COMPANY INFORMATION

BOARD OF DIRECTORS BASHIR H. ALIMOHAMMED - Chairman & Chief Executive A.RAZAK HAJI SATTAR YASIN HAJI KASSAM YOUNUS HAJI LATIF ZAIN BASHIR ZIAD BASHIR ABDUL AZIZ YOUSUF

COMPANY SECRETARY

MOHAMMED HUSSAIN, FCA

AUDIT COMMITTEE

A. RAZZAK HAJI SATTAR YOUNUS HAJI LATIF ZAIN BASHIR

- Chairman - Member - Member

BANKERS

ABN AMRO BANK NV AMERICAN EXPRESS BANK LIMITED BANK AL HABIB LIMITED CITIBANK, N.A. CREDIT AGRICOLE INDOSUEZ DEUTSCHE BANK AG HABIB BANK AG ZURICH HABIB BANK LIMITED MEEZAN BANK LIMITED NATIONAL BANK OF PAKISTAN STANDARD CHARTERED BANK UNION BANK LIMITED UNITED BANK LIMITED HYDER BHIMJI & CO. Chartered Accountants

AUDITORS

REGISTERED OFFICE

PLOT NO.82 MAIN NATIONAL HIGHWAY LANDHI, KARACHI-75120

SHARES DEPARTMENT

PLOT NO.HT/3A LANDHI INDUSTRIAL AREA KARACHI-75120 LANDHI INDUSTRIAL AREA KARACHI-75120 finance@gulahmed.com www.gulahmed.com

MILLS

E-MAIL URL

Directors Report
Your Directors take pleasure in presenting 50th Annual Report and the audited accounts for the year ended September 30, 2002. OPERATING RESULTS Rs. 000s Operating results of the Company are noted below: Profit after providing depreciation of Rs.285 million amounts to Less: Provision for taxation Profit after taxation Add: Unappropriated profit brought forward Amount available for appropriation Appropriations Proposed dividend General reserve Amount carried forward 400,362 64,600 335,762 11,703 347,465 170,366 175,000 2,099 347,465

Sales crossed rupees five billion mark and were Rs.5.76 billion an increase of 15%. The profit before tax Rs.400 million is lower as compared to the previous years profit before tax of Rs.519 million. Reasons for the decrease are mainly the appreciation of Pakistan Rupee against US Dollar and reduction in duty drawback rates. Earnings per share work out to Rs.9.85. DIVIDEND Your Directors are pleased to recommend cash dividend @ 50% that is Rs. 5/- per share. FUTURE PROSPECTS Positive steps taken by the Government on the economic front are expected to improve the investment climate in the country. We are however cautious about the prospects for the global economy. Moreover the European Union has started anti-dumping investigations on bed linen imports from Pakistan and if this leads to imposition of antidumping duties export of bed linen to the European market will become uncompetitive and will therefore suffer.

Your Company has taken necessary steps and will continue to do so, to ensure that it is in a stronger position to withstand these challenges, as far as possible. Having said this, our overall outlook is that the business environment is likely to remain difficult for the foreseeable future. SUBSIDIARY COMPANY At the Extraordinary General Meeting of the Company held on September 30, 2002, approval of the shareholders was obtained to form a wholly owned subsidiary company in UAE with an initial equity investment of USD one million (Rs.58 million approximately). We are pleased to report that the subsidiary company under the name of Gul Ahmed International Limited FZC has now been incorporated in UAE and the Company has invested USD one million towards its 100% share of the equity. BOARD OF DIRECTORS At the Extraordinary General Meeting of the Company held on March 30, 2002 Mr. Iqbal AliMohammed, Mr. Bashir H. AliMohammed, Mr. Ghulam Haji AliMohammed, Mr. Jawaid Iqbal, Mr. Zain Bashir, Mr. Ziad Bashir and Mr. Danish Iqbal were elected Directors of the Company for a period of three years commencing from April 1, 2002. The Board appreciates the useful services rendered by Mr. Muhammad Ayub the outgoing Director in whose place Mr. Danish Iqbal was elected. Subsequently Mr. Iqbal AliMohammed, Mr. Ghulam Haji AliMohammed, Mr. Jawaid Iqbal and Mr. Danish Iqbal resigned and Mr. A. Razak Haji Sattar, Mr. Yasin Haji Kassam, Mr. Younus Haji Latif and Mr. Abdul Aziz Yousuf were co-opted directors to fill in the vacancies. Mr. Bashir H. AliMohammed was appointed Chief Executive of the Company to fill in the vacancy due to the resignation of Mr. Iqbal AliMohammed. The Board wishes to place on record its deep appreciation for the valuable services rendered by Mr. Iqbal AliMohammed, Mr. Ghulam Haji AliMohammed, Mr. Jawaid Iqbal and Mr. Danish Iqbal more particularly the long and meritorious services of Mr. Iqbal AliMohammed who has been on the Board since March 1976. The Board also extends a warm welcome to Mr. A. Razak Haji Sattar, Mr. Yasin Haji Kassam, Mr. Younus Haji Latif and Mr. Abdul Aziz Yousuf.

CORPORATE GOVERNANCE We are pleased to report that your Company has taken necessary steps to comply with the provisions of the Code of Corporate Governance as incorporated in the Listing Rules of the Stock Exchanges. The financial statements, prepared by the management of the Company, present fairly its state of affairs, the result of its operations, cash flows and changes in equity. Proper books of account of the Company have been maintained. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and departure, if any, has been adequately disclosed. The system of internal control is sound in design and has been effectively implemented and monitored. There are no significant doubts upon the Companys ability to continue as a going concern. There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations. The key operating and financial data for the last six years, in a summarized form, is annexed. During the year four board meetings were held and the attendance by each Director is included in this report.

PATTERN OF SHAREHOLDING A statement showing the pattern of shareholding in the Company as at September 30, 2002 is included in this report.

AUDITORS The present auditors Hyder Bhimji & Co., Chartered Accountants, retire and offer themselves for re-appointment. ACKNOWLEDGEMENT Your Directors are once more pleased to record their appreciation for the dedication, commitment and loyalty of the employees of the Company. We also appreciate the assistance and support of the various Government Departments and Bankers.

For and behalf of the Board BASHIR H. ALIMOHAMMED Chairman and Chief Executive Karachi: January 01, 2003

GUL AHMED TEXTILE MILLS LIMITED BALANCE SHEET AS AT SEPTEMBER 30, 2002
2002 Note Rs.000s SHARE CAPITAL AND RESERVES Authorised capital 500,000 50,000,000 ordinary shares of Rs.10 each Issued, subscribed and paid-up capital 3 340,733 Reserves 4 1,447,645 Unappropriated profit 2,099 1,790,477 LONG TERM LOANS 5 DEFERRED LIABILITIES Taxation Gratuity 6 7 80,670 35,974 116,644 70,670 27,393 98,063 757,049 2001 500,000

340,733 1,272,645 11,703 1,625,081 998,885

CURRENT LIABILITIES AND PROVISIONS Short term running finance 8 1,873,264 Current maturity of long term loans 275,381 Creditors and accrued liabilities 9 547,130 Other liabilities0 1 5,442 Proposed dividend 170,366 2,871,583 CONTINGENT LIABILITIES AND COMMITMENTS 11 5,535,753 TANGIBLE FIXED ASSETS Operating assets 12 2,458,875 Capital work-in-progress 111,068 13 2,569,943 LONG TERM LOANS AND ADVANCES 14 10,236 LONG TERM DEPOSITS 4,685 2,575,614 42,699 2,618,313 8,901 3,421 6,004,172 2,332,137 177,299 596,163 6,178 170,366 3,282,143

CURRENT ASSETS Stores and spares 15 204,798 146,043 1,114,263 1,219,831 239,750 589,569 64,081 3,373,537

Stock-in-trade 16 1,033,507 Trade debts 17 737,433 Loans, advances, prepayments and other receivables 18 337,165 Short term investment 19 545,213 Cash and bank balances 20 92,773 2,950,889

5,535,753

6,004,172

The annexed notes form an integral part of these accounts

BASHIR H. ALIMOHAMMED Chairman and Chief Executive

ZAIN BASHIR Director

GUL AHMED TEXTILE MILLS LIMITED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED SEPTEMBER 30, 2002
2002 Note Sales Cost of sales Gross profit Administrative expenses Selling expenses Operating profit Other income Financial charges Workers' profit participation fund Workers' welfare fund Profit for the year before taxation Provision for taxation Profit for the year after taxation Unappropriated profit brought forward Profit available for appropriation 23 24 21 22 5,765,701 4,534,745 1,230,956 241,598 199,760 441,358 789,598 7,720 797,318 371,949 21,268 3,739 396,956 400,362 64,600 335,762 11,703 347,465 Rs.000s 4,996,023 3,781,787 1,214,236 208,815 162,438 371,253 842,983 9,028 852,011 300,817 27,560 4,860 333,237 518,774 46,000 472,774 9,295 482,069 2001

25 26

27

Appropriations Proposed dividend @ Rs. 5/(2001: Rs. 5/-) per share General reserve Unappropriated profit carried forward 170,366 175,000 345,366 2,099 170,366 300,000 470,366 11,703

Earnings per share (Rs.)

28

9.85

13.88

The annexed notes form an integral part of these accounts.

BASHIR H. ALIMOHAMMED Chairman and Chief Executive

ZAIN BASHIR Director

GUL AHMED TEXTILE MILLS LIMITED CASH FLOW STATEMENT

FOR THE YEAR ENDED SEPTEMBER 30, 2002
2002 Rs.000s CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Adjustments for: Depreciation Gratuity Financial charges Provision for slow moving/obsolete stores and spares Provision for doubtful debts Profit on sale of operating assets Interest income/exchange differences 400,362 518,774 2001

284,506 10,373 358,824 4,760 4,710 (2,687) 13,125 1,073,973

229,036 9,902 385,218 3,499 4,673 (5,613) (84,401) 1,061,088

Changes in working capital: (Increase)/Decrease in current assets Stores and spares Stock-in-trade Trade debts Loans, advances, prepayments and other receivables (Decrease)/Increase in current liabilites Creditors, accrued and other liabilities Cash generated from operations Payments for : Gratuity Financial charges Income tax Long term loans and advances Net cash generated/(used) from operating activities

(63,515) 80,756 477,688 (67,207) 427,722 (38,371) 389,351 1,463,324

(43,375) (354,924) (264,595) (90,934) (753,828) 115,834 (637,994) 423,094

(1,792) (370,222) (86,639) (1,335) 1,003,336

(3,685) (361,507) (63,058) (926) (6,082)

CASH FLOW FROM INVESTING ACTIVITIES Capital expenditure Sale proceeds of operating assets Interest income/exchange differences Long term deposits Net cash used in investing activities (246,304) 12,855 (11,294) (1,264) (246,007) (1,054,337) 28,185 82,174 (220) (944,198)

2002 Rs.000s CASH FLOW FROM FINANCING ACTIVITIES Short term loans Redemption of redeemable capital Long term borrowings Long term borrowings - repayments Dividend paid Net cash (used)/generated in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents - at the beginning of the year Cash and cash equivalents - at the end of the year (143,754) (170,366) (314,120) 443,209 (1,678,487) (1,235,278)

2001

(210,217) (32,445) 790,000 (145,094) (238,513) 163,731 (786,549) (891,938) (1,678,487)

CASH AND CASH EQUIVALENTS Cash and cash equivalents include: Short term investment Cash and bank balances Short term running finance 545,213 92,773 (1,873,264) (1,235,278) 589,569 64,081 (2,332,137) (1,678,487)

BASHIR H. ALIMOHAMMED Chairman and Chief Executive

ZAIN BASHIR Director

GUL AHMED TEXTILE MILLS LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED SEPTEMBER 30, 2002
Rs.000s Shares capital Balance as at September 30, 2000 Profit for the year Transferred from profit and loss account Dividend Balance as at September 30, 2001 Profit for the year Transferred from profit and loss account Proposed dividend Balance as at September 30, 2002 340,733 340,733 340,733 Revenue reserve 820,000 300,000 1,120,000 175,000 1,295,000 Capital reserve 152,645 152,645 152,645
Unappropriated

profit 9,295 472,774 (300,000) (170,366) 11,703 335,762 (175,000) (170,366) 2,099

Total 1,322,673 472,774 (170,366) 1,625,081 335,762 (170,366) 1,790,477

BASHIR H. ALIMOHAMMED Chairman and Chief Executive

ZAIN BASHIR Director