Frontier Ceramics Limited- Annual Reports 2003- PakSearch.com,

FRONTIER CERAMICS LIMITED

Annual Reports 2003

COMPANY INFORMATION

BOARD OF DIRECTORS

Mr. S.U. Durrani

Chairman

Maj. Gen. (R) Jehanzeb Khan

Mr. Shamsul Hassan

Chief Executive

Mr. M. Fayyaz Khan

Mr. Rab Nawaz

Mr. Muhammad Iqbal

Mr. Hukam Khan Badshah

Company Secretary & Chief Financial Officer

Mr. Rab Nawaz

BANKERS

National Bank of Pakistan

United Bank Limited

The Bank of Khyber

Bank AI-Habib

AUDITORS

Messrs Muqtadir Mushtaq & Co. Chartered Accountants.

LEGAL ADVISOR

Col. (Rtd) Nazirullah Qazi Advocate

REGISTRAR AND SHARE TRANSFER OFFICE

Saeed Methani Mushtaq & Co. Chartered Accountants, Suite # 23C,Block B,

2nd Floor, Cantonment Plaza, Fakhr-e-Alam Road, Peshawar Carrtt.

HEAD OFFICE / REGISTERED OFFICE

29, Industrial Estate, Jamrud Road, Peshawar, N.W.F.P.

Tel: 92-91 -812360, 812746 Fax: 92-91 -812757

ZONAL OFFICES

PESHAWAR

29-lndustrial Estate, Jamrud Road, Peshawar

Tel: 92-9 1-8 12360, 812746

RAWALPINDI

82-A, Satellite Town Rawalpindi.

Tel: 92-5 ! -44 1 0998 Fax: 92-5 1 -4425523

KARACHI

1* Floor, Kashif Centre,

Shahra-e-Faisal, Karachi.

Tel: 92-2 1-5673006

NOTICE OF THE ANNUAL GENERAL MEETING

Notice is hereby given that the Twenty First Annual General Meeting of Frontier Ceramics Limited will be

held at its registered office, 29-lndustrial Estate, Jamrud Road, Peshawar on Thursday .October 30, 2003, at

09:00 a.m. to transact the following business:

1. To confirm minutes of the Twentieth Annual General Meeting of the Company held on

Octobers 1,2002.

2. To receive, consider and approve the Audited Accounts together with the Directors' and Auditors'

Reports for the year endedjune 30,2003.

3. To appoint Auditors of the Company for the year ending 2003-200-4 and fix their

remuneration. The present auditors Messrs Muqtadir Mushtaq & Co. Chartered Accountants are

retiring.

The Company has received notices from Shareholders under Section 253 of the Companies

Ordinance 1984, proposing the name of Messre Saeed Methani Mushtaq & Co., Chartered

Accountants,23-C,Block-B, 2nd Floor, Cantonment Plaza, Fakhr-e-Alam Road, Peshawar, for the

appointment as auditors of Frontier Ceramics Ltd for the year 2003-2004, which has

recommended by the Audit Committee in its meeting held on September 18,2003.

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

BY ORDER OF THE BOARD

September 30, 2003 (Company Secretary)

NOTES:

1. The Register of Members of the Company will remain closed from October 21,2003 to

October 31,2003 (both days inclusive).

2. A member entitled to attend and vote at the General Meeting is entitled to appoint a

proxy to attend and vote on his/her behalf. Proxy Forms must reach the Company's

Registered Office, at-least48 hours before the meeting.

3. Shareholders who have deposited their shares into Central Depository Company of

Pakistan Limited, must bring their original National Identity Card (NIC) at the time of

attending the meeting.

4. In case of Corporate entity, the Board of Directors' resolution/power of attorney with

specimen signature of the nominee shall be produced (unless it has been provided earlier) at

the time of the meeting.

5. Members are requested to notify the Company or Registrar of the Company, Messrs

Saeed Methani Mushtaq & Co., Chartered Accountants, Suite No. 23-C, 2^nd Floor,

Block-B, Cantonment Plaza, Fakhr-e-Alam Road Peshawar, for any change in their

mailing address.

DIRECTORS' REPORT

The Board of Directors is pleased to present the 21st Annual Report alongwith the

Audited Accounts for the year ended June 30, 2003.

Gross sales of the Company for the year under review, was Rs. 144.330 million.

The desired results could not be achieved due to interruption of gas supply to the

project in the months of December 2002, January, February and April 2003, which

seriously upset the production in these months. The capacity of the newly installed

Roller Kiln could not be utilized due to Gas supply problems. Additionally, revenue

from sales of Tiles was also reduce due to intense competition in the market and

dumping of under-invoiced imported tiles, which are available in the market at

exceptionally low rates. This has seriously affected your Company's ability to achieve

the desired production/sales targets. These conditions forced the Company

to sell its products on a heavy discount and incentives given to distributors for

promoting the Company's sales.

FINANCIAL SUMMARY

(Rs. In Million)

Sales

114.007

Gross Profit

26.57

Less: Admin and Selling Expenses

28.265

Operating Profit/(Loss)

(1.694)

Add: Other Income

1.809

0.115

Less: Financial Expenses

(6.440)

Provision for Taxation

(0.982)

Loss after Taxation

(7.308)

Prior year Adjustment

0.097

Accumulated Profit/(Loss) brought forward

(71.689)

Adjustment of incremental

Depreciation out of Revaluation of Fixed Assets

79.253

Profit/(Loss) carried over to Balance Sheet

0.354

DIVIDEND

In view of the current financial position of your Company, the Directors are not

recommending a Dividend for the year under review.

FUTURE OUTLOOK

Under the prevailing market conditions, we foresee a tremendous pressure on the

selling prices of products viz-a-viz our profitability. To overcome this problem

efforts are being made to reduce the cost of production and improve the efficiency

of the plant, which has become inevitable due to continuous increases in the

energy and other input costs of production.

The steps announced by the Government of Pakistan to encourage investments in

the Housing Sector and new demands from Afghanistan should auger well for

your Company's sales efforts.

The Company will explore new avenues for enhancing the sales volume and to

make it a profitable venture in spite of immense pressure for reduction in Custom

Tariff on imported tiles under the WTO Regime, which will encourage dumping

of imported tiles in the local market.

To meet the challanges of our times, the Company is planning to restart the

production of Sanitary-ware alongwith other activities in collaboration with

Foreign manufacturers. Further high value tiles will be produced on the Roller

Kiln, which is an energy saving equipment. Serious efforts are also being made to

induct energy saving machinery/equipment under BMR to enable the Company to

produce at competitive rates, by increasing efficiency levels and reducing our

energy costs.

CORPORATE GOVERNANCE

In compliance of the Code of Corporate Governance we give below a statement

in accordance with the Financial and Corporate Reporting framework:

a) The financial statement, prepared by the management of the Company

present fairly its state of affairs, the results of operation, cash flow statement

and statement of changes in equity.

b) Proper books of accounts have been maintained.

c) Appropriate accounting policies have been consistently applied in preparation

of the financial statements and accounting estimates are based on reasonable

and prudent judgment.

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

followed in the preparation of financial statements and any departure

Therefrom has been adequately disclosed.

e) The existing system of internal control and other procedures is being

continuously reviewed by the internal auditor. The process of review

will continue and any weakness in controls will have immediate attention

of the management.

f) There is no significant doubt about the company's ability to continue as a

going concern.

g) There has been no material departure from the best practice of corporate

governance, as detailed in the listing regulations.

h) Key operating and financial data for the last six years in summarized form

is annexed.

AUDITORS

The present Auditors Messrs Muqtadir Mushtaq & Co. Chartered Accountants

retired and are not eligible for reappointment as per Circular No. 19 dated

27-12-2002 issued by the Securities & Exchange Commission of Pakistan.

In compliance of the Code of Corporate Governance, the Audit Committee

has on the request of the members, recommended the appointment of Messrs

Saeed Methani Mushtaq & Co., Chartered Accountants, 23-C, Block-B, 2nd

Floor, Cantonment Plaza, Fakhre Alam Road Peshawar, as Auditors of the

Company for the year 2003-04.

MEETING OF THE BOARD OF DIRECTORS

During the year five (5) meetings of the Board of Directors were held, which

were attended by the Directors as mentioned below:

Mr. Shakirullah Durrani

4

Maj. Gen (R) Jehanzeb Khan

4

Mr. Muhammad Ayub

4

Mr. Shahid Mehboob

4

Mr. Shamsul Hassan

5

Mr. M. Fayyaz Khan

4

Mr. Azhar Amin

2

Mr. Rab Nawaz

2

PATTERN OF SHAREHOLDING

The Statement of Pattern of Shareholding as at June 30, 2003 is annexed with

the report.

ACKNOWLEDGMENT

We would like to appreciate the positive attitude and cooperation extended by

the employees of the Company during the year of difficulties. We also

acknowledge the dedication and hard work of the employees during this

period. We also express our thanks to our Bankers, Shareholders, Customers

and other stakeholders for their continued support.

On behalf of the Board of Directors.

(Shamsul Hassan)

Chief Executive.

KEY OPERTING AND FINACIAL DATA

FROM 1997-98 TO 2002-2003

1998

1999

2000

2001

2002

2003

TILES (SQ.M)

Tiles (SQ.M)

512,652

470,909

533,308

478,129

504,774

S/WARE (TONS)

1,209

949

503

236

_

SALES (RUPEES)

229,645,457

1 85,3 1 0,26 1

222,823,397

148,348,157

144,330,728

OPERATING RESULTS

NET SALES

151,349,789

157,242,701

163,600,945

150,137,255

116,514,208

114,006,559

GROSS PROFIT

23,464,102

33.347,115

30,330,190

44,499,61 1

21,948,594

26,570,037

PRE-TAX PROFIT (LOSS)

-17,773,415

-15,818,191

-19,908,408

4,996, 1 87

-10,914,811

-6,325,606

AFTER TAX PROFIT (LOSS)

-18,919,972

8,437,295

-22,680,264

10,218,384

-11,497,382

-7,307,614

FINANCIAL RESULTS

CURRENT ASSETS

295,806,761

303,327,044

284,275,645

296,705,788

293,404,269

282,401,564

CURRENT LIABILITIES

206,417,494

188,571,625

180,736,441

172,550,016

186,565,461

207,423,160

OPERATING FIXED ASSETS

397,231,145

366,899,704

335,459,859

321,533,246

307,969,492

311,252,533

LONG TERM LIABILITIES

178,321,931

164,929,347

144,306,601

144,841,272

127,033,628

113,181,694

SHARE HOLDERS EQUITY

25,115,405

33,552,700

10,872,436

17,220,220

84,976,276

77,766,050

RATIOS

CURRENT RATIO

1.43

1.61

1.57

1.72

1.58

1.36

GROSS PROFIT (LOSS) TO SALES %

15.5

21.21

18.54

29-64

26.16

23.31

NET PROFIT (LOSS) TO SALES %

-12.5

5.37

-13.86

6.81

-2.05

-5.5

REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE

WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

We have reviewed the Statement of Compliance with the best practices contained in the Code of

Corporate Governance prepared by the Board of Directors of M/S FRONTIER CERAMICS

LIMITED to comply with the Listing Regulation No. 37 (Chapter XI) of the Karachi Stock

Exchanges (Guarantee) Limited and Section 36 (Chapter XI) of the listing Regulation of the

Islamabad Stock Exchange (Guarantee) Limited where the company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of

Directors of the Company. Our responsibility is to review, to the extent where such compliance

can be objectively verified, whether the Statement of Compliance reflects the status of the

Company's compliance with the provisions of the Code of Corporate Governance and report if it

does not. A review is limited primarily to inquiries of the Company personnel and review of

various documents prepared by the Company to comply with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the

accounting and internal control systems sufficient to plan the audit and develop an effective audit

approach. We have not carried out any special review of the internal control system to enable us

to express an opinion as to whether the board's statement on internal control covers all controls and

the effectiveness of such internal controls.

Based on our review, nothing has come to our attention, which causes us to believe that the

Statement of Compliance does not appropriately reflect the compliance, in all material respects,

with the best practices contained in the Code of Corporate Governance.

PESHAWAR MUQTADIR MUSHTAQ & CO.,

September 26,2003. Chartered Accountants

AUDITORS* REPORT OF THE MEMBERS

We have audited the annexed balance sheet of M/S FRONTIER CERAMICS LIMITED as at

June 30,2003 and the related profit and loss account, cash flow statement and statement of changes

in equity together with the notes forming part thereof, for the year then ended and we state that

we have obtained all the information and explanation which, to the best of our knowledge and

belief, were necessary for the purpose of our audit.

It is the responsibility of the Company's management to established and maintain a system of

internal control and prepare and present the above said statement in conformity with the approved

accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility

is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These

standards require that we plan and perform the audit to obtain reasonable assurance about

weather the above said statement are free of any material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the above said

statements. An audit also includes assessing the accounting policies and significant estimates made

by management, as well as, evaluating the overall presentation of the above said statements. We

believe that our audit provides a reasonable basis for our opinion and after due verification, we

report that:

a) in our opinion proper books of account have been kept by the Company as

required by the companies Ordinance, 1984;

b) in our opinion :

I. The balance sheet and profit and loss account together with the notes

thereon, have been drawn up in conformity with the companies

Ordinance, 1984 and are in agreement with the books of account and are

further in accordance with accounting policies consistently applied;

I I. The expenditure incurred during the year was for the purpose of the

Company's business;

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 the 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 fairview

of the state of the company's affairs as at June 30,2003 and of the loss, its cash flows

and changes in equity fortheyearthen ended, and

D) in our opinion no Zakat was deductible at source under the Zakat & Ushr

ordinance, I960.

PESHAWAR MUQTADIR MUSHTAQ & CO,

September 26, 2003. Chartered Accountants

BALANCE SHEET AS AT JUNE 30, 2003

2003

2002

Notes

Rupees

PROPERTY AND ASSETS

Fixed Assets - at cost less depreciation

12

311,252,533

307,969,492

Capital Work in Progress

13

—

1,675,692

Long Term Deposits

14

1,202,250

198,250

312,454,783

309,843,434

CURRENT ASSETS

Stores, spares and loose tools - at cost

15

33,461,823

32,296,134

Stock in Trade - at cost

16

169,624,034

168,130,759

Trade Debtors

17

64,377,631

70,297,375

Advances, Deposits, Pre-payments &

Other Receivables

18

8,051,643

13,293,738

Cash and Bank Balances

19

6,886,433

9,386,263

282,401,564

293,404,269

CURRENT LIABILITIES

Finance under Markup Arrangements

8

96,825,808

94,825,808

Current Portion of Long Term Loan Liabilities

9

33,492,571

21,745,806

Creditors, Accrual and other Liabilities

10

77_rl04_r78l

69,993,847

207.423.160

186.565.461

Working Capital

74,978,404

106,838,808

Total Assets

387,433,187

416,682,242

Less: Long Term Loans

7

51,451,246

57,667,327

Long Term Loan BEL Consortium

6

25,256,095

33,094,870

Deferred Liabilities

5

36,474,353

36,271,431

Net Assets

274,251,493

289,648,614

REPRESENTED BY

Issued, Subscribed and Paid up Capital

3

77,412,000

Profit & Loss

354,050

75,64,726

Surplus on Revaluation of fixed assets

4

1 96,485,443

204.672,338

274,251,493

289,648,614

Contingencies and Commitments

II

PROFIT & LOSS ACCOUNT

FOR THE YEAR ENDED JUNE 30, 2003

Notes

2003

2002

Rupees

Sales - Net

20

114,006,559

1 16,514,208

Cost of Sales

21

87.436.522

86.037.600

Gross Profit/(l_oss)

26,570,037

30,476,608

OPERATING EXPENSES

Administrative Expenses

22

16,100,862

15,280,563

Selling & Distribution Expenses

23

12.163.913 28.264.775

11.812.776 27.093.339

Operating Profit / (Loss)

-1,694,738

3,383.27

Profit/(Loss) on Sale of fixed Assets

26

1,753,662

238,564

Profit on PLS Saving Account

55,861

8,965

Other Income

—

1 00,000

1.809.523

347.529

114,785

3,730,798

Financial Expenses

24

6,440,391

6, 1 1 7,595

Profit/(Loss) before taxation

-6,325,606

-2,386,797

Taxation

25

982.008

582.571

Profit/(l_oss) after taxation

-7,307,614

-2,969,368

Prior Year Adjustment

-97,388

Accumulated Profit / (Loss) Brought Forward

7,564,276

-60,191,780

Amortization of incremental depreciation on revaluation

of fixed assets

—

70,725,424

Accumulated Profit/(Loss) Carried to Balance Sheet

354,050

7,564,276

Earning per share

28

STATEMENT OF CHANGES IN FINANCIAL POSITION

(CASH FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 2003

2003

2002

Rupees

CASH FLOW FROM OPERATING ACTIVISTS

ProfiV(Loss) before taxation

-6,325,606

-2,386,797

Adjustments to reconcile profit to net cash

provided by operating activities

Depreciation

4,972,,62 1

5,230,554

Less: ( gain)/Loss on sale of fixed assets

-1,753,662

-238,564

Financial expenses

6,440,39 1

6,117,595

Prior Year Adjustment

97,388

-

Cash flows from operating activates before

working capital changes.

3,431,132

8,722,755

CASH FLOWS FROM WORKING CAPITAL CHANGES

(INCREASE)/ DECREASE IN CURRENT ASSETS

Stores, Spares & loose tools

-1,165,689

-2,437,819

Stock in trade

-1,493,275

2,817,669

Advance, deposits, prepayments & other receivables

5,919,744

1,328,489

2,637,425

1,858,028

INCREASE/(DECREASE)IN CURRENT LIABILITIES

Creditors, accruals & other liabilities

3,738,676

9,049,792

CASH FLOWS FROM WORKING CAPITAL CHANGES

9,636,881

12,616,159

CASH FLOWS FROM OPERATING ACTIVITIES

13,068,013

21,338,947

Interest paid

-2,852,673

-5,638,408

Income tax paid Dividend paid

-390,076

-750,686

-

-673,060

NET CASH FLOWS FROM OPERATING ACTIVITIES

9,825,264

14,276,793

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed capital expenditures

-13,351,003

-222,250

Sale proceeds of operating fixed assets Capital work in progress

2,338,000

266,000

Long term security deposits

-1,004,000

(1,675,692) 100,000

NET CASH FLOWS FROM INVESTING ACTIVITIES

-12,017,003

-1,531,942

CASH FLOWS FROM FINANCING ACTIVITIES

Deferred liabilities

.

202,951

Fiances under mark up arrangements

2,000,000

5,391,402

long term loan

-47,844

-11,353,720

Long term loan (BEL Consortium)

-2,260,247

-6,538,636

NET CASH FLOWS FROM FINANCING ACTIVITIES

-308,091

-12,480,003

NET INCREASE/ (DECREASE)IN CASH AND CASH EQUIVALENTS

-2,499,830

264,848

CASH AND CASH EQUIVALENT AT THE

BEGINNING OF THE YEAR

9,386,263

9,121,415

CASH AND CASH EQUIVALENT AT THE END

OF THE YEAR

6,886,433

9,386,263

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED JUNE 30, 2003

Share Capital

Capital Reserve

Accumulated

Total

Rupees

Profit / (Loss)

Rupees

Balance as at 1 st July 200 1

77,412,000

283,925,776

(60, 1 9 1 ,780)

301,145,996

Issue of Shares Capital

-

Proposed Dividend

-

0

Amortization of incremental

depreciation on revaluation

of Fixed Assets

-70,725,424

-

-70,725,424

Revaluation Adjustment for the year

-8,528,014

-

-8,528,014

Profit/(Loss)after taxation

-

-2,969,368

Retained Earning

-

70,725,424

Balance at 30th June 2002

77,412,000

204,672,338

7,564,276

289,648,614

Revaluation Adjustment for the year

-8,186,895

-

(8, 1 86,895)

Profit/(Loss)after taxation

-

-7,210,226

Balance at 30th June 2003

77,412,000

196,485,443

354,050

274,251,493

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED JUNE 30,2O03

1. THE COMPANY AND ITS OPERATIONS

Frontier Ceramics Limited was incorporated in Pakistan in July 1982 as a Public Limited Company, and

was listed on the Karachi and Lahore Stock Exchange in April 1992.

The company is engaged in the manufacturing and sale of sanitary ware and ceramics tiles.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation of Financial Statements

These financial statements have been prepared in accordance with International Accounting

standards as applicable in Pakistan, and under the historical cost convention as modified by

capitalization of certain exchange difference in the cost of relevant assets without any

adjustments for the effects of inflation, except plant and machinery which has been re-

valued (Note No. -4).

2.2 Staff Retirement Benefits

The Company operates a provident fund scheme for all its employees, contributions in

respect thereof are made in accordance with the terms of the scheme.

2.3 Taxation

Charge for current taxation in the accounts is based on taxable income of the Company after

taking into account rebate, if any allowable to the company. The company accounts for

deferred taxation using liability method arising on all major timing differences.

2.4 Fixed Assets

Fixed assets are stated at cost less accumulated depreciation, except leasehold land and

capital work in progress, which are stated at cost.Depreciation is charged on reducing

balance method at the rates specified in Note No. 12. Full year depreciation is charged

on fixed assets acquired during the first half of the accounting year, but no depreciation is

charged on fixed assets acquired during the second half of the accounting year. No

depreciation is charged if the assets are disposed off/deleted in the first half of the

accounting year but charged if disposal/deletion is made in the second half of the

accounting year.

Normal repairs and maintenance are charged to expenses, as and when

incurred, while major renewals and replacements are capitalized. Gains

and losses on disposal of fixed assets are taken to Profit and Loss Account currently.

The company's management decided to reduce the rate of depreciation of Plant &

Machinery and Building on lease hold land in 2001. The depreciation was charged on

the said assets previously & 6.6% and 10% respectively.

The depreciation is charged on imported Plant & Machinery @ 4% and on Building

@ 5% since 2001. The basic motive of reduction in depreciation rates is to

minimize the cost of production and improve the profitability ofthe company.

2.5 Stock in Trade, Stores, Spares and Loose Tools

These are stated as follows:

Stores, Spares and Loose Tools At average cost

Raw & Packing Material At average cost, except in transit,

wh ich are stated at actual cost.

Work in process At cost

Finished Goods At lower of cost or market value.

2.6 Rate of Exchange

Foreign currency loans and other foreign currency transactions are recorded at the

rate prevailing on the date of transaction. Repayment of foreign currency loans are

made at the rate at which the same were disbursed because of exchange risk having

been covered.

2.7 Revenue Recognition

Sales are recorded on dispatch of goods to customers.

Notes

2003

2002

Rupees

SHARE CAPITAL

AUTHORISED

8,000,000 Ordinary Shares of Rs. IO/- each

3

80,000,000

Issued, Subscribed and Paidup Capital 7,741,200

Ordinary shares of Rs. 1 0/- each issued for cash

77,412,000

SURPLUS ON REVALUATION

OF FIXED ASSETS

4

204,672,338

283,925,776

Less: Amortization of Incremental depreciation arising

out of revaluation of fixed assets

-8,186,895

-79,253,438

196,485,443

204,672,338

i) Revaluation of plant & machinery has been carried out as on June 30, 1996 by an independent valuer,

M/s Global Engineer (Pvt) Ltd. Faisalabad, and duly certified by R.H. & Co. Chartered Accountants, a firm

approved by the State Bank of Pakistan for the purpose of revaluation of fixed assets. Revaluation

has been carried out on the basis of depreciated replacement value (Refer to note No. 12).

ii) Incremental depreciation arising out of revaluation of fixed assets is being charged as per Clause 35 of

Ordinance No. C of 2002. (F.No. 2(l)/2002-Pub) dated 26th October 2002.

iii) DEFERRED LIABILITIES

5

a. Remission/Waiver of PICIC Markup

loan restructured

20,678,992

24,814,791

Less: Remission / Waiver adjusted

4,135,799

16,543,193

20,678,992

b. Add: Deferred Markup PICIC

11,322,467

8,406,100

Deferred Markup BEL Consortium

8,608,693

7,186,339

19,931,160

15,592,439

36,474,353

36,271,431

The restructured loan liabilities entails remission/waiver which would be'aJlowed and in proportion to the actual

payment made by the company over the period.

Future markup of the restructured loan @ 10% p.a. on the principal amount on reducing balance over a period of

84 months shall be payable on any of the first available options as noted below:

i. If the company receive refund of Sales Tax for Rs. 150 million then the full amount shall be paid by the company.

ii. In case the Sales Tax is not refunded to the company within the year ending 30-06-2001 then the company shall

sell/dispose their office at Kashif Centre, Karachi and full amount shall be paid by the company out of the sales

proceed of the office by 30-06-2001.

iii. In case either of the above two options not materialise then the amount shall be paid by the company from the

month following immediately after payment of restructured loan.

iv. BEL, HBL, UBL, MCB, ABL has approved loan restructuring while NBP has not yet issued approval

letter. However, markup has been provided on the basis of other consortium members.

BEL CONSORTIUM

NOTE

(in rupees)

LOANS

6

BEL

NBP

HBL

UBL

MCB

ABL

2003

2002

Redeemable Capital Restructured/

Rescheduled into loan (Secured)

20,589,498

7,340,059

5,138,512

3,874,191

2,869,739

2,214,000

42,025,999

48,564,635

Paid during the year

1,123,065

-

380,632

286,976

305,574

1 64,000

2,260,247

8,018,020

Add: Prior year adjustment

-

0

1,479,384

19,466,433

7,340,059

4,757,880

3,587,215

2,564,165

2,050,000

39,765,752

42,025,999

Current Portion of Long term Loan

Current Maturity and Over

dues installment

7,861,455

1,048,572

1,903,160

1,434,880

1,441,590

820,000

14,509,657

8,931,129

11,604,978

6,291,487

2,854,720

2,152,335

1,122,575

1,230,000

25,256,095

33,094,870

All the BEL led consortium members approved restructuring proposal from 1st Jan - 2000 on the basis mentioned here under:

1. Outstanding principal amount and 20% of the outstanding mark-up be restructured and merged into single loan and will be payable in 84 equal monthly installments

commencing from January 2000.

2. Future mark-up to be accrued @ 10% p.a. on the outstanding principal loan amount on a reducing balances over a period of 84 months shall be payable on any of the

first available options as noted below:

i) From the refund of sales tax of Rs. 150 million or from the sale of Kashif Centre premises or on completion of the 84 monthly installments, the same installments to be

continued to pay off the said interest.

ii) In case the Sales Tax is not refunded to the company within the year ending 30-06-2001 then the company shall sell/dispose their office at Kashif Centre, Karachi

and full amount shall be paid by the company out of the sales proceed of the office by 30-06-2001.

iii) In case either of the above two options not materialise then the amount shall be paid by the company from the month following immediately after payment of

restructured loan.

3. The restructured / rescheduled loans are secured by way of first charge already created on the fixed assets of the company both moveable and immovable floating

charge and hypothecation of all other assets i.e. book debt and other current assets present and future ranking pari pasu with NDFC, PICIC.

4. BEL, HBL, UBL, MCB and ABL approved restructuring / rescheduling whereas NBP rescheduling has not yet been finalised. The amount of NBP as stated above

determined on the basis of other consortium members.

2003

2002

Notes

Rupees

LONG TERM LOANS

(SECURED)

7

Foreign Currency

Pakistan Industrial Credit & Investment

Coporation

7.1

43,258,910

54,794,630

Less: Paid during the year

7,690,490

11,535,720

35,568,420

43,258,910

National Development Finance Corporation

7.2

25,944, 1 37

25,944,137

ORIX Investment Bank Pakistan Limited

7.3

9,500,000

-

Less:Paid during the year

578,397

-

8,921,603

0

70,434,160

69,203,047

Less: Transfer to current maturity & Over Dues

PICIC

15,380,960

11,535,720

NDFC

-

ORIX

3,601,954

-

18,982,914

11,535,720

51,451,246

57,667,327

PICIC Loan 7.1

PICIC has extended a restructuring/rescheduling facility to the company through consent decree in

the Sindh High Court on June 8, 1999 on the basis of following terms and conditions.

Part-l

Principal amount of Rs. 64.907 million together with foreign exchange risk fee and partial accrued

interest thereon of Rs. 15.843 million totalling Rs. 80.750 million.

Part-l I (Future Interest)

Interest Accrued on Principal @ 10% p.a. on the original principal loan amount of Rs. 64.907 million

on reducing balance over a period of 84 months amounting to Rs. 22.988 million. The total

restructured loan liability of Rs. 103.738 million entails remission/waiver of Rs. 68.435 million according

to PICIC original claims of Rs. 172.173 million as on 31-12-1998. The remission/waiver will be

allowed over the period and in proportion of the actual payment made by the company.

REPAYMENTS

Part I

Rs. 80.750 million shall be repaid in 84 equal monthly installments of Rs. 961,310/- each commencing from

15-04-1999.

Part II

Future interest shall be paid onthe following alternatives:

(a) If the company receives refund of Sales Tax of Rs. 150 million then the full amount of Rs. 22.988

million shall be paid/adjusted by the company to PICIC immediately henceforth.

(b) In case the aforesaid sales tax of Rs. 150 million is not refunded to the company within the year

ending 30-06-2001 then the company shall sell/dispose their office at Kashif Centre Karachi at

any price (which the company have assured to PICIC shall be in the region of Rs. 25 million) and

the full amount of Rs. 22.988 million shall be paid by the company to PICIC out of the aforesaid

sale proceeds of the office by 30-06-2001.

(c) In case either of the above two options does not materialize then this amount of Rs. 22.988 million

shall be paid by the company through their own sources in monthly installments of Rs. 961,310/-

from the month following immediately after payment of Rs. 80.750 million.

(d) The restructured/rescheduled loans are secured by a first charge already created on the fixed assets

of the company both moveable and immoveable floating charge and hypothecation of all other

assets i.e. book debts and other current assets, present and future ranking pari pasu with NDFC &

BEL Syndicate.

NDFC Loan 7.2

The rate of interest is I I % and foreign exchange risk is 3% per annum payable on the 15^th day of March and

15* day of September each year. Total amount of foreign currency disbursed has since been fixed in Pak

Rupee. The above loan is repayable in sixteen half yearly installments, commencing from I" March 1993.

Against this loan, the Company has regularly paid Rs. 0.5 million p.m. till March 1997, which NDFC has set-

off against their markup dues and Rs. 3.91 6 million paid during the year commencingjuly I, 1999 to June 30,

2000 on the basis of liabilities settled with PICIC. Insp'rte of this no positive response from NDFC has yet

been received. The company also made several attempts to settle the loan under the S.B.P loans scheme,

circular No. 19 dated 05-06-1997 under which the company claims remission in markup, etc. The

company expected as amicable settlement. However, afterthe failure of the negotiations, it has filed a suit

in Court of law. Markup on markup has been deferred by the company till the final decision of the courts.

The loan are secured by first pari pasu charge with PICIC & BEL Syndicate on the fixed assets of the

company both moveable & immoveable floating charge and hypothecation of all other assets i.e. book

debts and another current assets, present and future. This case is subjudice with Honourable

Peshawar High Court.

ORIX Investment Bank Pakistan Limited?.3

The company has arranged a long term finance from Orix Investment Bank Pakistan Ltd. for Rs. 9.5 million

Under markup arrangement. Markup is computed at the rate of 43.84 paisas/l 000/day.

The facility is valid & repayable in a period of 3 years. Repayment of principal would be effected in 34

Monthly installments, commencing three months from the date of agreement and markup would be

Effected, monthly from the date of agreement i.e. July 27, 2002.

Securities:-

The above facility is secured by way of:

1. Hypothecation charge over fixed assets of the company amounting to Rs. 12.667.000/- inclusive

of 25% margin, which is to be maintained at all times.

2. Pledge of certificate of investment amounting to Rs. 1,000,000

Notes

2003

2002

FINANCE UNDER MARKUP

Rupees

ARRANGEMENTS - (SECURED)

8

Cash Finance - Hypothecation

8.1

60,000,000

cash finance - pledge

8.2

9,761,000

Running Finance

8.3

25,064,808

Working Capital

8.4

2,000,000

—

96,825,808

94,825,808

8.1 National Bank of Pakistan has sanctioned a credit facility of Rs. 60.00 million for cash finance The above finance

is secured by first charge against hypothecation of stock in trade, spares, book debts, current assets and risk

sharing guarantee of BEL and NCB's. The validity of the facility has expired on 30-06-98.

The rate of markup is Rs. 0.43836 (2000 Rs. 0.54) per 1000 per day on daily product basis payable

half yearly.

8.2 National Bank of Pakistan has granted cash finance facility of Rs. 10 million against pledge of stock of finished

goods. Rs. 20 m for import of L/C limit, Rs. 5.00 million for Inland L/C limit and Rs. 5.00 million for guarantee limit

The above finance is secured against pledge of stocks of finished goods at 100% margin.

The rate of markup is 0.43836 paisa per Rs. 1000 per day on daily product basis payable half yearly. The

validity of this facility has been renewed uptil June 30, 2001.

8.3 The Bank of Khyber has sanctioned credit facility of Rs. 25 million for cash finance, and Rs. One million for

guarantee limit.The above finance is secured by hypothecation of stocks, stores and spares of the company.

The rate of markup is Rs. 0.43 (2001 Rs. 0.46) per 1000 per day on daily product basis, payable quaterely.

The validity of the facility has been renewed for a full period of one year ending 30-04-2002.

8.4 First Crescent Modarba has sanctioned credit facility under Musharaka Agreement of Rs. 0.3 million for

working capital at a markup rate of 18% per annum for a short term period.

The above finance is secured by hypothecation of debts and Assets of the company.

Notes

2003

2002

Rupees

CURRENT PORTION OF

LONG TERM LIABILITIES

9

Redeemable Capital/Restructured Loan

7,838,775

8,931,129

Long Term Loans

14,883,919

11,535,720

Over due installments

10,769,877

1,278,957

33,492,571

21,745,806

CREDITORS, ACCRUALS AND

OTHER LIABILITIES

10

Creditors

6,949,960

2,436,547

Accrued Liabilities

6,520,340

1,830,082

Other Liabilities

20,954,727

26,419,722

Interest Accrued on Secured Loans

41,402,219

38,017,423

Workers Profit Participation Funds

707,502

Taxation

570,033

582,571

77.104.781

69.993.847

CONTINGENCIES AND COMMITMENTS

Bank Guarantee to Sui Northern Gas

security against bill

II

2,815,000

4,097,000

SALES TAX

7,269,099

Since March 1995 till November 1995 company stopped payment of Sales Tax after finding and decision

of Honorable Wafaqi Mohtasib in favour of the company against our Sales Tax appeal. The department

imposed complete embargo on the clearance of goods from the factory till payment of Rs. 14.772.024/-

in respect of principal amount of Sales Tax and Additional Sales Tax. The company paid Rs. 7,502,925/-

the principal amount of Sales Tax and appealed under Sales Tax Act 1990 for the waiver of Additional

Sales Tax amounting to Rs. 7.269.099/-. The appeal is lying pending before the Peshawar High Court.

FIXED CAPITAL EXPENDITURE AS ON 30-06-2003

Note No. 12

Cost or

Addition

Cost or

Rate of

Accumulated

Depreciation

Accumulated

Written Down

Revaluation

Deletion

Revaluation

Depreciation

for the

Depreciation

Value

PARTICULARS

as at 30-0 6-02

Adjustments

as at 30-06-03

%

as at 30-06-02

Year

as at 30-06-03

Leasehold Land

3,518,245

-

3,518,245

-

3,518,245

Buildings

Factory on Leasehold Land

62,653,320

-

62,653,320

5

45,599,444

852,694

46,452,138

16,201,182

Office on Freehold Land

-

2,648,885

5

1,056,796

79,604

1,136,400

1,512,485

Plant & Machinery Imported

399,160,725

15,963,020

415,123,745

4

128,410,965

10,829,990

139,240,950

275,882,795

Plant & Machinery Local

6,036,532

159,000

6,195,532

10

2,031,600

407,393

2,438,993

3,756,539

Electrification

12,055,064

-

12,055,064

5

6,035,601

300,973

6,336,574

5,718,490

Casting Benches

1,796,000

-

1,796,000

10

1,385,132

41,089

1,426,221

369,779

Furniture & Fixture

2,382,907

-20,740

2,362,167

10

1,602,324

75,984

1,678,308

683,859

Vehicles

5,410,875

131,690

3,371,541

20

4,010,286

214,405

4,224,691

849,624

-2,171,024

-1,702,774

Air-Conditioners & Coolers

1,142,037

-55,648

1,086,389

10

663,245

42,314

705,559

380,830

Office Equipments

2,974,020

89,985

3,064,005

10

1,641,844

136,722

1,778,566

1,285,439

Generators

-

460,000

10

289,063

17,094

306,157

1 53,843

Laboratory Ware

30,130

_

30,130

20

27,090

609

27,699

2,431

Other Assets

1,097,304

87,200

1,144,804

10

643,162

41,444

684,606

460,198

-39,700

Assets subject to finance lease (Vehicles)

-

596,000

20

0

119.2

476,801)

17,026,895

Rupees

501,366,0/14

-2,287,112

516,105,827

193,396,552

13,159,516

204,853,294

311,252,533

501,442,144

222,250

501,366,044

179,908,898

13,758,568

193,396,552

307,969,492

Total 2002 Rupees

-298,350

12.1 Depreciation has ht'.i'.n allocated us under:

2003

2002

Charged to Cost of Sales A/C.

3,978,097

4,566,002

Charged to Admin Expenses

497,262

422,348

Charged to Selling Expenses

497,262

242,204

Charged to Surplus on Revaluation

of Fixed Assets

8,186,895

8,528,014

Total

13,159,516

13,758,568

Notes

2003

2002

Rupees

CAPITAL WORK IN PROGRESS

13

Capital work in Progress

-

1,675,692

LONG TERM DEPOSITS

14

Security Deposits

1,202,250

198,250

STORES, SPARES AND LOOSE

15

TOOLS- AT COST Qff\i«pc

14,930,300

13,906,936

OlWl Cj Spares

18,531,523

18,389,198

33,461,823

32,296,134

STOCK IN TRADE - AT COST

16

Raw Material

35,415,313

31,881,285

Packing Material

3,884,725

4,439,731

Fitting & Accessories

6,102,778

6,088,474

Work in Process

43,719,656

43,864,154

Finished Goods

80,501,562

81,857,115

169,624,034

168,130,759

TRADE DEBTORS

17

Considered Good

72,068,007

77,037,251

Considered Doubtful

-

72,068,007

77,037,25 1

Less: Provision for Doubtful Debts

7,690,376

6,739,876

64,377,631

70,297.38

ADVANCES, DEPOSITS, PREPAYMENTS

18

AND OTHER RECEIVABLES

Supplies

2,391,434

2,367,400

Contractors & Consultants

379,250

375,750

Due from Employees for Expenses

416,745

602,644

Advance against Salaries

398,915

775,952

Sales Tax paid in Advance

383,990

4,083,990

Excise Duty paid in Advance

75,114

Duty & Taxes Refundable

627,869

Deposits & Advances

1,570,000

2,472,223

L/G Margin Deposits

1,518,250

1,018,250

Tax Deduction u/s 1 53

290,076

894,546

8,051,643

13,293,738

2003

2002

Notes

Rupees

CASH AND BANK BALANCES

19

Cash in Hand

3,493,510

46,968

Cash in Transit

19.1

2,999,461

8,452,242

Cash at Bank in Current Account

393,462

887,053

6,886,433

9,386,263

19.1 Most of this amount is in the shape of cheques received, of which about half have still to be encashed.

SALES

20

Tiles

135,441,781

134,307,328

Sanitary

8,372,869

14,040,830

Export Sales

516,078

-

1 44,330,728

148,348,158

Less: Sales Tax

17,552,835

19,563,862

Discount

12,771,334

12,270,088

1 14,006,559

116,514.21

Note: Net Sales include sales to the tune of Rs. 24,629,625/- on which sales tax have been paid in advanced

COST OF SALES

21

Raw Material Consumed

21.1

29,607,733

29,366,064

Mould Dyes & Consumable store

-

213,000

Gas & Electricity

24,906,072

26,125,893

Oil & Lubricants Consumed

713,765

429,246

Wages,Salaries & other benefits

1 8,307,305

14,072,937

Insurance

352,106

834,387

Repair & Maintenance

4,653,142

4,598,957

Research & Development

72,769

16,025

Other Production expenses

460,909

454,275

Packing Material Consumed

21.2

2,695,157

3,548,172

Depreciation

12.1

3,978,097

4,566,002

85,747,055

84,224,958

Beginning Stock W.I. P. July 1st

43,864,154

38,303,205

129,611,209

122,528,163

Less: Closing Stock W.I. P. June 30th

43,719,656

43,864,154

85,891,553

78,664,009

Add: Stock of Finished Goods July 1st

81,857,115

88,634,968

Consumption of fittings and accessories

189,416

595,738

167,938,084

167,894,715

Less: Stock of Finished Goods June 30th

80,501,562

81,857,115

87,436,522

86,037,600

2003

2002

Notes

Rupees

RAW MATERIAL CONSUMED

21.1

Opening

31,881,285

32,358,010

Purchases

33,141,761

28,889,339

65,023,046

61,247,349

Closing Stock

35,415,313

31,881,285

Raw Material Consumed

29,607,733

29,366.06

Packing Material

21.2

Opening

4,439,731

4,918,812

Purchases

2,140,151

3,069,091

6,579,882

7,987,903

Closing Stock

3,884,725

4,439,73 1

Packing Material Consumed

2.695,157

3,548,172

ADMINISTRATION EXPENSES

22

Salaries, Allowances & Benefits

7,427,845

7,493,607

Rent, Rates and Taxes

182,520

113,735

Printing and Stationery

337,304

240,783

Postage, Telegram, Telephone & Telex

1,441,555

1 ,690,444

Fee and Subscription

217,969

216,249

Travelling and Conveyance

843,269

671,550

Legal and Professional Charges

779,503

870,574

Electricity, Gas and Water Charges

674,174

638,132

Lease Rentals

-

15,000

Repair & Maintenance

112,809

80,337

Motor Vehicle Expenses

1,621,677

1 ,646,504

General Expenses

877,275

1,054,140

Bad Debts

950,500

-

Auditors' Remuneration

22. 1

125,000

75,000

Charity & Donation

22.2

12,200

52,160

Depreciation

I2.I

497,262

422,348

22. 1 Auditors' Remuneration

16,100,862

1 5,280,563

Statutory Audit

1 20,000

70,000

Out of pocket expenses

5,000

125,000

75,000

SELLING & DISTRIBUTION EXPENSES

23

Salaries, Allowances & Benefits

3,998,259

3,729,990

Advertisements and Promotion

786,540

408,025

Travelling and Conveyance

340,732

298,196

Postage Telephones, Telegrams & Telex

825,194

728,653

Motor Vehicle Expenses

1,871,828

1,737,671

Entertainment

164,408

255,664

Printing & Stationery

50,633

237,605

Rent, Rates & Taxes

606,112

979,478

Freight Cartage etc.

2,339,682

2,216,004

Other Expenses

683,263

979,286

Depreciation

12.1

497,262

242,204

12,163,913

11,812,776

FINANCIAL CHARGES

24

Interest on Long Term Loans

371,152

982,300

Markup on Short Term Running Finance

5,796,302

4,864,743

Bank Charges

272,937

270,552

6,440,391

6,117,595

TAXATION

25

Current year provision.

570,033

582,571

Prior Year

411,975

-

982,008

582,571

The income tax assessment, of the company has been finalized upto and including assessment year

2002-2003 provision for taxation for the year has been made on the basis of the Turn Over Tax U/S 113

of the Income Tax Ordinance 2001.

DISPOSAL OF FIXED ASSETSNOTE

Mode of

Particular Original Accumulated

Sales 2003 2002

DESCRIPTION

Disposal

of buyer Cost Depreciation W.D.V.

Proceed ProfiV(Loss) ProfitALoss)

HINO Truck (1989)

By Negotiation

Forte Mktg. Services 323,870 306,053 17,817

431,750 413,933

186- A/1,

Township Lahore.

HINO Truck (1989)

By Negotiation

Mr.Hassan Faraz 308,000 294,452 13,548

610,000 596,452

JT 1090

S/o Syed Umer Khan

Akora Khattak.

Mazda Truck

By Negotiation

Forte Mktg. Services 500,000 180,000 320,000

350,000 30,000

JT1089

Karachi

Suzuki Swift (1989)

By Negotiation

Forte Mktg. Services 160,000 151,203 8,797

105,875 97,078

186- A/1,

Township Lahore.

Suzuki Pickup (1989)

By Negotiation

Forte Mktg. Services 90,000 85,059 4,941

105,875 100,934

186 -A/1,

Township Lahore.

Toyota Corolla (1981)

By Negotiation

Mehmood Ali Bangash(Employee) 178,750 176,688 2,062

200,000 197,938

H.No. 3, St. No. 3,

Warsak Road, Peshawar.

Suzuki Jeep

By Negotiation

Mehmood Ali Bangash(Employee) 97,000 95,875 1,125

110,000 108,875

H.No. 3, St. No. 3,

Warsak Road, Peshawar.

Suzuki Pickup (1995)

By Negotiation

ZahirUllah 222,000 163,803 58,197

180,000 121,803

Gul Abad, Bazit Khail,

Bada Bair Peshawar.

Suzuki Pickup

By Negotiation

Forte Mktg. Services 195,000 70,200 124,800

110,000 (14,800)

Karachi

Motor Cycle (1986)

By Negotiation

Forte Mktg. Services 14,700 14,287 413

19,000 18,587

186- A/1,

Township Lahore.

Motor Cycle (1990)

By Negotiation

Forte Mktg. Services 26,084 24,291 1,793

24,000 22,207

186- A/1,

Township Lahore.

Motor Cycle (1991)

By Negotiation

Forte Mktg. Services 27,350 25,001 2,349

25,000 22,651

186 -A/1,

Township Lahore.

Motor Cycle

By Negotiation

Forte Mktg. Services 28,270 26,328 1,942

20,000 18,058

Karachi

Furniture & Fixture

By Negotiation

Forte Mktg. Services 20,740 1 5,997 4,743

10,000 5,257

186- A/1,

Township Lahore.

Air Conditioners

By Negotiation

Forte Mktg. Services 55,648 42,919 12,729

25,000 12,271

186- A/1,

Township Lahore.

Other Assets

By Negotiation

Forte Mktg. Services 39,700 30,618 9,082

11,500 2,418

186- A/1,

Township Lahore.

2002-2003 2,287,112 1,702,774 584,338

2,338,000 1,753,662

2001-2002 298,350 270,914 27,436

266,000 - 238,564

REMUNERATION OF DIRECTORS AND EXECUTIVES

Chief

Other

Managerial

Executive

Directors

Executives

2003

2002

Remuneration

400,000

1,222,832

1,858,036

3,480,868

3,105,747

House Rent

1 60,000

489,133

743,214

1,392,347

1,242,299

Utilities

40,000

122,283

185,804

348,087

310,575

Total 2003

600,000

1,834,248

2,787,054

5,221,302

•

Total 2002

600,000

2,067,000

2,284,947

-

4,951,947

No. of Persons

2003

1

3

11

15

-

2002

1

3

12

_

16

In addition to the above, all the directors and executives are provided free use of company cars as per

their entitlement for office use. aggregate amount charged in the accounts for fee to directors

was Nil, (2002 Rs. Nil).

BASIC EARNING PER SHARE 28

Prof it/(Loss) for the year after taxation

-7,307,614

-2,969,368

Average issued ordinary shares

7,741,200

Earning per share

-0.94

-0.38

29. CAPACITY

The Installed production capacity of the plant is 3,000 tons for Sanitaryware

and 620,000 sqm. for Tiles. Actual capacity attained during the year in

respect of Tiles were 504,774 Sqm. Respectively (2002 Sanitary 236 tons

and Tiles 478,129 Sqm.)

FINANCIAL ASSETS AND LIABILITIES

Interest/Markup bearinq

Non - Interest Markup bearinq

Maturity

Sub

Maturity

Sub

Total

upto one

After one

Total

upto one

after one

Total

2003

2002

year

Financial Assets

Advances, Deposits,

Prepayments and other

Receivables

-

0

8,051,643

-

8,051,643

13,293,738

Trade Debtors

-

0

64,377,631

-

64,377,631

70,297,375

Long Term Deposits

-

0

-

1,202,250

198,250

Cash and Bank Balance

-

0

6,886,433

-

6,886,433

9,386,263

June 30, 2003

-

0

79,315,707

1,202,250

80,517,957

93,175,626

June 30, 2002

-

0

92,977,376

198,250

93,175,626

-

Financial Liabilities

Redeemable capital

0

-

0

42,025,999

Long-term loans

18,982,914

51,451,246

70,434,160

_

-

0

70,434,160

69,203,047

Short-term finances

-

96,825,808

-

0

96,825,808

94,825,808

Creditors, accrual

and other liabilities

-

0

77,104,781

-

77,104,781

70,581,560

June 30, 2003

115,808,722

51,451,246

167,259,968

77,104,781

-

77,104,781

244,364,749 ;

276,636,414

June 30, 2002

115,292,657

90,762,197

206,054,854

73,779,100

-

73,779,100

279,833,954

-

30.1 Concentration of credit risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties fail completely

to perform as contracted. Out of the total financial assets of Rs. 80,517,957/-(2002 Rs. 93,175,626) the financial assets

which are subject to credit risk amounted to Rs. 74,631,624/- (2002 Rs. 83,789,636). The Company believes that it is not

exposed to major concentration of credit risk.

30.2 Foreign Exchange Risk Management

Foreign currency risk arises mainly where receivables and payables exists due to transaction with foreign undertakings.

30.3 Fair Value of Financial Assets and Liabilities

The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values.

31. NUMBER OF EMPLOYEES

Total number of employees as at June 30, 2003 were 365 (2002:360)

32. CORRESPONDING FIGURES

Corresponding figures have been rearranged and reclassified, wherever necessary, for the purpose of comparison.

PATTERN OF SHAREHOLDING AT 30 JUNE, 2003

Number of

Share Holders

Shareholding

Total Share Held

116

1

100

11,600

2,476

101

500

1,175,600

85

501

1,000

83,300

92

1,001

5,000

231,700

11

5,001

10,000

88,000

2

10,001

15,000

26,600

2

15,001

20,000

35,500

1

20,001

25,000

20,800

2

25,001

45,000

90,000

1

45,001

50,000

47,500

1

50,001

70,000

67,000

2

70,001

100,000

200,000

1

100,001

125,000

122,900

1

125,001

150,000

147,500

1

150,001

500,000

464,000

1

500,001

600,000

516,805

1

600,001

1,000,000

716,600

1

1,000,001

1,100,000

1,040,000

1

1,100,001

1,300,000

1,208,195

1

1,300,001

1,500,000

1,447,600

2.799

7,741,200

Categories of

Number of

Share Holders

Share Holders Share Held

Percentage

1. Individuals

2,792

5,172,600

66.82

2. Investment Companies

1

122,900

1.59

3. Insurance Companies

2

200,000

2.58

4. Financial Institutions

3

2,231,200

28.82

5. Modaraba

1

14,500

0.19

6. Joint Stock Companies

7. Foreign Investors

8. Co-operative Societies

9. Charitable Trusts

1 0. Others

2,799

7,741,200

100