Annual Report 2017 PDF

ITTEFAQ IRON INDUSTRIES LTD.
Annual Report 2017
LOOKING
BEYOND
TOMORROW
CONTENTS
Key Figures 02
Corporate Information 04
Vision, Mission 06
Strategy Goals & Core Values 09
Notice of Annual General Meeting 10
Code of Business Conduct & Ethics 16
Profile of Directors 18
Company Profile 20
Organization Chart 24
Chief Executive Message 25
Directors Report 26
Last Five year Financial review 32
Pattern of Shareholding 35
Statement of Compliance with the code of
Corporate Governance 37
Review Report to the Members 39
FINANCIAL STATEMENTS
Auditors Report to the Members 43
Balance Sheet 44
Profit and Loss Account 46
Statement of Comprehensive Income 47
Statement of Changes in Equity 48
Cash Flow Statement 49
Notes to the Financial Statement 51
Directors Reports in Urdu 89
Forms of Proxy in Urdu & English
ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 1

KEY FIGURES
Sales Revenue
PKR in 4,442.102,678
Million (2016: 3,917.451,919) Restated
EBITDA
PKR in
430.704,533 Million
(2016: 434.357,235) Restated
Profit Before Taxation and

PKR in Depreciation
Million 319.296,913
(2016: 266.864,402) Restated
Profit After Taxation

PKR in
140.861,268 Million
(2016: 77.029,293) Restated
Earnings Per Share

PKR (Basic and Diluted)
1.55 (2016: 0.861) Restated (After IPO)
(2016: 8.61) Restated (Before IPO)
2 ANNUAL REPORT 2017

Return On Capital Employed
% 4.80
(2016: 4.88)
Total Assets
PKR in
5,142.699,424 Million
(2016: 4,006.452,559)
Current Ratio
PKR 2.37
(2016: 1.46)
Shareholders Equity
PKR in
2,934.413,263 Million
(2016: 1,578.304,414)
Break-Up Value Per Share

PKR in 22.00
Million (2016: 18.00)

CORPORATE INFORMATION
Board of Directors Hr & R Committee
Mian Muhammad Pervaiz Shafi Chairman Khalida Pervaiz Chariman
Usman Javed Chief Executive Sumbleen Usman Member
Javed Sadiq Director Ayesha Fahad Member
Khalid Mustafa Director
Khalida Pervaiz Director Chief Financial Officer
Sumbleen Usman Director Amir Munir Bhatti (FCMA)
Ayesha Fahid Director
Share Registrar
M/s. Corplink (Pvt.) Ltd
Audit Committee
Share Registrar & Corporate Consultants
Mian Muhammad Pervaiz Shafi Chairman
Wing Arcade, 1-K, Commercial
Usman Javed Member
Model Town,Lahore
Javed Sadiq Member
Tel; 042-35916714, Fax; 042-35869037
Email; corplink786@gmail.com
Company Secretary
Muhammad Shahzad Bazmi(AFPA) Registered Office
40 B-II, Gulberg III, Lahore
Auditors Tel: 042-35765021-26, Fax; 042-35759546
Kaleem & Co. Email: info@ittefaqsteel.com
Chartered Accountants
H.No.134, C Link 4, St # 2 Company Website
Cavalary Ground Lahore www.ittefaqsteel.com
Legal Advisor
Mills Muhammad Shahzad Bazmi
8-KM Manga Raiwind Road Advocate High Court
Near Rousa Stop 40 B-II, Gulberg III, Lahore
Tel: 042-35397001-8 Tel: 042-35765021-26, Fax; 042-35759546
Email: mshehzadbazmi@yahoo.com
Bankers
National Bank of Pakistan
Bank of Punjab

VISION
STATEMENT
TO CONTRIBUTE TO THE SOCIETY BY

CREATING BETTER VALUE, INNOVATIVE
TECHNOLOGY, HIGH QUALITY STEEL
PRODUCTS AND SUPERIOR SERVICES.

MISSION
STATEMENT
ITTEFAQ STEEL AIMS TO PROCEED ON ITS

PATH TO BE THE LEADING PROVIDER OF
QUALITY STEEL PRODUCTS, THROUGH
EMPLOYEES EMPOWERMENT WITH SAFE AND
ENVIRONMENTALLY SOUND PRACTICE.

STRATEGIC
GOALS
PROVIDING CUSTOMER SATISFACTION BY
SERVING WITH SUPERIOR QUALITY PRODUCTION
OF STEEL BAR, GIRDER ETC AT LOWEST COST.
ENSURING SECURITY AND ACCOUNTABILITY
FOR EMPLOYEES, PRODUCTION FACILITIES AND
PRODUCTS.
ENSURING EFFICIENT RESOURCE MANAGEMENT
BY MANAGING HUMAN, FINANCIAL, TECHNICAL
AND INFRASTRUCTURAL RESOURCES SO AS TO
SUPPORT ALL OUR STRATEGIC GOALS AND TO
ENSURE HIGHEST POSSIBLE VALUE ADDITION TO
STAKEHOLDERS.

CORE VALUES
STRIVING FOR CONTINUOUS IMPROVEMENT
AND INNOVATION WITH COMMITMENT AND
RESPONSIBILITY: TREATING STAKEHOLDERS
WITH RESPECT, COURTESY AND COMPETENCE;
PRACTICING HIGHEST PERSONAL AND
PROFESSIONAL INTEGRITY; MAINTAINING
TEAMWORK, TRUST AND SUPPORT WITH OPEN
AND CANDID COMMUNICATION; AND ENSURING
COST CONSCIOUSNESS IN ALL DECISIONS AND
OPERATIONS.

NOTICE OF ANNUAL
GENERAL MEETING
Notice is hereby given that the 12th Annual General Meeting of the members of ITTEFAQ IRON
INDUSTERIES LIMITED will be held on Saturday, October 28, 2017 at 12:00 noon at registered office,
40 B II, Gulberg-III, , Lahore to transact the following business.
ORDINARY BUSINESS
1. To confirm the minutes of the last EOGM held on Monday , February 01, 2017.
2. To receive, consider and adopt the audited financial statements of the Company together with
the Directors and Auditors Report thereon for the year ended June 30, 2017.
3. To appoint Auditors for the year ending June 30, 2018 and to fix their remuneration. The present
auditor M/s. Kaleem & Co., Chartered Accountants, the retiring auditors, who being eligible,
have offered themselves for re-appointment.
4. To elect seven (7) directors of the Company as fixed by the Board of Directors in accordance
with the provisions of section 159(1) of the Companies Act , 2017 for a term of three (3) years
commencing from October 31, 2017. The names of retiring directors are as follows:
1. Mr. Usman Javed 2. Mian Muhammad Pervaiz Shafi

3. Mr. Javed Sadiq 4. Mr. Khalid Mustafa
5. Mrs. Khalida Perviz 6. Mrs. Sumbleen Usman
7. Mrs. Ayesha Fahid
The above retiring directors are eligible for re-election.
5. Any other Business with the permission of the Chairman.

SPECIAL BUSINESS
6. To consider, and if thought fit, to pass the following resolution as special resolution with or without
modification relating to transmission of annual audited financial statements of the Company
through CD 0r DVD or USB.
RESOLVED that the transmission of the annual audited financial statements of the Company
together with the Directors and auditors report thereon, the notes and other information forming
part thereof through CD or DVD or USB to members instead of sending in Book form/Hard Copy
be and is hereby approved in terms of SECP .S.O.R No 470 Dated May 31, 2016.
7. To consider, and if thought fit, to pass the following resolution as special resolution with or without
amendments, for alteration in the Articles of Association of the Company in order to copy with
the mandatory e-Voting requirements as prescribed by Securities and Exchange Commission
under Companies (E-Voting ) regulations 2016:
RESOLVED that the accordance with applicable statutory requirements, the following new articles
45-A, be and is hereby inserted after the existing articles 45 in the Articles of Association.
45-A (Electronic Voting)
1. A member may opt for e-voting in a general meeting of the Company under the provision and
requirements for e-voting as prescribed by the SECP from time to time and shall be deemed
to be incorporated in these Articles. Members are allowed to appoint members as well as non-
members as proxies for the purposes of electronic voting pursuant to this article.
2. The Article shall be applicable for the purpose of electronic voting only;
Resolved further that the Company Secretary be and is hereby authorized to do all acts, deeds
and things, take all steps and actions as deemed necessary, ancillary and incidental in order to
give effect the aforesaid resolution.
A statement as required by Section 134 (3) of the Companies Act , 2017 in respect of Election of
Directors and Special Business to be considered at the meeting is being sent to the members,
along with a copy of this notice.
BY ORDER OF THE BOARD
Lahore: Muhammad Shahzad Bazmi

October 6, 2017 Company Secretary.

NOTES:
1. Book closure
Share transfer books of the Company will remain closed from October 21, 2017 to October
28, 2017 (both days inclusive). Physical transfers/ CDS transaction IDs received in order by the
Companys Share Registrar, M/s. Corplink (Pvt.) Limited Wings Arcade,1-K, Commercial, Model
Town, Lahore, up to the close of business on October 20, 2017 will be treated in time.
2. A member entitled to attend and vote at the above meeting may appoint a person/representative
as Proxy to attend and vote on his behalf at the Meeting. The instrument of Proxy duly executed in
accordance with the Articles of Association of the Company must be received at the Registered
Office of the Company not less than 48 hours before the time of holding the meeting.
3. The individual members or representatives of corporate members of the Company in CDC must
bring original National Identity Card or Passport, CDC Account and Participant ID Numbers
to prove identity and verification at the time of Meeting. CDC account holders will further have
to follow the guidelines as laid down in Circular No.1 dated January 26, 2000 issued by the
Securities and Exchange Commission of Pakistan.
4. Notice to Shareholders who have not provided their CNICs:

In accordance with the notification of the Securities and Exchange Commission of Pakistan
vide their SRO 779 (1)/2011 dated August 18, 2011 and SRO 831(1) 2012 dated 5 July, 2012,
dividend warrants are required to bear CNIC number of the registered member or the authorized
person, except in case of minor(s) and corporate members. Accordingly, members who have
not yet submitted copies of their valid CNIC or NTN in case of corporate entities are requested
to submit the same to the Companys Shares Registrar. In case of noncompliance, the Company
will withhold dispatch of Dividend Warrants as per law.
5. Payment of Cash Dividend Through Electronic Mode

The provisions of Section 242 of the Companies Act, 2017 require that the dividend payable in
cash shall only be paid through electronic mode directly into the bank account designated by the
entitled shareholders. Therefore, for making compliance to the provisions of law, all those physical
shareholders who have not yet submitted their bank account IBAN details to the Company are
requested to provide the same on the Dividend Mandate Form available on Company website
at www.ittefaqsteel.com All those shareholders of the Company in CDC, who have also not
provided their bank account details are also requested to provide the same to their participants
in CDC, who maintain their accounts in CDC and ensure that their bank account details are
updated.
6 Deduction of Income Tax from Dividend under Section 150 of the Income Tax Ordinance, 2001:
The current prescribed rates for the deduction of withholding tax from payment of dividend by the
companies are as under:
For filers of income tax returns: 15%

For non-filers of income tax returns: 20%
The income tax is deducted from the payment of dividend according to the Active Tax-Payers List
(ATL) provided on the website of FBR. Further, according to clarification received from Federal
Board of Revenue (FBR), withholding tax will be determined separately on Filer/Non-Filer status
of Principal shareholder as well as joint-holder(s) based on their shareholding proportions, in
case of joint accounts held by the shareholders.

In this regard, all shareholders who hold shares jointly are requested to provide shareholding
proportions of Principal shareholder and Joint-holders in respect of shares held by them to our
Shares Registrar, in writing as follows:
ITTEFAQ IRON INDUSTRIES LIMITED

FORM OF JOINT SHAREHOLDING PROPORATION
Folio/CDC Names of Total Percentage of CNIC no (copy Signatures
Account no. principal and joint shares shares held attached)
shareholders (proportion)
7 Video conferencing facility
Pursuant to provisions of SECP Circular No.10 of 2014 dated May 21,2014, if the Company
receives consent from members holding aggregate 10% or more shareholding, residing in
geographical location to participate in the meeting through video conference at least 10 days
prior to the date of meeting, the Company will arrange video conference facility in that city.

8. Election of directors
Every candidate desiring to contest the election of Directors, whether he/she is retiring Director or
otherwise, shall file with the Company not later than fourteen (14) days before the date of Annual
General Meeting, a notice of his/her intention to offer himself/ herself for election, in terms of
section 159 (3) of the companies Act 2017 along with his/her consent to act as Director, in terms
of section 167(1) of the Companies Act 2017.
The candidate shall further comply with the relevant provisions of listing regulations of Pakistan
Stock Exchange Limited and file with the Company a detailed profile along with his/her relevant
declarations as required under the Code of Corporate Governance 2012. He /She should also
confirm that:
A. He /She is not ineligible to become Director of the Company under any applicable laws and
regulations (including listing regulation of the Stock Exchange).
B. He/ she is not serving as Director in more then seven listed Companies.
C. Neither he/she nor his/her spouse engaged in the business of brokerage or is a sponsor directors
or officer of the corporate brokerage house.
9. Members are requested to notify any changes in their mailing addresses to the Companys Share
Registrar as soon as possible.
10. For any query/information, the shareholders may contact corporate affairs department, 042-
35765029, email address or Companys Share Registrars, M/s Corplink (Pvt.) Limited, Wings
Arcade,1-K Commercial, Model Town, Lahore. Phone:042-35916714, 042-35916719.
Email:corplink@gmail.com.

CODE OF BUSINESS
CONDUCT & ETHICS
The Code of Conduct sets out the Companys objectives and its responsibilities to various stakeholders
and the ethical standards required from its Directors and employees to meet such objectives and
responsibilities.
FINANCIAL DISCLOSURE
All transactions should be accurately reflected in the books of accounts according to applicable
accounting principles. Falsification of the Companys books, any of the recorded bank accounts and
transactions is strictly prohibited.
CONFLICT OF INTEREST
The Directors and employees of the Company must recognize that in the course of performing their
duties, they may be out into a position where there is a conflict in the performance of such duty and
a personal interest they may have. It is the overriding intention of the Company that all business
transactions conducted by it are on arms length basis.
COMPLIANCE WITH LAWS, DIRECTIVES & RULES
Compliance with all applicable laws, regulations, directives and rules including those issued by the
Board of Directors and Management.
CONFIDENTIALITY
Confidentiality of the Companys internal confidential information must be maintained and upheld,
which includes proprietary, technical, business, financial, joint-venture, customer and employee
information that is not available publicly.
TIME MANAGEMENT
The Directors and the employees of the Company shall ensure that they adopt efficient and productive
time management schedules.
BUSINESS INTEGRITY
The Directors and employees will strive to promote honesty, integrity and fairness in all aspects of
the Companys business and their dealings with vendors, contractors, customers, Joint Venture
participants and Government officials.

INSIDER TRADING
Every Director and employee who has knowledge of confidential material information is prohibited
from trading in securities of the Company.
HEALTH, SAFETY & ENVIRONMENT
The Company, its Directors and employees will Endeavour to exercise a systematic approach to health,
safety and environmental management, in order to achieve continuous performance improvement.
INVOLVEMENT IN POLITICS, GIFTS & BRIBARY
Company shall not make payments or other contributions to political parties and organizations.
Employees must ensure that if they elect to take part in any form of political activity in their spare time,
such activity does not and will not have any adverse effects on the Company and such activities must
be within the legally permissible limits. The Directors and employees shall not give or accept gifts,
entertainment, or any other personal benefit or privilege that could influence business dealings.
COMPLIANCE
All Directors and employees must understand and adhere to the Companys business practices
and Code of Conduct. They must commit to individual conduct in accordance with the Companys
business practices and Code of Conduct and observe both the spirit and the letter of the Code in their
dealings on the Companys behalf.
ACCOUNTABILITY
Failure to adhere to the Companys business practices or Code of Conduct may result in disciplinary
action, which could include dismissal.

PROFILE OF DIRECTORS
Mr. Usman Javed, Chief Executive Officer / Director
Mr. Usman is the son of Mian Muhammad Javed Shafi; one of the most eminent industrialists of the
country with a superior vision and dynamic brand of leadership. Mr. Usman has held the directorships
at Kashmir Poultry Breeders (Pvt.) Limited, Ittefaq Sugar Mills Ltd. and Kashmir Feeds Ltd.
Mr. Usman is instrumental in making strategic decisions for the Company and has led the Company
to become one of the leading players in steel sector. He is an MBA from The University of Utah, USA.
Mr. Mian Muhammad Pervaiz Shafi, Director
Mr. Pervaiz has a rich and diversified experience of 40 years in iron and steel industry and is renowned
as one of the most experienced industrialists of the steel industry. He has also served as the Director
of Ittefaq Sugar and Kashmir Sugar Mills Ltd. Under his leadership the Company expects to achieve
new heights and can further excel in the steel industry. Mr. Pervaiz is also serving as a member of audit
committee of the Company.
Mr. Javed Sadiq, Director
Mr. Sadiq is serving as an independent director and has brought significant diversity to the board
of Ittefaq Iron Industries (Formerly Ittefaq Sons Limited). Previously, he has served on the boards
of National Investment Trust, Regional Development Finance Corporation, Lahore University of
Management Sciences and State Cement Corporation and currently holds directorships in The United
Insurance Co. of Pakistan and Greenstar Social Marketing. Having a remarkable history of more than
four decades, Mr. Sadiq has served various prestigious organizations including National Development
Finance Corporation as Director, EVP Karachi, SVP Zonal Head Lahore, Overseas Employment
Corporation as Manager Marketing Planning and Development, MICAS Association Pakistan as
Deputy General Manager, Decca Ltd. London as System and O&M Analyst and BBC London in
audience Research Development. He has also worked with First national Bank Modaraba as the CEO
and Industrial Development Bank of Pakistan as a Chairman.
Mr. Sadiq has also rendered consultancy services to NDFC for the affairs related to Karachi Electric,
Wapda and National Book Foundation. Also, he has provided his consultancy for the billion, transmission
and distribution departments of KE.
Mr. Sadiq is also a member of audit committee of the Company. He holds the degree of B.A (Hons.)
from University of Liverpool, England and is also an M.A in International Relations & Economy from
University of Manchester, England.

Mr. Khalid Mustafa, Director
Mr. Khalid Mustafa is a graduate from M.A.O College, Lahore. He has a vast and illustrious experience
of transport and steel business having served in the sectors in various capacities. He possesses keen
interest in Pakistan Politics and sports. He was elected as councilor in local body election thrice and
has also served as chairman bait-ul- mall Lahore.
Mrs. Khalida Pervaiz, Director
Mrs. Khalida Pervaiz is daughter of Mian Khalid Siraj who was ex-partner of Ittefaq Foundries. She has
also served as director in Ittefaq Sugar Mills Ltd. At present she is on the board as well as a member of
Human Resource Committee and has taken numerous initiatives for the development of HR function
of the Company. She is also supervising a charitable institution and actively participates in social work.
Mrs. Ayesha Fahid, Director
Mrs. Ayesha Fahid is a graduate from Lahore College. Her presence on the board and as a member
of HR Committee has brought numerous initiatives to set high standards and benchmarks for the
performance of the Company. She also aims to work for the improvement of product portfolio of the
Company and expanding its customer base.
Mrs. Sumbleen Usman, Director
Mrs. Usman is a graduate from Lahore College. Apart from serving the board she is supervising the
procurement of raw materials and is also serving as a member of HR Committee.

COMPANY PROFILE
Ittefaq the name of itself has over the years become synonymous with quality structural steel in
Pakistan.
Ittefaq steel is made up of 1000 team-mates whose goal is to take care of the customers. We are
accomplished this by being the safest highest quality and most productive steel products company
is Pakistan. We are committed to doing this while being cultural and environmental stewards in
communities where we live and work. We are succeeding by working together.
The companys attention is focused on customers satisfaction, development of products, research and
quality control however, the main concern since the beginning has been to emphasize on investment
in the national manpower, as it is the real capital of the company.
The companys long term investment in a combination of advanced technologies with the highly trained
and motivated work force has been the key factor in bringing us to this point in our development.
Today, by the grace of ALLAH we are leading a way in heavy industry by providing structure and alloy
steel in the form of billet & bars in all type of industrial, residential sectors.
Product Profile
Ittefq Steel is the leading steel rolling mill in Pakistan with the capability to manufacture international
quality products with various standards, such as DIN, ASTM etc. the company has created a name
for itself and is known as the pioneer in steel products. Our state of the arts rolling mill can produce
structure steel (with close tolerance and the required mechanical properties) and cater yo stringentt
requirements for critical applications. Highly responsive and flexible production capability producing
trailor made solution has resulted in Ittefaq Steel becaome a preffered supplies to key customers of
structural steel in the region. Ittefaq steel is also able to minimize the leading time required to provide
consistent international quality structural steel angels flat bars, channels, round and girders in a wide
range of sizes.
PRODUCTS
DEFORMED BARS
Ittefeq Steel has been shaping steel for the nation for more than 50 Years. Our Deformed steel bars
of Grade 40 and Grade 60 are produced in all American and British Standards Sizes from 10mm to
50mm. The Deformed bars are manufactured in a state if the art fully computerized plant. Well trained
staff operates the plant with through quality control at all stages of manufacturing process. Ittefaq steel
has also introduced international quality ittefaq thermex TMT bars.

GIRDER, T-IRON, I & BEAM, CHANNEL & ANGEL
I-Beam are commonly made of structured steel. A common type of I-Beam is the Rolled Steel joist
(RJS). These sections have parallel flanges. Ittefaq Steel is manufacturing I & H-Beam, Girder, T-Iron,
Channel and Angle that has no match in strength and durability. All these products are available in
different sizes as per your need and convenience.
STEEL BILLETS
Ittefaq Steel has quickly emerged as one of the most productive mills in Pakistan producing high
quality industrial steel conforming to international standards industrial section, angles girders, channels,
rounds, and special shapes. Throughout our melt shop from steel scrap to billets we maintain strict
control over the composition of our steel. Ittefaq steel quality system is based in the key principals of
ISO and is focused on production products consistently right, to meet the customer requirements.
PRODUCTION FACILITIES
INDUCTION FURNACES
Melt shop is the heart of steel making operation at ittefaq. Here, steel scrap is transformed in to a
semi-finished product (Called a Billet) of correct size and chemistry, in two medium frequency induction
furnace each having of 15 ton capacity per heat
LADLE REFINING FURNACES
Ladle Refining Furnace with a capacity of 20 ton per heat is used for refining liquid steel to produce
high quality alloy steel. LRF reduces the dissolved gas content and helps in improved quality with
better content and helps in improved quality with better recover of Ferro Alloys.
AOD CONVERTER
A.O.D is an improved Air-Oxygen Decarburization (AOD) Convertor. At Ittefaq Steel, our AOD has a
capacity of 22 tons per heat for making Stainless Steel and low carbon alloy steels.
CONTINUOUS CASTING
The two strand 6/11 radius continous caster is occupied with special features, for the production of
100mm X 100mm to 200mm x 200mm steel billet.
BAR ROLLING MILL
Fully automatic rolling of 20 straight with auto controlled re-heating furnace has the capacity to roll
steel bars from 10mm to 50mm size according to international standards.
STRUCTURAL MILL
A 24 modern structural mill has been recently installed with a rolling capacity of 35-40 ton per hour to
produce Ms Joist, Ms Channel, Ms Angle, Ms T-Iron, Round Bar and other shapes of steel structure.

QUALITY Universal Tensile Testing Machine
Ittefaq iron industries limited is committed to A modern hydraulic tensile testing machine with
supply quality products strictly as per customer maximum load capacity 2000KN is installed
requirement. A well equipped metallurgical with servo control to test various metallic and
labortary has always been need of the day to non-metallic materials for tension, compression,
ensure products being produced as per requisite bending and shearing strength. It is capable of
standards for this purpose company have testing the characteristic of material on physical
established a well equipped modern steel testing and technological properties machine is equipped
laboratory to ensure strict quality control at all with computer software and printer. It can control
stages i.e. from induction of raw material to the the test procedures as the set programs and can
dispatch of finish products. also display record, process and print the test
results and can draw test curves automatically
Quality assurance laboratory installed is one of the in real time. This machine has been recently
most modern laboratories in Pakistan equipped imported installed and commissioned under the
with the following testing facilities required for supervision of foreign experts and is presently
quality production of steel and R & D purpose for the biggest capacity computerized machine
further advancement in the relevant field. in any steel industry in Pakistan. Besides this,
there is already a 1000-KN capacity machine in
Emission Spectrometer the mechanical testing lab to share the load of
testing.
A twenty seven channel optical Emission
spectrometer for direct analysis of solid metallic Moreover this machine complies with ISO 7500-
samples of ferrous metals with high precision 1, ISO-6892, ISP-15630, ASTMA-730, ASTME4,
accuracy least inter element interference ASTME9, ASTMD 76, JISZ 2841 standards.
particularly for trace element analysis of world
famous German Spectro Lab brand has been Hardness Testing
installed and Commissioned under foreign experts
for quick and accurate analysis of results and to Two latest model hardness testers have been
print out reports in addition to save analysis data installed in the laboratory for determining brinnel
for traceability. Rockwell and Vickers hardness of ferrous
nonferrous and hard alloys with complete
LECO CS 230 Analyzer measuring range.
LEO CS 230 has been installed to determine Metallography

precisely carbon & sulphur contents of steel and
other carbonaceous material over a wide range of Metallography is a powerful material investigation
composition. The equipment is of German origin tool. Its lead to establish product reliability and to
and has been designed for more accurate results determine the failure of materials. Keeping in view
in quick basis with built in computer to print out the vital role of Metallography laboratory has been
analysis report. installed and is under functioning. The laboratory
comprises of a metallurgical microscope equipped

with reflected illumination which provides bright Sample Preparation
field, dark field, polarization observation and
photography. Moreover a computer system The goal of metallo graphic specimen preparation
with image analyzer software is attached to the is to reveal the true structure of the material.
microscope for online microstructure analysis. True structure enables the analyst to examine a
specimen surface that show a precise image of
Chemical Analysis the material. Mechanical preparation (i.e) (cutting,
grinding and polishing) is the most common
In addition to above mentioned testing facilities, method of preparing samples for microscopic
there exists a complete and up to date chemical examination.
laboratory for analysis of ferrous and Ferro
alloys. A dedicated and experienced R & D team A complete range of equipment for cutting,
is engaged in developing new products and grinding, fine grinding, cold mounting and
upgrading existing formulations. We develop and embedding, hot compression mounting has
produce products to meet the entire satisfaction been installed in the metallographic laboratory for
of the customer. We continuously upgrade the proper preparation of samples for metallographic.
product based in the feedback from end user. Our
field representative keep a track of performance
of each supply and forward the feedback to
our technical experts. Who analyze and make
necessary changes, if required. Our valued
customers are assured of best quality material.

ORGANIZATION CHART
Chief Financial
Officer

CHIEF EXECUTIVE MESSAGE
Dear Shareholders,
I take great pleasure in welcoming you. This is our first annual

report after becoming a listed company, with an IPO that
was oversubscribed by 2.5 times in book building exercise,
Alhamdulillah. The share was valued at a premium of PKR
20.2/- coming to PKR 30.2/- per share. Our team at Ittefaq
takes pride in announcing that we have outperformed our
expectations
The success of any industry depends on the extent of its

competitiveness in the markets. Doubtlessly, steel industry
is the backbone of industrial progress for any community.
Therefore, we took special care at an early stage in
establishing a strong steel industry in our country. That is
why, Ittefaq Steel, an integrated steel complex is considered
to be a source of pride for the country and ranked amongst
one of the largest steel producers in Pakistan.
Ittefaq will continue to strive not only to maintain but also

to enhance its reputation by a process of continuous
improvement in every area of operations, to protect the ongoing development of the company. As an
existing or potential customer of ittefaq, your continued consideration and support is highly valued,
as we continue to grow and participate in the development of the steel industry in Pakistan. Ittefaq
steel also occupies a strategic position amongst the largest steel producers in the country. This was
the result of efforts over decades during which many challenges were encountered and surmounted,
thanks to ALLAH.
My appreciation goes also to my colleagues, directors of the board, management and employees
of the company whose sincere efforts have been instrumental in maintaining the attained records
of quality and quantity. I am confident that our products will always be strong and durable as our
commitment.
Usman Javed
Chief Executive Officer

DIRECTORS
REPORT
It gives me great pleasure in presenting
you the Companys 12th Annual Report
and Audited Accounts for the year
ended 30th June 2017.

OPERATING RESULTS (Rs. In Million)
PARTICULARS 2016-17 2015-16

Gross Sale 4544.932 4065.879
Net Sales 4442.102 3917.451
Operating Profit 319.554 307.295
Profit Before Tax 198.736 135.006
Profit After Tax 140.861 77.029
Earning Per Share( EPS) 1.55 0.86
REVIEW OF OPERATING RESULTS synergy between process-efficiency and cost-

effectiveness.
It is our humble gesture to present the first annual
report and financial statements for the year ended Keeping in view the above fact , we are confident
30th June 2017 to all our valued shareholders that our business will grow and Company will be
after becoming a listed Company. In order to in a better to announce bonus, cash dividend
cater the demand for its products, the required etc. its shareholders in the near future.
enhancement in its working capital was raised
via equity financing, so Company issued share DIVIDEND
capital through Initial Purchase Offer ( IPO) which
was oversubscribed by 2.5 times in book building The Board of Directors of the Company has not
exercise at the end of May 2017. Alhamdolillah, announced divided for the year ended 30.02017,
the share was valued at a premium of PKR 20.2/- However Board is optimistic for better results in
coming to PKR 30.2/- per share future.
The steel requirements of the domestic market in CHIEF EXECUTIVES REVIEW

Pakistan is growing exponentially due to increased
government spending on building, infrastructure, The Directors endorse the contents of the Chief
and various CPEC related projects. Executives Review for the year ended 30 June
2017 which contains the state of the Companys
Company is the steel provider for various ongoing affairs, operational performance. The contents of
government based projects, including dams, the said review shall be read along with this report
motorways, barrages CPEC related projects etc. and shall form an integral part of the Directors
Report in terms of section 227 of the Companies
We also have trust in maintaining and developing Act , 2017 and the requirements of the Code
long term relationship with clients. The world to of Corporate Governance under the Listing
ten big construction companies of Pakistan are Regulations of the Stock Exchanges.
working with us.
FINANCIAL STATEMENTS
In addition, We have experienced ,skilled,
competent and devoted personnel. Our team As required under listing regulations 35(xxi) of
is whole-heartedly dedicated to achieving a Pakistan Stock Exchange, the Chief Executive

Officer and Chief Financial Officer present the the performance of the CEO in line with the
financial statements, duly endorsed under established performance based evaluation
their respective signatures, for consideration system. The evaluation was reviewed against the
and approval of the Board of Directors and following criteria:
the Board, after consideration and approval,
authorize the signing of financial statements for Leadership
issuance and circulation. The financial statements Policy and strategy
of the Company have been duly audited and People Management
approved without qualification by the auditors Business Processes/Excellence
of the Company, Kaleem & Co., Chartered Governance and Compliance
Accountants and their report is attached with the Financial Performance
financial statements. No material changes and Societal Impact Investment
commitments affecting the financial position of
your Company have occurred between the end Committees recommendations were, thereafter,
of the financial year to which this Balance Sheet reviewed and approved by the Board.
relates and the date of the Directors Report.
DIRECTOR COMPLIANCE STATEMENT ON
ROLE OF CHAIRMAN AND CHIEF CORPORATE AND FINANCIAL REPORTING
EXECUTIVE OFFICER FRAME WORK
The Chairman and the Chief Executive Officer As required under the Code of Corporate
have separate and distinct roles. The Chairman Governance (CCG), the Board of Directors states
has all the powers vested under the Code of that:
Corporate Governance and presides over Board
meetings. The principal role of the Chairman is to The financial statements present fairly the true
manage and to provide leadership to the Board of affairs of the Company, the results of its
of Directors of the Company. The Chairman is operations, cash flows and changes in equity;
accountable to the Board and acts as a direct
liaison between the Board and the management Proper books of accounts of the Company
of the Company through the Chief Executive have been maintained;
Officer. The Chairman is independent from Accounting policies as stated in the notes
management and free from any interest and any to the financial statements have been
business or other relationship which could conflict consistently applied in preparation of financial
with the Chairmans independent judgment. The statements and accounting estimates are
Chief Executive Officer performs his duties under based on reasonable and prudent judgment;
the powers vested by the law and the Board, International Financial Reporting Standards,
and recommends and implements the business as applicable in Pakistan and the requirements
plans, and is responsible for overall control and of Companies Act 2017, have been followed
operation of the Company. in preparation of the financial statements;
The system of internal control is sound in
CEOS PERFORMANCE EVALUATION design and has been effectively implemented
and monitored;
During the year, the Human Resource and There are no doubts about the Companys
Remuneration Committee of the Board evaluated ability to continue as going concern;

There has been no material departure from In addition to Audit Committee, the Board has
the best practices of corporate governance also constituted the Human Resource and
as detailed in the listing regulations; Remuneration committee and both comprise solely
A statement regarding key financial data for of Non- Executive Directors and are mandated to
the last six years is annexed to this report; assist the Board to discharge its functions as well
Information about taxes and levies is given in and monitor its. Compliance with the Companys
the notes to the financial statements. governing principles. Four meetings of the Board
During the year 11 board meetings were were held during the year to review and approve
held. The minutes of the meetings were all issues and matters referred by the board. The
appropriately recorded and circulated. issues discussed included periodical and annual
financial statements, corporate and financial
DIRECTORS reporting framework, corporate strategy, budget
reviews, budget forecasts with actual cash flows,
Election of directors will be held on 28 Oct management letters issued by the external
2017 and a seven member Board was elected auditors, compliance with relevant laws and
unopposed whose term of office will expire on regulations including the amendments introduced
28 Oct 2020. Mr.Zohaib Zahid and Mr Shahzad during the year, the development and framework,
Javed resigned during the year and the casual acquisitions and disposals of fixed assets, review
vacancies were filled by Mr.Usman Javed, Mrs, of risks identified and their mitigation, accounting
Khalida Pervaiz, and further five directors also and internal control system including IS controls
appointed to meet the compliance of listing and other significant management issues.
Company. the board constituted an audit
committee comprising of one independent and During the year, four Audit Committee meetings
two non executive Directors. were held to review periodical and annual financial
statements, audit plans and reports issued by the
internal audit function.

HUMAN RESOURCE COMMITTEE
Two meetings of the Human Resource and
Remuneration (HR & R) committee were held to The Board has constituted a Human Resource
address changes in the regulatory environment, Committee in compliance with the Code of
review policies relating to employee compensation Corporate Governance 2012.
and benefit plans and evaluate the performance
of the Chief Executive Officer. DIRECTORS TRAINING PROGRAM
The Board of Directors approved Head of Internal As required by the Code, Company have
Audit, as recommended by the Human Resource conducted professional training for its Directors
and Remuneration Committee. Further, for the need to meet the requirement of the corporate
purposes of clause xvi(l) of the Code of Corporate governance future.
Governance, the Board had set the threshold
that Functional Heads of all the Departments of AUDITORS
the Company shall be considered as Executive.
The Board has reviewed the threshold and found The auditors, Kaleem & Co., Chartered
it satisfactory keeping in view the management Accountants are due to retire in the forthcoming
structure of the Company. annual general meeting of the company and
have offered themselves for re-appointment.
INITIAL PURCHASE OFFER (IPO) The Board Audit Committee and the Board of
Directors of the Company have recommended
During the year Company took certain corporate their appointment for shareholders consideration
actions like enhancement of the Authorized and approval at the forthcoming annual general
Share Capital from Rs:1000,000,000/- to meeting.
3000,000,000/ . The denomination of share from
Rs:100 to Rs:10/, The name of Company was PATTERN OF SHAREHOLDING AND
changed from Ittefaq Sons Pvt Ltd to Ittefaq Iron SHARES TRADED
Industries Pvt Ltd , The status of the company The pattern of shareholding and additional
from Private to Public Listed. The Initial Purchase information regarding pattern of shareholding is
(IPO) was offered to Public on Last week of May attached separately. No trading in the shares of
2017 and finally Company listed with Pakistan the Company was carried out by the Directors,
Stock Exchange (PSX) at the end of June 2017. the Chief Executive Officer, the Chief Financial
Officer, the Company Secretary, Executives and
AUDIT COMMITTEE their spouses and minor children.
The Board has constituted an Audit Committee GRATUITY FUND INVESTMENT

consisting of three members including Chairman
of the Committee. The committee regularly meets The Company also operates a funded Gratuity
as per requirement of the code. The committee Fund Scheme covering all its permanent
assists the Board in reviewing internal audit employees in accordance with Gratuity Fund
manual and internal audit system. Rules.

MESSAGES OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The directors endorse the contents of the Chairmans and Chief Executive Officers messages.
ACKNOWLEDGEMENTS
The Board expresses its gratitude for the efforts of all its employees, executives, workers and
stakeholders which enabled the management to run the Company smoothly throughout the year. It is
expected that the same cooperation would be forthcoming in future years.
On behalf of the Board
Usman Javed Mian Muhammad Pervaiz Shafi

CEO Director
Lahore : Oct 05, 2017

Last Five year Financial review
(Amounts in PKR Mn.) FY12 FY13 FY14 FY15 FY16 1QFY17
Income Statement Audited Audited Audited Audited Audited Audited
Sales 3,215 3,138 4,110 3,842 3,917 959

Cost of Goods Sold 2,917 2,853 3,749 3,490 3,562 876
Gross Profit 298 286 361 352 356 83
EBITDA 383 360 463 440 433 98
Operating Profit 271 248 311 304 307 67
Financial Charges 170 157 176 183 149 26
Profit before Taxation 100 87 132 115 152 42
Profit after Taxation 65 56 87 65 88 33
Balance Sheet
Non-Current Assets 1,744 1,754 1,710 1,596 1,471 1,441
Current Assets 2,072 2,356 2,550 3,142 2,536 2,510
Total Assets 3,816 4,110 4,260 4,738 4,006 3,950
Share Capital 895 895 895 895 895 895
Total Equity (including surplus
on revaluation of assets) 1,598 1,653 1,604 1,671 1,762 1,795
Non-Current Liabilities 532 449 377 328 366 366
Deferred Liabilities 15 17 156 146 137 138
Current Liabilities 1,671 1,990 2,122 2,593 1,741 1,651
Total Liabilities 2,218 2,457 2,656 3,067 2,244 2,156
Total Equity and Liabilities 3,816 4,110 4,260 4,738 4,006 3,950
Total Number of Issued Shares
of PKR 100 each (mn)# 8.9 8.9 8.9 8.9 8.9 8.9
Financial Ratios
Gross Margin(1) 9.3% 9.1% 8.8% 9.2% 9.1% 8.7%
Operating Profit Margin(2) 8.4% 7.9% 7.6% 7.9% 7.8% 7.0%
Net Margin(3) 2.0% 1.8% 2.1% 1.7% 2.3% 3.4%
EBITDA Margin(4) 11.9% 11.5% 11.3% 11.5% 11.1% 10.3%
EBIT Margin(5) 8.4% 7.8% 7.5% 7.8% 7.7% 7.1%
Earnings Per Share (PKR) (6) 0.73 0.63 0.97 0.73 0.99 0.36
Current Ratio (x) (7) 1.24 1.18 1.20 1.21 1.46 1.52
Breakup Value Per Share (PKR)
(8) (excluding surplus on
revaluation of assets) 11.96 13.11 14.70 15.69 16.93 17.38
Breakup Value Per Share (PKR)(9)
(including surplus on revaluation
of assets) 17.86 18.48 17.93 18.68 19.70 20.06
Working Capital Turnover (x) (10) 2.40 2.80 2.80 1.79 2.05 1.97*
Inventory Days(11) 150 144 114 122 109 98
Receivable Days(12) 29 30 22 29 40 45
Payable Days(13) 29 67 61 60 48 38
Inventory Turnover(14) 2.00 2.08 2.64 2.46 2.76 3.05*

(Amounts in PKR Mn.) FY12 FY13 FY14 FY15 FY16 1QFY17
Income Statement Audited Audited Audited Audited Audited Audited
Receivable Turnover(15) 10.39 10.15 13.76 10.23 7.49 6.62*

Payable Turnover(16) 10.31 4.50 4.88 5.04 6.24 7.97*
Asset Turnover(17) 84.6% 79.2% 98.2% 85.4% 89.6% 96.4%*
Return on Asset(18) 1.7% 1.4% 2.1% 1.4% 2.0% 3.3%*
Return on Equity (including surplus
on revaluation) (19) 4.2% 3.5% 5.3% 4.0% 5.1% 7.3%*
Return on Equity (excluding surplus
on revaluation) (20) 6.5% 5.0% 7.0% 4.8% 6.1% 8.5%
Return on Fixed Asset(21) 4.2% 3.2% 5.0% 3.9% 5.8% 9.0%*
Debt to Equity (including surplus
on revaluation) (22) 1.03 0.91 0.98 1.21 0.88 0.87
Debt to Equity(excluding surplus
on revaluation)(23) 1.53 1.29 1.20 1.45 1.02 1.00
Debt to Assets(24) 0.43 0.37 0.37 0.43 0.39 0.39
Return on Equity (including surplus
on revaluation) (19) 4.2% 3.5% 5.3% 4.0% 5.1% 7.3%*
Return on Equity (excluding surplus
on revaluation) (20) 6.5% 5.0% 7.0% 4.8% 6.1% 8.5%
Return on Fixed Asset(21) 4.2% 3.2% 5.0% 3.9% 5.8% 9.0%*
Debt to Equity (including surplus
on revaluation) (22) 1.03 0.91 0.98 1.21 0.88 0.87
Debt to Equity(excluding surplus
on revaluation)(23) 1.53 1.29 1.20 1.45 1.02 1.00
Debt to Assets(24) 0.43 0.37 0.37 0.43 0.39 0.39
Notes:
(1) Gross Margin is calculated by dividing the gross profit for the year with the net sales of the same year
(2) Operating Profit Margin is calculated by dividing the operating profit for the year with the net sale of the same year
(3) Net Margin is calculated by dividing the profit after tax of the year with the net sales of the same year
(4) EBITDA Margin is calculated by dividing the earnings before interest, tax, depreciation and amortization of the year with the net sales of the same year
(5) EBIT Margin is calculated by dividing the earnings before interest and tax of the year with the net sales of the same year
(6) Earnings per Share is calculated by dividing the profit after tax of the year with the total number of current issued shares (i.e 89,471,240 ordinary shares)
(7) Current Ratio is calculated by dividing the total current assets of the year with the total current liabilities of the same year
(8) Breakup Value per Share excluding surplus on revaluation of fixed assets is calculated by dividing the Net equity less revaluation of fixed assets with the total number
of current issued shares (i.e 89,471,240 ordinary shares)
(9) Breakup Value per Share including surplus on revaluation of fixed assets is calculated by dividing the Net equity of the year with the total number of current issued
shares (i.e 89,471,240 ordinary shares)
(10) Working Capital Turnover is calculated by dividing the net sales of the year with the working capital of the same year
(11) Inventory Days is calculated by dividing 300 with the inventory turnover ratio
(12) Receivable Days is calculated by dividing 300 with the receivable turnover ratio
(13) Payable Days is calculated by dividing 300 with the payable turnover ratio
(14) Inventory Turnover is calculated by dividing the Cost of Goods Sold of the year with average of inventory
(15) Receivable Turnover is calculated by dividing the Net Sales of the year with average of receivables
(16) Payable Turnover is calculated by dividing the Cost of Goods Sold of the year with average of payables
17) Asset Turnover is calculated by dividing the Net Sales of the year with the average total assets
(18) Return on Assets is calculated by dividing the Profit after Tax of the year with the average total assets
(19) Return on Equity is calculated by dividing the Profit after Tax of the year with the average equity (including surplus on revaluation of assets)
(20) Return on Equity is calculated by dividing the Profit after Tax of the year with the average equity (excluding surplus on revaluation of assets)
(21) Return on Fixed Assets is calculated by dividing the Profit after Tax of the year with the average non-current assets
(22) Debt to Equity is calculated by dividing the total debt of the year (including mark-up payable and short term liabilities) with the equity (including surplus on revaluation
of assets) of the same year
(23) Debt to Equity is calculated by dividing the total debt of the year (including mark-up payable and short term liabilities) with the equity (excluding surplus on
revaluation of assets) of the same year
(24) Debt to Assets is calculated by dividing the total debt of the year (including mark-up payable and short term liabilities) with the total assets of the same year
* these ratios are calculated by annualizing the numbers of 1QFY17
# The Company changed the par value of its shares form PKR 100/- per share to PKR 10/- per share on 24/11/2016. Currently the issued capital of the Company
consists of 89,471,240 ordinary shares

The Companies Ordinance, 1984 Form - 34
(Section 236(1) and 464)
PATTERN OF SHAREHOLDING
1. Incorporation Number
2. Name of Company ITTEFAQ IRON INDUSTRIES LIMITED
3. Pattern of holding of shares

held by the shareholders as at June 30, 2017
4. Number of Shares held Range Total

Shareholders From To Shares held Percentage
3,388 101 500 1,694,000

1,557 501 1,000 1,557,000
624 1,001 5,000 1,414,500
26 5,001 10,000 215,500
7 10,001 15,000 102,000
2 15,001 20,000 40,000
5 20,001 25,000 120,000
15 25,001 30,000 433,054
27 30,001 35,000 869,114
2 35,001 40,000 73,079
5 40,001 45,000 214,322
6 45,001 50,000 285,562
4 50,001 55,000 214,338
1 55,001 60,000 57,500
2 60,001 65,000 123,186
2 65,001 70,000 139,250
1 70,001 75,000 75,000
3 75,001 80,000 233,338
3 85,001 90,000 265,548
4 95,001 100,000 400,000
2 120,001 125,000 250,000
1 130,001 135,000 131,147
1 135,001 140,000 138,500
1 155,001 160,000 156,000
1 160,001 165,000 163,934
1 165,001 170,000 167,213
1 170,001 175,000 175,000
1 190,001 195,000 190,163

4. Number of Shares held Range Total
Shareholders From To Shares held Percentage
1 195,001 200,000 200,000

1 235,001 240,000 240,000
1 240,001 245,000 240,625
1 295,001 300,000 300,000
1 300,001 305,000 305,000
1 315,001 320,000 320,000
1 325,001 330,000 327,868
1 345,001 350,000 350,000
2 365,001 370,000 735,390
2 395,001 400,000 800,000
1 490,001 495,000 491,803
1 495,001 500,000 500,000
1 555,001 560,000 555,555
2 595,001 600,000 1,200,000
1 630,001 635,000 634,700
1 685,001 690,000 688,524
1 730,001 735,000 735,000
1 845,001 850,000 850,000
1 895,001 900,000 897,000
1 925,001 930,000 929,781
1 1,065,001 1,070,000 1,070,000
1 1,110,001 1,115,000 1,112,000
1 1,495,001 1,500,000 1,500,000
1 1,645,001 1,650,000 1,650,000
1 1,670,001 1,675,000 1,672,370
1 1,690,001 1,695,000 1,690,900
1 1,830,001 1,835,000 1,834,477
1 1,940,001 1,945,000 1,944,000
4 2,495,001 2,500,000 10,000,000
1 2,755,001 2,760,000 2,759,029
1 3,055,001 3,060,000 3,058,490
1 3,095,001 3,100,000 3,100,000
1 3,130,001 3,135,000 3,131,000
1 5,195,001 5,200,000 5,198,160
1 5,260,001 5,265,000 5,260,630
1 5,310,001 5,315,000 5,310,090
1 5,380,001 5,385,000 5,381,170
1 6,170,001 6,175,000 6,170,820
1 6,305,001 6,310,000 6,309,780
1 8,045,001 8,050,000 8,049,800
1 8,140,001 8,145,000 8,144,480
1 8,200,001 8,205,000 8,205,000
1 8,690,001 8,695,000 8,690,860
1 8,775,001 8,780,000 8,778,690
5,743 131,221,240

Form - 34
5. Categories of shareholders Share held Percentage
5.1 Directors, Chief Executive Officers, 14,026,850 10.6895%

and their spouse and minor childern
5.2 Associated Companies, 0 0.0000%

undertakings and related
parties.
5.3 NIT and ICP 0 0.0000%
5.4 Banks Development 1,834,477 1.3980%

Financial Institutions, Non
Banking Financial Institutions.
5.5 Insurance Companies 634,700 0.4837%
5.6 Modarabas and Mutual 11,574,677 8.8207%

Funds
5.7 Share holders holding 10% 0 0.0000%

or more
5.8 General Public

a. Local 89,473,465 68.1852%
b. Foreign 0 0.0000%
5.9 Others (to be specified)

Joint Stock Companies 13,644,291 10.3979%
Others 32,780 0.0250%

STATEMENT OF COMPLIANCE
WITH THE CODE OF CORPORATE GOVERNANCE
NAME OF COMPANY : ITTEFAQ IRON INDUSTRIES LIMITED
YEAR ENDED: JUNE 30, 2
This statement is being presented to comply with the Code of Corporate Governance (CCG) contained
in Regulation No.35 of the Listing Regulation of the Stock Exchange in Pakistan for the purpose of
establishing a framework of good governance, Whereby a listed Company is managed in compliance
with the best practice of corporate governance, The company has applied the principals contained in
the CCG in the following manner.
1. The company encourages representation of independent non-executive directors and directors

representing minority interests on its Board of Directors. At present, the board includes:-
Category Names
Executive Directors Mr. Muhammad Pervaiz Shafi

Mr. Usman Javed
Independent Director Mr. javed Sadiq
Non-Executive Directors Mr. Khalid Mustafa

Mrs. Sumbleen Usman
Mrs. Khalida Pervaiz
Mrs. Ayesha Fahid
2. The Directors have confirmed that none of them is serving as Director on more than seven listed
companies including this Company.
3. All the resident Directors of the company are registered as taxpayers and none of them has
defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of
a stock exchange has been declared as a defaulter by that stock exchange.
4. The board has developed a vision/ mission statement overall corporate strategy and significant
policies of the company. A complete record of particulars of significant policies along with the
dates on which they were approved amended has been maintained
5. The meetings of the Board were presided over by the Chairman and the Board met at least once
in every Quarter. Written notices of the Board Meetings, along with agenda and working papers
were circulated at least seven days before the meetings. The minutes of the meetings were
appropriately recorded and circulated.
6. All the powers of the Board have been duly exercised and decision on material transactions,
including appointment and determination of remuneration and terms and condition of employment
of the CEO, other executive and non executive directors have been taken by the Board.
7. The company has prepared a Code of conduct and has ensured that appropriate steps have
been taken to disseminate it throughout the company along with its supporting policies and
procedures.
8. The Board had arranged Orientation Courses for its Directors during the preceding years from
recognized institutions of Pakistan that meet the criteria specified by the SECP whereas some

Directors having the requisite experience on the Board(s) of listed Companies are exempt from
the Directors training program. Further the Director have also provided declarations that they are
aware of their duties, powers and responsibilities under the Companies Act 2017 and the Listing
Regulations of the Stock Exchanges.
9. The financial statements of the Company were duly endorsed by CEO and CFO Before approval
of the Board.
10. The Company has complied with all the corporate and financial reporting requirements of the
CCG.
11. The Board has ratified the appointment of CFO Company Secretary and head of internal Audit
including their remuneration and terms and conditions of employment.
12. The meetings of Audit Committee were held at least once every quarter prior to approval of
interim and final results of the company as required by the CCG. The terms of reference of the
committee have been formed and advised to the committee for compliance.
13. The Board has formed and Audit Committee. It comprises of four members and all of four are non-
executive directors including the chairman of the committee who is and independent director.
14. The directors, CEO and executives do not hold any interest in shares of the company other than
that disclosed in the pattern of shareholding.
15. The director report for this year has been prepared in compliance with the requirements of the
CCG and fully describes that salient matters required to be disclosed.
16. Material / price sensitive information has been disseminated among all market participation at
once through stock exchanges.
17. The Closed period prior to the announcement of interim /final results and business decisions
which may materially affect the market price of the company s securities was determined and
intimated to Directors executive and stock exchange (S).
18. We confirmed that all other material principles enshrined in the CCG have been complied with.
FOR AND ON BEHAIF OF THE BOARD
Usman Javed Muhammad Pervaiz Shafi

Chief Executive Officer Director
Lahore
October 5, 2017

REVIEW REPORT TO THE MEMBERS
ON THE STATEMENT OF COMPLIANCE WITH THE CODE
OF CORPORATE GOVERNANCE
We have reviewed the enclosed Statement of Compliance with the best practices contained in the
Code of Corporate Governance (the Code) prepared by the Board of Directors of ITTEFAQ IRON
INDUSTRIES LIMITED (The Company) (Formerly Ittefaq Sons Private Limited), Regulation No. 35 of
the Pakistan Stock Exchange where the Company is listed.
The responsibility for compliance with the Code 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
responsibility is to review, to the extent where such compliance can be objectively verified, whether the
Statement of Compliance reflects the status of the Companys compliance with the provisions of the
Code and report if it does not and to highlight any non-compliance with the requirements of the Code.
A review is limited primarily to inquiries of the Companys personnel and review of various documents
prepared by the company to comply with the code.
As a part of our audit of the 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 are not required to consider whether the Board of Directors statement on internal
control covers all risks and controls or to form an opinion on the effectiveness of such internal controls,
the Companys corporate governance procedures and risks.
The Code requires the Company to place before the Audit Committee, and upon recommendation
of the Audit Committee, place before the Board of Directors for their review and approval its related
party transactions distinguishing between transactions carried out on terms equivalent to those that
and recording proper justification for using such alternate pricing mechanism. We are only required
and have ensured compliance of this requirement to the extent of the approval of the related party
transactions by the Board of Directors upon recommendation of the Audit Committee. We have not
carried out any procedures to determine whether the related party transactions were undertaken at
arms length price or not.
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 Companys compliance, in all material respects, with
the best practices contained in the Code as applicable to the Company for the year ended 30 June
2017.
KALEEM & COMPANY

CHARTERED ACCOUNTANTS
Lahore: October 5, 2017
Engagement Partner: Muhammad Kaleem Rathor

Financial Statments
For the year ended 30 June 2017

AUDITORS REPORT TO THE MEMBERS
We have audited the annexed balance sheet of ITTEFAQ IRON INDUSTRIES LIMITED (The Company)
(Formerly Ittefaq Sons Private Limited) as at June 30, 2017 and the related profit and loss account,
statement of comprehensive income, cash flow statement and statement of changes in equity together
with notes forming part thereof, for the year then ended and we state that we have obtained all the
information and explanations which, to the best of our knowledge and belief, were necessary for the
purposes of our audit.
It is the responsibility of the Companys management to establish and maintain a system of internal
control, and prepare and present the above said statements in conformity with the approved
accounting standards and the requirements of the Companies Ordinance, 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 whether
the above said statements are free of any material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the above said statements. An
audit also includes assessing the accounting policies and significant estimates made by management,
as well as, evaluating the overall presentation of 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 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 account and are further in accordance with accounting policies consistently
applied which we concur;
ii) the expenditure incurred during the year was for the purpose of the Companys 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, statement of comprehensive income, 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 Companys affairs as at June 30, 2017 and of the Profit,
comprehensive income, its cash flows and changes in equity for the year then ended; and
(d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
KALEEM AND COMPANY

Muhammad Kaleem Rathor Chartered Accountants
Lahore: October 05, 2017

BALANCE SHEET
AS AT JUNE 30, 2017
2017 2016 2015

Notes RUPEES RUPEES RUPEES
Re-stated Re-stated
EQUITY& LIABILITIES
SHARE CAPITAL & RESERVES
Authorized Share Capital 4 3,000,000,000 1,000,000,000 1,000,000,000
Issued Subscribed and Paid-up Share Capital 4 1,312,212,400 894,712,400 894,712,400

Capital Reserves 5 774,507,925 - -
Equity Portion of Sponsors Loan 49,724,864 62,718,864 74,193,743
Unappropriated Profit 797,968,074 620,873,150 509,236,346
2,934,413,263 1,578,304,414 1,478,142,489
Surplus on Revaluation of Fixed Assets 6 229,871,741 247,883,207 267,520,775
NON-CURRENT LIABILITIES
Sponsors Loans -subordinated 7 244,264,194 224,095,591 205,592,285

Long Term Loans 8 - 49,991,000 9,967,048
Liabilities Against Assets Subject to
Finance Lease 9 - - 2,100,000
244,264,194 274,086,591 217,659,333
Deferred Liabilities 10 132,980,560 166,385,149 182,079,189
CURRENT LIABILITIES
Trade and Other Payables 11 474,704,584 490,609,811 650,119,169

Finance Cost Payable 18,580,147 18,667,077 52,726,335
Short Term Borrowings 12 935,472,278 982,777,828 1,581,492,159
Current Portion of Long Term Liabilities 13 83,342,994 182,258,752 68,409,659
Provision for Taxation 89,069,663 65,479,730 239,992,047
1,601,169,665 1,739,793,198 2,592,739,369
Contingencies & Commitments 14 - - -
5,142,699,424 4,006,452,559 4,738,141,155
The annexed notes form an integral part of these financial statements.
CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER DIRECTOR

2017 2016 2015
Notes RUPEES RUPEES RUPEES
Re-stated Re-stated
ASSETS
NON-CURRENT ASSETS
Property, Plant & Equipments 15 1,332,684,239 1,448,613,574 1,560,502,630
Capital W.I.P 2,834,248 2,563,303 16,365,331
Long-Term Security Deposits 19,103,526 19,409,026 19,489,626
CURRENT ASSETS
Stores, Spares & Loose Tools 137,202,627 168,060,611 211,867,078

Stock in Trade 16 1,434,987,235 1,152,565,252 1,431,920,516
Trade Debts 680,207,444 597,100,046 449,124,690
Advances, Deposits, Prepayments
& Other Receivables 17 284,712,980 481,127,605 709,383,919
Taxes Refundable 18 140,157,092 131,696,292 323,451,846
Cash & Bank Balances 19 1,110,810,033 5,316,850 16,035,519
3,788,077,412 2,535,866,656 3,141,783,568
5,142,699,424 4,006,452,559 4,738,141,155

PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2017
Note 2017 2016

RUPEES RUPEES
Re-stated
Sales-Net 20 4,442,102,678 3,917,451,919

Cost of Sales 21 (4,070,358,212) (3,561,943,062)
Gross Profit 371,744,466 355,508,857
Distribution Cost 22 13,216,251 13,278,919

Administrative Expenses 23 38,973,373 34,934,359
(52,189,624) (48,213,278)
Operating Profit 319,554,842 307,295,579
Other Income 24 5,318,825 5,209,310
324,873,667 312,504,889
Finance Cost 25 111,407,620 167,492,833

Workers Profit Participation Fund 10,673,302 7,250,603
Workers Welfare Fund 4,055,855 2,755,229
(126,136,777) (177,498,665)
Profit Before taxation 198,736,890 135,006,224
Taxation 26 (57,875,622) (57,976,931)
Profit After taxation 140,861,268 77,029,293
After Before
IPO IPO
Earning Per Share 27 1.55 0.86 8.61

STATEMENT OF COMPREHENSIVE INCOME
Note 2017 2016

RUPEES RUPEES
Re-stated
Profit after taxation 140,861,268 77,029,293
Other Comprehensive Income/(Loss)
Remeasurement of defined benefits plan 10.1.2 971,343 (2,360,518)

Deferred tax on remeasurement of defined benefit plan (310,830) 755,366
660,513 (1,605,152)
Total Comprehensive Income 141,521,781 75,424,141

STATEMENT OF CHANGES IN EQUITY
Reserve
Issued Equity Capital Revenue Total Total
Subscibed and Portion of Reserves Equity
paid up Sponsors Share Unappropriated
Capital Loan Premium Profit
Rupees
Balance as on June 30, 2015 894,712,400 - - 509,236,346 509,236,346 1,403,948,746
Equity Portion of Sponsors / Directors Loan - net

of deferred tax - due to correction of error - 74,193,743 - - - 74,193,743
Balance as on June 30, 2015 - Restated 894,712,400 74,193,743 - 509,236,346 509,236,346 1,478,142,489
Total Comprehensive income for the year ended

30th June, 2016 - Restated - - - 75,424,141 75,424,141 75,424,141
Decrease in deferred Tax due to rate change - 1,107,369 - - - 1,107,369

Less: Unwinding of discount - net of deferred tax - (12,582,248) - 12,582,248 12,582,248 -
- (11,474,879) - - - 1,107,369
Incremental Depreciation transferred
from Surplus on Rev. of fixed assets - - - 23,630,415 23,630,415 23,630,415
Balance as on June 30, 2016 - Restated 894,712,400 62,718,864 620,873,150 620,873,150 1,578,304,414
Total Comprehensive income for the year ended

30th June, 2017 - - - 141,521,781 141,521,781 141,521,781
Decrease in deferred Tax due to rate change - 922,336 - - - 922,336

Less: Unwinding of discount - (13,916,336) - 13,916,336 13,916,336 -
- (12,994,000) 922,336
Issuance of shares 417,500,000 - 843,350,000 - 843,350,000 1,260,850,000

Less: Shares issue cost - - 68,842,075 - 68,842,075 68,842,075
- - 774,507,925 - 774,507,925 1,192,007,925
Incremental Depreciation transferred

from Surplus on Rev. of fixed assets - - - 21,656,807 21,656,807 21,656,807
Balance as on June 30, 2017 1,312,212,400 49,724,864 774,507,925 797,968,074 1,572,475,999 2,934,413,263

CASH FLOW STATEMENT
Note 2017 2016

RUPEES RUPEES
Re-stated
CASH FLOWS FROM OPERATING ACTIVITIES
Profit Before Taxation 198,736,890 135,006,224

Adjustments for:
Depreciation 120,560,023 131,858,178

Provision of Gratuity 5,650,570 5,672,395
Gain on Sale of Fixed Asset (1,767,684) -
Finance Cost 111,407,620 167,492,833
Prior Year Adjustment (378,024) (3,792,241)
235,472,505 301,231,165
Profit Before Working Capital Changes 434,209,395 436,237,389
Working Capital Changes
(INCREASE)/ DECREASE IN
Stores, Spares & Loose Tools 30,857,984 43,806,467

Stock in Trade (282,421,983) 279,355,264
Trade Debts (83,107,398) (147,975,356)
Advances, Deposits, Prepayments & Other Receivables 196,414,625 228,256,314
(138,256,772) 403,442,689
INCREASE/ (DECREASE) IN
Trade and Other Payables (16,830,392) (159,509,358)
Cash Generated from Operations 279,122,231 680,170,720
Taxes Paid (73,995,671) (48,236,493)

Finance Cost Paid (91,325,947) (183,048,785)
Gratuity Paid (3,585,643) (6,576,331)
(167,289,620) (237,861,609)
Net Cash from Operating Activities 110,252,970 442,309,111
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed Assets Acquired (5,453,704) (19,969,122)

Capital Work in Progress (270,945) 13,802,028
Proceeds from disposal of fixed asset 2,590,700 -
Security Deposits 305,500 80,600
Net Cash used in Investing Activities (2,828,449) (6,086,494)

2017 2016
RUPEES RUPEES
Re-stated
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from isue of shares 1,192,007,925 -

Long Term Loans (146,633,713) 160,000,000
Short Term Borrowings (47,305,550) (598,714,331)
Liabilities Against Assets Subject to Finance Lease - (8,226,955)
Net Cash from / (used in) Financing Activities 998,068,662 (446,941,286)
Net Increase / (Dcrease) in Cash and Cash Equivalents 1,105,493,183 (10,718,669)
Cash & Cash Equivalents at the Beginning of the Year 5,316,850 16,035,519
Cash & Cash Equivalents at the End of the Year 1,110,810,033 5,316,850

NOTES TO THE ACCOUNTS
1. LEGAL STATUS AND NATURE OF BUSINESS
1.1 Ittefaq Iron Industries Limited ( The Company) (Formerly Ittefaq Sons (Private) Limited)
was incorporated on February 20, 2004 and converted into public unquoted company
on 05 January 2017. The company also changed its name from (Ittefaq Sons (Private)
Limited) to (Ittefaq Iron Industries Limited) on 09 february 2017. The principal activity
of the company is manufacturing of Iron Bars and Girders. The registered office of the
company is situated at 40, B-II Gulberg III M. M. Alam Road, Lahore.
1.2 During the year the company has made an initial public offering (IPO) of Rs:
1,260,850,000/- through issuance of 41,750,000 ordinary shares of Rs: 10/- each
at a price of Rs: 30.2/- per share including share premium of Rs: 20.2/- per share
amounting to 843,350,000/-.On 03 July 2017 the Pakistan Stock Exchange approved
the companys application for formal listing and quotation of the shares. Out of total
issue of 41.750 million ordinary shares 31.3125 million shares were subscribed through
book building by High Net Worth Individuals (HNWI) and Institutional Investors, while the
remaining 10.4375 million shares were subscribed by the general public and the shares
have been duly allotted . Further the company also changed the par value of its shares
from Rs: 100/-each to Rs: 10/- each.
2. BASIS OF PREPARATION
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 the companies ordinance
1984. Approved accounting standards comprise of such International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board
as are notified under the Companies Ordinance, 1984. In case requirements differ, the
provisions or directives of the Companies Ordinance, 1984 shall prevail.
During the year on 30 May 2017, the Companies Act, 2017 (the Act) was enacted which
replaced and repealed the Companies Ordinance, 1984 (the repealed Ordinance).
However, the Securities and Exchange Commission of Pakistan (SECP) through its
Circular No. 17 of 2017 dated 20 July 2017 has advised that the Companies whose
financial year closes on or before 30 June 2017 shall prepare their financial statements
in accordance with the provisions of the repealed Companies Ordinance, 1984.
2.2 Basis of measurement
These accounts have been prepared under historical cost convention without any
adjustments for the effects of inflation or current values.
Historical cost is generally based on the fair value of the consideration given in exchange
for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement
date, regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating fair value of an asset or liability, the Company takes
into the characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purposes in these financials statements is
determined on such basis, except for share based-payment transactions that are within

the scope of IFRS-2, leasing transactions that are within the scope of IFRS-16, and
measurements that have some similarities to fair value but are not fair value, such as net
realizable value in IAS-2 or value in use in IAS-36.
2.3 Functional & presentation currency
These financial statements are presented in Pakistan Rupees which is also the
Companys functional currency. All financial information presented in Pakistan Rupees
are rounded to the nearest thousand.
2.4 Use of estimates & judgements
The preparation of financial statements in conformity with approved accounting standards,

as applicable in Pakistan, requires management to make judgments, estimates and
assumptions that affect the application of policies and the reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are based
on historical experience and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis of making the judgments
about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both
current and future periods. Judgments made by the management in the application of
approved accounting standards, as applicable in Pakistan, that have significant effect
on the financial statements and estimates with significant risk of material judgment in
the next year are set forth below.
a) Employee Benefits
The cost of defined benefit retirement plan (gratuity) is determined using actuarial
valuations (projected unit credit method) performed by independent actuaries. The
actuarial valuation involves making assumptions about discount rates, future salary
increases, and mortality rates. All assumptions are reviewed at each reporting date.
b) Taxation
The Company takes into account the current income tax law and decisions taken by
the taxation authorities. Instances where the Companys views differ from the views
taken by the income tax department at the assessment stage and where the Company
considers that its view on items of material nature is in accordance with law, the
amounts are shown as contingent liabilities. The Company also regularly reviews the
trend of proportion of incomes between Presumptive Tax Regime income and Normal
Tax Regime income and the change in proportions, if significant, is accounted for in the
year of change.
c) Property, plant and equipment
The Company reviews appropriateness of the rate of depreciation and useful life used in
the calculation of depreciation. Further, where applicable, an estimate of the recoverable
amount of assets is made for possible impairment on an annual basis. In making these
estimates, the Company uses the technical resources available with the Company. Any
change in the estimates in the future might affect the carrying amount of respective

item of property, plant and equipment, with corresponding effects on the depreciation
charge and impairment.
Assumptions and estimates used in determining the depreciation rates, recoverable

amount, residual values and useful lives of the property, plant and equipment-note 3.4
and 15.
d) Inventories
The Company reviews the net realizable value of stock in trade and stores and spare
parts to assess any diminution in the respective carrying values. Net realizable value is
estimated with reference to the estimated selling price in the ordinary course of business
less the estimated cost necessary to make the sale.
Assumptions and estimates used in determining the estimated selling price and
estimated cost and provision for slow moving stores and spares-note 3.8, 3.9, & 16
respectively
e) Directors / Sponsors Loan
The company has discounted loan using market related interest on loans with similar
terms and conditions.
f) Impairment
The management of the Company reviews carrying amounts of its assets including
receivables and advances and cash generating units for possible impairment and
makes formal estimates of recoverable amount if there is any such indication.
2.5 INITIAL APPLICATION OF A STANDARD, AMENDMENT OR AN INTERPRETATION

TO AN EXISTING STANDARD
2.5.1 Amendments to published standards and interpretations effective in 2016:
The following amendments to published standards are mandatory for the financial year
beginning January 1, 2016 and are relevant to the Company.
- IAS 27 (Amendment) Separate financial statements. The amendment allows entities

to use the equity method to account for investments in subsidiaries, joint ventures and
associates in their separate financial statements.The amendment does not have any
impact on the Companys financial statements.
- IFRS 7, Financial instruments: Disclosures. There are two amendments:
Servicing contracts - If an entity transfers a financial asset to a third party under conditions
which allow the transferor to derecognize the asset, IFRS 7 requires disclosure of all
types of continuing involvement that the entity might still have in the transferred assets.
The amendment provides guidance about what is meant by continuing involvement.
The amendment is prospective with an option to apply retrospectively.

Interim financial statements - The amendment clarifies that the additional disclosure
required by the amendments to IFRS 7, Disclosure Offsetting financial assets and
financial liabilities is not specifically required for all interim periods, unless required by
IAS 34. The amendment is retrospective.
These amendments only affects the disclosures in the Companys financial

statements.
- IAS 1, Presentation of Financial Statements (effective for annual periods beginning on

or after January 1, 2016). The amendments provide clarifications on a number of issues,
including:
Materiality an entity should not aggregate or disaggregate information in a manner that

obscures useful information. Where items are material, sufficient information must be
provided to explain the impact on the financial position or performance.
Disaggregation and subtotals line items specified in IAS 1 may need to be

disaggregated where this is relevant to an understanding of the entitys financial position
or performance. There is also new guidance on the use of subtotals.
Notes confirmation that the notes do not need to be presented in a particular order.
OCI arising from investments accounted for under the equity method the share of
OCI arising from equity-accounted investments is grouped based on whether the items
will or will not subsequently be reclassified to profit or loss. Each group should then be
presented as a single line item in the statement of other comprehensive income.
- IAS 19 (Amendment), Employee benefits. The amendment clarifies that, when

determining the discount rate for post-employment benefit obligations, it is the currency
that the liabilities are denominated in that is important, not the country where they arise.
The assessment of whether there is a deep market in high-quality corporate bonds
is based on corporate bonds in that currency, not corporate bonds in a particular
country. Similarly, where there is no deep market in high-quality corporate bonds in that
currency, government bonds in the relevant currency should be used. The amendment
is retrospective but limited to the beginning of the earliest period presented. This
amendment only affects the disclosures in the Companys financial statements.
- IAS 34,Interim financial reporting. This amendment clarifies what is meant by the
reference in the standard to information disclosed elsewhere in the interim financial
report. The amendment also amends IAS 34 to require a cross-reference from the
interim financial statements to the location of that information. The amendment is
retrospective. This amendment only affects the disclosures in the Companys financial
statements.
The other new standards, amendments to published standards and interpretations that
are mandatory for the financial year beginning on January 1, 2016 are considered not
to be relevant or to have any significant effect on the Companys financial reporting and
operations.

2.5.2 Standards, amendments to published standards and interpretations that are
not yet effective and have not been early adopted by the Company:
The following new standards and amendments to published standards are not effective
for the financial year beginning on July 1, 2016 and have not been early adopted by the
Company
IFRS-9 Financial instruments (effective for periods beginning on or after January 1,

2018). This standard is yet to be notified by the SECP. This standard replaces the
guidance in IAS 39. It includes requirements on the classification and measurement
of financial assets and liabilities; it also includes an expected credit losses model that
replaces the current incurred loss impairment model. It is unlikely that the standard will
have any significant impact on the Companys financial statements.
IFRS 15, Revenue from contracts with customers (effective for periods beginning
on or after January 1, 2018). This standard is yet to be notified by the SECP. This
standard deals with revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature, amount, timing and
uncertainty of revenue and cash flows arising from an entitys contracts with customers.
Revenue is recognised when a customer obtains control of a good or service and thus
has the ability to direct the use and obtain the benefits from the good or service. The
standard replaces IAS 18 Revenue and IAS 11 Construction contracts and related
interpretations. The Company is yet to assess the full impact of the standard.
IFRIC 22, Foreign currency transactions and advance consideration (effective for
periods beginning on or after January 1, 2018). This IFRIC addresses foreign currency
transactions or parts of transactions where there is consideration that is denominated
or priced in a foreign currency. The interpretation provides guidance for when a single
payment/receipt is made as well as for situations where multiple payments/receipts
are made. The guidance aims to reduce diversity in practice. It is unlikely that the
interpretation will have any significant impact on the Companys financial statements.
There are number of other standards, amendments and interpretations to the published
standards that are not yet effective and are also not relevant to the Company and
therefore, have not been presented here.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Surplus on Revaluation of Fixed Assets
The surplus arising on revaluation of fixed assets is credited to the Surplus on

revaluation of fixed assets account which is shown below equity in the balance sheet in
accordance with the requirements of section 235 of the Companies Ordinance, 1984.
The said section was amended through the Companies (Amendment) Ordinance,
2002 and accordingly the Company has adopted the following accounting treatment
of depreciation on revalued assets, keeping in view the Securities and Exchange
Commission of Pakistan (SECP) SRO 45(1)/2003 dated January 13, 2003:

- depreciation on assets which are revalued is determined with reference to the value
assigned to such assets on revaluation and depreciation charge for the period is taken
to the profit and loss account; and
- an amount equal to incremental depreciation for the period net of deferred taxation is
transferred from surplus on revaluation of fixed assets to unappropriated profit through
statement of Changes in Equity to record realization of surplus to the extent of the
incremental depreciation charge for the period.
3.2 Employee Benefits
The Company operates an unfunded retirement gratuity scheme for those employees
who have completed specified period of service with the Company. Gratuity expense is
accounted for on accrual basis.
3.3 Taxation
a) Current Tax
Provision for current taxation is based on taxable income for the year determined in
accordance with the prevailing law for taxation of income. The charge for current tax is
calculated using prevailing tax rate expected to apply to the profit for the year if enacted.
The charge for current tax also include adjustments, where considered necessary , to
provision for tax made in previous years arising from assessments framed during the
year for such years.
b) Deferred Tax
Deferred income tax is provided using the balance sheet liability method for all temporary
differences at the balance sheet date between tax base of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred tax liability is recognized for all taxable temporary differences and deferred tax
assets are recognized for all deductible temporary differences, carry forward of unused
tax credits and unused tax losses, if any, to the extent that it is probable that future
taxable profit will be available against which the deductible temporary difference, carry-
forward of unused tax credits and unused tax losses can be utilized.
The correction of error has been accounted for retrospectively in accordance with
the requirements of IAS 8, Accounting Policies, Changes in Accounting Estimates
and Errors and comparative figures have been restated. Further the management
has presented three balance sheets in accordance with the requirements of IAS 1
Presentation of financial statements.
c) Prior Year
This includes adjustments, where considered necessary, to existing provision for tax
made in previous years arising from assessments framed during the period for such
years.

d) Sales Tax And Federal Excise Duty
Revenues, expenses and assets are recognized net of amount of sales tax and federal
excise duty except:
- Where amount incurred on a purchase of asset or service is not recoverable from the
taxation authority, the tax / duty is recognized as part of the cost of acquisition of the
asset or as part of the expense item, as applicable; and
- Receivables or payables that are stated with the amount of sales tax and federal excise
duty included.
The net amount of sales tax and federal excise duty recoverable from, or payable to, the
taxation authority is included as part of receivables or payables in the balance sheet.
3.4 Fixed Assets and Depreciation
These are stated at cost less accumulated depreciation and accumulated impairment
losses, (if any), except freehold land which is stated at cost less accumulated impairment
losses (if any). Cost comprises of historical cost, borrowing cost pertaining to the
erection period and directly attributable costs of bringing the assets to working condition.
These costs are transferred to specific assets as and when assets are available for use.
Subsequent costs are included in the assets carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economics benefits associated
with the item will flow to the Company and the cost of the item can be measured reliably.
Cost incurred to replace a component of an item of property, plant and equipment is
capitalized and the asset so replaced is derecognized. The cost of the day to day servicing
of property, plant and equipment are recognized in profit or loss account.
Depreciation is charged to income applying the reducing balance method at the rates
given in relevant notes to the financial statements to write off the cost of operating fixed
assets over their expected useful life. Depreciation on additions is charged from the
date when the asset is available for use and on deletions up to the date when the asset
is deleted. An item of property, plant and equipment is derecognized upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or
loss on disposal or derecognition (calculated at the difference between the net disposal
proceeds and carrying amount of the asset) is taken to profit and loss account.
Impairment test for property, plant and equipment is performed when there is an indication
of impairment. At each period end, an assessment is made to determine whether there
is any indication of impairment. If any such indications exist, an estimate of the assets
recoverable amount is calculated being the higher of the fair value of the asset less cost to
sell and the assets value in use. If the carrying amount of the asset exceeds its recoverable
amount, the property, plant and equipment is impaired and an impairment loss is charged
to the profit and loss account so as to reduce the carrying amount of property, plant and
equipment to its recoverable amount. Fair value is determined as the amount that would be
obtained from the sale of the asset in an arms length transaction between knowledgeable
and willing parties. Value in use is determined as the present value of the estimated future
cash flows expected to arise from the continued use of the property,plant and equipment

in its present form and its eventual disposal. An impairment loss is recovered if there has
been a change in the estimate used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the assets carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortization, if
no impairment loss had been recognized.
3.5 Assets Subject to Finance Lease
Leases where the company has substantially all the risks and rewards of ownership are
classified as finances leases. At inception, finance leases are capitalized at the lower
of present value of minimum lease payments under the lease agreements and the fair
value of the assets, less accumulated depreciation and impairment loss, if any.
The related rental obligations, net of finance costs, are included in liabilities against
assets subject to finance lease. The liabilities are classified as current and non-current
depending upon the timing of the payment.
Each lease payment is allocated between the liability and finance costs so as to achieve
a constant rate on the balance outstanding. The interest element of the rental is charged
to profit and loss account over the lease term.
Assets acquired under a finance lease are depreciated over the estimated useful life of
the assets on reducing balance method at the rates specified in schedule. Depreciation
of leased assets is charged to profit and loss account.
Depreciation on additions is charged from the month the asset is available for use while
no depreciation is charged in the month in which the asset is disposed off.
The finance cost is calculated at the interest rates implicit in the lease and are charged
to profit and loss account.
3.6 Operating Lease

Rentals payable under operating leases are charged to profit or loss on a straight line
basis over the term of the relevant lease.
3.7 Capital Work-in-Progress

Capital work-in-progress is stated at cost less identified impairment losses, if any. All
expenditure connected with specific assets incurred during installation and construction
period are carried under capital workin-progress. These are transferred to specific
assets as and when these are available for use. All cost or expenditure attributable to
work-in-progress are capitalized and apportioned to buildings and plant and machinery
at the time of commencement of commercial operations.
3.8 Stores, Spares and Loose Tools

Store and spares are valued at moving average cost or net realizable value (NRV). Item
in transit is valued at cost comprising invoice value plus other charges paid thereon.
3.9 Stock In Trade
Stock-in-trade is valued at lower of average cost and net realizable value except waste
which is valued at net realizable value determined on the basis of contract prices.
Average cost and net realizable value are defined as under:

Cost is determined as follows:
- For Raw Materials Weighted average cost.
- For Work-in-Process & At weighted average manufacturing cost (Direct Labour,
Finished Goods Material and Appropriate Manufacturig Overheads)
- Net Realizable Value Net realizable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
3.10 Financial instruments

3.10.1 Recognition and derecognition
All the financial assets and financial liabilities are recognized at the time when
the Company becomes a party to the contractual provisions of the instruments
and are remeasured at fair value. Financial assets are derecognized when the
Company looses control of the contractual rights that comprise the financial
assets. Financial liabilities are derecognized when they are extinguished i.e.
when the obligation specified in the contract is discharged, cancelled or expired.
Any gain/loss on de-recognition and on remeasurement of such financial
instruments is included in the profit/loss for the period in which it arises.
3.10.2 Financial assets
Significant financial assets include trade debts, advances and receivables, long
term deposits and bank balances. Finances and receivables are stated at their
nominal value as reduced by provision for doubtful finances and receivable,
while other financial assets are stated at cost.
3.10.3 Financial liabilities

Financial liabilities are classified according to the substance of the contractual
arrangements entered into. Significant financial liabilities include short and
long term finances, lease finances, interest and mark up accrued and trade
and other payables. Markup based financial liabilities are recorded at gross
proceeds received. Other liabilities are stated at their nominal value.
3.11 Off Setting of financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount is reported in
the balance sheet, when there is a legally enforceable right to set off the recognized
amounts and the Company intends to either settle on net basis or to realize the asset
and settle the liability simultaneously. Corresponding income on assets and charge on
liability is also offset.
3.12 Revenue Recognition
Revenue is measured at fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business.
- Sale of goods is recorded when significant risks and rewards of ownership are transferred
to the customer;
- Interest and rental income are recognized on accrual basis.
- Sale of scrap is recognized on actual realization basis.

3.13 Foreign Currencies
Foreign Currency transactions are converted into Pak Rupees using the rates prevailing
on the date of transaction while monetary assets & liabilities are converted into Pak
Rupees using the rates of exchange prevailing at the balance sheet date. Exchange
gains and losses on conversion are charged to income currently.
3.14 Provisions
Provisions are recognized when the company has a present legal or constructive
obligation as a result of past events, if 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 periodically and adjusted
to reflect the current best estimate.
3.15 Borrowings and their Cost
Borrowings are recognized initially at fair value less attributable transaction cost.
Subsequent to initial recognition, these are stated at amortized cost with any difference
between cost and redemption value being recognized in the profit and loss / equity over
the period of the borrowings on an effective interest basis.
Borrowings are recorded at the proceeds received. Borrowing costs are recognized as
an expense in the period in which these are incurred except to the extent of borrowing
costs that are directly attributable to the acquisition, construction and commissioning
of a qualifying asset. Such borrowing costs, if any , are capitalized as part of the cost of
that asset.
3.16 Investments
All investments are initially recognized at cost being the fair value of consideration
given.
These investments are being measured at fair value, being their market value at balance
sheet date. The resulting gain or loss is included in profit or loss for the period. Whereas,
cost is calculated on moving average basis.
Classification of investments is made based on the intended purpose of holding such

investments, which is as follows:
3.16.1 Held for Trading Securities
These are investments securities, which are acquired principally for the purpose
of generating profit, from short-term fluctuations in price.
3.16.2 Held to Maturity Securities
These are investments securities with fixed or determinable payments and

fixed maturity and the company has the positive intent and ability to hold till
maturity.
3.16.3 Available for sale securities
These are investments, which do not fall under the category of held for trading
or held to maturity.

3.17 Trade Debts and Other Receivables
Trade debts are carried at original invoice amount less an estimate made for doubtful
debts based on a review of all outstanding amounts at the year end. Bad debts are
written off when identified.
3.18 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 future for goods and services received. Whether or
not billed to the Company. Provisions are recognized when the Company has a present
legal or constructive obligations as results of past events , It is probable that an out flow
of resources embodying economic benefits will be required to settle the obligation and
reliable estimate of the amount can be made. Provisions are reviewed at each balance
sheet date and adjusted to reflect the current best estimate.
3.19 Cash and Cash Equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of
cash flow statement, cash and cash equivalents consist of cash in hand, cash in transit
and balances with banks.
3.20 Earnings Per Share
The company presents basic and diluted earnings per share (EPS). Basic EPS is calculated
by dividing the profit and loss attributable to ordinary shareholders of the company by
the weighted average number of ordinary shares outstanding during the period. Diluted
EPS is determined by using profit and loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, adjusted for the affects of all
dilutive potential ordinary shares.
3.21 Transactions with Related Parties
Transactions with related parties are priced on arms length basis. Prices for these
transactions are determined on the basis of comparable uncontrolled price method,
which sets the price with reference to comparable goods and services sold in an
economically comparable market to a buyer unrelated to the seller.
Sales, purchases and other transactions with related parties are carried out on
commercial terms and conditions.
3.22 Contingent liabilities
A contingent liability is disclosed when the Company has a possible obligation as a

result of past events, whose existence will be confirmed only by the occurrence or non-
occurrence, of one or more uncertain future events not wholly within the control of the
Company; or the Company has a present legal or constructive obligation that arises from
past events, but it is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, or the amount of the obligation cannot
be measured with sufficient reliability.

3.23 Share Capital
Ordinary shares are classified as equity instruments and recognized at their fair value.
Transaction costs of an equity transaction are accounted for as a deduction from equity
to the extent they are incremental costs directly attributable to the equity transaction
that otherwise would have been avoided. The costs of an equity transaction that is
abandoned are recognized as an expense.
Transaction costs that relate jointly to more than one transaction such as costs of
a concurrent offering of shares and a stock exchange listing are allocated to those
transactions using a basis of allocation that is rational and consistent with similar
transactions.
3.24 Correction of error
Treatment of director sponsor loan
Previously the company stated director/ sponsor loan at cost .During the year the
company has rectified the error and the loan has been stated at present value and
accordingly the comparative figures have been restated.
2016 2015
RUPEES RUPEES
3.25 Impact of Restatement
Present value adjustment 92,233,624 110,736,930

Deferred tax liability (29,514,760) (36,543,187)
Equity portion 62,718,864 74,193,743

Unwinding 18,503,306 -
Deferred tax expense (5,921,058) -
Finance cost 18,503,306 -
WPPF and WWF (1,276,728)
Profit before taxation (17,226,378) -
Profit after taxation (11,305,320)
EPS (1.26) -
As a result of discounting, loan from directors / sponsor as at 30 June 2015 has

decreased by Rs. 110.736 million with a corresponding increase in equity portion of
loan from sponsor shareholders by Rs. 74.193 million (net of deferred tax) . Subsequent
unwinding has decreased profit before taxation (PBT) by Rs: 17.226 million (2016) and
increase in finance cost of Rs: 18,503,306 resulting in consequent increase in present
value of the loan in 2015-16 as presented above. This classification has resulted in
decrease in basic or diluted earning per share of the Company for the year ended June
30, 2015-16.

2017 2016
RUPEES RUPEES
4. SHARE CAPITAL
4.1 Authorized Capital
Ordinary shares (2017: 10,000,000) of Rs: 10/-
each (2016: 10,000,000) of Rs 100/- each 3,000,000,000 1,000,000,000
During the year the company has increased authorized share capital from 10 million
ordinary shares of Rs: 100/- each to 300 million ordinary shares of Rs: 10/- each.
4.2 Issued Subscribed and Paid-up Capital
Ordinary shares (2017: 8,000,000 of Rs: 10/-)
(2016: 80,000,000 of Rs 100/-) each issued
for consideration paid in cash. 800,000,000 800,000,000
Ordinary shares (2017: 9,471,240 of Rs: 10/-)
(2016: 947,124 of Rs 100/-) each issued for
consideration other than cash. 94,712,400 94,712,400
Ordinary shares of Rs 10/- (2017: 41,750,000)
(2016: Nil) each fully paid in cash. 417,500,000 -
1,312,212,400 894,712,400
During the year the company has made an initial public offering (IPO) of Rs:
1,260,850,000/- through issuance of 41,750,000 ordinary shares of Rs: 10/- each at a
price of Rs: 30.2/- per share including share premium of Rs: 20.2/- per share amounting
to 843,350,000/-. Out of total issue of 41.750 million ordinary shares 31.3125 million
shares were subscribed through book building by High Net Worth Individuals (HNWI)
and Institutional Investors, while the remaining 10.4375 million shares were subscribed
by the general public and the shares have been duly allotted . Further the company also
changed the par value of its shares from Rs: 100/-each to Rs: 10/- each.
5. CAPITAL RESERVES
Capital Reserves
Share Premium 843,350,000 -
Capital reserves represents premium of Rs: 20.2/- per share received on public issuance of
41,750,000 shares of Rs: 10/- each during the year. This reserve has been accounted for in
accordance with section 83 of the companies ordinance ,1984. This reserve can be utilized by
the Company only for the purpose specified in section 83(2) of the Companies Ordinance, 1984.
Movement in Capital reserves
Opening Balance - -
Add: Premium of Rs: 20.2/- per share of
41,750,000 shares. 843,350,000 -
Less: Transaction Cost 68,842,075 -
Closing Balance 774,507,925 -

2017 2016
RUPEES RUPEES
6. SURPLUS ON REVALUATION OF FIXED ASSETS
Opening Balance 364,534,129 399,284,739
Less: Transferred to equity in respect of:

Incremental depreciation on revalued Asset 21,656,807 23,630,415
Related deferred tax liability 9,729,870 11,120,195
31,386,677 34,750,610
Closing Balance - Gross 333,147,452 364,534,129
Less: Related Deferred tax liability

Related Deferred Tax Liability on
Revaluation Surplus 116,650,922 131,763,964
Effect of change in tax rate (3,645,341) (3,992,847)
Amount realized during the year on account
of incremental depreciation (9,729,870) (11,120,195)
103,275,711 116,650,922
Closing Balance - Net 229,871,741 247,883,207
The company has complied with the requirements of SRO 45(I)2003 for the effect of
incremental depreciation. The incremental depreciation charged on revalued assets, except
land, during the years has been transferred to retained earnings / accumulated profit/(Loss)
to record realization of surplus to the extent of incremental depreciation to comply with the
amendment in section 235 of Companies Ordinance, 1984 further notification of Securities
and Exchange Commission of Pakistan to clarify the treatment of surplus arising on revaluation
of fixed assets.
2017 2016 2015

RUPEES RUPEES RUPEES
Restated Restated
7. DIRECTORS / SPONSORS LOAN
Interest free loan 316,329,215 316,329,215 316,329,215
Present value adjustment (92,233,624) (110,736,930) (110,736,930)
Unwinding of discount 20,168,603 18,503,306 -
Present value of loan from

sponsor shareholders 244,264,194 224,095,591 205,592,285

This represents interest free and unsecured loan received from the directors / sponsor
shareholders of the Company, which will be repaid through cash generated internally from
operations. It has been recognized at present value cost using discount rate of 9% per annum.
Un winding of discount has been recognized through profit and loss.
This interest free loan has been discounted using market related interest on loans with similar
terms and conditions and the resulting credit has been transferred to equity in the current year.
The adjustment has been made retrospectively in accordance with IAS-8 Accounting Policies,
Changes in Accounting Estimates and Errors and comparative figures have been restated.
2017 2016
RUPEES RUPEES
8. LONG TERM LOANS
Soneri Bank Limited - 9,967,048

Bank Islami 49,991,000 200,000,000
49,991,000 209,967,048
Less: Current Portion 49,991,000 159,976,048
- 49,991,000
Long term loans were obtained from various commercial banks. The loans are secured
against mortgage of Land, Building, Plant & Machinery and the personal guarantees of all the
directors of the company. Mark-up is charged at the rate ranging from 3-months to 6-months
KIBOR plus 2.25% to 2.5% per annum. The loans will be expired on the dates ranging from
31 March, 2016 to 1 September, 2017.
9. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE
2017 2016
Payable within Payable Payable within Payable after
one year after one year one year one year but
but less than less than
five years five years
Total of Minimum lease payments - - 2,273,045 -
Less: Finance cost - - - -
Present value of Minimum

lease payments - - 2,273,045 -
The rate of interest used as discounting factor ranging from 3 to 6 months KIBOR + 3 to
4 % per annum with floor of 12.5%. The taxes, repairs and insurance cost are borne by
lessee. Lessee shall have no right to terminate the lease agreement and if lease agreement
is terminated, the lessee shall pay entire amount of rentals for unexpired period of lease
agreements. In all the above leases, the purchase option is available to the company which
it intends to avail. This lease is secured against the ownership of leased asset in the name of
bank and the Personal Guarantees of the Directors.

2017 2016 2015
Note RUPEES RUPEES RUPEES
Restated Restated
10. DEFERRED LIABILITIES
Staff Retirement Gratuity 10.1 23,294,506 20,258,236 18,801,654

Deferred Tax 10.2 109,686,054 146,126,913 163,277,535
132,980,560 166,385,149 182,079,189
10.1 Movement in the net liability recognized in the balance sheet is as follows:
Opening liability 20,258,236 18,801,654 18,121,669

Amount recognized during the year 10.1.1 5,650,570 5,672,395 5,715,132
Remeasurements chargeable in
other comprehensive income 10.1.2 971,343 2,360,518 2,987,158
Benefits paid during the year (3,585,643) (6,576,331) (8,022,305)
Closing liability 23,294,506 20,258,236 18,801,654
10.1.1 The amount recognized in the profit and loss account is as follows:
Current service cost 4,311,827 4,159,830 3,845,489

Interest cost 1,338,743 1,512,565 1,869,643
Expense chargeable to Profit and loss 5,650,570 5,672,395 5,715,132
10.1.2 The amount recognized in the Other Comprehensive Income is as follows:
Actuarial (gain)/loss 4,210,141 (143,614) (102,628)

Experience Adjustments (3,238,798) 2,504,132 3,089,786
Total remeasurements chargeable in
other comprehensive income 971,343 2,360,518 2,987,158

a) Changes in present value of defined benefit obligations
2017 2016 2015

Restated Restated
Present value of defined
benefit obligations 20,258,236 18,801,654 18,121,669
Current Service Cost 4,311,827 4,159,830 3,845,489
Interest Cost on defined
Benefits paid during the year (3,585,643) (6,576,331) (8,022,305)
Actuarial Adjustment
Remeasurements:
Actuarial (gain)/losses from changes

in financial assumptions 4,210,141 (143,614) (102,628)
Experience adjustments (3,238,798) 2,504,132 3,089,786
Present value of defined
b) Principal actuarial assumptions
The principal actuarial assumptions used in the actuarial valuation of this scheme by applying
projected unit credit method as on 30 June are as follows:
Discount rate used for interest cost 7.25% 9.75% 13.25%

Discount rate used for year end obligation 7.75% 7.25% 9.75%
c) Expected rate of salary increase in future years
Salary Increase for year 2016 N/A N/A 8.75%

Salary Increase for year 2017 6.75% 6.25% 8.75%
Salary Increase for year 2022 onward 6.75% 6.25% 8.75%
Net salary is increased at 1-Jan-18 1-Jan-17 1-Jan-16
Expected mortality rate SLIC 2001-2005 SLIC 2001-2005 SLIC 2001-2005

Setback 1 Year Setback 1 Year Setback 1 Year
Withdrawal rates Age-Based Age-Based Age-Based

Retirement assumption Age 60 Age 60 Age 60
Estimated expense to be charged to Profit and Loss in 2018 is Rs. 7,072,289.

d) Year and sensitivity analysis ( 100 bps) on defined benefit obligation
2017 2016 2015

Restated Restated
Discount rate + 100 bps 17,825,350 19,510,972 -

Discount rate - 100 bps 20,553,777 21,116,021 -
Salary increase + 100 bps 20,553,777 21,173,092 -
Salary increase - 100 bps 17,803,393 19,444,233 -
The average duration of defined obligation is 6 year.
10.2 The Deferred Tax Liability/(Asset) comprises of Temporary differences relating to:
Taxable Temporary Differences

Accelerated Tax Depreciation 181,686,704 193,261,748 207,842,263
Revaluation surplus 103,275,710 116,650,921 131,763,964
Finance Lease - 6,105,329 4,364,139
Euity portion of Directors /
Sponsors Loan 22,340,156 29,514,760 36,543,187
Deductible Temporary Differences
Minimum tax available for carry forward (112,027,536) (112,027,536) (127,607,809)
Unused Tax Losses (78,367,683) (80,895,673) (83,423,663)
Staff Retirement Benefits-Gratuity (7,221,297) (6,482,636) (6,204,546)
109,686,054 146,126,913 163,277,535
2017 2016
RUPEES RUPEES
Restated
11. TRADE AND OTHER PAYABLES
Sundry Creditors 329,929,605 391,134,436

Advances from Customers 75,322,724 45,608,552
Accrued Expenses 46,882,797 22,550,108
Security Deposits Payable 2,081,664 775,669
Others Payables 6,683,802 6,800,607
Workers Profit Participation Fund 11.1 9,748,137 14,182,928
Workers Welfare Fund 4,055,855 9,557,511
474,704,584 490,609,811

Note 2017 2016
RUPEES RUPEES
Restated
11.1 Workers profit participation fund
Balance as at 01 July 14,182,928 6,932,325

Allocation for the year-Restated 10,673,302 7,250,603
Less: Amount adjusted / paid (15,108,093) -
Balance as at 30 June 9,748,137 14,182,928
12. SHORT TERM BORROWINGS-SECURED
Bank of Punjab Ltd. 349,626,412 346,429,968

National Bank of Pakistan Ltd. 585,845,866 391,649,984
MCB Bank Limited - 157,300,039
J-S Bank Ltd - 87,397,837
935,472,278 982,777,828
Short term borrowings were obtained from various commercial banks. The borrowings are
secured against charge over Raw Material, Finished Goods, Imported Chemicals and the
personal guarantees of all the directors of the company. Mark-up rate charged at the rate
ranging from 3-months to 6-months KIBOR plus 2.25% to 3.0% per annum. These loan will
expire within the period ranging from March 2016 to December 2017.
13. CURRENT PORTION OF LONG TERM LIABILITIES
Current Portion of Long Term Loans 13.1 83,342,994 179,985,707

Current Portion of Liabilities Against Assets
Subject to Finance Lease - 2,273,045
83,342,994 182,258,752
13.1 This amount includes current portion of Long Term Loans pertaining to balance
outstanding of Islamic bank in the prior year which is not paid fully during the year and
the management acknowledged that its payments shall be cleared at the year end.
14. CONTINGENCIES AND COMMITMENTS
There were no known contingencies as at June 30, 2017 (2016: Nil). The commitments
against Letter of Credits are Nil as at June 30, 2017 (2016: Nil).

70
15. PROPERTY, PLANT & EQUIPMENTS
PARTICULARS C O S T/Revalued Amount Rate Depreciation WDV
As At Addition/ Adjustments As At % As At Adjustments For The As At As At

01-07-2016 (Deletion) 30-06-2017 01-07-2016 Year 30-06-2017 30-06-2017
Land 62,875,000 - - 62,875,000 - - - - - 62,875,000

Building 500,282,974 748,519 - 501,031,493 5 96,581,675 - 20,222,491 116,804,166 384,227,327
ANNUAL REPORT 2017

Plant & Machinery 1,320,600,063 3,865,344 29,289,710 1,352,480,117 10 501,393,807 7,937,512 85,116,058 593,783,505 758,696,612
(1,275,000) (663,872)
Grid Station 57,279,039 - - 57,279,039 10 36,197,520 - 2,108,152 38,305,672 18,973,367
Electric Installation 192,691,624 148,000 - 192,839,624 10 89,708,483 - 10,313,114 100,021,597 92,818,027
Vehicles 25,792,671 105,500 24,964,271 20 16,269,879 - 1,770,329 17,318,196 7,646,075
(933,900) - (722,012) -
Furniture & Fixture 5,316,107 10,000 - 5,326,107 10 2,969,410 - 235,670 3,205,080 2,121,027
Office Equipment 3,356,812 576,341 - 3,933,153 20 2,112,088 - 364,213 2,476,301 1,456,852
Laboratory Equipment 11,232,088 - - 11,232,088 10 7,098,123 - 413,397 7,511,520 3,720,568
Arms & Ammunition 146,013 - - 146,013 10 91,368 - 5,465 96,833 49,180
Tools 302,509 - - 302,509 10 191,171 - 11,134 202,305 100,204
Year 2017 2,179,874,900 3,244,804 29,289,710 2,212,409,414 752,613,524 6,551,628 120,560,023 879,725,175 1,332,684,239
Year 2016 2,159,905,778 19,969,122 - 2,179,874,900 623,127,813 - 129,485,711 752,613,524 1,427,261,376
15.1 WDV IF COST MODEL APLLIED
PARTICULARS C O S T/Revalued Amount Rate Depreciation WDV
As At Addition/ Adjustments As At % As At Adjustments For The As At As At

01-07-2016 (Deletion) 30-06-2017 01-07-2016 Year 30-06-2017 30-06-2017
Land 33,322,002 - - 33,322,002 - - - - - 33,322,002

Building 505,651,695 748,519 - 506,400,214 5 144,179,119 - 18,111,055 162,290,174 344,110,040
Plant & Machinery 984,475,285 3,865,344 - 987,065,629 10 458,021,438 7,937,512 52,904,419 518,199,497 468,866,132
(1,275,000) (663,872)
Grid Station 57,279,039 - - 57,279,039 10 36,197,520 - 2,108,152 38,305,672 18,973,367
Electric Installation 192,691,624 148,000 - 192,839,624 10 89,708,483 - 10,313,114 100,021,597 92,818,027
Vehicles 25,792,671 105,500 - 24,964,271 20 16,269,879 - 1,738,878 17,286,745 7,677,526
(933,900) (722,012)
Furniture & Fixture 5,316,107 10,000 - 5,326,107 10 2,969,410 - 235,670 3,205,080 2,121,027
Office Equipment 3,356,812 576,341 - 3,933,153 20 2,112,088 - 364,213 2,476,301 1,456,852
Laboratory Equipment 11,232,088 - - 11,232,088 10 7,098,123 - 413,397 7,511,520 3,720,568
Arms & Ammunition 146,013 - - 146,013 10 91,368 - 5,465 96,833 49,180
Tools 302,509 - - 302,509 10 191,171 - 11,134 202,305 100,204
Year 2017 1,819,565,845 3,244,804 - 1,822,810,649 756,838,599 6,551,628 86,205,497 849,595,724 973,214,925
Year 2016 1,799,596,723 19,969,122 - 1,819,565,845 662,103,497 - 94,735,101 756,838,599 1,062,727,247

15.2 The surplus on revaluation of land, building and plant & machinery was determined as on June 11, 2011 by M/S Riyadh Co. (Approved Valuer of Pakistan Banks Association) on current replacement cost
basis as follows:
Original Book Revalued Revaluation

Cost Value amount Surplus
Rupees Rupees Rupees Rupees
Land 33,322,002 33,322,002 62,875,000 29,552,998

Building 301,589,141 241,645,900 296,220,420 54,574,520
Plant & Machinery 428,928,610 269,274,614 765,053,388 495,778,774
Total 763,839,753 544,242,516 1,124,148,808 579,906,292
15.3 LEASED ASSETS
PARTICULARS COST Rate Depreciation WDV
As At Addition Adjustments As At % As At Adjustments For The As At As At

01-07-2016 30-06-2017 01-07-2016 Year 30-06-2017 30-06-2017
Plant & Machinery 29,289,710 - (29,289,710) - 10 7,937,512 (7,937,512) - - -
ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited)

Year 2017 29,289,710 - (29,289,710) - 7,937,512 (7,937,512) - - -
Year 2016 29,289,710 - - 29,289,710 5,565,045 - 2,372,467 7,937,512 21,352,198
Total for the Year 2017 2,209,164,610 3,244,804 - 2,212,409,414 760,551,036 (1,385,884) 120,560,023 879,725,175 1,332,684,239
Total for the Year 2016 2,189,195,488 19,969,122 - 2,209,164,610 628,692,858 - 131,858,178 760,551,036 1,448,613,574
15.4 Depreciation for the year has been allocated as under : -

2017 2016
RUPEES RUPEES
Cost of Sales 95% 114,532,022 125,265,269

Administrative Expenses 5% 6,028,001 6,592,909
120,560,023 131,858,178
15.5 Disposal for the year has been allocated as under : -
Description Original Accumulated Written Sales Gain/ Mode of

of Asset Cost Depreciation Down Value Proceeds (Loss) Disposal
LEJ-4532 650,000 575,194 74,806 460,000 385,194 Negotiation

LEP-1308 86,300 71,511 14,789 32,000 17,211 Negotiation
LEY-675 92,100 66,636 25,464 43,000 17,536 Negotiation
LEM-404 105,500 8,671 96,829 105,500 8,671 Claim Recievable
Plant & Machinery 750,000 390,513 359,487 1,040,200 680,713 Negotiation
Plant & Machinery 525,000 273,359 251,641 910,000 658,359 Negotiation
71
2,208,900 1,385,884 823,016 2,590,700 1,767,684
2017 2016
RUPEES RUPEES
16. STOCK IN TRADE
Stock of Raw Material 1,217,043,796 401,083,174

Finished Goods 217,943,439 751,482,078
1,434,987,235 1,152,565,252
17. ADVANCES, DEPOSITS, PREPAYMENTS &

OTHER RECEIVABLES
Advance to :
-Suppliers 44,890,737 44,196,010
-Office Staff 188,287 257,494
-Clearing Agent 2,079,885 2,208,904
-Staff for Expenses 10,336,832 7,377,611
Advances Against L/C 198,123,095 404,787,077
Security Deposits 22,571,058 17,277,423
Letter of Guarantee 6,523,086 5,023,086
284,712,980 481,127,605
18. TAXES REFUNDABLE
Sales Tax Receivable 60,274,226 5,738,728

Advance Income Tax 79,882,866 125,957,564
140,157,092 131,696,292
19. CASH & BANK BALANCES
Cash at Banks 1,107,423,357 2,130,594

Cash in Hand 3,386,676 3,186,256
1,110,810,033 5,316,850
20. SALES
Export Sales - 4,604,425

Local Sales 4,544,932,426 4,061,274,782
Total Sales 4,544,932,426 4,065,879,207

Less : Sales Tax 102,829,748 148,427,288
4,442,102,678 3,917,451,919

Note 2017 2016
RUPEES RUPEES
21. COST OF SALES
Raw Material Consumed 21.1 3,161,197,826 2,424,127,179

Salaries, Wages & Benefits 21.2 80,582,966 134,398,623
Store Consumption 14,423,343 96,679,777
Fuel and Power 125,900,190 293,416,705
Repair & Maintenance 20,913,248 35,088,079
Freight Expenses 501,196 28,400,000
Vehicles Running Expenses 3,053,319 4,782,076
Insurance Charges 4,044,439 4,646,124
Traveling & Conveyance 115,955 404,420
Entertainment 386,027 356,756
Printing & Stationery 228,696 222,950
Rent, Rates & Taxes 283,500 105,300
Telephone Expense 213,958 297,471
Laboratory Expense 2,117,376 345,195
Misc. Expenses 8,325,511 16,333,717
Depreciation 114,532,022 125,265,269
3,536,819,573 3,164,869,641
Opening Stock 751,482,078 1,148,555,499
Closing Stock (217,943,439) (751,482,078)
4,070,358,212 3,561,943,062
21.1 Raw Material consumed
Opening Raw material stock 401,083,174 283,365,017

Add: Purchases during the year 3,977,158,448 2,541,845,336
4,378,241,622 2,825,210,353
Less: Consumption during the year 3,161,197,826 2,424,127,179
Closing stock 1,217,043,796 401,083,174
21.2 Includes Rs: 4,237,927/- (2016 :Rs.4,254,296/-) in respect of staff retirement benefits.

Note 2017 2016
RUPEES RUPEES
22. DISTRIBUTION COST
Salaries, Wages and Benefits 2,161,090 529,170
Advertising Expenses 1,728,108 153,510
Packing Expenses 3,098,285 2,898,898
Loading/Unloading 772,351 1,025,466
Sample Test Expenses 64,750 101,600
Others 5,391,667 8,570,275
13,216,251 13,278,919
23. ADMINISTRATIVE EXPENSES

Salaries, Wages and Benefits 23.1 22,750,761 19,439,022
Fee & Subscription 1,207,637 755,558
Legal & Professional Charges 391,275 231,535
Auditors Remuneration 23.2 900,000 600,000
Vehicle Running Expenses 3,132,712 3,136,315
Traveling & Conveyance 562,990 389,550
Printing & Stationery 174,854 686,347
Donation 324,000 324,000
Insurance Charges 657,278 638,743
Telephone & Postage Charges 848,522 452,294
Entertainment 87,635 93,727
Advertisement 41,180 82,080
Misc. Expenses 1,866,528 1,512,279
Depreciation 6,028,001 6,592,909
38,973,373 34,934,359
23.1 Includes Rs: 1,412,642/- (2016 :Rs. 1,418,099/-) in respect of staff retirement benefits
& Directors Remuneration of Rs. 8,708,536/- (2016: Rs.6,465,300).
23.2 Auditors Remuneration
Audit Fee 800,000 600,000
Review report on code of corporate governance 100,000 -
900,000 600,000
24. OTHER INCOME

Interest and Other Income 3,551,141 5,209,310
Gain on Disposal of Fixed Assets 1,767,684 -
5,318,825 5,209,310
25. FINANCE COST

Finance Cost on Banks Borrowings 89,621,375 145,505,685
Finance Cost on Lease Liability - 657,637
Bank Charges 1,617,642 2,826,205
Unwinding Interest Cost 20,168,603 18,503,306
111,407,620 167,492,833

2017 2016
RUPEES RUPEES
26. TAXATION
Current
For the Year 89,069,663 65,479,730
Prior Year 378,024 3,792,241
89,447,687 69,271,971
Deferred
Relating to origination and reversal of
temporary differences (29,145,300) (7,580,549)
Relating to rate change (2,426,765) (3,714,491)
(31,572,065) (11,295,040)
57,875,622 57,976,931
Tax Reconciliation
Reconciliation between the average effective tax rate and the applicable tax rate.
2017 2016
RUPEES RUPEES
% Age
Applicable tax rate 31 32
Tax effect of amounts that are deductible for

tax purposes (0.120) (0.110)
Effect on opening deferred taxes of reduction in tax rate 0.123 0.035
Others (0.0019) (0.025)
Average effective tax rate charged to profit and
loss A/c in percentage (31.07) (32.00)

27. Earnings Per Share
2017 2016
RUPEES RUPEES
Before IPO
27.1 Earning Per Share based on face value of
Rs: 10/ and Rs: 100/- per share
Profit after taxation for the year attributable to

ordinary shareholders 140,861,268 77,029,293
Weighted average number of ordinary shares

outstanding during the year. 90,615,076 8,947,124
Earning Per Share (Rs./Share) 1.55 8.61
27.2 Earning Per Share based on face value

of RS: 10/- per share After IPO
Profit after taxation for the year attributable to

ordinary shareholders. 140,861,268 77,029,293
Weighted average number of ordinary shares

outstanding during the year. 90,615,076 89,471,240
Earning Per Share (Rs./Share) 1.55 0.86
27.3 Diluted Earning Per Share
There is no dilution effect on the basic earnings per share as the company has no such
commitments.

28. REMUNERATION OF CHIEF EXECUTIVE AND OTHER EXECUTIVE OFFICERS
The aggregate amount charged in the accounts for the year for remuneration to the Chief
Executive and other executive officers was as follows:
2017 2016
Chief Director Chief Director

Executive Executive
Rs. Rs. Rs. Rs.
Managerial remuneration 3,747,988 4,960,548 3,532,650 2,932,650

Housing allowance - - - -
Utilities and conveyance - - - -
Medical - - - -
Bonus - - - -
Others - - - -
3,747,988 4,960,548 3,532,650 2,932,650

Number of persons
1 3 1 1
28.1 In addition Chief Executive and Directors are provided with company maintained car
with reimbursement of certain expenses pertaining to business.
29. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
The Company has exposure to the following risks from its use of financial instruments:
- Credit Risk
- Liquidity Risk
- Market Risk
The Companys overall risk management policy focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the Companys financial
performance.
29.1 Risk management framework
Risk management is carried out by the Companys finance department under policies
approved by the Board of Directors. The Companys finance department evaluates and
hedges financial risks. The Board provides principles for overall risk management, as well
as policies covering specific areas such as currency risk, other price risk, interest rate
risk, credit risk, liquidity risk, use of derivative financial instruments and non derivative
financial instruments and investment of excess liquidity.

Risk management systems are reviewed regularly by the executive management team
to reflect changes in market conditions and the Companys activities. The Company,
through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand
their roles and obligations.
29.2 Credit risk
Credit risk is the risk of financial loss to the company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from
trades debts, advances and deposits, interest accrued, other receivables and margin
on letter of guarantee. To manage credit risk, the Company maintains procedures
covering the credit worthiness of debtors and monitoring of exposures .As part of these
processes the financial viability of all counterparties is regularly monitored and assessed.
Outstanding customer receivables are regularly monitored. Some customers are also
secured, where possible, by way of cash security deposit.
a) Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The
maximum exposure to credit risk at the reporting date is as follows:
2017 2016
RUPEES RUPEES
Trade Debtors 680,207,444 597,100,046

Deposits, Prepayments & Other Receivables 284,712,980 481,127,605
Bank Balances 1,110,810,033 5,316,850
2,075,730,457 1,083,544,501
Trade Debtors
Majority of the Companys sales are on advance basis and trade debts represents
receivable from various customers. Hence the management believes that no impairment
allowance is necessary in respect of these trade debts.
Deposits, Prepayments & Other Receivables
These mainly comprise of advances against L/C, security deposits, letter of guarantee
and partial payment of cost of documents and Sales Tax Recoverable.
Customer credit risk is managed subject to the Companys established policies,

procedures and controls relating to customer credit risk management. Based on past
experience the management believes that no impairment allowance is necessary in
respect of trade receivables 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.

b) Credit Quality of Financial Assets
The credit quality of financial assets that are neither past due nor impaired can be
assessed by reference to external credit ratings agencies as follows:
Rating
Agency Short-term Long-term
Banks
National Bank of Pakistan PACRA A1+ AAA

The Bank of Punjab PACRA A1+ AA
Allied Bank Limited PACRA A1+ AA+
Askari bank Limited PACRA A1+ AA+
Bank Alfalah Limited PACRA A1+ AA+
Faisal Bank Limited JCR-VIS A1+ AA
Habib Bank Limited JCR-VIS A1+ AAA
Habib Metropolitan Bank Limited PACRA A1+ AA+
JS Bank Limited PACRA A1+ AA-
Samba Bank Limited JCR-VIS A-1 AA
Silk Bank Limited JCR-VIS A-2 A-
Soneri Bank Limited PACRA A1+ AA-
Standard Chartered Bank Pakistan PACRA A1+ AAA
Summit Bank Limited JCR-VIS A-1 A-
United Bank Limited JCR-VIS A-1+ AAA
Bank Islamic Pakistan Limited PACRA A+ A+
Dubai Islamic Bank Pakistan Limited JCR-VIS AA- AA-
Meezan Bank Limited JCR-VIS AA AA
MCB Islamic Bank Limited PACRA A A
Due to the Companys long standing business relationships with these counterparties
and after giving due consideration to their strong financial standing, management
does not expect non performance by these counterparties on their obligations to the
Company. Accordingly the credit risk is minimal.
29.3 Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations
as they fall due. The companys approach to managing liquidity is to ensure, as far as
possible, that it will 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 companys reputation.
The company manages liquidity risk by maintaining sufficient cash. The company
follows an effective cash management and planning policy to ensure availability of funds
and to take appropriate measures for new requirements. Following are the contractual
maturities of financial liabilities. The amounts disclosed in the table are undiscounted
cash flows.

- Contractual maturities of financial liabilities as at 30 June 2017
Carrying Contractual 6 month 6-12 1-2 Year More Than

Amount Cash Flows or less month 2 Year
RUPEES
Non-derivative financial liabilities:
Long Term Loan 83,342,994 83,342,994 41,671,497 41,671,497 - -

Liabilities against Assets- -
Subject to Finance Lease - - - - - -
Trade and Other Payables 474,704,584 474,704,584 46,882,797 22,569,458 405,252,329 -
Finance Cost Payable 18,580,146 18,580,146 18,580,146 - - -
Short term borrowings 935,472,278 935,472,278 467,736,139 467,736,139 - -
- Contractual maturities of financial liabilities as at 30 June 2016
Carrying Contractual 6 month 6-12 1-2 Year More Than

Amount Cash Flows or less month 2 Year
RUPEES
Non-derivative financial liabilities:
Long Term Loan 209,967,048 209,967,048 89,992,854 89,992,854 29,981,341

Liabilities against Assets- - - - 1,136,523 - -
Subject to Finance Lease
Trade and Other Payables 490,609,811 490,609,811 22,550,108 31,316,715 391,134,436 -
Finance Cost Payable 18,667,077 18,667,077 18,667,077 - - -
Short term borrowings 982,777,828 982,777,828 491,388,914 491,388,914 - -
1,702,021,764 1,702,021,764 622,598,953 613,835,006 421,115,777 -
Fair values of financial assets and liabilities
The carrying values of all financial assets and liabilities reflected in financial statements approximate
their fair values. The following table provides an analysis of financial instruments that are measured
subsequent to initial recognition at fair value, grouped in to levels 1 to 3 based on the degree to which
fair value is observable:
Financial instruments by categories
Loans and Available Total Loans and Available Total

receivables for sale receivables for sale
2017 2016
Rupees
Assets as per balance sheet
Trade Debtors 680,207,444 - 680,207,444 597,100,046 - 597,100,046

Deposits, Prepayments
& Other Receivables 284,712,980 - 284,712,980 481,127,605 - 481,127,605
Bank Balances 1,110,810,033 - 1,110,810,033 5,316,850 - 5,316,850
2,075,730,457 - 2,075,730,457 1,083,544,501 - 1,083,544,501

Financial Liabilities at Amortized Cost
2017 2016
RUPEES RUPEES
Liabilities as per balance sheet
Long Term Loan 83,342,994 209,967,048

Liabilities against Assets-Subject to Finance Lease - -
Trade and Other Payables 474,704,584 490,609,811
Finance Cost Payable 18,580,146 18,667,077
Short term bank borrowings 935,472,278 982,777,828
1,512,100,002 1,702,021,764
Liquidity Risk Management
The companys approach to managing liquidity is to ensure, as far as possible, that it will
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 companys
reputation.
The company monitors cash flow requirements and produces cash flow projections for the
short and long term. Typically, the company ensures that it has sufficient cash on demand to
meet expected operational cash flows, including serving of financial obligations. This includes
maintenance of balance sheet liquidity ratios, debtors and creditors concentration both in
terms of overall funding mix and avoidance of undue reliance on large individual customer.
Further, the company has the support of its sponsors in respect of any liquidity shortfalls.
29.4 Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates,
interest rates and equity prices will affect the companys net profit or the fair value of
its financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimizing return.
a) Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. Currency risk arises mainly
from future commercial transactions or receivables and payables that exist due to
transactions in foreign currencies.
The company is not exposed to currency risks.
b) Other price risk
Other price risk represents the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices (other than those arising
from interest rate risk or currency risk), whether those changes are caused by factors
specific to the individual financial instrument or its issuer, or factors affecting all similar
financial instrument traded in the market. The Company is not exposed to commodity
price risk.

c) Interest rate risk
This represents the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market interest rates. The company is geared only
to the extent of borrowings as mentioned in note # 08, 09 & 12. Financial instruments at
variable rates expose the company to cash flow interest rate risk. Financial instruments
at fixed rate expose the company to fair value interest rate risk.
The Company has no long-term interest-bearing assets. The Companys interest rate
risk arises from long term financing and short term borrowings.
At the balance sheet date the interest rate profile of the Companys interest bearing
financial instruments was:
2017 2016
RUPEES RUPEES
Floating rate instruments
Financial liabilities
Long Term Loan 83,342,994 209,967,048

Liabilities against Assets Subject to Finance Lease - -
Short Term Loan 935,472,278 982,777,828
Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair
value through profit or loss. Therefore, a change in interest rate at the balance sheet
date would not affect profit or loss of the Company.
Cash flow sensitivity analysis for variable rate instruments
The Company does not account for any variable rate financial assets and liabilities at
fair value through profit or loss. Therefore, a change in interest rate at the balance sheet
date would not affect profit or loss of the Company.
The sensitivity analysis prepared is not necessarily indicative of the effects on profit for
the year and assets and liabilities of the Company.
30. CAPITAL RISK MANAGEMENT
The companys prime object when managing capital is to safeguard its ability to continue as
a going concern in order to provide adequate returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of
dividends paid to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the company monitors capital on the basis of the
gearing ratio. The ratio is calculated as net debt divided by total capital. Net debt is calculated
as total borrowings less cash and bank balances. Total capital is calculated as equity as
shown in the balance sheet plus net debt.
Capital risk management
The Companys objective when managing capital is to safeguard the Companys ability to
remain as a going concern and continue to provide returns for shareholders and benefits for
other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Company is currently financing majority of its operations through long-term and short-
term financing in addition to its equity. The Company has a positive gearing ratio of 69.6%
(2016: 98.7%) as of the balance sheet date.
31. TRANSACION WITH RELATED PARTIES
Related parties of the Company comprises Associates directors and key management
personnel. Transactions and balances if any ,with related parties are disclosed in respective
notes to the accounts.
2017 2016
RUPEES RUPEES
32. PLANT CAPACITY AND ACTUAL PRODUCTION
Plant Capacity-Actual (M.Tons) 120,000 120,000
Capacity Utilization (M.Tons) 53,323 52,879
Capacity Utilization (Percentage) 44.44 44.06
32.1 Low production during the period is due to power and gas shutdowns.
33. GENERAL
33.1 Corresponding Figures
Previous years figures have been rearranged and reclassified wherever necessary for
the purposes of comparison and for better presentation. However, there is no material
rearrangement to report.

33.2 Functional and Presentation Currency
a) The financial statements are prepared in Pakistani Rupee, which is the Companys
functional and presentation currency.
b) Figures have been rounded off to the nearest rupees.
33.3 Number of employees at the end of year and average were 182 and 188 (2016: 202
and 250) respectively.
34. DATE OF AUTHORIZATION FOR ISSUE
These financial statements have been approved by the Board of Directors of the Company
and authorized for issue on October 05, 2017.
35. SUBSEQUENT EVENTS AFTER BALANCE SHEET DATE
Ittefaq Iron Industries Limited (The Company) (Formerly Ittefaq Sons Private Limited) has
been listed on Pakistan Stock Exchange on 3 July 2017.

Form of Proxy / E-Voting
Ittefaq Iron Industries Limited
40-B-II, Gulberg-III, Lahore. Tel: 042-35765021-26 Fax: 042-35759546
Option 1
Appointing other person as Proxy
I/We _______________________________________ of __________________________________, being member(s) of
Ittefaq Iron Industries Limited, holder of _________ Ordinary Share(s) as per Registered Folio/CDC Account No. _______
hereby appoint Mr. ___________________________________ Folio / CDC Account No. _______________ (if member) of
_______________________ or failing him, Mr. ___________________________ Folio / CDC Account No. _______________
(if member) of ______________, as my / our Proxy in my / our absence to attend and vote for me / us, and on my / our
behalf at the 12th Annual General Meeting of the Company to be held on October 28, 2017 and at any adjournment thereof.
Signed under my / our hand(s) this _________ day of ________ 2017.
Option 2
E-voting as per the Companies (E-Voting) Regulations, 2017

I/We _______________________________________ of __________________________________, being member(s) of
Ittefaq Iron Industries Limited, holder of ______________ Ordinary Share(s) as per Registered Folio/CDC Account No.
_____________ hereby opt for e-voting through intermediary and hereby consent the appointment of Execution Officer
____________________________ as Proxy and will exercise e-voting as per the Companies (e-voting) Regulations, 2016
and hereby demand for poll for resolutions.
My secured email address is ____________________________________ . Please send login details, password and
electronic signature through email.
Signature of Proxy Signature of Member

(Signatures should agree with
specimen signature registered
with the Company)
Signed in the presence of:
Signature of witnesses _______________________________ Signature of witnesses _______________________________

Name : _____________________________________________ Name : _____________________________________________
Address: ____________________________________________ Address: ____________________________________________
____________________________________________________ ____________________________________________________
CNIC No. ___________________________________________ CNIC No. ___________________________________________
NOTES FOR APPOINTING PROXY:

This instrument appointing a proxy under option 1 shall be in writing under the hand of the appointer or his attorney duly authorized
in writing, or if the appointer is a corporation either under the common seal or under the hand of an official or attorney so authorized.
The instrument appointing a proxy under option 1 and the power of attorney or other authority (if any), under which it is signed or
a notarially certified copy of that power of authority, shall be deposited at the office of the Company not less than 48 (forty eight)
hours before the time for holding the meeting at which the person named in the instrument proposes to vote, and in default the
instrument of a proxy shall not be treated as valid.
The instrument of e-voting under option 2 shall be deposited in advance in writing at least ten days before holding of general
meeting at the registered office of the company at 40-B-II, Gulberg-III, Lahore or through e-mail: info@ittefaqsteel.com.
The Company will arrange for e-voting if the company receives demand for poll from atleast five members or by any member or
members having not less than one tenth of the voting power.
FORM FOR VIDEO CONFERENCE FACILITY
I/We _______________________________________________ of _________________________________________, being meember(s) of
Ittefaq Iron Industries Limited, holder of ______________ Share(s) as per Registered Folio/CDC Account No. _____________ hereby
opt for video conference facility at _____________________________________.
______________________
Signature of member(s)

AFFIX
CORRECT
POSTAGE
The Company Secretary

40-B-II, Gulberg-III, Lahore
Tel: 042-35765021-26

AFFIX
CORRECT
POSTAGE
The Company Secretary

40-B-II, Gulberg-III, Lahore
Tel: 042-35765021-26

Head Office: Head Office:
40-B II Gulberg III, Lahore (Pakistan).
Phone: +92-42-35765021-26
info@ittefaqsteel.com

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ITTEFAQ IRON INDUSTRIES LTD.

Annual Report 2017

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 1

Profit Before Taxation and

Profit After Taxation

Earnings Per Share

2 ANNUAL REPORT 2017

Break-Up Value Per Share

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 3

4 ANNUAL REPORT 2017

TO CONTRIBUTE TO THE SOCIETY BY

6 ANNUAL REPORT 2017

ITTEFAQ STEEL AIMS TO PROCEED ON ITS

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 7

8 ANNUAL REPORT 2017

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 9

1. Mr. Usman Javed 2. Mian Muhammad Pervaiz Shafi

The above retiring directors are eligible for re-election.

5. Any other Business with the permission of the Chairman.

10 ANNUAL REPORT 2017

45-A (Electronic Voting)

BY ORDER OF THE BOARD

Lahore: Muhammad Shahzad Bazmi

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 11

4. Notice to Shareholders who have not provided their CNICs:

5. Payment of Cash Dividend Through Electronic Mode

For filers of income tax returns: 15%

12 ANNUAL REPORT 2017

ITTEFAQ IRON INDUSTRIES LIMITED

7 Video conferencing facility

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 13

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 15

COMPLIANCE WITH LAWS, DIRECTIVES & RULES

16 ANNUAL REPORT 2017

HEALTH, SAFETY & ENVIRONMENT

INVOLVEMENT IN POLITICS, GIFTS & BRIBARY

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 17

Mr. Mian Muhammad Pervaiz Shafi, Director

Mr. Javed Sadiq, Director

18 ANNUAL REPORT 2017

Mrs. Khalida Pervaiz, Director

Mrs. Ayesha Fahid, Director

Mrs. Sumbleen Usman, Director

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 19

20 ANNUAL REPORT 2017

LADLE REFINING FURNACES

BAR ROLLING MILL

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 21

LEO CS 230 has been installed to determine Metallography

22 ANNUAL REPORT 2017

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 23

24 ANNUAL REPORT 2017

I take great pleasure in welcoming you. This is our first annual

The success of any industry depends on the extent of its

Ittefaq will continue to strive not only to maintain but also

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 25

26 ANNUAL REPORT 2017

PARTICULARS 2016-17 2015-16

REVIEW OF OPERATING RESULTS synergy between process-efficiency and cost-

The steel requirements of the domestic market in CHIEF EXECUTIVES REVIEW

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 27

28 ANNUAL REPORT 2017

ITTEFAQ IRON INDUSTRIES LIMITED (Formerly Ittefaq Sons Private Limited) 29