 2 256 Fee and subscription 520 - Depreciation- owned assets (Note �4.�.�) 2 943 2 542 928 778 905 920




29. administrative and generaL eXpenses Salaries, wages and other benefits 164 241 �4� 778 Staff retirement benefits 6 368 6 059 Rent, rates and taxes 2 706 2 085 Legal and professional 8 997 6 26� Insurance 3 297 2 60� Traveling and conveyance 15 195 9 0�� Vehicles’ running 15 096 �5 4�2 Entertainment 5 719 4 65� Auditors’ remuneration: Audit fee 1 278 � �62 Half yearly review 315 ��5 Reimbursable expenses 29 �4

1 622 � 49� Advertisement 69 75� Postage, telephone and telegram 5 387 6 22� Electricity and sui gas 11 397 9 740 Printing and stationery 9 799 9 26� Repair and maintenance 6 572 5 7�7 Fee and subscription 5 237 � 69� Research and development (Note 29.�) 12 470 - Miscellaneous 6 580 8 �79 Depreciation –owned assets (Note �4.�.�) 39 450 �� 692 320 202 264 807 29.1 research and deveLopment support Support on account of research and development (Note 29.2) 205 773 - Less: Utilization Product development 154 700 - Up-gradation of information technology 4 935 - Professional consultancy 7 395 - Market research 23 716 - Environment improvement 15 223 - Participation in exhibition 12 274 -

218 243 - 12 470 -



29.2 The research and development support has been given by Ministry of Commerce, Government of Pakistan vide SRO 80� (�)/2006 dated 04 August 2006 in order to encourage and regulate the research and development in textile sector.


30. other operating eXpenses Workers’ participation fund (Note 9.2) 64 618 67 006 Workers’ welfare fund 25 462 - Amortization of deferred cost (Note �7.�) 630 � 065 Donation (Note �0.�) 1 048 �0 6�8 91 758 78 689 30.1 There is no interest of any director or his spouse in donees’ fund. 31. other operating income Income from financial assets Dividend income (Note ��.�) 329 502 �65 724 Gain on sale of investment 155 943 48 824 Profit on deposit with banks 368 � �2�

485 813 2�5 67� Income from non-financial assets Gain on disposal of operating fixed assets 21 081 9 458 Sale of scrap, empties and sundry receipts 55 569 52 494 Rental income 247 ��8

76 897 62 290 562 710 277 96�

31.1 dividend income from related parties D.G. Khan Cement Company Limited 23 687 �� 59 MCB Bank Limited 273 746 �28 569 Nishat (Chunian) Limited 15 350 �8 689 Adamjee Insurance Company Limited 1 834 92� Security General Insurance Company Limited 13 635 � 6�6

328 252 �64 974 others Pakistan Strategic Allocation Fund 1 250 750 329 502 �65 724



(rupees in thousand) 2007 200632. finance cost Interest on: Employees’ provident fund trust - 650 Workers’ participation fund (Note 9.2) 2 003 � 620 Mark-up on: Long term financing 322 382 ��8 4�4 Short term finances 403 881 ��8 968 Finance charges on lease liabilities 5 735 9 �27 Bank charges and commission 85 266 �04 275 819 267 755 054 33. provision for taXation Current - for the year (Note ��.�) 220 807 20� 2�5 Prior year adjustment (75 807) (75 2�5) 145 000 �26 000

33.1 The company falls under the ambit of presumptive tax regime under section �69 of the Income Tax Ordinance, 200�. Provision for income tax is made accordingly. Provision on dividend income is made under section 5 of the Income Tax Ordinance, 200�. However, provision is made on other income (excluding dividend income)@ �5 percent under normal law as the company has no carry forwardable tax losses. Reconciliation of tax expense and product of accounting profit multiplied by the applicable tax rate is not required in view of presumptive taxation.

33.2 Provision for deferred tax is not required as the company is chargeable to tax under section �69 of the Income Tax Ordinance, 200� and no temporary differences are expected to arise in the foreseeable future.

34. earnings per share - Basic and diLuted There is no dilutive effect on the basic earnings per share which is based on: 2007 2006

Profit attributable to ordinary shareholders (Rupees in thousand) 1 674 170 � 6�2 866 Number of ordinary shares (Numbers) 159 785 717 �59 785 7�7 Earnings per share – Basic (Rupees) 10.48 �0.22



35. events after the BaLance sheet date

Board of Directors of the company have proposed a cash dividend for the year ended �0 June 2007 amounting to Rupees 2.50 (�0 June 2006: Rupees �.50) per share and stock dividend (Bonus shares) Nil (�0 June 2006: 0� ordinary share per �0 ordinary shares of Rupees �0 each) at their meeting held on 20 August 2007. Board of directors also proposed to transfer Rupees � 244.000 million (�0 June 2006: Rupees � 269.000 million) from un-appropriated profit to general reserve and Rupees Nil (2006: Rupees 145.260 million) from un-appropriated profit to reserve for issue of bonus shares in the aforesaid meeting. However, these events have been considered as non-adjusting events under IAS-�0 and have not been recognized in these financial statements.

36. chief eXecutive officer’s, directors’ and eXecutives’ remuneration

Aggregate amount charged in these financial statements for the year for remuneration and allowances, including all benefits to Chief Executive Officer, Directors and Executives of the company is as follows:

(rupees in thousand)

d e s c r i p t i o n 2007 2006 chief directors executives Chief Directors Executives executive Executive Officer Officer managerial remuneration 3 200 2 826 22 172 � 200 2 0�6 �6 606 allowances Cost of living allowance - 5 148 - 4 ��0 Housing 1 440 1 246 8 319 � 440 90� 6 454 Conveyance - - 75 - - 4� Medical - 32 1 031 - �� 529 Utilities 160 130 1 466 �60 90 � �2� Special - 2 77 - 2 5� company’s contribution to provident fund trust - 124 2 107 - �2� � 57� Leave encashment - - 1 030 - - 446 4 800 4 365 36 425 4 800 � �49 26 9�5

Number of Persons 1 4 34 � 4 26

36.1 Chief Executive Officer, four Directors and certain Executives of the company have been provided free maintained vehicles and certain Executives are also provided free housing facility with utilities.

36.2 No remuneration was paid to directors as meeting fee during the current year and previous year.



2007 200637. numBer of empLoyees

At the year end 13 636 �4 277 38. transactions With reLated parties

The related parties comprise associated undertakings, other related companies and key management personnel. The company in the normal course of business carries out transactions with various related parties. Amount due to related parties is disclosed in Note 9.� due from related parties is disclosed in Note 20.� and remuneration of the key management personnel is disclosed in Note �6. Aggregate transactions with related parties are given below:


Purchase of goods and services 88 101 �20 28� Sale of goods and services 37 339 55 400 Purchase of operating fixed assets 449 - Sale of operating fixed assets 3 065 � 480 Dividend income 436 818 25� 826 Dividend paid 28 671 47 7�5 Company’s contribution to provident fund trust 45 032 �8 4�5

(figures in thousand) 2007 200639. pLant capacity and actuaL production spinning �00 % plant capacity converted to 20s count based on � shifts per day for � 095 shifts (2006: � 095 shifts) (Kgs.) 60 917 58 �57 Actual production converted to 20s count based on � shifts per day for � 095 shifts (2006: � 095 shifts) (Kgs.) 54 779 5� 279 Weaving �00 % plant capacity at 50 picks based on � shifts per day for � 095 shifts (2006: � 095 shifts) (Sq.Mt.) 215 767 �9� 596 Actual production converted to 50 picks based on � shifts per day for � 095 shifts (2006: � 095 shifts) (Sq.Mt.) 202 730 �8� �08 dyeing and finishing Production capacity for � shifts per day for � 095 shifts (2006: � 095 shifts) (Mt.) 48 000 �4 �00 Actual production on � shifts per day for � 095 shifts (2006: � 095 shifts) (Mt.) 42 080 �� 8�� power plant Generation capacity (KWH) 421 957 �5� 5�5 Actual generation (KWH) 293 714 288 �40 processing and stitching The capacity of this division is indeterminable due to multi product plants involving varying

processes of manufacturing and run length of order lots.



39.1 reason for LoW production

Under utilization of available capacity is mainly due to normal maintenance. For power plant, the capacity utilization is low because of some old engines which could not be run at rated capacity.

40. financiaL instruments and reLated discLosures

40.1 interest / mark-up rate risk Interest/mark-up rate risk and sensitivity of the company’s financial liabilities and

financial assets as at 30 June 2007 can be evaluated from the following:

(rupees in thousand) 2007 total eXposed to eXposed to not interest/ interest/ eXposed mark-up mark-up to rate price rate cash interest/ risk fLoW risk mark-up Within more than Within more than rate one one year one one year risk year and upto year and upto five years five years

LiaBiLities Long term financing 3 082 354 - - 1 308 534 1 773 820 - Liabilities against leased assets 33 031 33 031 - - - - Short term finances 5 018 664 5 018 664 - - - - Trade and other payables 796 9�8 - - - - 796 9�8 Accrued markup �� 744 - - - - �� 744

9 062 7�� 5 05� 695 - � �08 5�4 � 77� 820 928 682

a s s e t s Long term investments 6 280 928 - - - - 6 280 928 Long term deposits 9 184 - - - - 9 184 Short term investments 8 ��8 459 - - - - 8 ��8 459 Trade debts 8�� 654 - - - - 8�� 654 Short term deposits 994 - - - - 994 Other receivables �78 72� - - - - �78 72� Cash and bank balances 69 607 - - - - 69 607

�5 489 549 - - - - �5 489 549 Total interest/mark-up rate sensitivity gap 6 426 8�8 (5 05� 695) - (� �08 5�4) (� 77� 820) �4 560 867

Unrecognized financial instruments Contract for capital expenditure �7 882 - - - - �7 882 Letter of credit other than for capital expenditure 458 �58 - - - - 458 �58



40.2 effective interest / mark-up rates (2007) financial liabilities Long term financing 6 to 11.32 percent per annum Liabilities against leased assets 11.75 percent per annum Short term running finances 5.69 to 13.41 percent per annum

Export refinances 6.90 to 7 percent per annum financial assets Cash with banks on fixed deposits 0.1 to 4.75 percent per annum

40.3 interest / mark-up rate risk Interest/mark-up rate risk and sensitivity of the company’s financial liabilities and

financial assets as at 30 June 2006 can be evaluated from the following:

(rupees in thousand) 2006 total eXposed to eXposed to not interest/ interest/ eXposed mark-up mark-up to rate price rate cash interest/ risk fLoW risk mark-up Within more than Within more than rate one one year one one year risk year and upto year and upto five years five years LiaBiLities Long term financing 4 296 512 - - 1 314 159 2 982 353 - Liabilities against leased assets 61 643 28 612 33 031 - - - Short term finances 4 315 708 4 315 708 - - - - Trade and other payables 860 9�9 - - - - 860 9�9 Accrued markup �5� 2�6 - - - - �5� 2�6

9 686 0�8 4 �44 �20 �� 0�� 4 �59 2 982 �5� � 0�2 �75

a s s e t s Long term investments 3 186 810 - - - - 3 186 810 Long term deposits 9 019 - - - - 9 019 Short term investments 4 ��5 426 - - - - 4 ��5 426 Trade debts � 026 884 - - - - � 026 884 Short term deposits 772 - - - - 772 Other receivables �05 750 �� - - - �05 6�7 Cash and bank balances 50 250 ��7 - - - 50 ��

8 7�4 9�� 250 - - - 8 7�4 66� Total interest/mark-up rate sensitivity gap (97� �27) (4 �44 070) (�� 0��) (� ��4 �59) (2 982 �5�) 7 702 486

Unrecognized financial instruments Contract for capital expenditure 77 967 - - - - 77 967 Letter of credit other than for capital expenditure �84 8�4 - - - - �84 8�4



40.4 effective interest / mark-up rates (2006) financial liabilities Long term financing 6.35 to 13 percent per annum

Liabilities against leased assets 8.50 to 11.75 percent per annum Short term running finances 3.07 to 9.66 percent per annum

Export refinances 7.90 to 8 percent per annum financial assets Cash with banks on fixed deposits 0.1 to 12.50 percent per annum

40.5 credit risk The management of the company believes that the company is not exposed to

major concentration of credit risk. Further, the company controls its credit risk by ascertainment of credit worthiness of customers, monitoring of debt on a continuous basis and providing appropriate provision for doubtful receivables where it is considered necessary.

40.6 foreign eXchange risk Foreign currency risk on financial instruments receivable and payable in foreign

currency is not material. 40.7 Liquidity risk Liquidity risk reflects an enterprises inability in raising funds to meet commitments.

The company follows an effective cash management and planning policy to ensure availability of funds and to take appropriate measures for new requirements.

40.8 fair vaLue of financiaL instruments The carrying values of financial assets and financial liabilities approximate their fair

values. Investments in unquoted equity instruments are stated at cost as allowed under IAS-�9.

41. authoriZation of financiaL statements These financial statements were approved and authorized by the board of directors for issue

on 20 August 2007. 42. figures

l Comparative figures of balance sheet, profit and loss account, cash flow statement and statement of changes in equity and related notes have been re-arranged, wherever necessary for the purpose of comparison. Significant reclassifications and rearrangements are as under:



- Long term investment in Gulf Nishat Apparel Limited has been re-categorized as available for sale instead of stating under equity method due to change in the percentage of shareholding (Note �5).

- Commission to selling agents has been grouped in selling and distribution expenses instead of presenting as deduction from sales (Note 28).

l Figures have been rounded off to the nearest thousand Rupees.






form of proXy

I/We _________________________________________________________________________

of ___________________________________________________________________________

being a member of Nishat Mills Limited, hereby appoint _________________________________

_____________________________________________________________________________

of ___________________________________________________________________________

or failing him/her _______________________________________________________________

of ___________________________________________________________________________

member(s) of the Company, as my/our proxy in my/our absence to attend and vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on Monday, 0� October, 2007 at 11.00 a.m. at Nishat House, 53-A, Lawrence Road, Lahore.

as witness may hand this ____________ day of _______ 2007

Signed by the said member ____________________________

in presence of _______________________________________

Signature of witness Signature(s) of Member(s)

please quote:

Folio No. Shares held CDC A/C. NO

important: This instrument appointing a proxy, duly completed, must be received at the

Registered Office of the Company at 53-A, Lawrence Road, Lahore not later than 48 hours before

the time to holding the annual general meeting.

Pleaseaffix

revenuestampRs. 5



AFFIX

CORRECT

POSTAGEThe Company Secretary

nishat miLLs LimitedNishat House,53 - A, Lawrence Road, Lahore.

Documents

Annual Report 2007 - Nishat Group · 0 Annual Report 2007 paid up capitaL of investee company, numBer of present sharehoLders and capitaL heLd (%age Wise), (Based on Latest annuaL