CHEMI
GROUP
CONTENTS
Corporate Information
Directors' Report
10
11
13
15
Financial Statements
16
60
Pattern of Shareholding
103
Form of Proxy
105
Our Vision
To be sustainable and growth oriented Company who plays a
competitive role in industry and adds value to economy through
excellence in technological advancement and quality products
Our Mission
The mission of Ittehad is to be
A Company built on sound financial footings and achieves
excellent operating results through superior efficiency and cost
control
A Company that consistently benefits its stakeholders through
enhanced profitability
A Company that achieves a high level of customer care service by
providing quality products and positive feedback
A Company that provides excellent working environment to its
employees that assists in enhancing their strengths and abilities,
create a culture that fosters motivation and promotes individual
growth and care
A Company that contributes towards a good corporate citizenship
and sets highest standards in serving the society
2009
WEALTH GENERATED
Total revenue net of discount and allowances
Bought-in-material and services
2008
(Rs. in million)
4,197
2,722
3,157
2,040
1,475
1,117
To Employees
Salaries benefits and other cost
223
165
To Government
Income tax, sales tax and special excise duty
663
491
To Providers of Capital
Dividend to shareholders
Mark up / interest expenses on borrowed funds
54
240
54
213
296
194
1,475
1,117
WEALTH DISTRIBUTED
45%
45%
40%
35%
20%
30%
16%
25%
15%
20%
4%
15%
10%
5%
0%
To
Government
Depreciation
and Retained
Profits
To Lenders
To Employees
To Shareholders
Provide
Chartered Accountants
17
Balance Sheet
18
19
20
21
22
Chartered Accountants
in our opinion, proper books of accounts have been kept by the Company as required by the Companies
Ordinance, 1984;
b)
in our opinion:
i)
the balance sheet and profit and loss account together with the notes thereon have been drawn up
in conformity with the Companies Ordinance, 1984, and are in agreement with the books of
accounts and are further in accordance with accounting policies consistently applied;
ii)
the expenditure incurred during the year was for the purpose of the Company's business; and
iii)
the business conducted, investments made and the expenditure incurred during the year were in
accordance with the objects of the Company;
c)
in our opinion and to the best of our information and according to the explanations given to us, the balance
sheet, profit and loss account, cash flow statement and statement of changes in equity together with the
notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give
the information required by the Companies Ordinance, 1984, in the manner so required and respectively
give a true and fair view of the state of the Company's affairs as at June 30, 2009 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 1980), was
deducted by the Company and deposited in the Central Zakat fund established under Section 7 of that
Ordinance.
ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Operating fixed assets
Capital work in progress
Intangible assets
Investment properties
Long term investments
Deferred cost
Long term deposits
CURRENT ASSETS
Stores, spares and loose tools
Stock in trade
Trade debts
Loans and advances
Trade deposits and short term prepayments
Other receivables
Tax refunds due from Government
Taxation - net
Cash and bank balances
TOTAL ASSETS
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital
75,000,000 (2008: 75,000,000) shares of Rs. 10/- each
Issued, subscribed and paid up capital
Reserves
Note
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19.1
19.2
20
2009
2008
(Rupees in thousand)
2,422,693
32,919
2,455,612
3,310
78,700
87,786
11,321
2,636,729
2,316,478
104,377
2,420,855
4,141
70,950
65,107
11,475
2,572,528
341,790
105,732
573,001
61,151
14,120
1,404
45,723
26,037
1,168,958
3,805,687
315,257
144,335
297,437
35,336
22,438
836
439
61,446
40,859
918,383
3,490,911
750,000
360,000
530,505
890,505
749,059
750,000
360,000
415,650
775,650
643,372
21
22
23
24
25
26
18,750
583,333
272,222
357,528
1,231,833
50,000
750,000
350,000
491
294,525
1,445,016
CURRENT LIABILITIES
Trade and other payables
Markup accrued
Short term borrowings
Current portion of long term liabilities
Provision for taxation - net
27
28
29
30
31
445,311
72,387
130,143
276,193
10,256
934,290
221,291
60,191
294,969
50,422
626,873
3,805,687
3,490,911
32
The annexed notes from 1 to 50 form an integral part of these financial statements.
Note
Sales
Cost of sales
Gross profit
Selling and distribution expenses
General and administrative expenses
Other operating expenses
Other operating income
Operating profit
Financial charges
Fair value gain / (loss) on investment properties
Profit before taxation
Taxation
Profit after taxation
Earnings per share - basic and diluted (Rupees)
33
34
35
36
37
38
39
40
42
2009
2008
(Rupees in thousand)
3,568,352
(2,747,957)
820,395
(204,213)
(100,292)
(20,620)
13,223
(311,902)
508,493
(239,586)
7,750
276,657
(107,481)
169,176
4.70
2,685,176
(2,137,311)
547,865
(139,213)
(72,261)
(10,246)
16,308
(205,412)
342,453
(212,824)
(390)
129,239
(63,631)
65,608
1.82
2009
2008
(Rupees in thousand)
276,657
129,239
188,094
1,823
1,962
(394)
(7,750)
(253)
2,955
646
239,586
703,326
181,901
655
1,600
53
390
(156)
901
1,261
212,824
528,668
(26,533)
38,603
(278,912)
(25,815)
8,318
(568)
(284,907)
226,927
645,346
(22,422)
(507)
(227,390)
395,027
(25,251)
(42,050)
146,026
(8,821)
(14,595)
(529)
54,780
29,766
613,214
(17,085)
(203,639)
392,490
(60,167)
(992)
(57,313)
710
(23,000)
154
(140,608)
(114,490)
(3,258)
11,190
(81,120)
228
2,730
(184,720)
(50,000)
(415)
(54,000)
(164,826)
(269,241)
(14,822)
40,859
26,037
(83,266)
750,000
(699,253)
350,000
(311,188)
(373)
(54,000)
(147,961)
(196,041)
11,729
29,130
40,859
The annexed notes from 1 to 50 form an integral part of these financial statements.
Fair value
reserve
Unappropriated
profits
Total
(Rupees in thousand)
Balance as at July 01, 2007
360,000
1,134
403,343
764,477
Dividend paid
(54,000)
(54,000)
65,608
65,608
360,000
(435)
(435)
699
414,951
775,650
Dividend paid
(54,000)
(54,000)
169,176
169,176
360,000
(321)
378
530,127
(321)
890,505
The annexed notes from 1 to 50 form an integral part of these financial statements.
2.1
Statement of compliance
These financial statements have been prepared in accordance with approved accounting
standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984.
Approved accounting standards comprise of such International Accounting Standards (IASs) as
notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of
the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission
of Pakistan (SECP) differ with requirements of these standards, the requirements of Companies
Ordinance, 1984 or the requirements of the said directives take precedence.
These financial statements represent the separate stand alone financial statements of Ittehad
Chemicals Limited. The consolidated financial statements of the Company and its subsidiary
company are presented separately.
Initial Application of a Standard, Amendment or an Interpretation to an Existing
Standard and Forthcoming Requirements.
Initial application
IFRS 7 Financial Instruments: Disclosures (effective for annual periods beginning on or after
28 April 2008) supersedes IAS 30 Disclosures in the Financial Statements of Banks and
Similar Financial Institutions and the disclosure requirements of IAS 32 Financial Instruments:
Disclosure and Presentation. The application of the standard did not have significant impact on
the Company's financial statements other than increase in disclosures.
Accounting convention
These financial statements have been prepared under the historical cost convention except as
modified by fair value adjustment in investment properties, freehold land, investments and
exchange differences as referred to in notes 2.6, 2.7 and 2.21 respectively.
2.4
a)
Owned assets
These are stated at cost / revalued amount less accumulated depreciation and accumulated
impairment losses, if any, except capital work-in-progress which is stated at cost. Cost comprises
of actual cost including, interest expense and trial run operational results.
Depreciation is charged on all fixed assets by applying the reducing balance method at the rates
specified in note 3. The rates are determined to allocate the cost of an asset less estimated
residual value, if not insignificant, over its useful life.
Depreciation on assets is charged from the month of addition while no depreciation is charged
for the month in which assets are disposed off.
Maintenance and normal repairs are charged to income as and when incurred while cost of major
replacements and improvements, if any, are capitalized.
Gains and losses on disposal and retirement of an asset are included in the profit and loss
account.
b)
Leased assets
Leases of property, plant and equipment where the Company has substantially all the risks and
rewards of ownership are classified as finance lease. Assets subject to finance lease are stated at
the lower of present value of minimum lease payments under the lease agreement and the fair
value of the assets acquired on lease. Outstanding obligations under the lease less finance
charges allocated to future periods are shown as liability. Finance costs under lease agreements
are allocated to the period during the lease term so as to produce a constant periodic rate of
financial cost on the remaining balance of principal liability for each period.
Assets acquired under a finance lease are depreciated over the useful life of the asset on reducing
balance method at the rates given in note 3. Depreciation on leased assets is charged to the profit
and loss account.
Depreciation on additions to leased assets is charged from the month in which an asset is
acquired while no depreciation is charged for the month in which asset is disposed off.
c)
2.5
Intangible assets
Costs that are directly associated with identifiable software products controlled by the Company
and have probable economic benefits beyond one year are recognized as intangible assets. These
are stated at cost less accumulated amortization and impairment losses, if any. Amortization is
provided on a straight line basis over the asset's estimated useful lives.
2.6
Investment properties
Investment properties are properties which are held either to earn rental income or for capital
appreciation or for both. Investment properties are initially recognized at cost, being the fair
value of the consideration given. Subsequent to initial recognition these are stated at fair value.
The fair value is determined annually by an independent approved valuer. The fair values are
based on market values being the estimated amount for which a property could be exchanged on
the date of valuation between knowledgeable and willing buyer and seller in an arms length
transaction.
Any gain or loss arising from a change in fair value is recognized in the income statement.
Rental income from investment property is accounted for as described in note 2.24.
When an item of property, plant and equipment is transferred to investment property following a
change in its use and differences arising at the date of transfer between the carrying amount of
the item immediately prior to transfer and its fair value is recognized in surplus on revaluation of
property, plant and equipment if it is a gain. Upon disposal of the item the related surplus on
revaluation of property, plant and equipment is transferred to retained earnings. Any loss arising
in this manner is recognized immediately in the income statement.
For a transfer from inventories to investment property that will be carried at fair value any
difference between the fair value of the property at that date and its previous carrying amount
shall be recognized in the income statement.
Investments
Investment in associates
Investment in associates where the Company holds 20% or more of the voting power of the
investee companies and where significant influence can be established are accounted for using
the equity method. Investment in associates other than those described as above are classified as
available for sale.
In case of investments accounted for under the equity method, the method is applied from the
date when significant influence is established until the date when that significant influence
ceases.
Investments in subsidiary
Investment in unquoted subsidiary is initially valued at cost. At subsequent reporting dates, the
company reviews the carrying amount of the investment to assess whether there is any indication
that such investments have suffered an impairment loss. If any such indication exist, the
recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
Available for sale investments
These are initially measured at cost, being the fair value of consideration given. At subsequent
reporting dates, these investments are re-measured at fair value. For listed securities, fair value is
determined on the basis of period end bid prices obtained from stock exchange quotations, while
for unquoted securities, fair value is determined considering break up value of securities.
All purchases and sales of investments are recognized on the trade date which is the date that the
Company commits to purchase or sell the investment. Cost of purchase includes transaction cost.
Changes in carrying value are recognized in equity until the investment is sold or determined to
be impaired at which time the cumulative gain or loss previously recognized in equity is included
in profit and loss account for the year.
2.8
Deferred cost
Expenses incurred on issue of Term Finance Certificates (TFCs) are amortized over a period of
five years from the date of issue of TFCs. No further deferred cost has been included in these
financial statements in pursuance of the Securities and Exchange Commission of Pakistan
Circular Number 01 of 2005 dated January 19, 2005.
2.9
2.10 Stock-in-trade
These are valued at lower of cost and net realizable value. Cost is determined as follows:
Raw and packing
materials
Work in process
Finished goods
Net realizable value represents the estimated selling prices in the ordinary course of business less
expenses incidental to make the sale.
2.11 Trade debts and other receivables
Trade debts and other receivables are carried at original invoice amount being the fair value of
amount to be received, less an estimate made for doubtful receivables based on review of
outstanding amounts at the year end, if any. Provision is made against those having no activity
during the last three years and is considered doubtful by the management. Balances considered
bad and irrecoverable are written off when identified.
2.12 Taxation
a)
Current
The charge for current year is higher of the amount computed on taxable income at the current
rates of taxation after taking into account tax credits and rebates, if any, and minimum tax
computed at the prescribed rate on turnover. The charge for current tax also includes
adjustments, where considered necessary, to provision for tax made in previous years arising
from assessments framed during the year for such years.
b)
Deferred
Deferred tax is computed using the balance sheet liability method providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply to the period when the liability is settled based on tax
rates that have been enacted or substantively enacted at the balance sheet date. A deferred tax
asset is recognized only to the extent that it is probable that future taxable profit will be available
and the credits can be utilized.
2.13 Borrowings
Loans and borrowings are recorded at the proceeds received. Financial charges are accounted for
on accrual basis.
2.14 Trade and other payables
Liabilities for trade and other amounts payable are carried at cost which is the fair value of the
consideration to be paid in the future for goods and services received.
2.15 Provisions
Provisions are recognized when the Company has a present, 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 obligation and a reliable estimate of the amount can be made.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best
estimates.
2.16 Cash and cash equivalents
For the purposes of cash flow statement, cash and cash equivalents consist of cash in hand and
balances with banks net of borrowings not considered as being in the nature of financing
activities.
2.17 Dividend and appropriation to reserve
Dividend distribution to the Companys shareholders is recognized as a liability in the
Companys financial statements in the period in which the dividends are approved.
2.18 Impairment
The Company assesses at each balance sheet date whether there is any indication that an asset
may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to
assess whether they are recorded in excess of their recoverable amount. Where carrying value
exceeds recoverable amount, assets are written down to the recoverable amount.
Dividend on equity investments is recognized as income when the right to receive payment is
established.
Rental income is recognized on accrual basis.
2.25 Related party transactions
Transactions with related parties are based on the policy that all transactions between the
Company and the related parties are carried out at arm's length. The prices are determined in
accordance with the methods prescribed in the Companies Ordinance, 1984.
2.26 Borrowing costs
Interest and commitment charges on long term loans are capitalized for the period up to the date
of commencement of commercial production of the respective plant and machinery acquired out
of the proceeds of such loans. All other interest and charges are treated as expenses during the
year.
2.27 Recoating expenses of DSA Plant
Provision has been made in these financial statements for the erosion of coating on the anodes
during the year based on best estimates available. Anodes once recoated are used for a period of
three years.
Description
Freehold
land
Buildings on
freehold
land
Railway
sidings
Plant and
machinery
Other
Furniture
equipments and fixtures
Office and
other
equipments
Vehicles
Total
Assets
subject to
finance lease
(Rupees in thousand)
670,093
106,287
776,380
78,786
7,636
(8,311)
78,111
5,109
(512)
4,597
1,514,440
163,265
(167,597)
1,510,108
6,871
1,021
(1,090)
6,802
3,524
249
(361)
3,412
10,624
4,891
(3,185)
12,330
25,908
11,276
(316)
(6,813)
30,055
2,315,355
294,625
(316)
(187,869)
2,421,795
1,123
(225)
898
776,380
776,380
134,619
(56,508)
78,111
7,274
(2,677)
4,597
2,416,700
(906,592)
1,510,108
37,086
(30,284)
6,802
6,159
(2,747)
3,412
24,902
(12,572)
12,330
67,866
(37,811)
30,055
3,470,986
(1,049,191)
2,421,795
1,404
(506)
898
3
(1
2
615,058
55,035
670,093
74,447
11,870
(7,531)
78,786
2,143
3,318
(352)
5,109
1,624,508
54,012
(164,080)
1,514,440
5,511
2,464
(1,104)
6,871
3,301
583
(360)
3,524
5,479
6,688
(1,543)
10,624
27,931
4,908
(281)
(6,650)
25,908
2,358,378
138,878
(281)
(181,620)
2,315,355
1,371
33
(281)
1,123
670,093
670,093
126,983
(48,197)
78,786
7,274
(2,165)
5,109
2,253,435
(738,995)
1,514,440
36,065
(29,194)
6,871
5,910
(2,386)
3,524
20,011
(9,387)
10,624
57,906
(31,998)
25,908
3,177,677
(862,322)
2,315,355
1,404
(281)
1,123
5 to 10
10
10
15
10
15 to 30
20 to 25
20
hold land was revalued by an independent valuer M/s. Dimen Associates (Private) Limited as at June 30, 2009 on the basis of market value. Had there been no revaluation on tha
of operating fixed assets would have been lower by Rs. 720.278 million (2008: Rs. 614.591 million).
Note
3.2
The depreciation charge for the year has been allocated as follows:
Cost of sales
Selling and distribution expenses
General and administrative expenses
3.3
2009
2008
(Rupees in thousand)
34
35
36
183,209
832
4,053
188,094
178,746
640
2,515
181,901
The following operating fixed assets were disposed off during the year:
Description
Cost
Sale
proceeds
Mode of
disposal
Particulars of buyers
Vehicle
LXH-1452 Suzuki Bolan Van 1998
297
265
32
55
Negotiated
444
370
74
100
Negotiated
Muhammad Saeed
236
229
80
Negotiated
Akmal Shahzad
233
30
203
225
Negotiated
100
Negotiated
Muhammad Sohail
106
106
150
Negotiated
Tanveer Iqbal
1,316
1,283
1,000
1,002
316
281
710
228
Total - 2009
Total - 2008
Note
4
2009
2008
(Rupees in thousand)
32,487
432
32,919
103,611
766
104,377
4.1
An amount of Rs. 128.771 million (2008: Rs. 24.422 million) has been transferred to operating
fixed assets during the year.
INTANGIBLE ASSETS
Software-ERP (SAP Business One)
5.1
5.1
36
4,141
4,141
992
(1,823)
3,310
1,538
3,258
(655)
4,141
33.33%
33.33%
61,200
17,500
78,700
52,950
18,000
70,950
52,950
53,340
8,250
61,200
(390)
52,950
INVESTMENT PROPERTIES
Free hold land (commercial property)
Free hold land (industrial property)
6.1
3,310
6.1
6.2
This comprises commercial property that is free hold land held for capital appreciation. The
carrying value of investment property is the fair value of the property as at June 30, 2009 as
determined by approved independent valuer M/s. Dimen Associates (Pvt.) Limited. Fair value
was determined having regard to recent market transactions for similar properties in the same
location and condition.
Note
6.2
2009
2008
(Rupees in thousand)
18,000
-
28,800
(10,800)
(500)
17,500
18,000
This relates to land that has been rented out to Chemi Chloride Industries Limited, subsidiary
company and shown under the head "Investment properties". The carrying value of investment
property is the fair value of the property as at June 30, 2009 as determined by approved
independent valuer M/s. Dimen Associates (Pvt.) Limited. Fair value was determined having
regard to recent market transactions for similar properties in the same location and condition.
87,400
64,400
56,250
56,250
(56,250)
-
(56,250)
-
Relevant information:
Percentage of investment in equity held 95%
(2008: 93.33%)
(Chief Executive: Mr. Abdul Sattar Khatri)
Investment in related parties - unquoted
Chemi Visco Fiber Limited
5,625,000 (2008: 5,625,000) fully paid
ordinary shares of Rs.10/- each
Less: Provision for diminution in value
of investment
Relevant information:
Percentage of investment in equity held 7.91%
(2008: 7.91%)
(Chief Executive: Mr. Usman Ghani Khatri)
7.1
Note
Investment in others - quoted
National Bank of Pakistan Limited
5,750 (2008: 4,792) ordinary shares including
4,967 (2008: 4,009) bonus shares of Rs. 10/- each
Add: Fair value gain
2009
2008
(Rupees in thousand)
8
378
386
87,786
8
699
707
65,107
7.1
This provision was made in earlier years as a matter of prudence since the project of the investee
company is not operating and there is some uncertainty regarding future earnings and related
cash flows.
DEFERRED COST
Balance as at July 01,
Less: Amortization for the year
10
901
901
-
11,321
11,475
137,213
118,660
194,032
27,484
221,516
305
359,034
17,244
341,790
207,862
10,848
218,710
319
337,689
22,432
315,257
10.2
10.1
Stores and spares also include items which may result in capital expenditure but are not
distinguishable at the time of purchase.
10.2
22,432
22,432
5,188
17,244
22,432
Note
11
STOCK IN TRADE
Raw materials:
in hand
in transit
Packing materials
Work in process
Finished goods
12
91,154
1,320
92,474
1,630
3,694
46,537
144,335
269,095
110,540
12.1
303,906
22,093
325,999
595,094
22,093
573,001
186,897
24,366
211,263
321,803
24,366
297,437
12.2
These include balances due from related parties and associated companies aggregating to
Rs. 7.183 million (2008: Rs. 1.36 million) comprising of the following:
Chemi Chloride industries Limited
Chemi Visco Fiber Limited
Chemi Dyestuff Industries (Private) Limited
12.2
34
34
42,501
2,330
44,831
2,930
4,384
53,587
105,732
TRADE DEBTS
Secured
Considered good
Unsecured
Considered good
Considered doubtful
12.1
2009
2008
(Rupees in thousand)
7,153
30
7,183
453
438
469
1,360
24,366
23,215
(4,475)
(753)
2,955
(2,273)
22,093
(110)
1,261
1,151
24,366
Note
13
2009
2008
(Rupees in thousand)
13.1
Considered doubtful
For supplies and services
To employees
1,639
7,152
38,078
1,012
13,270
61,151
1,639
3,160
11,032
261
18,790
454
35,336
51
104
155
61,306
155
61,151
51
104
155
35,491
155
35,336
13.1
This represents advance to Chemi Chloride Industries Limited, a subsidiary company. The entire
balance of advance including mark up thereon shall be repaid in full within 60 days from the
closing of the financial year of the Company. The advance carries mark up at the weighted
average borrowing cost of the Company prevailing on the first day of the quarter of financial
year to which the advance relates. Subsequent to the balance sheet date, this amount was repaid
in full by the subsidiary company.
14
15
11,279
193
11,472
193
11,279
2,841
14,120
20,931
504
21,435
504
20,931
1,507
22,438
12
1,392
1,404
21
815
836
OTHER RECEIVABLES
(Considered good)
Insurance claims receivable
Others
Note
16
2009
2008
(Rupees in thousand)
16.1
45,723
439
16.1
17
TAXATION - NET
Advance income tax
Less: Provision for taxation
18
79,933
18,487
61,446
2,080
23,957
26,037
629
40,230
40,859
500,000
250,000
750,000
500,000
250,000
750,000
1,000
249,000
110,000
360,000
10.18%
1,000
249,000
110,000
360,000
10.18%
19
SHARE CAPITAL
19.1
2008
Number shares
50,000,000
50,000,000 Ordinary shares of Rs. 10 each.
25,000,000
25,000,000 Preference shares of Rs. 10 each.
75,000,000
75,000,000
19.2
Note
20
RESERVES
Fair value reserve
Unappropriated profit
21
2009
2008
(Rupees in thousand)
378
530,127
530,505
699
414,951
415,650
643,372
105,687
749,059
643,372
643,372
21.1
21.1
This amount represents surplus arising on the revaluation of freehold land carried out on
June 30, 2009 by an independent valuer M/s. Dimen Associates (Private) Limited on the basis
of market value.
22
22.1
22.2
6,250
6,250
12,500
18,750
18,750
37,500
22.3
6,250
18,750
22.4
31,250
37,500
50,000
31,250
18,750
43,750
62,500
100,000
50,000
50,000
30
22.1
These finances are secured against first pari passu charge on all present and future fixed assets
of the Company and carry mark up at six months average KIBOR Ask rate plus 1.80% (with
floor of 3% and cap of 9%) per annum. These loans were disbursed in November 2004 and are
repayable in sixteen equal quarterly installments commencing from January 2006.
22.2
These finances are secured against first pari passu charge on all present and future fixed assets
of the Company and carry mark up at six months average KIBOR Ask rate plus 1.80 % (with
floor of 3% and cap of 9%) per annum. These loans were disbursed in November 2004 and are
repayable in sixteen equal quarterly installments commencing from January 2006.
22.3
This finance is secured against first pari passu charge on all present and future fixed assets of
the Company and carries mark up at six months average KIBOR Ask rate plus 1.80 % (with
floor of 3% and cap of 9%) per annum. This loan was disbursed in November 2004 and is
repayable in sixteen equal quarterly installments commencing from January 2006.
22.4
This finance is secured against first pari passu charge on fixed assets of the Company and
carries mark up at six months average KIBOR Ask rate plus 2.25% per annum. This loan was
disbursed in September 2006 and is repayable in eight semi annual equal installments
commencing from September 2007.
Note
23
2009
2008
(Rupees in thousand)
30
75,000
150,000
50,000
250,000
50,000
575,000
75,000
150,000
50,000
250,000
50,000
575,000
150,000
25,000
175,000
750,000
166,667
583,333
150,000
25,000
175,000
750,000
750,000
23.1
The above finances are secured against first pari passu charge on fixed assets of the Company
and carry mark up at six months average KIBOR rate plus 200bps. These finances were
disbursed from August 22, 2007 to September 01, 2007 and are repayable in nine semi annual
equal installments commencing from August 22, 2009 being the 24th month from the facility
date.
24
24.1
30
350,000
77,778
272,222
350,000
350,000
24.1
This finance is secured against first pari passu charge on fixed assets of the Company and
carries mark up at six months average KIBOR Ask rate plus 200bps. This loan was disbursed in
August 31, 2007 and is repayable in nine semi annual equal installments commencing from
August 22, 2009.
Note
25
25.1
2009
2008
(Rupees in thousand)
25.1
30
498
498
-
913
422
491
The minimum lease payments have been discounted at an implicit interest rate of 12.57% to
arrive at their present value. Rentals are paid in monthly installments.
Taxes, duties, registration costs, charges, levy / penalties, if any, applicable and insurance costs
are to be borne by the Company.
The amount of future payments of the lease and the period in which these payments will become
due are as follows:
Upto one
One to
Total
year
five years
2009
(Rupees in thousand)
Minimum lease payments
outstanding
Less: Finance charges not yet due
Present value of minimum
lease payments
Less: Current portion shown
under current liabilities
26
Total
2008
522
(24)
522
(24)
498
498
913
(498)
-
(498)
-
(422)
491
26.1
26.2
26.3
21,993
330,020
5,515
357,528
1,010
(97)
DEFERRED LIABILITIES
Provision for recoating of DSA anodes
Deferred taxation
Provision for gratuity
19,086
271,379
4,060
294,525
2009
2008
(Rupees in thousand)
26.1
26.2
31,646
(8,663)
14,571
37,554
(15,561)
21,993
33,085
(8,897)
7,458
31,646
(12,560)
19,086
332,984
325,896
(1,930)
(1,034)
330,020
(1,421)
(441)
(52,655)
271,379
Deferred taxation
Deferred tax liability comprises as follows:
Taxable temporary differences
Tax depreciation allowances
Deductible temporary differences
Provision for gratuity
Provision for doubtful debts
Unused tax losses
26.3
a.
General description
The scheme provides for terminal benefits for all its permanent employees who qualify for the
scheme. The defined benefit payable to each employee at the end of his service comprises of
total number of years of his service multiplied by last drawn basic salary including cost of living
allowance.
Annual charge is based on actuarial valuation carried out as at June 30, 2008 using the Projected
Unit Credit method.
b.
Note
c.
d.
4,060
1,468
494
(507)
5,515
2,460
1,345
255
4,060
1,468
494
1,962
1,345
255
1,600
50,910
323,208
27,167
647
18,771
2,652
527
787
15,154
5,488
445,311
32,509
136,662
30,761
632
3,392
4,583
1,900
581
7,625
2,646
221,291
27.1
4,060
4,060
27
5,515
5,515
e.
2009
2008
(Rupees in thousand)
27.1
27.2
These include a balance due to Chemi Multifabrics Limited, an associated company, amounting
to Rs. 4.002 million (2008: Rs. 4.711 million).
Note
27.2
2009
2008
(Rupees in thousand)
37
7,625
7,625
6,913
712
14,442
15,154
12,678
12,678
12,015
663
6,962
7,625
The Company retains the allocation of this fund for its business operations till the amounts are
paid.
28
MARK UP ACCRUED
Secured
Long term financing
Long term murabaha
Short term borrowings
29
35,224
15,166
9,801
60,191
29.1
29.2
29.3
29.4
32,529
19,033
28,000
10,581
88,954
88,162
49,679
68,174
29.5
40,000
130,143
294,969
29.1
44,044
19,724
8,619
72,387
This facility is secured against first pari passu charge over present and future current assets of
the Company and hypothecation of stock of chemicals. The facility carries mark-up at three
months average KIBOR Ask rate plus 2.5% spread with floor of 12.00% per annum (2008:
1.5% with floor of 10%). The limit of finance is Rs. 90 million (2008: Rs. 90 million).
29.2
This facility is secured against first pari passu charge over all present and future current assets
of the Company and carries mark-up at three months average KIBOR Ask rate plus 1.9 % per
annum (2008: Three months average KIBOR Ask rate plus 1.5% per annum). The limit of
finance is Rs. 200 million (2008: Rs. 200 million).
29.3
This facility is secured against first pari passu charge upto the limit of Rs. 150 million on all
present and future current assets of the Company and carries mark-up at three months average
KIBOR Ask rate plus 2.5% per annum with floor of 10% per annum (2008: Six months
average KIBOR Ask rate plus 2.5% per annum with floor of 12 %). The limit of finance is
Rs. 150 million (2008: Rs. 150 million).
29.4
This facility is secured against first pari passu charge over all present and future current assets
of the Company and carries mark-up at three months average KIBOR Ask rate plus 3% per
annum(2008: three months average KIBOR Ask rate plus 2 % per annum). The limit of finance
is Rs. 50 million (2008: Rs. 135 million).
29.5
This facility is secured against first pari passu charge over present and future current assets of
the Company and carries mark-up at six months average KIBOR Ask rate plus 3% per annum
(2008: Six months average KIBOR Ask rate plus 2.25% per annum). The limit of finance is
Rs. 40 million (2008: Rs. 40 million).
Note
30
31
2009
2008
(Rupees in thousand)
22
23
24
25
31,250
166,667
77,778
498
276,193
50,000
422
50,422
35,451
25,195
10,256
32
32.1
Contingent liabilities
a)
The Company is facing claims, launched in the labour courts, pertaining to staff retirement
benefits. In the event of an adverse decision the Company would be required to pay an amount
of Rs. 2.947 (2008: Rs. 4.680 million) against these claims.
b)
Letters of guarantee outstanding as at June 30, 2009 were Rs. 198.240 million (2008:
Rs. 207.997 million) and corporate guarantees on behalf of Chemi Chloride Industries Limited,
subsidiary company amounted to Rs. 203 million (2008: Rs. 118 million).
32.2
Commitments
Commitments as on June 30, 2009 were as follows:
Against letters of credit amounting to Rs. 128.073 million (2008: Rs. 73.086 million).
Against purchase of land amounting to Rs. 1.838 million (2008: Rs. 1.838 million).
Note
33
2009
2008
(Rupees in thousand)
SALES
Sales
Manufacturing
Trading
33.1
4,195,962
558
4,196,520
522,897
72,587
32,684
628,168
3,568,352
3,154,370
2,686
3,157,056
400,793
44,315
26,772
471,880
2,685,176
33.1
This amount includes export sales amounting to Rs. 110.629 million (2008: Rs. 29.094 million).
34
COST OF SALES
Raw materials consumed
Opening stock
Purchases
Closing stock
Stores, spares and consumables
Packing materials consumed
Salaries, wages and other benefits
Fuel and power
Repair and maintenance
34.1
91,154
360,611
451,765
(42,501)
409,264
274,434
10,760
148,037
1,678,677
21,064
35,087
417,934
453,021
(91,154)
361,867
198,076
9,863
112,645
1,220,966
18,909
Note
Insurance
Depreciation
Vehicle running expenses
Postage, printing and stationery
Other expenses
Work in process
Opening
Closing
Cost of goods manufactured
Cost of stores traded
Finished goods
Opening
Closing
3.2
11
11
2009
2008
(Rupees in thousand)
8,570
183,209
12,048
1,239
2,650
2,340,688
7,936
178,746
8,784
2,345
2,603
1,760,873
3,694
(4,384)
(690)
2,749,262
5,745
3,201
(3,694)
(493)
2,122,247
2,289
46,537
(53,587)
(7,050)
2,747,957
59,312
(46,537)
12,775
2,137,311
34.1
This amount includes Rs. 1.037 million (2008: Rs. 0.945 million) in respect of employees'
retirement benefits.
35
35.1
35.1
3.2
17,975
2,179
1,854
558
1,080
35,887
135,425
5,295
581
1,377
1,170
832
204,213
13,354
1,653
1,760
1,570
1,177
26,994
88,294
2,350
266
747
408
640
139,213
This amount includes Rs. 0.370 million (2008: Rs. 0.302 million) in respect of employees'
retirement benefits.
Note
36
2009
2008
(Rupees in thousand)
36.1
3.2
5.1
36.2
56,579
11,592
3,166
1,654
2,156
884
5,097
1,869
1,337
2,955
2,593
4,053
1,823
646
3,888
100,292
39,424
9,621
2,215
1,496
1,974
628
3,016
1,347
804
1,261
1,359
2,515
655
901
2,051
2,994
72,261
36.1
This amount includes Rs. 0.584 million (2008: Rs. 0.490 million) in respect of employees'
retirement benefits.
36.2
Donations
36.2.1 Interest of the Directors or their spouses in the donations made during the year is as follows:
Donation amounting to Rs. 1.306 million paid to Kiran Ibtadai School. Ms. Sabina Khatri w/o
Mr. Muhammad Siddique Khatri, Chairman and Chief Executive of the Company is the patron
of the school.
36.2.2 Donations other than mentioned above were not made to any donee in which any director of the
Company or his spouse had any interest at any time during the year.
Note
37
38
27.2
450
100
100
40
690
14,442
5,488
20,620
350
100
100
35
585
53
6,962
2,646
10,246
28
473
253
754
33
156
189
394
3,036
753
4,183
2,187
2,187
1,614
1,872
4,800
13,223
1,904
2,084
9,944
16,308
123,552
53,548
101
58,710
235,911
3,675
239,586
102,905
41,777
6,994
126
49,739
201,541
11,283
212,824
39
2009
2008
(Rupees in thousand)
FINANCIAL CHARGES
Markup/interest on:
Long term financing
Long term morabaha
Redeemable capital
Liabilities against assets subject to finance lease
Short term borrowings
Bank charges and commission
2009
2008
(Rupees in thousand)
40
TAXATION
Current
Prior year charge
Deferred
40.1
35,839
13,001
58,641
107,481
14,309
1,893
47,429
63,631
276,657
96,830
614
(4,164)
13,001
1,200
107,481
40.2
As the tax charge of previous period represents minimum tax under the Income Tax Ordinance,
2001, numerical reconciliation between the average effective tax rate and the applicable tax rate
was not prepared and presented.
41
43
169,176
36,000
4.70
65,608
36,000
1.82
44
Nature of transaction
Associated company
Marketing service charges
Subsidiary/Associated companies Sale of goods and services
Subsidiary company
Rental income
35,888
36,390
4,800
26,994
14,448
9,944
2009
2008
(Rupees in thousand)
Relation with the Company
Nature of transaction
Subsidiary company
Subsidiary company
Subsidiary company
Staff retirement fund
45
21,198
23,000
1,614
24,452
1,904
168
136
48,205
33,028
FINANCIAL INSTRUMENTS
Financial risk management
The Company has exposure to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Market risk
The Board of Directors has overall responsibility for the establishment and oversight of
Company's risk management framework. The Board is also responsible for developing and
monitoring the Company's risk management policies.
45.1
Credit risk
Credit risk represents the accounting loss that would be recognized at the reporting date if the
counter party fail completely to perform as contracted and arise principally from trade debts,
loans and advances, trade deposits and other receivables. The carrying amount of financial
assets represents the maximum credit exposure before any credit enhancements. The maximum
exposure to credit risk at the reporting date is as follows:
Trade debts
Loans and advances
Trade deposits
Other receivables
Bank balances
573,001
61,151
11,279
1,404
26,037
297,437
35,336
20,931
836
40,230
To manage exposure to credit risk in respect of trade receivables, management performs credit
reviews taking into account the customer's financial position, past experience and other factors.
Credit terms are approved by the approval committee. Where considered necessary, advance
payments are obtained from certain parties. The management has set a maximum credit period
of 30 days to reduce the credit risk.
Concentration of credit risk arises when a number of counter parties are engaged in similar
business activities or have similar economic features that would cause their abilities to meet
contractual obligation to be similarly effected by the changes in economic, political or other
conditions. The Company believes that it is not exposed to major concentration of credit risk.
The maximum exposure to credit risk for trade debts at the balance sheet date by geographic
region is as follows:
2009
2008
(Rupees in thousand)
Export
Domestic
30,552
542,449
573,001
297,437
297,437
The maximum exposure to credit risk for trade debts at the balance sheet date by type of
customer is as follows:
Distributors
End-user customers
259,379
313,622
573,001
115,843
181,594
297,437
347,144
136,970
68,785
20,102
573,001
188,883
64,405
39,820
4,329
297,437
The Company's most significant customers, are distributors with balance amounting to
Rs. 155.631 million (2008: Rs. 58.626 million) of the total carrying amount as at June 30, 2009.
Based on the past experience, consideration of financial position, past track records and
recoveries, the Company believes that no impairment allowance is necessary in respect of trade
debtors past due as some receivables have been recovered subsequent to the year end and for
other receivables there are reasonable grounds to believe that the amounts will be recovered in
short course of time.
On the prudence basis an amount of Rs. 2.955 million (2008: Rs. 1.261 million) has been
charged, as provision for doubtful debts, to profit and loss account.
45.2
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as
they fall due. The Company's approach to managing liquidity is to ensure as far as possible to
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company's
reputation.
Six
Six to
One to
Two to
months
twelve
two
five
amount
cash flow
or less
months
years
years
-----------------------( Rupees in thousand )-----------------------
Carrying
Contractual
2009
Financial
liabilities
Long term
financing
Long term
diminishing
musharaka
Long term
morabaha
Liabilities
against assets
subject to
Trade and other
payables
Markup accrued
Short term
borrowing
50,000
58,217
28,161
8,273
15,028
6,755
750,000
1,043,071
141,945
135,433
476,605
289,088
350,000
486,764
66,241
63,202
117,287
240,034
498
522
258
264
445,311
72,387
445,311
72,387
445,311
72,387
130,143
1,798,339
142,884
2,249,156
142,884
897,187
207,172
608,920
535,877
Six
Six to
One to
Two to
months
twelve
two
five
amount
cash flow
or less
months
years
years
-----------------------( Rupees in thousand )-----------------------
Carrying
Contractual
2008
Financial
liabilities
Long term
financing
Long term
diminishing
musharaka
Long term
morabaha
Liabilities
against assets
subject to
Trade and other
payables
Markup accrued
Short term
borrowing
45.3
100,000
117,765
30,038
29,510
36,434
21,783
750,000
1,146,453
46,088
58,613
528,708
513,044
350,000
535,623
21,508
27,353
129,443
357,319
913
1,010
258
258
494
221,291
60,191
221,291
60,191
221,291
60,191
294,969
1,777,364
311,096
2,393,429
311,096
690,470
115,734
695,079
892,146
Market risk
Market risk is the risk that the value of the financial instrument may fluctuate as a result of
changes in market interest rates or the market price due to a change in credit rating of the issuer
or the instrument, change in market sentiments, speculative activities, supply and demand of
securities, and liquidity in the market. The Company is exposed to currency risk and interest rate
risk only.
2009
2008
(Rupees in thousand)
Trade debts
Gross balance sheet exposure
Outstanding letters of credit
Net exposure
30,552
30,552
(128,073)
(97,521)
(73,086)
(73,086)
The following significant exchange rates were applied during the year:
Average rate
2009
2008
USD to PKR
80.00
65.00
68.20
Sensitivity analysis
At reporting date, if the PKR had strengthened by 10% against the US dollar with all other
variables held constant, post tax profit for the year would have been lower by the amount shown
below.
Effect on profit or loss
2009
2008
(Rupees in thousand)
Loss
(3,055)
The weakening of the PKR against US dollar would have had an equal but opposite impact on
the post tax profits / loss.
45.3.2 Interest rate risk
Interest rate risk is the risk that fair value of future cash flows of financial instrument will
fluctuate because of changes in market interest rates. The Company is not materially exposed to
interest rate risk.
45.4
46
2,400
1,080
120
3,600
1
Number of persons
1,500
675
75
2,250
1
4,000
1,800
200
6,000
2
2,067
930
103
3,100
2
25,737
11,581
1,287
38,605
44
18,452
8,303
923
27,678
37
46.1 The Company also provides the Chief Executive and some of the Directors and Executives
with free use of cars and mobile phones.
47
Caustic soda
Liquid Chlorine
Hydrochloric acid
Sodium hypochlorite
Bleaching earth
Zinc sulphate
Chlorinated parafin wax
Silphuric acid
48
Installed capacity
Tons
2009
2008
Actual production
Tons
2009
2008
143,550
13,200
150,000
49,500
3,300
600
3,000
3,300
95,448
7,758
133,680
31,035
2,253
29
261
60
143,550
13,200
123,750
49,500
3,300
600
3,000
3,300
Reason for
shortfall
93,313
8,886
100,361
37,979
2,532
Cautious production
strategy
based on
196
599 actual demands.
CAPITAL MANAGEMENT
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. The Board of Directors
monitor the return on capital, which the Company defines as net profit after taxation divided
by total shareholders' equity. The Board of Directors also monitor the level of dividend to
ordinary shareholders. There were no changes to the Company's approach to capital
management during the year and the Company is not subject to externally imposed capital
requirements.
49
50
GENERAL
Figures have been rounded off to the nearest rupees in thousand unless stated otherwise.
Previous year's figures have been re-arranged and re-classified wherever necessary for the
purpose of comparison, the effect of which is not material.
CONTENTS OF CONSOLIDATED
FINANCIAL STATEMENTS
Directors Report
61
62
Balance Sheet
63
64
65
66
67
Chartered Accountants
Note
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20.1
20.2
21
2009
2008
(Rupees in thousand)
2,598,293
32,919
2,631,212
3,310
6,445
61,200
386
12,186
2,714,739
2,523,899
104,377
2,628,276
4,141
6,445
52,950
707
12,339
2,704,858
344,471
128,307
601,687
50,511
14,409
12
45,723
26,494
1,211,614
3,926,353
317,191
159,683
299,766
18,477
27,635
21
439
62,897
42,070
928,179
3,633,037
750,000
360,000
478,408
838,408
4,261
842,669
748,559
750,000
360,000
379,123
739,123
1,811
3,124
744,058
643,372
22
23
24
25
26
27
128,058
583,333
272,222
357,528
1,341,141
173,117
750,000
350,000
491
294,525
1,568,133
CURRENT LIABILITIES
Trade and other payables
Mark up accrued
Short term borrowings
Current portion of long term liabilities
Provision for taxation - net
28
29
30
31
32
448,247
74,560
152,327
309,263
9,587
993,984
3,926,353
237,717
63,663
294,969
81,125
677,474
3,633,037
33
The annexed notes from 1 to 53 form an integral part of these financial statements.
Note
Sales
Cost of sales
Gross profit
Selling and distribution expenses
General and administrative expenses
Other operating expenses
Other operating income
Operating profit
Financial charges
Fair value gain / (loss) on investment property
Profit before taxation
Taxation
Profit after taxation
34
35
36
37
38
39
40
7
41
Attributable to:
Profits attributable to equity holders of holding company
Minority interest - Share of profit / (loss)
Earnings per share - basic and diluted (Rupees)
43
2009
2008
(Rupees in thousand)
3,633,404
(2,792,628)
840,776
(218,750)
(101,284)
(20,713)
5,069
(335,678)
505,098
(250,907)
8,250
262,441
(107,698)
154,743
153,606
1,137
154,743
4.27
2,698,036
(2,163,233)
534,803
(142,121)
(74,336)
(10,321)
2,220
(224,558)
310,245
(218,056)
(390)
91,799
(63,733)
28,066
29,081
(1,015)
28,066
0.81
Note
2009
2008
(Rupees in thousand)
262,441
91,799
206,274
1,823
1,962
(394)
(8,250)
(385)
2,955
646
250,907
717,979
192,494
655
1,600
53
390
1,510
964
1,261
218,056
508,782
(27,280)
31,376
(305,269)
(32,034)
13,226
9
(319,972)
(25,709)
(46,800)
145,665
13,058
(13,319)
287
73,182
224,995
623,002
(21,857)
(507)
(240,010)
360,628
27,861
609,825
(17,213)
(208,503)
384,109
(60,263)
(992)
(57,313)
710
153
(117,705)
(114,706)
(3,258)
11,190
1,150
(81,595)
228
2,731
(184,260)
6,000
(67,442)
(415)
(54,000)
(142,642)
(258,499)
(15,576)
42,070
26,494
(83,266)
35,160
(706,387)
750,000
350,000
(311,188)
(373)
(54,000)
(166,855)
(186,909)
12,940
29,130
42,070
19
The annexed notes from 1 to 53 form an integral part of these financial statements.
Issued, subscribed Capital reserve and paid-up capital fair value reserve
Unappropriated
profits
Minority - share
capital
Total
Minority - share of
profit / (loss)
Total
Grand
( Rupees in thousand )
360,000
1,134
403,343
764,477
paid
(54,000)
(54,000)
29,081
29,081
4,600
(1,476)
loss
360,000
(435)
(435)
699
378,424
739,123
4,600
(1,476)
3,124
3,124
paid
(54,000)
(54,000)
153,606
153,606
1,137
1,137
loss
360,000
(321)
378
478,030
(321)
838,408
4,600
(339)
4,261
Abdul Satta
Directo
2.1
Statement of compliance
These financial statements have been prepared in accordance with approved accounting
standards as applicable in Pakistan and the requirements of Companies Ordinance, 1984.
Approved accounting standards comprise of such International Accounting Standards (IASs) as
notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of
the Companies Ordinance, 1984 or directives issued by the Securities and Exchange
Commission of Pakistan (SECP) differ with requirements of these standards, the requirements
of Companies Ordinance, 1984 or the requirements of the said directives take precedence.
Initial Application of a Standard, Amendment or an Interpretation to an Existing
Standard and Forthcoming Requirements
Initial application
IFRS 7 - Financial Instruments: Disclosures (effective for annual periods beginning on or after
28 April 2008) supersedes IAS 30 Disclosures in the Financial Statements of Banks and
SimilarFinancial Institutions and the disclosure requirements of IAS 32 Financial Instruments:
Disclosure and Presentation. The application of the standard did not have significant impact on
the Company's financial statements other than increase in disclosures.
IAS 29 - Financial Reporting in Hyperinflationary Economies (effective for annual periods
beginning on or after 28 April 2008). The Company does not have any operations in
Hyperinflationary Economies and therefore the application of the standard did not affect the
Company's financial statements.
IFRIC 13 - Customer Loyalty Programmes (effective for annual periods beginning on or after
01 July 2008) addresses the accounting by entities that operate or otherwise participate in
customer loyalty programmes under which the customer can redeem credits for awards such as
free or discounted goods or services. The application of IFRIC 13 did not affect the Company's
financial statements.
IFRIC 14 and IAS 19 - The Limit on Defined Benefit Asset, Minimum Funding Requirements and
their interaction (effective for annual periods beginning on or after 1 January 2008) clarifies
when refunds or reductions in future contributions in relation to defined benefit assets should be
regarded as available and provides guidance on minimum funding requirements for such asset.
Forthcoming
The following standards, amendments and interpretations of approved accounting standards are
only effective for accounting periods beginning from the dates specified below. These standards
are either not relevant to the Companys operations or are not expected to have significant
impact on the Companys financial statements other than increased disclosures in certain cases:
Revised IAS 1 - Presentation of financial statements (effective for annual periods beginning
on or after 1 January 2009).
Revised IAS 23 - Borrowing costs (effective for annual periods beginning on or after
01 January 2009).
Amended IAS 27 - Consolidated and Separate Financial Statements (effective for annual
periods beginning on or after 1 July 2009).
Amendments to IAS 32 - Financial instruments: Presentation and IAS 1 Presentation of
Financial Statements (effective for annual periods beginning on or after 1 January 2009).
Amendments to IAS 39 - Financial Instruments: Recognition and Measurement Eligible
hedged Items (effective for annual periods beginning on or after 1 July 2009).
Amendments to IAS 39 and IFRIC 9 - Embedded derivatives (effective for annual periods
beginning on or after 1 January 2009).
Amendment to IFRS 2 - Share-based Payment Vesting Conditions and Cancellations
(effective for annual periods beginning on or after 1 January 2009).
Amendment to IFRS 2 - Share-based Payment Group Cash-settled Share-based Payment
Transactions (effective for annual periods beginning on or after 1 January 2010).
Revised IFRS 3 - Business Combinations (applicable for annual periods beginning on or after
1 July 2009).
IFRS 4 - Insurance Contracts (effective for annual periods beginning on or after 1 January
2009).
Amendment to IFRS 7 - Improving disclosures about Financial Instruments (effective for
annual periods beginning on or after 1 January 2009).
IFRS 8 - Operating Segments (effective for annual periods beginning on or after 1 January
2009).
IFRIC 15 - Agreement for the Construction of Real Estate (effective for annual periods
beginning on or after 1 October 2009).
IFRIC 16 - Hedge of Net Investment in a Foreign Operation (effective for annual periods
beginning on or after 1 October 2008).
IFRIC 17 - Distributions of Non-cash Assets to Owners (effective for annual periods
beginning on or after 1 July 2009).
IFRIC 18 - Transfers of Assets from Customers (to be applied prospectively to transfers of
assets from customers received on or after 01 July 2009).
The International Accounting Standards Board made certain amendments to existing
standards as part of its first annual improvements project. The effective dates for these
amendments vary by standard and most will be applicable to the Companys 2010 financial
statements.
The International Accounting Standards Board made certain amendments to existing
standards as part of its Second annual improvements project. The effective dates for these
amendments vary by standard and most will be applicable to the Companys 2010 financial
statements.
2.3
Accounting convention
These financial statements have been prepared under the historical cost convention except as
modified by fair value adjustment in investment properties, investments and exchange
differences as referred to in notes 2.8, 2.9 and 2.23 respectively.
The preparation of financial statements in conformity with approved accounting standards
requires management to make estimates, assumptions and use judgments that effect the
application of policies and reported amount of assets and liabilities and income and expenses.
Estimates, assumptions and judgments are continually evaluated and are based on historical
experience and other factors, including reasonable expectations of future events. Revisions to
accounting estimates are recognized prospectively commencing from the period of revision.
Judgments and estimates made by the management that may have a significant risk of material
adjustments to the financial statements in subsequent years are disclosed in note 42.
2.4
2.5
a)
Owned assets
These are stated at cost / revalued amount less accumulated depreciation and accumulated
impairment losses, if any, except capital work-in-progress which is stated at cost. Cost
comprises of actual cost including, interest and charges and trial run operational results.
Depreciation is charged on all fixed assets by applying the reducing balance method at the rates
specified in note 3. The rates are determined to allocate the cost of an asset less estimated
residual value, if not insignificant, over its useful life.
Depreciation on assets is charged from the month of addition while no depreciation is charged
for the month in which assets are disposed off.
Maintenance and normal repairs are charged to income as and when incurred while cost of
major replacements and improvements, if any, are capitalized.
Gains and losses on disposal and retirement of an asset are included in the profit and loss
account.
b)
Leased assets
Leases of property, plant and equipment where the Company has substantially all the risks and
rewards of ownership are classified as finance lease. Assets subject to finance lease are stated at
the lower of present value of minimum lease payments under the lease agreement and the fair
value of the assets acquired on lease. Outstanding obligations under the lease less finance
charges allocated to future periods are shown as liability. Finance costs under lease agreements
are allocated to the periods during the lease term so as to produce a constant periodic rate of
financial cost on the remaining balance of principal liability for each period.
Assets acquired under a finance lease are depreciated over the useful life of the asset on
reducing balance method at the rates given in note 3. Depreciation on leased assets is charged to
the profit and loss account.
Depreciation on additions to leased assets is charged from the month in which an asset is
acquired while no depreciation is charged for the month in which asset is disposed off.
c)
2.6
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's
share of the net identifiable assets of the acquired subsidiary at the date of acquisition.
Separately recognised goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are not reversed.
2.7
Intangible assets
Costs that are directly associated with identifiable software products controlled by the Company
and have probable economic benefits beyond one year are recognized as intangible assets.
These are stated at cost less accumulated amortization and impairment losses, if any.
Amortization is provided on a straight line basis over the asset's estimated useful lives.
2.8
Investment properties
Investment properties are properties which are held either to earn rental income or for capital
appreciation or for both. Investment properties are initially recognized at cost, being the fair
value of the consideration given. Subsequent to initial recognition these are stated at fair value.
The fair value is determined annually by an independent approved valuer. The fair values are
based on market values being the estimated amount for which a property could be exchanged
on the date of valuation between knowledgeable and willing buyer and seller in an arms length
transaction.
Any gain or loss arising from a change in fair value is recognized in the income statement.
Rental income from investment property is accounted for as described in note 2.26.
When an item of property, plant and equipment is transferred to investment property following
a change in its use and differences arising at the date of transfer between the carrying amount of
the item immediately prior to transfer and its fair value is recognized in surplus on revaluation of
property, plant and equipment if it is a gain. Upon disposal of the item the related surplus on
revaluation of property, plant and equipment is transferred to retained earnings. Any loss arising
in this manner is recognized immediately in the income statement.
For a transfer from inventories to investment property that is carried at fair value any difference
between the fair value of the property at that date and its previous carrying amount is
recognized in the income statement.
If an investment property becomes owner-occupied, it is reclassified as property, plant and
equipment and its fair value at the date of reclassification becomes its cost for accounting
purposes.
2.9
Investments
Investment in associates
Investment in associates where the Company holds 20% or more of the voting power of the
investee company and where significant influence can be established are accounted for using
the equity method. Investment in associates other than those described as above are classified
as available for sale.
In case of investments accounted for under the equity method, the method is applied from the
date when significant influence is established until the date when that significant influence
ceases.
Available for sale investments
These are initially measured at cost, being the fair value of consideration given. At subsequent
reporting dates, these investments are re-measured at fair value. For listed securities, fair value
is determined on the basis of period end bid prices obtained from stock exchange quotations,
while for unquoted securities, fair value is determined considering break up value of securities.
All purchases and sales of investments are recognized on the trade date which is the date that
the Company commits to purchase or sell the investment. Cost of purchase includes transaction
Changes in carrying value are recognized in equity until the investment is sold or determined to
be impaired at which time the cumulative gain or loss previously recognized in equity is
included in profit and loss account for the year.
2.10
Deferred cost
Expenses incurred on issue of Term Finance Certificates (TFCs) are amortized over a period of
five years from the date of issue of TFCs. No further deferred cost has been included in these
financial statements in pursuance of the Securities and Exchange Commission of Pakistan
Circular number 01 of 2005 dated January 19, 2005.
2.11
2.12
Stock-in-trade
These are valued at lower of cost and net realizable value. Cost is determined as follows:
Raw and packing materials
Raw and packing materials in transit
Work in process
Finished goods
Net realizable value represents the estimated selling prices in the ordinary course of business
less expenses incidental to make the sale.
2.13
2.14
Taxation
a)
Current
The charge for current year is higher of the amount computed on taxable income at the current
rates of taxation after taking into account tax credits and rebates, if any, and minimum tax
computed at the prescribed rate on turnover. The charge for current tax also includes
adjustments, where considered necessary, to provision for tax made in previous years arising
from assessments framed during the year for such years.
b)
Deferred
Deferred tax is computed using the balance sheet liability method providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply to the period when the liability is settled
based on tax rates that have been enacted or substantively enacted at the balance sheet date. A
deferred tax asset is recognized only to the extent that it is probable that future taxable profit
will be available and the credits can be utilized.
2.15
Borrowings
Loans and borrowings are recorded at the proceeds received. Financial charges are accounted
for on accrual basis.
2.16
2.17
Provisions
Provisions are recognized when the Company has a present, 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 obligation and a reliable estimate of the amount can be
made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current
best estimates.
2.18
2.19
2.20
Impairment
The Company assesses at each balance sheet date whether there is any indication that an asset
may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to
assess whether they are recorded in excess of their recoverable amount. Where carrying value
exceeds recoverable amount, assets are written down to the recoverable amount.
2.21
Financial instruments
All the financial assets and financial liabilities are recognized at the time when the Company
becomes a party to the contractual provisions of the instrument. Any gains or losses on derecognition of the financial assets and financial liabilities are taken to profit and loss account
currently.
2.22
2.23
2.24
2.25
Compensated absences
The Company accounts for these benefits in the period in which the absences are earned.
2.26
Revenue recognition
Sales are recognized on dispatch of goods to customers.
Interest income is recognized on accrual basis.
Dividend on equity investments is recognized as income when the right to receive payment is
established.
Rental income is recognized on accrual basis.
2.27
2.28
Borrowing costs
Interest and commitment charges on long term loans are capitalized for the period up to the date
of commencement of commercial production of the respective plant and machinery acquired
out of the proceeds of such loans. All other interest and charges are treated as expenses during
the year.
2.29
Description
Freehold
land
Buildings on
freehold land
Railway
sidings
Plant and
machinery
Office and
other
equipments
(Rupees in thousand)
Other
equipments
Furniture
and fixtures
Vehicles
Total
Assets
subject to
finance lease
G
t
688,093
105,787
793,880
98,909
7,636
(10,322)
96,223
5,109
(511)
4,598
1,681,237
163,265
(13,237)
(183,342)
1,647,923
8,281
1,021
(1,302)
8,000
3,558
249
(364)
3,443
10,852
4,987
(3,230)
12,609
26,737
11,276
(316)
(6,978)
30,719
2,522,776
294,221
(13,553)
(206,049)
2,597,395
1,123
(225)
898
(2
2,5
793,880
793,880
155,801
(59,578)
96,223
7,274
(2,676)
4,598
2,579,559
(931,636)
1,647,923
38,611
(30,611)
8,000
6,195
(2,752)
3,443
25,242
(12,633)
12,609
68,800
(38,081)
30,719
3,675,362
(1,077,967)
2,597,395
1,404
(506)
898
3,6
(1,0
2,5
615,058
73,035
688,093
74,447
33,052
(8,590)
98,909
1,624,508
230,108
(173,379)
1,681,237
5,511
3,988
(1,218)
8,281
3,301
619
(362)
3,558
5,479
6,932
(1,559)
10,852
27,931
5,840
(281)
(6,753)
26,737
2,358,378
356,892
(281)
(192,213)
2,522,776
1,371
33
(281)
1,123
2,3
3
688,093
688,093
-
148,165
(49,256)
98,909
5 to 10
2,429,531
(748,294)
1,681,237
10
37,590
(29,309)
8,281
15
5,946
(2,388)
3,558
10
20,255
(9,403)
10,852
15 to 30
58,840
(32,103)
26,737
20 to 25
3,395,694
(872,918)
2,522,776
1,404
(281)
1,123
20
3,3
(8
2,5
2,143
3,318
(352)
5,109
7,274
(2,165)
5,109
10
2,5
2
(1
2,5
ree hold land was revalued by an independent valuer M/s. Dimen Associates (Private) Limited as at June 30, 2009 on the basis of market value. Had there been no revaluation on that date, the value of operating
ssets would have been lower by Rs. 720.278 million (2008: Rs. 614.591 million).
Note
2009
2008
(Rupees in thousand)
The depreciation charge for the year has been allocated as follows:
Cost of sales
Selling and distribution expenses
General and administrative expenses
35
36
37
201,176
831
4,267
206,274
189,
2
192
The following operating fixed assets were disposed off during the year:
Description
Accumulated
Net Book
depreciation
value
(Rupees in thousand)
Cost
Sale
proceeds
Mode of
disposal
Particulars of buyers
Vehicle
LXH-1452 Suzuki Bolan Van 1998
297
265
32
55
Negotiated
444
370
74
100
Negotiated
Muhammad Saeed
236
229
80
Negotiated
Akmal Shahzad
233
30
203
225
Negotiated
100
Negotiated
Muhammad Sohail
106
106
150
Negotiated
Tanveer Iqbal
1,316
1,283
1,000
1,002
316
281
710
228
Total - 2009
Total - 2008
2009
Note
4
2008
(Rupees in thousand)
32,487
432
32,919
103,611
766
104,377
An amount of Rs. 128.771 million (2008: Rs. 24.422 million) has been transferred to operating
fixed assets.
5
INTANGIBLE ASSETS
Software-ERP (SAP Business One)
5.1
5.1
37
4,141
992
(1,823)
3,310
1,538
3,258
(655)
4,141
33.33%
33.33%
6,445
6,445
6,445
6,445
61,200
52,950
52,950
53,340
8,250
61,200
(390)
52,950
INVESTMENT PROPERTIES
Free hold land (Commercial property)
7.1
4,141
GOODWILL
Balance as at July 01,
Acquisition of subsidiary
Balance as at June 30,
3,310
Opening balance
Fair value gain/(loss) on revaluation shown in
"income statement"
7.1
This comprises commercial property that is free hold land held for capital appreciation. The
carrying value of investment property is the fair value of the property as at June 30, 2009 as
determined by approved independent valuer M/s. Dimen Associates (Pvt.) Limited. Fair value
was determined having regard to recent market transactions for similar properties in the same
location and condition.
2009
Note
8
2008
(Rupees in thousand)
8.1
56,250
56,250
(56,250)
-
(56,250)
-
Relevant information:
Percentage of investment in equity held 7.91%
(2008: 7.91%)
(Chief Executive: Mr. Usman Ghani Khatri )
Investment in others - quoted
National Bank of Pakistan Limited
5,750 (2008: 4,792) ordinary shares including
4,967 (2008: 4,009) bonus shares of Rs. 10/- each
Add: Fair value gain
8
378
386
386
8
699
707
707
8.1
This provision was made in earlier years as a matter of prudence since the project of the
investee company is not operating and there is some uncertainty regarding future earnings and
related cash flows.
DEFERRED COST
Balance as at July 01,
Less: Amortization for the year
10
901
901
-
11
12,186
12,339
139,694
120,594
194,032
27,484
221,516
207,862
10,848
218,710
2009
Note
Loose tools
Less: Provision for obsolete stores and spares
11.2
2008
(Rupees in thousand)
505
361,715
17,244
344,471
319
339,623
22,432
317,191
11.1
Stores and spares also include items which may result in capital expenditure but are not
distinguishable at the time of purchase.
11.2
12
Packing materials
Work in process
Finished goods
5,188
17,244
22,432
35
43,946
2,330
46,276
6,367
4,384
71,280
128,307
98,677
1,320
99,997
7,236
3,694
48,756
159,683
35
35
297,993
112,129
303,694
22,093
325,787
623,780
22,093
601,687
187,637
24,366
212,003
324,132
24,366
299,766
TRADE DEBTS
Secured
Considered good
Unsecured
Considered good
Considered doubtful
13.1
22,432
STOCK IN TRADE
Raw materials:
in hand
in transit
13
22,432
13.1
13.2
These include balances due from related parties and associated companies aggregating to
Rs. 0.03 million (2008: Rs. 0.907 million) comprising of the following:
Chemi Visco Fiber Limited
Chemi Dyestuff Industries (Private) Limited
30
30
438
469
907
2009
2008
(Rupees in thousand)
13.2
14
Considered doubtful
For supplies and services
To employees
(4,475)
(753)
2,955
(2,273)
22,093
(110)
1,261
1,151
24,366
1,639
7,280
40,580
1,012
50,511
1,639
3,274
12,163
938
463
18,477
51
104
155
50,666
155
50,511
51
104
155
18,632
155
18,477
11,444
193
11,637
193
11,444
2,965
14,409
25,879
504
26,383
504
25,879
1,756
27,635
12
21
16
23,215
15
24,366
OTHER RECEIVABLES
(Considered good)
Insurance claims receivable
2009
2008
(Rupees in thousand)
17
17.1
45,723
439
17.1
18
TAXATION - NET
Advance income tax
Less: Provision for taxation
19
81,486
18,589
62,897
2,417
24,077
26,494
1,167
40,903
42,070
500,000
250,000
750,000
500,000
250,000
750,000
1,000
249,000
110,000
360,000
10.18%
1,000
249,000
110,000
360,000
10.18%
20
SHARE CAPITAL
20.1
20.2
50,000,000
25,000,000
75,000,000
75,000,000
2008
Note
21
RESERVES
Fair value reserve
Unappropriated profit
22
2009
2008
(Rupees in thousand)
378
478,030
478,408
699
378,424
379,123
643,372
105,187
643,372
-
748,559
643,372
SURPLUS ON REVALUATION
OF FIXED ASSETS
Balance as at July 01,
Surplus arising during the year
22.1
22.1
This amount represents surplus arising on the revaluation of freehold land carried out on
June 30, 2009 by an independent valuer M/s. Dimen Associates (Private) Limited on the basis of
market value.
23
23.1
23.2
23.3
6,250
6,250
42,500
55,000
18,750
18,750
47,500
85,000
23.4
6,250
18,750
23.5
31,250
43,750
23.3
53,693
61,953
23.6
16,375
107,568
20,557
145,010
23.7
23.7
23.7
8,250
10,660
10,900
29,810
192,378
4,850
9,660
9,300
23,810
253,820
31
64,320
128,058
80,703
173,117
23.1
These finances are secured against first pari passu charge on all present and future fixed assets
of the Company and carry mark up at six months average KIBOR Ask rate plus 1.80 % (with
floor of 3% and cap of 9%) per annum. These loans were disbursed in November 2004 and are
repayable in sixteen equal quarterly installments commencing from January 2006.
23.2
These finances are secured against first pari passu charge on all present and future fixed assets
of the Company and carry mark up at six months average KIBOR Ask rate plus 1.80% (with
floor of 3% and cap of 9%) per annum. These loans were disbursed in November 2004 and are
repayable in sixteen equal quarterly installments commencing from January 2006.
23.3
These finances are sanctioned under LTF-EOP Scheme of the State Bank of Pakistan for a
period of five years including grace period of one year and carry markup at State Bank`s
declared rate for the Scheme plus 2% per annum. These are secured against first pari passu
charge by way of hypothecation over all present and future fixed assets of the Company
excluding land and building.
23.4
This finance is secured against first pari passu charge on all present and future fixed assets of
the Company and carries mark up at six months average KIBOR Ask rate plus 1.80 % (with
floor of 3% and cap of 9%) per annum. This loan was disbursed in November 2004 and is
repayable in sixteen equal quarterly installments commencing from January 2006.
23.5
This finance is secured against first pari passu charge on fixed assets of the Company and
carries mark up at six months average KIBOR Ask rate plus 2.25% per annum. This loan was
disbursed in September 2006 and is repayable in eight semi annual equal installments
commencing from September 2007.
23.6
This finance is sanctioned for the period of five years including grace period of one year and
carries markup at six months KIBOR plus 3% per annum. This loan is secured against first pari
passu charge by way of hypothecation over all present and future fixed assets of the Company
excluding land and building.
23.7
These are interest free loans and repayable in a period of 2 years starting from July 2009.
2009
2008
(Rupees in thousand)
24
Secured
Banking Companies
Standard Chartered Bank
Askari Bank Limited
Dawood Islamic Bank
United Bank Limited Ameen
Atlas Bank Limited
75,000
150,000
50,000
250,000
50,000
575,000
75,000
150,000
50,000
250,000
50,000
575,000
Note
Financial Institutions
Pak Libya Holding Company (Private) Limited
UBL Fund Manager
31
2009
2008
(Rupees in thousand)
150,000
25,000
175,000
750,000
150,000
25,000
175,000
750,000
166,667
583,333
750,000
24.1
The above finances are secured against first pari passu charge on fixed assets of the Company
and carry mark up at six months average KIBOR rate plus 200bps. These finances were
disbursed from 22 August 2007 to 01 September 2007 and are repayable in nine semi annual
equal installments commencing from 22 August 2009 being the 24th month from the Facility
Date.
25
25.1
350,000
350,000
31
77,778
272,222
350,000
25.1
This finance is secured against first pari passu charge on fixed assets of the Company and
carries mark up at six months average KIBOR Ask rate plus 200bps. This loan was disbursed in
August 31, 2007 and is repayable in nine semi annual equal installments commencing from
August 22, 2009.
26
26.1
26.1
498
913
31
498
-
422
491
The minimum lease payments have been discounted at an implicit interest rate of 12.57% to
arrive at their present value. Rentals are paid in monthly installments.
Taxes, duties, registration costs, charges, levy / penalties, if any, applicable and insurance costs
are to be borne by the Company.
The amount of future payments of the lease and the period in which these payments will
become due are as follows :
Upto one
year
one to five
Total
years
2009
(Rupees in thousand)
522
522
1,010
(24)
(24)
(97)
498
498
913
(498)
-
(498)
-
(422)
491
Note
27
27.1
27.2
27.3
21,993
330,020
5,515
357,528
19,086
271,379
4,060
294,525
31,646
(8,663)
14,571
37,554
(15,561)
21,993
33,085
(8,897)
7,458
31,646
(12,560)
19,086
332,984
325,896
(1,930)
(1,034)
330,020
(1,421)
(441)
(52,655)
271,379
27.2
2009
2008
(Rupees in thousand)
DEFERRED LIABILITIES
Provision for recoating of DSA anodes
Deferred taxation
Provision for gratuity
27.1
Total
2008
Deferred taxation
Deferred tax liability comprises as follows:
Taxable temporary differences
Tax depreciation allowances
Deductible temporary differences
Provision for gratuity
Provision for doubtful debts
Unused tax losses
27.3
a.
General description
The scheme provides for terminal benefits for all its permanent employees who qualify for the
scheme. The defined benefit payable to each employee at the end of his service comprises of
total number of years of his service multiplied by last drawn basic salary including cost of living
allowance.
Annual charge is based on actuarial valuation carried out as at 30 June 2008 using the
Projected Unit Credit method.
2009
Note
b.
2008
(Rupees in thousand)
c.
d.
e.
28
5,515
5,515
4,060
4,060
4,060
1,468
494
(507)
5,515
2,460
1,345
255
4,060
1,468
494
1,962
1,345
255
1,600
55,860
327,712
27,309
47,337
137,547
30,818
28.1
2009
Note
Retention money
Sales tax payable
Excise duty payable
Income tax deducted at source
Other liabilities
Workers' Profit Participation Fund
Workers' welfare fund
28.2
2008
(Rupees in thousand)
647
11,694
2,652
944
787
15,154
5,488
448,247
632
3,392
4,583
2,556
581
7,625
2,646
237,717
28.1
These include a balance due to Chemi Multifabrics Limited, an associated company, amounting
to Rs. 4.002 million (2008: Rs. 4.711 million).
28.2
38
7,625
7,625
6,913
712
14,442
15,154
12,678
12,678
12,015
663
6,962
7,625
The Company retains the allocation of this fund for its business operations till the amounts are
paid.
29
MARK UP ACCRUED
Accrued mark up / interest
Secured
Long term financing
Long term murabaha
Short term borrowings
30
45,614
19,724
9,222
74,560
38,696
15,166
9,801
63,663
32,529
41,217
88,954
88,162
30.1
30.2
2009
Note
The Bank of Punjab Limited
KASB Bank Limited
Murabaha finance
Faysal Bank Limited
2008
(Rupees in thousand)
30.3
30.4
28,000
10,581
49,679
68,174
30.5
40,000
152,327
294,969
30.1
This facility is secured against first pari passu charge over present and future current assets of
the Company and hypothecation of stock of chemicals. The facility carries mark-up at three
months average KIBOR Ask rate plus 2.5% spread with floor of 12.00% per annum (2008:
1.5% with floor of 10%). The limit of finance is Rs. 90 million (2008: Rs. 90 million).
30.2
This facility is secured against first pari passu charge over all present and future current assets
of the Company and carries mark-up at three months average KIBOR Ask rate plus 1.9 % per
annum (2008: Three months average KIBOR Ask rate plus 1.5% per annum). The limit of
finance is Rs. 200 million (2008: Rs. 200 million).
30.3
This facility is secured against first pari passu charge upto the limit of Rs. 150 million on all
present and future current assets of the Company and carries mark-up at three months average
KIBOR Ask rate plus 2.5% per annum with floor of 10 % per annum (2008: Six months
average KIBOR Ask rate plus 2.5% per annum with floor of 12 %). The limit of finance is
Rs. 150 million (2007: Rs. 150 million).
30.4
This facility is secured against first pari passu charge over all present and future current assets
of the Company and carries mark-up at three months average KIBOR Ask rate plus 3% per
annum(2008: three months average KIBOR Ask rate plus 2% per annum). The limit of finance
is Rs. 50 million (2008: Rs. 135 million).
30.5
This facility is secured against first pari passu charge over present and future current assets of
the Company and carries mark-up at six months average KIBOR Ask rate plus 3% per annum
(2008: Six months average KIBOR Ask rate plus 2.25% per annum). The limit of finance is
Rs. 40 million (2008: Rs. 40 million).
31
23
24
25
26
64,320
166,667
77,778
498
309,263
80,703
422
81,125
2009
Note
32
2008
(Rupees in thousand)
35,451
25,864
9,587
33
33.1
Contingent liabilities
a)
The Company is facing claims, launched in the labour courts, pertaining to staff retirement
benefits. In the event of an adverse decision the Company would be required to pay an amount
of Rs. 2.947 (2008: Rs. 4.680 million) against these claims.
b)
Letters of guarantee outstanding as at 30 June 2009 were Rs. 198.240 million (2008:
Rs. 207.997 million).
33.2
Commitments
Commitments as on June 30, 2009 were as follows:
Against letters of credit amounting to Rs. 128.073 million (2008: Rs. 73.086 million).
Against purchase of land amounting to Rs. 1.838 million (2008: Rs. 1.838 million).
34
SALES
Sales
Manufacturing
Trading
Less: Sales tax
Commission to selling agents
Special Excise duty
34.1
34.1
4,264,757
558
4,265,315
526,420
72,587
32,904
631,911
3,633,404
3,168,303
2,686
3,170,989
401,799
44,315
26,839
472,953
2,698,036
This amount includes export sales amounting to Rs. 177.241 million (2008: Rs. 44.081 million).
2009
Note
35
2008
(Rupees in thousand)
COST OF SALES
Raw materials consumed
Opening stock
Purchases
Closing stock
Stores, spares and consumables
Packing materials consumed
Salaries, wages and other benefits
Fuel and power
Repair and maintenance
Insurance
Depreciation
Vehicle running expenses
Postage, printing and stationery
Other expenses
Work in process
Opening
Closing
Cost of goods manufactured
Cost of stores traded
Finished goods
Opening
Closing
12
35.1
3.2
12
12
98,677
359,134
457,811
(43,946)
413,865
284,758
16,104
155,060
1,691,808
22,211
9,126
201,176
12,048
1,291
2,650
2,396,232
37,706
424,426
462,132
(98,677)
363,455
201,211
10,518
115,087
1,222,373
19,115
8,183
189,218
8,784
2,366
2,771
1,779,626
3,694
(4,384)
(690)
2,809,407
5,745
3,201
(3,694)
(493)
2,142,588
2,289
48,756
(71,280)
(22,524)
2,792,628
67,112
(48,756)
18,356
2,163,233
35.1
This amount includes Rs. 1.037 million (2008: Rs. 0.945 million) in respect of employees'
retirement benefits.
36
36.1
17,975
2,183
1,854
14,139
1,085
35,887
136,353
13,354
1,705
1,761
3,646
1,194
26,994
89,041
2009
Note
Rent, rates and taxes
Printing and stationery
Fuel and power
Repair and maintenance
Depreciation
3.2
2008
(Rupees in thousand)
5,295
581
1,377
1,190
831
218,750
2,350
280
748
408
640
142,121
36.1
This amount includes Rs. 0.370 million (2008: Rs. 0.302 million) in respect of employees'
retirement benefits.
37
37.1
3.2
5.1
37.2
57,211
11,592
3,166
1,658
2,156
892
5,221
1,879
1,337
2,955
2,593
4,267
1,823
646
3,888
101,284
39,710
9,684
2,215
1,496
1,974
630
3,039
1,349
804
1,261
1,360
2,636
655
964
2,051
1,510
2,994
4
74,336
37.1
This amount includes Rs. 0.584 million (2008: Rs. 0.490 million) in respect of employees'
retirement benefits.
37.2
Donations
37.2.1 Interest of the Directors or their spouses in the donations made during the year is as follows:
Donation of Rs. 1.306 million paid to Kiran Ibtadai School. Ms. Sabina Khatri w/o Mr.
Muhammad Siddique Khatri, Chairman & Chief Executive of the Company is the patron of the
said school.
37.2.2 Donations other than that mentioned above were not made to any donee in which any director
of the Company or his / her spouse had any interest at any time during the year.
2009
38
Note
Auditors' remuneration
Audit fee
Half yearly review fee
Tax and certification charges
Out of pocket expenses
Loss on sale of fixed assets
Workers' profit participation fund
Workers' welfare fund
39
543
100
100
40
783
14,442
5,488
20,713
425
100
100
35
660
53
6,962
2,646
10,321
28
473
385
33
-
394
3,036
753
4,183
5,069
2,187
2,187
2,220
133,805
53,548
101
59,466
246,920
3,987
250,907
108,025
41,777
6,994
126
49,739
206,661
11,395
218,056
36,056
13,001
58,641
107,698
14,411
1,893
47,429
63,733
FINANCIAL CHARGES
Markup/interest on:
Long term financing
Long term morabaha
Redeemable capital
Finance lease
Short term borrowings
Bank charges and commission
41
(Rupees in thousand)
40
28.2
2008
TAXATION
For the year:
Current
Prior year charge
Deferred
42
2008
(Rupees in thousand)
43
153,606
36,000
4.27
There is no dilutive effect on the basic earnings per share of the Company.
29,081
36,000
0.81
44
45
2008
(Rupees in thousand)
Nature of transaction
Associated company
Associated companies
Associated company
Staff retirement fund
Others
46
35,888
7,771
1,000
26,994
2,947
9,660
168
136
49,489
3,400
1,600
33,040
3,200
9,300
FINANCIAL INSTRUMENTS
Financial risk management
The Company has exposures to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Market risk
The Board of Directors has overall responsibility for the establishment and oversight of
Company's risk management framework. The Board is also responsible for developing and
monitoring the Company's risk management policies.
46.1
Credit risk
Credit risk represents the accounting loss that would be recognized at the reporting date if the counter
party fails completely to perform as contracted and arise principally from trade debts, loans and
advances, trade deposits and other receivables. The carrying amount of financial assets represents the
maximum credit exposure before any credit enhancements. The maximum exposure to credit risk at the
reporting date is as follows:
2009
2008
(Rupees in thousand)
Trade debts
Loans and advances
Trade deposits
Other receivables
Bank balances
601,687
50,511
11,444
12
24,077
299,766
18,477
25,879
21
40,903
To manage exposure to credit risk in respect of trade receivables, management performs credit reviews
taking into account the customer's financial position, past experience and other factors. Credit terms are
approved by the approval committee. Where considered necessary, advance payments are obtained
from certain parties. The management has set a maximum credit period of 30 days to reduce the credit
risk.
Concentration of credit risk arises when a number of counter parties are engaged in similar business
activities or have similar economic features that would cause their abilities to meet contractual
obligation to be similarly effected by the changes in economic, political or other conditions. The
Company believes that it is not exposed to major concentration of credit risk.
The maximum exposure to credit risk for trade debts at the balance sheet date by geographic region is
as follows:
Domestic
Export
542,239
59,448
601,687
298,177
1,589
299,766
The maximum exposure to credit risk for trade debts at the balance sheet date by type of customer is as
follows:
Distributor
End-user customers
259,378
342,309
601,687
115,843
183,923
299,766
2009
2008
(Rupees in thousand)
375,830
136,970
68,785
20,102
601,687
191,212
64,405
39,820
4,329
299,766
The Company's most significant customers are distributors from whom the receivable was Rs. 155.631
million (2008: Rs. 58.626 million) of the total carrying amount as at 30 June 2009.
Based on the past experience, consideration of financial position, past track records and recoveries, the
Company believes that no impairment allowance is necessary in respect of trade debtors past due as
some receivables have been recovered subsequent to the year end and for other receivables there are
reasonable grounds to believe that the amounts will be recovered in short course of time.
On the prudence basis an amount of Rs. 2.955 million (2008: Rs. 1.261 million) has been charged, as
provision for doubtful debts, to profit and loss account.
46.2
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall
due. The Company's approach to managing liquidity is to ensure as far as possible to always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company's reputation.
Carrying
amount
2009
cash flow
or less
months
Two to five
years
years
Financial liabilities
Long term financing
192,378
209,072
38,953
32,223
62,092
75,804
750,000
1,043,071
141,945
135,433
476,605
289,088
350,000
486,764
66,241
63,202
117,287
240,034
498
522
258
264
448,247
448,247
448,247
74,560
74,560
74,560
152,327
165,068
165,068
1,968,010
2,427,304
935,272
231,122
655,984
604,926
Carrying
amount
2008
Financial liabilities
Long term financing
Long term diminishing musharaka
Long term morabaha
Liabilities against assets subject to
finance lease
Trade and other payables
Markup accrued
Short term borrowing
46.3
253,820
750,000
350,000
284,038
1,146,453
535,623
41,855
46,088
21,508
37,818
58,613
27,353
73,176
528,708
129,443
131,189
513,044
357,319
913
237,717
63,663
294,969
1,951,082
1,010
237,717
63,663
311,096
2,579,600
258
237,717
63,663
311,096
722,185
258
124,042
494
731,821
1,001,552
Market risk
Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in
market interest rates or the market price due to a change in credit rating of the issuer or the instrument,
change in market sentiments, speculative activities, supply and demand of securities, and liquidity in
the market. The Company is exposed to currency risk and interest rate risk only.
59,448
59,448
(128,073)
(68,625)
1,589
1,589
(73,086)
(71,497)
80.00
65.00
68.20
Sensitivity analysis
At reporting date, if the PKR had strengthened by 10% against the US dollar with all other variables
held constant, post tax profit for the year would have been lower by the amount shown below.
2009
2008
(Rupees in thousand)
Effect on profit or loss
Loss
(5,945)
(159)
The weakening of the PKR against US dollar would have had an equal but opposite impact on the post
tax profits / loss.
46.3.2 Interest rate risk
Interest rate risk is the risk that fair value of future cash flows of financial instrument will fluctuate
because of changes in market interest rates. The Company is not materially exposed to interest rate
risk.
46.4
47
CAPITAL MANAGEMENT
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The Board of Directors monitor the
return on capital, which the Company defines as net profit after taxation divided by total shareholders'
equity. The Board of Directors also monitor the level of dividend to ordinary shareholders. There were
no changes to the Company's approach to capital management during the year and the Company is not
subject to externally imposed capital requirements.
48
Managerial remuneration
House rent allowance
Medical expenses
Number of persons
48.1
2,400
1,080
120
3,600
1
1,500
675
75
2,250
1
Directors
2009
2008
(Rupees in thousand)
4,000
1,800
200
6,000
2
2,079
930
103
3,112
2
Executives
2009
2008
26,593
11,966
1,330
39,889
46
18,452
8,303
923
27,678
37
The Company also provides the Chief Executive and some of the Directors and Executives with free
use of cars and mobile phones.
49
Caustic soda
Liquid chlorine
Hydrochloric acid
Sodium Hypochlorite
Bleaching earth
Chlorinated parafin wax
Sulphuric acid
Calcium Chloride Prills
50
Installed capacity
Tons
2009
2008
Actual production
Tons
2009
2008
143,550
13,200
150,000
49,500
3,300
3,000
3,300
20,000
95,448
7,758
133,680
31,035
2,253
261
60
5,702
143,550
13,200
123,750
49,500
3,300
3,000
3,300
20,000
DETAIL OF SUBSIDIARY
Name of subsidiary
Chemi Chloride Industries Limited
51
93,313
8,886
100,361
37,979
2,532
196
599
1,238
Accounting
year end
30-Jun-09
Percentage Country of
of holding Incorporation
95%
Pakistan
52
CORRESPONDING FIGURES
Previous year's figures have been re-arranged and re-classified wherever necessary for the
purpose of comparison, the effect of which is not material.
53
GENERAL
Figures have been rounded off to the nearest rupees in thousand unless stated otherwise.
PATTERN OF SHAREHOLDING
As At June 30, 2009
Shareholding
No. of Shareholders
15
21
60
128
165
6
5
1
3
5
1
1
2
1
1
3
3
1
1
1
3
2
3
1
2
4
2
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
463
From
To
1
101
501
1,001
5,001
10,001
15,001
20,001
25,001
35,001
45,001
55,001
70,001
75,001
85,001
140,001
155,001
175,001
190,001
215,001
250,001
280,001
315,001
320,001
345,001
350,001
355,001
365,001
370,001
395,001
405,001
410,001
445,001
460,001
465,001
475,001
540,001
790,001
845,001
935,001
1,230,001
1,685,001
1,975,001
2,155,001
2,255,001
2,430,001
2,755,001
4,750,001
100
500
1,000
5,000
10,000
15,000
20,000
25,000
30,000
40,000
50,000
60,000
75,000
80,000
90,000
145,000
160,000
180,000
195,000
220,000
255,000
285,000
320,000
325,000
350,000
355,000
360,000
370,000
375,000
400,000
410,000
415,000
450,000
465,000
470,000
480,000
545,000
795,000
850,000
940,000
1,235,000
1,690,000
1,980,000
2,160,000
2,260,000
2,435,000
2,760,000
4,755,000
PATTERN OF SHAREHOLDING
As required under Code of Corporate Governance
As At June 30, 2009
Shareholders' Category
ASSOCIATED COMPANIES
1 CHEMITEX INDUSTRIES LTD.
2 JHELUM SILK MILLS (PVT.) LTD.
FINANCIAL INSTITUTIONS
GENERAL PUBLIC
TOTAL
Percentage
1,978,560
1,686,240
3,664,800
5.4960%
4.6840%
10.1800%
460,800
2,155,680
324,000
319,680
144,000
4,754,880
55,200
374,400
25,597
144,000
352,800
283,680
9,394,717
1.2800%
5.9880%
0.9000%
0.8880%
0.4000%
13.2080%
0.1533%
1.0400%
0.0711%
0.4000%
0.9800%
0.7880%
26.0964%
11,110
2,136
1,400
2,640
1,440
7,200
36,000
61,926
0.0309%
0.0059%
0.0039%
0.0073%
0.0040%
0.0200%
0.1000%
0.1720%
0.0000%
22,878,557
63.5515%
36,000,000
100.0000%
Holding
Percentage
4,898,880
13.6080%