Crescenet Textile

1
Contents
Company Information Notice of Annual General Meeting Mission, Vision and Values Directors Report to the Shareholders Key Operating / Financial Highlights Statement of Compliance with best practices of Code of Corporate Governance Review report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance Pattern of Shareholding Auditors Report to the Members Balance Sheet Profit & Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Notes to the Financial Statements Proxy Form
3 4 6 7 16
17
19 20 23 24 26 27 28 29 30 83
Company information
Mr. Muhammad Anwar
Chairman & Chief Executive Director Director Director Director Director Director
Mr. Ahmad Shafi Mr. Khalid Bashir Mr. Muhammad Arshad Mr. Muhammad Asif (Nominee NIT) Mr. Nasir Shafi Mr. Tariq Shafi
Al Baraka Islamic Bank B.S.C (E.C) Allied Bank Limited Faysal Bank Limited Habib Bank Limited Meezan Bank Limited MCB Bank Limited National Bank of Pakistan NIB Bank Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited
Audit Committee
Mr. Khalid Bashir Mr. Nasir Shafi Mr. Ahmad Shafi Chairman Member Member
Mills & Head Office

Sargodha Road, Faisalabad, Pakistan T: + 92-041-111-105-105 F: + 92-041-111-103-104 E: crestex@ctm.com.pk
Chief Financial Officer

Mr. Sadiq Saleem
Registered Office Corporate Secretary

Mr. Naseer Ahmad Chaudhary 40-A, Off: Zafar Ali Road, Gulberg-V, Lahore, Pakistan T: + 92-042-111-245-245 F: + 92-042-111-222-245 E: mailho@crescentbahuman.com
Head of Internal Audit

Mr. Muhammad Attiq ur Rehman
Auditors
Riaz Ahmad & Company Chartered Accountants
Share Registrar
Crescent Group Services (Pvt) Ltd, 306, 3rd Flr, Siddiq Trade Centre, 72-Main Boulevard, Gulberg, Lahore, Pakistan T: + 92-042-35787592 F: + 92-042-35787594 E: corpsecry@cresjute.com www.ctm.com.pk
Legal Advisor
Mujtaba Jamal Law Associates Raza Abbas Chaudhary Advocate
Stock Exchange Listing

The Crescent Textile Mills Limited is a listed Company and its shares are traded on all three Stock Exchanges in Pakistan. The Company's shares are quoted in leading dailies under textile personal goods sector.
Notice of Annual General Meeting

Notice is hereby given that the 61st Annual General Meeting of the shareholders of the Company will be held on Saturday, the October 30, 2010 at 9:30 a.m. at the registered office of the company at 40-A, Off: Zafar Ali Road, Gulberg V, Lahore to transact the following business:1. To confirm the minutes of last Annual General Meeting of the shareholders held on October
29, 2009.
2. To receive, consider and approve the audited accounts of the company for the year ended
June 30, 2010 together with the Directors' and Auditors' Reports thereon.
3. To approve, as recommended by the Board of Directors, payment of cash dividend @ 15%
i.e. Rs. 1.50 per share for the year ended June 30, 2010.
4. To appoint auditors of the company and fix their remuneration for the year ending June 30,
2011. Present auditors M/s. Riaz Ahmad and Company, Chartered Accountants, retire and being eligible to offer themselves for re-appointment.
5. To transact any other business with permission of the Chairman.
Registered Office: 40-A, Off: Zafar Ali Road, Gulberg-V, Lahore: T: +92-042-111-245-245 F: +92-042-111-222-245 Dated: October 04, 2010
By Order of The Board
(Naseer Ahmad Chaudhary) Corporate Secretary
Notes
1. The Members' Register will remain closed from October 22, 2010 to October 30, 2010 (both days inclusive). Physical / CDC transfers received at the Registered Office of the Company by the close of business on October 21, 2010 will be considered in time for the purpose of payment of cash dividend to the transferees. 2. A member eligible to attend and vote in this meeting may appoint another member as proxy to attend and vote in the meeting. Proxies in order to be effective must be received by the company at the Registered Office not later than 48 hours before the time for holding the meeting. 3. Shareholders are requested to immediately notify the change in address, if any. 4. 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: a. For attending the meeting: i). In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall authenticate his/her identity by showing his original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting. In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signatures of the nominee shall be produced (unless it has been provided earlier) at the time of the Meeting.
ii).
b. For Appointing Proxies: i). In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per the Regulations, shall submit the proxy form as per the above requirement.
ii). The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned on the form. iii). Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form. iv). The proxy shall produce his original CNIC or original passport at the time of the Meeting. v). In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signatures shall be submitted (unless it has been provided earlier) along with proxy form to the company.
Mission, Vision and Values

To be the 1st Choice of Customers and achieve a leading role in the economy through enhancement of quality of life style for Stakeholders.
Directors' Report to the Shareholders

Directors of your company are pleased to present the 61st Annual Report and Audited Financial Statements of the company for the year ended June 30, 2010 together with the Auditors' Report thereon.
Profit % of Sales
Highlights for the year: Achieved stable sales revenue of Rs.10,863 million against Rs.10,751 million of last year. Net profit after tax was 3.17% of sales against 1.67% during last year; which improved earnings per share to Rs 7.00 from Rs 3.64. Other operating expenses and financial costs declined by 63.63% and 34.28% respectively from last year. Operations remained smooth and stable despite serious energy crises and difficult security situation in the country.
20% 15% 10% 5% 0% -5% 2005 2006 2007 2008 2009 2010
Gross pr ofit to sales (%) Profit afte r tax to s ales (%)
Operating profit to sales (%)
Break up value (Rupe es/share )

70 60
Rupees
Yarn prices remained bullish on sharp increase in cotton prices and higher international demand but value added sector faced brunt of high input costs. Summary of highlights is as below: (Rupees in million) Particulars Sales revenue Net profit before tax Net profit after tax Other operating cost Finance cost 2010 2009 % Change 1.05 94.32 92.53 (63.63) (34.28)
50 s e 40 e p u 30 R 20 10 0 2005 2006 2007 2008 2009 2010
10,863.386 10,750.512 463.491 238.518 344.670 179.020 136.872 376.284 536.270 815.948
Profi t before tax and after tax

Rupees in million
The strategy and focus: Company is fully integrated into composite textile chain and strategically poised to enhance revenues from its home textile products. Therefore, growth in value added sales through maximum use of own manufactured products is the way forward. Achieve greater consistency and safety of operational strength to inculcate more confidence into all stakeholders for reliance on achievements and commitments.
500
n o i l 400 l i m300 n i s e 200 e p 100 u R

(100) 2005 2006 2007 2008 2009 2010
Profit before tax
Profit after tax
Continuation of achieving legal, corporate, social, and local as well as international laws and norms for satisfaction of all concerned parties. To be resilient in order to face challenges of difficult business environments in all times to come through attaining financial and operational stability. Company also places emphasis on investing in human resource for improving organizational strength to cope with complex and strategic business ventures.
Fixed assets Investments Current as sets
Assets
Over view of economy and business environment: In the backdrop of stagnant economy marred with bleak energy and security situation, the country was able to achieve 4.1% GDP growth against 1.2% of last year mainly due to manufacturing and service sector growth. Country saw some consolidation in recovery but power shortages, circular debt and increased external debt servicing continue to impede recovery. Trade deficit was down, largely through increase in exports by 8.43% (from $17.8 billion to $19.3 billion). Exports showed resilience despite global recession, no concessional treatment for Pakistan's exports, severe competition and high input costs. Textile exports also registered increase mainly driven by three segments including cotton, yarn and synthetic textiles. Increasing cotton prices, persistent power and gas shortages, higher mark up rates and unstable security and political situation had affected industry's performance. Contrary to proclamation in Textile Policy 2009 the Govt did not exempt export industry from gas and power load shedding. Gas curtailment by utility company for supply to power plants not only halted operations but also reduced margins of industry due use of alternate fuel at high cost. An average increase in gas rates @6.20% over last year also negatively impacted performance of textile industry. To overcome energy deficiency Govt took various measures besides resorting to two weekly holidays; which had serious effects in shape of financial loss by way of non utilization of exports proceeds remitted by customers due to shortened working week. On IMF support and record increase in home remittances PKR remained stable (81.10 on June 30, 2009 to 85.40 on June 30, 2010) and declined only by 5.30% during the year. So, in comparative terms exchange rate did not contribute towards increase in exports.
Loans & advances
Equity & Liabilities
Equity Non cu rrent lia bilities
Surplus o n rev aluatio n Current liab ilities
Sales: Export & Local

12,000 n o i l l i 9,000 m n i s6,000 e e p u R 3,000 2005 2006 2007 2008 2009 2010
Rupees in million
Local Sales
Expo rt Sales
Cotton crop size of 12.8 million bales was short to industry's requirement of 15.5 million bales. Local shortfall in cotton crop coupled with global rising demand pushed prices to new apogee of Rs.6,700/Md against previous high of Rs.4,200/Md. Similarly, polyester prices also toed line of cotton prices and showed consistently rising trend. On higher international oil prices POL and HFO prices also remained strong negatively affecting energy generation on HFO based capacity. Local yarn prices also followed upward path and moved ahead of cotton rates on higher global demand. The value added sector's margins came under severe pressure due to high yarn prices. In order to protect valued sector Govt imposed 15% Regulatory Duty on yarn export ignoring outcry of spinning sector. Under Textile Policy, 2009 the Govt provided some financial relief to industry through mark up rebates/ subsidy on long term loans and export finances. But due to lack of budgetary allocation these benefits were not fully disbursed. During the year Textile Ministry also helped industry by arranging disbursement of all R&D pending claims of financial year 2008. Cash starved Govt hammered industry by blocking sales tax refunds and rebates thereby increasing finance cost and liquidity crunch. Financial performance: During the year your company demonstrated improved financial results amidst rising cost pressures, severe power crises and exacerbating cotton prices. Sales revenue showed relatively stable trend and growth in yarn and home textile sales helped to achieve this level; which were up by 34.95% and 12.74% respectively. Gross profit of the company lagged behind previous year (down by 7.52%) due depressed margins of value added segments but all time high margins on yarn sales offset the decline in manufacturing profit. The margins were also affected by substantial gas curtailment; which not only halted production but forced the company to use alternate expensive fuel for power generation. Operations also remained under stress due prolonged gas outages and could not pick momentum despite having ample export orders.
Other operating income 2%
Sources of Revenue
Share of associate profit 1%
Local 29%
Export 68%
Utilization of Revenue
Tax 1% NAT profit 3%
Finance co st 5% Admin & o ther cos ts 3%
Distribution 4%
Cost ofsales 84%
Rising fuel, freight and distribution expenses also had an impact on profitability of the company. However , company was able to combat these pressures and improved its bottom line by reducing 'Other operating expenses' by 63.63% and 'Finance cost' by 34.28%. The retirement of long term loans and use of low cost financing to cater borrowing needs of company for increased working capital requirements, helped in saving of finance cost. Sales: Overall sales of the company were slightly higher (1.05%) compared to previous year's sales as domestic sales surged by 19.70%. Major thrust in such sales was coming from yarn which rose by 32.34%. Composition of sales during the year with combination of local and exports was as below: Sales revenue Local: Yarn Fabric Others Export: Yarn Fabric- Own manufactured Fabric- Direct purchases Home textiles 2010 Million Rs. % 2,439.279 506.740 307.125 3,253.144 22 5 3 30 2009 Million Rs. % 1,843.253 559.806 314.749 2,717.808 17 5 3 25
Product mix 2010
Other 3%
Yarn 26%
Home Text ile 51%
Fabric 20%
393.725 4 1,608.305 15 2,347.550 21 3,260.662 30 7,610.242 70 10,863.386 100
257.404 2 1,507.640 14 3,375.417 32 2,892.243 27 8,032.704 75 10,750.512 100
Capital mix (Debt & Equity)

120% 100%
Export sales were marginally lower by 5.26% as frequent gas curtailment severally disrupted power generation facilities and production processes of the company. Partly, higher yarn prices were also responsible for decline in exports of value added goods as foreign buyers had reacted conservatively to rising textile prices and booked lesser orders. Our exports originated from all regions but majority were from EU and USA. In overall sales revenue exports constituted 70% against 75% during last year. In export category home textiles exports contributed 61% against 62% of last year, depicting stable trend of company's sales of value added segment. Despite tough business conditions, recession in US and Europe and un-favourable international business environment for Pakistan's textiles, exports of value added segment of company has been showing growth over the years as below:
80% 60% 40% 20% 0% 2005 2006 2007 2008 2009 2010
Debt
Equity
10
Year 2006 2007 2008 2009 2010
Yarn Million Rs. % 271 204 277 257 394 10 07 06 06 07
Fabric Million Rs. % 1,620 1,565 1,825 1,508 1,608 58 52 45 32 32
Home Textiles Million Rs. % 879 1,223 1,980 2,892 3,261 32 41 49 62 61
Total Million Rs. % 2,770 2,992 4,082 4,658 5,263 100 100 100 100 100
Particulars Yarn purchases Fabric purchases Weaving and processing charges Packing materials Fuel and power
2010 2009 Change Million Rs. Million Rs. ( % ) 821.830 382.891 376.884 369.779 976.607 424.348 391.942 286.817 325.025 859.546 94 (2) 31 14 14
To further boost exports of home textiles, your company has added more machines, and employed qualified and skilled work force. Growth in home textiles exports reflects on company's intention to convert maximum processed fabric in house in order to strengthen its bottom line. Comparison of total sales revenue composition with previous year is given as below: Particulars Yarn Fabric Home Textile Trading Others Total sales revenue 2010 2009 Change Million Rs. Million Rs. ( % ) 2,833 2,115 3,261 2,348 307 10,863 2,100 2,068 2,893 3,375 315 10,751 35 2 13 (30) (3) 1
Factors responsible for increase in these costs were:
Yarn prices were higher on increase in cotton prices and high export demand. Fabric purchase prices were also higher by 37% but less dependence on out side purchases had slight saving in cost through procurement of lesser quantities. Weaving and processing charges increased due requirement of outside weaved fabric and processing of some fabric from other sources for lack of availability of gas. Packing material was higher due to growth in home textile exports. Power cost rose considerably as frequent gas curtailment forced to shift to alternate expensive fuel to keep manufacturing processes operational although not fully. Company absorbed Rs.128.360 million due to extra fuel cost incurred during the year.
Operations and other costs: The impinging cost trends had an adverse impact on input cost but over all cost of sales of company remained in check through close monitoring, planning and cost effective measures. Rising raw materials prices increased input cost by 8.72% with cotton contributing 7.85% (avg rate was higher by Rs.500/ Md from Rs.3,700/ Md to Rs.4,200/ Md) and polyester 13.51% (avg rate increased from Rs.101/ Kg to Rs.114/ kg). The surge in raw materials prices was due to shortfall in cotton crop, use of imported cotton and higher PSF prices. Other costs which had increased compared to previous year were as below:
Distribution and shipment cost increased mainly due higher ocean freight charged by shipping lines on revival of export market and rising fuel costs. Administrative and general expenses were slightly higher but major decrease in other operating costs (reduced from Rs.376.284 million to Rs.136.872 million in current year) had significant impact on improving bottom line of the company. Finance cost decreased due stable PKR as lower interest rates on availing US $ loans proved very economical and also utilization of export refinance / SBP loans at concessional rate contributed favourably. Although average use of banking facilities was slightly higher but saving through mark-up rates resulted substantial reduction in finance cost. Share of profit from associate also improved bottom line of the company.
11
During the year company received mark-up support, subsidy and past pending R&D claims and part of Duty Draw Back claims under Textile Policy, 2009. Summarized financial results for the year 2010 were as below:
Particulars
Sales revenue Gross profit Operating costs Other operating income Finance cost Profit share from associate Profit before tax Taxation Profit after tax
stream processes saved company from rising costs and was able to demonstrate considerably well under difficult business conditions. Data given below clearly depicts this philosophy:
Year 2006 2007 2008 2009 2010
2010 2009 Change Million Rs. Million Rs. ( % )

10,863 1,457 789 212 536 120 464 119 345 10,750 1,575 937 251 816 165 238 59 179 1 (8) (16) (16) (34) (27) 95 102 93
a) Yarn (in '000' Kgs): Available for use Sold (%) Used in weaving (%) b) Grey fabric (in '000' Mtrs): Available for use Sold (%) Used in processing (%) 17,316 18,449 (64) 12,010 (69) 16,327 16,994 (58) 11,249 (69) 26,004 14,539 (42) 17,790 (68) 27,234 11,234 (33) 19,886 (73) 24,125 7,006 (29) 17,119 (71) 26,704 13,706 (52) 12,999 (48) 23,822 12,408 (52) 11,414 (48) 25,798 11,974 (46) 13,824 (54) 24,299 12,315 (49) 12,684 (51) 25,064 12,581 (50) 12,484 (50)
Operational performance: Frequent and continued gas load shedding badly disrupted operations of the company but use of alternate energy source helped to achieve satisfactory performance of operations. Reduced gas availability affected power and fabric processing facilities besides increasing fixed costs for not operating fully during the year. The gas load shedding increased from 36 days to 55 days in current year. Operational performance of company during the year was normal in spinning, lower in weaving and improved in value added segments. Comparison of the same with last year's data is as below: Particulars
Spinning: Yarn converted into 20's (000 kgs) Weaving: Fabric converted into 50 picks (000 Sq Meters) Processing: Fabric processed (000 in linear meters)
c) Processed fabric (in '000' Mtrs): Available for use Sold (%) Used in home textile (%) 28,893 18,449 (64) 10,445 (36) 29,294 16,994 (58) 12,301 (42) 34,719 14,539 (42) 20,179 (58) 34,135 11,234 (33) 22,900 (67) 35,477 11,026 (31) 24,451 (69)
Company continued to improve its assets base and added various machinery items in spinning, processing, home textiles and power generation facilities to cope with the current and future requirements. These machines were required to improve / enhance the efficiency of these processes. The operational efficiency of various processes was achieved 88% ~ 98% which helped in achieving yield from 85% in spinning and 97% in the other value added processes. This performance of various operations of company would have improved had there not been severe gas load shedding during year under reference. Compliance to systems, laws and social environment: The company maintained its systems, procedures and work place according to local and international laws. These compliances were helpful in achieving various certifications which were obtained through repellence audits conducted during the year. To ensure healthy and safe working environment all required arrangements were made in accordance with international standards.
2010 ( Qty )
36,281
2009 ( Qty )
36,091
Change ( % )
0.53
75,527
78,220
(3.44)
34,890
33,415 20,170
4.41 5.51
Home Textiles: Fabric stitched (000 in linear meters) 21,282
Internal use of semi and intermediate products was favourable to some extent as surge in prices of these products in local market would have considerable impact on profitability. Internal capacity to feed up-
12
In an overall operating set up workers, contractors and visitors were given required safety awareness and these were followed throughout plant operations. Various executives and employees attended courses / seminars of professional training at different forums which were either arranged in house or at outstation places. These steps in recognizing value of human resource were essentials to create a team of trained and professional people. Followings certifications given by accredited agencies were available with company:
ISO 9001:2008 ISO 14001:2004 C-TPAT/ GSV OE 100 GOTS Oeko-Tex 100 Oeko-Tex 100 SUPIMA SA 8000 Quality Management Systems Environment Management Systems Security Management Systems Product Standards, Organic Exchange Product Standards, Global Organic Textiles Product Standards for Fabric, Human Ecology Product Standards for Home Textiles Certification for use SUPIMA Cotton Social accountability (In process)
suitable workplace for its employees where all required necessary steps are taken to protect their legal rights and for their safety. For recreation of executive employees club facilities were provided for entertainment activities. Information technology: Information technology provides requisite leverage to company to boost its performance. New IT assets were added to fulfill business needs more efficiently and existing ones were upgraded. Company had installed OF (Oracle Financial) to cater its ERP needs. New developments on Oracle based platform are in progress and with passage of time being annexed to main system. Company is also planning to convert its existing OF to Release 12 which is an enhanced version and will have added features to cope requirements of newest technological changes. Social and welfare responsibilities: Cognizant of its social responsibilities company responds to the need of local communities and civil society organizations which include contributions in kind and in cash to health care centers, social welfare organizations and educational institutions. It has been funding to charitable institution and also established two Campuses in the vicinity of Faisalabad run by The Citizen Foundation (TCF) besides providing annual support fund for running of these schools. Company has its outreach to supports various other social and welfare organizations spread across the country.
Company is also striving to obtain accreditation of ISO 17025 for Competence of Testing and Laboratory Calibration respectively. Human resource and industrial relations: Harmonious working environment and cordial industrial relations prevailed during the year. Operations of the company were carried out keeping in view the dignity, respect, support, protection and international standards set to meet working environment. All workmen performed their duties and jobs at standard hours and if they were required to put extra workings to meet the exigencies and to fill man power shortage they were compensated and paid per legal criteria. There were no complaints of work abuse or of not fulfilling their legal requirements. All employees were provided suitable working environment and climate to ensure accomplishment of their jobs, smoothly. During the year company gave bonuses to workers and paid expenses of 05 workmen to perform Hajj. They were paid their remunerations well in time and disbursement of pays / wages were made within the legally specified days. Besides extending coverage to social security scheme the workmen were able to get benefit of ambulance service and also provided conveyance facility to outstation workforce. These things helped for industrial harmony as company had always taken lead and made it a
Future prospects and plans: Going forward, company envisages various challenges as cotton prices have hit record high levels to an expected shortfall in supplies from flood affected in Pakistan and rain hit in China. High cost is very disconcerting for textiles as it will affect margins due very limited scope to pass through the rising price impact to customers under intense global competition environment. Sever gas load shedding as witnessed in last year is likely to effect more in future due increasing gap between demand and supply. To avoid interruptions in processing operations the company has arranged LPG gas supply system which will not only ensure timely execution of export orders but and will also reduce fixed costs.
13
The recent upward revisions in discount rate by SBP in two MP announcements will also have a negative impact on borrowing costs in ensuing period. However, we shall focus on our processes, products, customers to improve from present level through efficiency and more dedicated efforts. Appropriations: The company has earned profit Rs.7.00 per share in the year 2010 as against earning per share of Rs.3.64 in previous year. Board of directors have recommended cash dividend for shareholders of the company @15% i.e. Rs.1.50/ share (2009: Nil) to be paid after approval by the shareholders in Annual General Meeting. Corporate governance and Financial frame work: Board of the company attaches utmost importance in adhering to local and international principles of good corporate governance and committed to inculcating this culture at all levels of organization. All directors and employees are required to sign the code of ethics in acknowledging of their understanding and acceptance of same. Before each board meeting closed period is declared during which directors and executives are not allowed to trade into shares of the company. Directors of the company are fully aware of their duties and responsibilities and strive to discharge fiduciary responsibilities in best possible manner in compliance with all applicable corporate laws and regulations. During the year Board was actively involved in performing their duties including those required to be performed under various laws and Memorandum and Articles of Association of the company with ultimate objective of safeguarding interests of the stakeholders, enhancing profitability of the company, increasing shareholders' wealth and promoting market confidence. The directors are pleased to state that: a. Financial statements prepared by the management represent fairly and accurately company's state of affairs, results of its operation, cash flows and changes in equity. Proper books of accounts have been maintained.
c.
d.
e.
f. g. h. i.
j.
k.
Appropriate accounting policies have been consistently applied in preparation of financial statements and any changes in accounting policies have been disclosed in the financial statements. The 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 any departure there from has been adequately disclosed. System of internal control is sound in design, has been effectively implemented and being monitored continuously. On-going review will continue in future for further improvement in controls. The company has sound potentials to continue as going concern. There has been no material departure from best practices of corporate governance. Information about outstanding taxes and levies is given in Notes to the Accounts. Transactions undertaken with related parties during the financial year have been ratified by the Audit Committee and approved by the Board. The value of investment in respect of Employees Provident Fund was Rs.537.373 million (as per audited accounts of 2009). During the year under review, four (04) meetings of the Board were held and following were in attendance: Director's Name Mr. Muhammad Anwar Mr. Ahmad Shafi Mr. Khalid Bashir Mr. Muhammad Iqbal Hussain Nominee NIT Mr. Muhammad Arshad Mr. Muhammad Asif- Nominee NIT Mr. Nasir Shafi Meetings Attended 3 4 3 1 4 1 4
S# 01 02 03 04 05 06 07
b.
Leave of absence was granted to directors who could not attend Board meetings.
14
l.
To the best of our knowledge, Directors, CEO, CFO and Company Secretary, auditors, their spouses and minor children have not undertaken any trading of company's shares.
Changes in accounting policies and estimates: Company has changed policies in current year regarding IAS1 'Presentation of Financial Statements', IFRS7 'Financial Instruments Disclosures', adoption of IFRS8 'Operating Segments' and change in accounting estimate regarding useful life of building. The impact of above changes in accounting policies and estimate has properly been disclosed in the financial statements as per the requirement of 'International Accounting Standards' as mentioned in Note 2.1 (d) (i) , 2.20 and 2.7 (d). Key operating financial highlights: Financial data of the last six (06) years is attached. Acknowledgements: I take this opportunity to thank the Board of Directors, management, staff and workers, customers, bankers, vendors and all other stake holders for support, efforts, commitment and ownership in what we have achieved as a team.
Events after the reporting period: There was no significant event after the reporting period which may warrant mentioning in Directors' Report. Audit Committee: The committee comprises of three members, two of them are non-executives independent directors including Chairman. Committee meets every quarter for review of audit reports, interim and annual financial results prior to approval of the Board. Investment in 'Preference Shares' of Crescent Bahuman Ltd - CBL: Board of Directors and shareholders of the company had resolved conversion of all sums due from Crescent Bauman Limited, an associate of the company, on account of long term loans and interest receivables thereon till date of conversion into Preference Shares of investee company subject to regulatory approvals to be obtained by said company. The terms of Preference Shares as approved by the shareholders are 5%, unlisted, non-voting, cumulative, participatory and convertible preference shares of Rupees 10 each. Pattern of shareholding: A statement showing the pattern of shareholding of the company as at June 30, 2010 is included in these financial statements.
For and on behalf of the Board of Directors Auditors: The auditors M/s. Riaz Ahmad & Co., Chartered Accountants, retire and offer themselves for reappointment for the year 2011.
(Muhammad Anwar) Chief Executive Officer
15
Key Operating / Financial Highlights

KEY INDICATORS Operating Gross profit margin Operating profit margin Pre tax margin After tax margin Performance Return on total assets Total assets turnover Fixed assets turnover Inventory turnover Return on paid up share capital Leverage Debt equity ratio Current ratio Quick ratio Valuation Earning per share Earnings growth Break up value Dividend - (cash/stock) Price earning ratio Market price per share Market capitalization HISTORICAL TRENDS Trade results Sales - net Gross profit Profit from operations Profit / (loss) before tax Profit / (loss) after tax Financial position Shareholders' equity Property, plant and equipment Working capital Non current liabilities 2,451 1,686 (235) 1,374 2,462 1,926 (500) 1,713 2,989 4,441 (688) 1,745 2,412 4,226 (1,419) 1,287 2,262 4,182 (1,720) 1,108 2,672 3,981 (1,808) 665 4,117 541 477 302 254 4,973 524 340 (17) (57) 5,730 529 582 117 88 8,845 968 515 (43) (62) 10,751 1,575 889 239 179 10,863 1,457 880 463 345 Rs % Rs % Times Rs Rs(M) 6.26 (1.27) 519.80 (120.29) 60.26 55.03 10.00 10.00 8.75 (17.72) 54.80 22.50 2,229 1,007 Rupees in million 1.78 (1.25) 240.16 (170.22) 66.82 49.02 10.00 38.76 (46.67) 69.00 58.52 3,087 2,880 3.64 391.20 45.96 6.73 24.50 1,206 7.00 92.31 54.31 15.00 3.08 21.57 1,061 Times Times Times 0.36 0.92 0.54 0.40 0.83 0.44 0.36 0.82 0.52 0.35 0.76 0.50 0.33 0.70 0.51 0.20 0.70 0.50 % Times Times Times % 3.71 0.60 2.04 3.55 62.57 (0.80) 0.70 2.31 4.58 (14.02) 0.86 0.56 1.29 5.36 19.63 (0.55) 0.79 2.09 5.17 (12.54) 1.66 0.99 2.57 5.88 36.38 3.14 0.99 2.73 7.22 70.04 % % % % 13.13 11.60 7.35 6.18 10.54 6.84 (0.34) (1.15) 9.24 10.15 2.04 1.53 10.95 5.83 (0.48) (0.70) 14.65 8.27 2.22 1.67 13.41 8.10 4.27 3.17
2005 2006 2007 2008 2009 2010
16
Statement of Compliance with Best Practices of Code of Corporate Governance

This statement is being presented to comply with the Code of Corporate Governance contained in Listing Regulations of Karachi, Lahore and Islamabad Stock Exchanges for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best Practices of Corporate Governance. The Company has applied the principles contained in the Code in the following manner:
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 two executive Directors, four non-executive Directors and one independent non executive Director but no Directors representing minority interest. The Directors have confirmed that none of them is serving as a Director in more than ten listed companies. 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. Casual vacancy occurred in the Board during the year 2010 was filled within the stipulated period of 30 days. Statement of Ethics and Business Practices has been circulated to directors and employees. The Board has developed a vision/mission statement, overall corporate strategy and significant policies. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration, terms and conditions of employment of the CEO have been taken by the Board. 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. Directors of the company have participated in Orientation Course at group level to apprise them of their duties and responsibilities. Director(s), who have not participated in these, have been apprised and adequately briefed.
2.
3.
4.
5. 6.
7.
8.
9.
10. The Board has approved the appointment of company CFO and Head of Internal Audit including
their remuneration and the terms of appointment as determined by the CEO.
17
11. The Directors' report for this year has been prepared in compliance with the requirements of the
Code and fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by CEO and CFO before approval by
the Board.
13. The Directors, CEO and Executives do not hold any interest in the shares of the Company other than
that disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code. 15. The related party transactions have been placed before the audit committee and approved by the
Board of Directors.
16. The Board has formed an Audit Committee. It comprises 3 members, two of them are non-executive
Directors including the Chairman of the Committee.

17. The meetings of the audit committee were held at least once in every quarter prior to approval of
interim and final results of the Company and as required by the Code. The terms of reference of the Committee have been formed and advised to the Committee for compliance.
18. The Board has set-up an effective internal audit function manned by suitably qualified and
experienced personnel who are conversant with the policies and procedures of the Company and they are involved in the internal audit function on a full time basis.
19. The statutory auditors of the Company have confirmed that they have been given a satisfactory
rating under the Quality Control Review program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan.
20. The statutory auditors or the persons associated with them have not been appointed to provide
other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.
21. The company has fully complied with the best practices on transfer pricing as contained in the
Listing Regulations of the Karachi, Lahore and Islamabad Stock Exchanges.

22. We confirm that all other material principles contained in the Code have been complied with. On behalf of the Board
(Muhammad Anwar) Chief Executive Officer
18
Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained in the code of Corporat Governance prepared by the Board of Directors of THE CRESCENT TEXTILE MILLS LIMITED (the Company) for the year ended June 30, 2010, to comply with the Listing Regulations of the respective Stock Exchanges, where the Company is listed. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the statement of compliance reflects the status of the Companys compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code. As part of our audit of financial statements, we are required to obtain and 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 Boards 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 procedure and risks. Further, Listing Regulations of the Karachi, Lahore and Islamabad Stock Exchanges require the Company to place before the Board of Directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arms length transactions and transactions which are not executed at arms length price recording proper justification for using such alternate pricing mechanism. Further, all such transactions are also required to be separately placed before the audit committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before 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 of Corporate Governance as applicable to the Company for the year ended June 30, 2010.
Faisalabad: October 05, 2010
Liaqat Ali Panwar (Riaz Ahmad & Company) Chartered Accountants
21
Pattern of Shareholding - (Form 34) as at June 30, 2010

No. of Shareholders
507 471 183 316 83 33 13 13 11 5 11 8 4 4 4 3 4 2 2 4 2 1 2 2 2 2 1 2 3 2 1 3 1 1 2 5
Shareholding From To
1 101 501 1,001 5,001 10,001 15,001 20,001 25,001 30,001 35,001 40,001 45,001 50,001 55,001 65,001 70,001 75,001 80,001 85,001 90,001 95,001 105,001 110,001 115,001 120,001 135,001 150,001 155,001 160,001 165,001 170,001 175,001 180,001 190,001 195,001 100 500 1,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 70,000 75,000 80,000 85,000 90,000 95,000 100,000 110,000 115,000 120,000 125,000 140,000 155,000 160,000 165,000 170,000 175,000 180,000 185,000 195,000 200,000
Total Shares Held

17,636 122,020 132,300 755,131 607,087 410,607 223,442 293,319 295,808 162,412 414,329 341,425 191,601 210,734 235,448 200,242 292,966 151,380 169,962 353,775 184,302 97,312 214,171 224,492 235,844 245,459 137,973 308,892 473,684 326,955 169,484 517,596 179,523 183,004 384,311 988,545
No. of Shareholders
1 3 2 1 2 1 2 1 2 1 1 1 1 1 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1,757
Shareholding From To
200,001 205,001 210,001 215,001 220,001 230,001 240,001 260,001 300,001 305,001 310,001 320,001 335,001 375,001 390,001 405,001 410,001 415,001 440,001 450,001 460,001 485,001 510,001 550,001 675,001 1,030,001 1,080,001 1,245,001 1,270,001 1,295,001 1,440,001 1,445,001 1,815,001 2,060,001 2,680,001 12,205,001 205,000 210,000 215,000 220,000 225,000 235,000 245,000 265,000 305,000 310,000 315,000 325,000 340,000 380,000 395,000 410,000 415,000 420,000 445,000 455,000 465,000 490,000 515,000 555,000 680,000 1,035,000 1,085,000 1,250,000 1,275,000 1,300,000 1,445,000 1,450,000 1,820,000 2,065,000 2,685,000 12,210,000
Total Shares Held

202,090 625,773 425,265 218,780 445,050 231,306 487,711 262,000 602,714 307,005 313,122 324,663 335,075 376,489 789,452 815,212 414,675 419,333 440,811 452,379 460,124 488,951 510,309 552,245 675,484 1,030,861 1,080,077 1,245,904 1,271,633 1,295,031 1,442,063 1,446,129 1,819,981 2,060,068 2,681,875 12,207,111 49,209,922
Categories of Shareholders
Financial Institutation Individual Insurance Companies Joint Stock Companies Associated Companies More than 10% Mutual Funds Modaraba & Modaraba Cos Others G. Total Others Abondand Property Association Non Resident Trust Total
Number
8 1,679 4 39 8 1 2 3 13 1,757 3 1 5 4 13
Shares Held
801,708 20,536,274 1,867,486 7,531,948 4,748,525 12,207,111 1,467,446 32,089 17,335 49,209,922 1,422 13 5,128 10,772 17,335
Percentage
1.63 41.73 3.79 15.31 9.65 24.81 2.98 0.07 0.03 100 0.00 0.00 0.01 0.02 0.03
20

Categories of Shareholders a) Directors, Chief Executive Officer, Their Spouse and Minor Children Chief Executive/Director Mr. Muhammad Anwar Directors Ahmad Shafi Tariq Shafi Muhammad Arshad Nasir Shafi Khalid Bashir Muhammad Asif (Nominee NIT) Directors' Spouse Salma Parveen Naryman Tariq Tanveer Khalid Bashir Shaheen Nasir Abida Anwar b) Associated Companies, Undertaking & Related Parties Crescent Sugar Mills & Distillery Ltd. Crescent Foundation Crescent Steel And Allied Products Ltd. Trustees The Crescent Textile Mills Emp Provident Fund Trust Premier Insurance Limited Shakarganj Mills Limited Ahsan Associates (Pvt) Limited Jubilee Spinning & Weaving Mills Limited 2,681,875 1,030,861 452,379 313,122 262,000 5,898 1,563 827 4,748,525 c) NIT & ICP National Bank of Pakistan-Trustee Department Ni(U)T Fund National Bank of Pakistan Investment Corporation of Pakistan National Bank of Pakistan Investar Accounts NDFC IDBP (ICP Unit) 2,060,068 1,245,904 10,891 2,054 1,890 3,320,807 159,194 92,199 58,802 8,157 5,122 323,474 1,080,077 107,432 212,011 239,473 6,536 2,155,838 510,309 Number of shares held
21

Number of shares held (d) Banks, DFIs, NBFIs 801,708
(e) Insurance Companies
1,867,486
(f) Modarabas
32,089
(g) Trusts
10,772
(h) Mutual Funds
1,467,446
(i) Other companies (Public Sector Companies, Corporations & Joint Stock Cos)
4,211,141
(j) Non-Residents
5,128
(k) Abondand Property
1,422
(l) Association
13
(m) Shareholders More than 10%
12,207,111
(n) General Public
18,056,962 49,209,922
22
Auditors Report to the Members

We have audited the annexed balance sheet of THE CRESCENT TEXTILE MILLS LIMITED as at June 30, 2010 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the 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 the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:
(a) in our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984; in our opinion: 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 except for the change stated in Note (2.1)(d)(i) and Note 2.20 with which we concur; the expenditure incurred during the year was for the purpose of the companys business; and the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company; 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, 2010 and of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended; and in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
(b) i)
ii) iii)
c)
d)
Faisalabad: October 05, 2010
Liaqat Ali Panwar (Riaz Ahmad & Company) Chartered Accountants
23
Balance Sheet as at June 30, 2010

2010 Note
EQUITY AND LIABILITIES Share capital and reserves Authorised share capital 100 000 000 (June 30, 2009: 100 000 000) ordinary shares of Rupees 10 each Issued, subscribed and paid up share capital Reserves Total equity Surplus on revaluation of operating fixed assets net of deferred tax Non-current liabilities Long term financing Deferred tax liability 6 7 3 4
2009
(Rupees in thousand)
1,000,000 492,099 2,180,340 2,672,439
1,000,000 492,099 1,769,738 2,261,837
1,640,407
1,640,393
656,351 8,813 665,164
1,108,019 1,108,019
Current liabilities Trade and other payables Accrued mark-up Short term borrowings Current portion of long term financing Provision for taxation Total liabilities Contingencies and commitments TOTAL EQUITY AND LIABILITIES The annexed notes form an integral part of these financial statements. 11 8 9 10 6
521,393 106,719 4,840,018 451,668 90,890 6,010,688 6,675,852
315,065 177,207 4,883,207 356,845 73,361 5,805,685 6,913,704
10,988,698
10,815,934
(Muhammad Anwar) Chairman & Chief Executive
24
Balance Sheet as at June 30, 2010

2010 2009 (Rupees in thousand)
Note
ASSETS Non-current assets
Property, plant and equipment Investment in an associate Long term investments Long term loans and advances Long term deposits and prepayments Deferred tax - asset
12 13 14 15 16 17
3,981,181 617,870 255,197 1,928,720 2,827 6,785,795
4,182,387 485,335 227,883 1,812,096 2,217 20,344 6,730,262
Current assets Stores, spare parts and loose tools Stock-in-trade Trade debts Loans and advances Short term deposits and prepayments Interest accrued Other receivables Short term investments Cash and bank balances
18 19 20 21 22 23 24 25
169,769 1,047,150 2,579,901 224,556 5,956 109,446 49,706 16,419 4,202,903
174,116 940,421 2,562,348 239,191 1,422 22,081 61,909 65,253 18,931 4,085,672
TOTAL ASSETS
10,988,698
10,815,934
(Khalid Bashir) Director
25
Profit and Loss Account for the Year Ended June 30, 2010
Note 2010 2009 (Rupees in thousand)
10,863,386 9,406,644 1,456,742 10,750,512 9,175,267 1,575,245
Sales Cost of sales Gross profit
26 27
Distribution cost Administrative expenses Other operating expenses
28 29 30
470,413 182,018 136,872 789,303 667,439
392,885 168,350 376,284 937,519 637,726 251,433 889,159 815,948 165,307 238,518
Other operating income Profit from operations Finance cost Share of profit of associate Profit before taxation
31
212,300 879,739
32
536,270 120,022 463,491
Provision for taxation Profit after taxation
33
118,821 344,670
59,498 179,020
Earnings per share - basic and diluted (Rupees)
34
7.00
3.64
The annexed notes form an integral part of these financial statements.
26
Statement of Comprehensive Income for the Year Ended June 30, 2010
Profit after taxation Other comprehensive income Surplus / (deficit) on remeasurement of available for sale investments
344,670
179,020
54,658
(329,376)
Total comprehensive income / (loss) for the year
399,328
(150,356)
27
Cash Flow Statement for the Year Ended June 30, 2010
Note
CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations Finance cost paid Income tax paid Dividend paid Workers' profit participation fund paid Net (increase)/decrease in long term deposits and prepayments Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on property, plant and equipment Proceeds from sale of property, plant and equipment Net decrease in long term loans and advances Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long term financing Repayment of long term financing Short term borrowings - net Net cash (used in) / from financing activities Net (decrease) / Increase 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 25 (356,845) (43,189) (400,034) (2,512) 18,931 16,419 90,183 (311,553) 297,664 76,294 10,359 8,572 18,931 (63,383) 6,295 1,247 (55,841) (256,452) 27,149 947 (228,356) 35 1,159,785 (606,758) (94,909) (7) (4,138) (610) 453,363 1,009,643 (757,853) (90,693) (17) 1,341 162,421
28
Statement of Changes in Equity for the Year Ended June 30, 2010
SHARE CAPITAL
CAPITAL RESERVE General Fair value
RESERVES REVENUE RESERVES Unappropriated Dividend profit / equalization (accumulated loss) 30,000
Sub total
TOTAL
TOTAL EQUITY
Balance as at June 30, 2008 Transfer from surplus on revaluation of operating fixed assets on account of incremental depreciation - net of deferred tax Total comprehensive loss for the year Balance as at June 30, 2009 Transfer from surplus on revaluation of operating fixed assets on account of incremental depreciation - net of deferred tax Share of associate's realized surplus on revaluation of property, plant and equipment Total comprehensive income for the year Balance as at June 30, 2010
492,099
350,507
1,773,643
(234,064) 1,569,579 1,920,086 2,412,185
492,099
(329,376) 21,131
1,773,643
30,000
8 179,020
179,020 (150,356) (150,356)
(55,036) 1,748,607 1,769,738 2,261,837
12
12
12
12
492,099
54,658 75,789
1,773,643
30,000
11,262 344,670
11,262 344,670
11,262 399,328
11,262 399,328
300,908 2,104,551 2,180,340 2,672,439
29
Notes to the Financial Statements for the Year Ended June 30, 2010
1. THE COMPANY AND ITS ACTIVITIES The Crescent Textile Mills Limited (the Company) is a public limited company incorporated in Pakistan under the Companies Ordinance, 1984. The registered office of the Company is located at 40-A, Off: Zafar Ali Road, Gulberg-V, Lahore. Its shares are quoted on all the Stock Exchanges in Pakistan. The Company is engaged in business of textile manufacturing comprising of spinning, combing, weaving, dyeing, bleaching, printing, stitching, buying, selling and otherwise dealing in yarn, cloth and other goods and fabrics made from raw cotton and synthetic fiber(s) and to generate, accumulate, distribute, supply and sale of electricity. The Company also operates a cold storage unit. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated: 2.1 Basis of preparation a) Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. 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, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.
b) Accounting convention These financial statements have been prepared under the historical cost convention, except freehold and leasehold land measured at revalued amounts and the financial instruments which are carried at fair value. c) Critical accounting estimates and judgments The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Company's financial statements or where judgments were exercised in application of accounting policies are as follows:
30
Useful lives, patterns of economic benefits and impairments Estimates with respect to residual values and useful lives and pattern of flow of economic benefits are based on the analysis of the management of the Company. Further the , Company reviews the value of assets for possible impairment on annual basis. Any change in the estimates in the future might affect the carrying amount of respective item of property, plant and equipment, with a corresponding effect on the depreciation charge and impairment. Taxation In making the estimates for income tax currently payable by the Company, the management takes into account the current income tax law and the decisions of appellate authorities on certain issues in the past. Provision for doubtful debts The Company reviews its receivable balances against any provision required for any doubtful balances on an ongoing basis. The provision is made while taking into consideration expected recoveries, if any. d) Standard and amendments to published approved accounting standards that are effective in current year i) Changes in accounting policies and disclosures arising from standard and amendments to published approved accounting standards that are effective in the current year IAS 1 (Revised) 'Presentation of Financial Statements' (effective for annual periods beginning on or after January 01, 2009). The revised standard prohibits the presentation of items of income and expenses (that is non-owner changes in equity) in the statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the Company presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share. IFRS 7 (Amendment) Financial instruments: Disclosures (effective for annual periods beginning on or after January 01, 2009). This amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular the amendment requires , disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share.
31
IFRS 8 'Operating Segments' (effective for annual periods beginning on or after January 01, 2009). It introduces the "management approach" to segment reporting. IFRS 8 requires presentation and disclosure of segment information based on the internal reports regularly reviewed by the Company's chief operating decision makers in order to assess each segment's performance and to allocate resources to them. Previously, the Company did not present segment information as IAS 14 limited reportable segments to those that earn a majority of their revenue from sales to external customers and therefore did not require the different stages of vertically integrated operations to be identified as separate segments. Under the management approach, the Company has determined operating segments on the basis of business activities i.e. Spinning, Weaving, Processing and Home Textile, Trading, Power Generation and Cold Storage. As the change in accounting policy only results in additional disclosures of segment information, there is no impact on earnings per share. ii) Other amendment to published approved accounting standard that is effective in the current year IAS 23 (Amendment) 'Borrowing Costs' (effective for annual periods beginning on or after January 01, 2009). It requires an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The Company's accounting policy on borrowing cost, as disclosed in note 2.14, complies with the above mentioned requirements to capitalize borrowing cost and hence this change has not impacted the Company's accounting policy. e) Standards, interpretations and amendments to published approved accounting standards that are effective in current year but not relevant There are other new standards, interpretations and amendments to the published approved accounting standards that are mandatory for accounting periods beginning on or after July 01, 2009 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements. f) Standards and amendments to published approved accounting standards that are not yet effective but relevant Following standards and amendments to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after July 01, 2010 or later periods:
32
IFRS 9 'Financial Instruments' (effective for annual periods beginning on or after January 01, 2013). IFRS 9 has superseded the IAS 39 'Financial Instruments: Recognition and Measurement'. It requires that all equity investments are to be measured at fair value while eliminating the cost model for unquoted equity investments. Certain categories of financial instruments available under IAS 39 will be eliminated. Moreover, it also amends certain disclosure requirements relating to financial instruments under IFRS 7. The management of the Company is in the process of evaluating impacts of the aforesaid standard on the Company's financial statements. There are other amendments resulting from annual improvements projects initiated by International Accounting Standards Board in April 2009 and May 2010, specifically in IFRS 7 'Financial Instruments: Disclosures', IFRS 8 'Operating Segments', IAS 1 'Presentation of Financial Statements', IAS 7 'Statement of Cash Flows', IAS 24 'Related Party Disclosures' and IAS 36 'Impairment of Assets' that are considered relevant to the Company's financial statements. The amendments are unlikely to have a significant impact on the Company's financial statements and have therefore not been analyzed in detail. g) Standards, interpretations and amendments to published approved accounting standards that are not effective in current year and not considered relevant There are other accounting standards, amendments to published approved accounting standards and new interpretations that are mandatory for accounting periods beginning on or after July 01, 2010 but are considered not to be relevant or do not have any significant impact on the Company's financial statements and are therefore not detailed in these financial statements. 2.2 Employees retirement benefits The Company operates a recognized provident fund for all its permanent employees. Equal monthly contributions are made to the fund both by the Company and the employees at the rate of 6.25 percent of the basic salary plus cost of living allowance. Obligation for contributions to defined contribution plan is recognized as an expense in the profit and loss account as and when incurred. Employees are eligible under the scheme on completion of prescribed qualifying period of service. 2.3 Liabilities against assets subject to finance lease Leases, where the Company has substantially all the risks and rewards of ownership of assets are classified as finance leases. At inception, finance leases are recorded at the lower of present value of minimum lease payments under the lease agreement and the fair value of the assets. The related rental obligations, net of finance cost, 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 cost so as to achieve a constant rate on the balance outstanding. The interest element of the rental is charged to profit over the lease term.
33
2.4 Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Dividend Dividend is recognized as a liability in the period in which it is declared. Taxation Current Provision for current tax 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 current tax rates or tax rates after taking into account rebates and tax credits, if any. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
2.5
2.6
34
2.7 Property, plant and equipment
2.7.1 Operating fixed assets and depreciation a) Cost / revalued amount Fixed assets are stated at cost less accumulated depreciation and any identified impairment loss, except freehold land which is stated at revalued amount less any identified impairment loss and leasehold land which is stated at revalued amount less accumulated depreciation and any identified impairment loss. Capital work-in-progress is stated at cost less any identified impairment loss. Cost of operating fixed assets consists of purchase cost, revalued amount, borrowing cost pertaining to the construction / erection period referred to Note 2.14 and directly attributable cost of bringing the assets to working condition. Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to profit and loss account during the period in which they are incurred. Any revaluation surplus is credited to surplus on revaluation of operating fixed assets except to the extent that it reverses a revaluation decrease of the same asset previously recognized in profit or loss, in which case the increase is recognized in profit or loss. A revaluation deficit is recognized in profit or loss, except to the extent that it offsets an existing surplus on the same asset recognized in surplus on revaluation of operating fixed assets. An annual transfer from surplus on revaluation of operating fixed assets to unappropriated profit is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation based on the assets original cost. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. All transfers from surplus on revaluation of operating fixed assets are net of applicable deferred taxation. b) Depreciation Depreciation on assets is charged from the month in which an asset is acquired while no depreciation is charged for the month in which the asset is disposed of.
35
Depreciation is charged to income on reducing balance method, except leasehold land on which depreciation is charged on straight line method to write off the cost of operating fixed assets over their expected useful lives at the rates mentioned in Note 12.1. c) Derecognition
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 arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and carrying amount of the asset) is included in profit and loss account in the year the asset is derecognized.
d)
Change in accounting estimate Previously depreciation on the office building on leasehold land at Hattar Unit was being charged at the rate of 10%. Now the Company has changed its accounting estimate to charge depreciation at the rate of 5% as a result of annual review of useful lives of assets. The change in accounting estimate has been applied prospectively in accordance with IAS 8 'Accounting policies, Changes in Accounting Estimates and Errors'. Had there been no change in this accounting estimate, the figures recognized in these financial statements would have been different as follows:
Net book value of building on leasehold land would have been lower by Profit after taxation would have been lower by 2.7.2 Assets subject to finance lease These are initially recognised at lower of present value of minimum lease payments under the lease agreements and fair value of assets. Subsequently, these assets are stated at cost less accumulated depreciation and any identified impairment loss. Assets so acquired are depreciated over their expected useful lives. Depreciation of leased assets is charged to profit and loss account. Depreciation on additions to leased assets is charged from the month in which an asset is acquired while no depreciation is charged for the month in which the asset is disposed of.
35 32
36
2.7.3 Assets subject to operating lease Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss account on a straight line basis over the lease term. 2.8 Investments Classification of an investment is made on the basis of intended purpose for holding such investment. Management determines the appropriate classification of its investments at the time of purchase. Investments are initially measured at fair value plus transaction costs directly attributable to acquisition, except for Investment at fair value through profit or loss which is measured initially at fair value.
The Company assesses at the end of each reporting period whether there is any objective evidence that investments are impaired. If any such evidence exists, the Company applies the provisions of IAS 39 'Financial Instruments: Recognition and Measurement' to all investments, except investment in an associate, which is tested for impairment in accordance with the provisions of IAS 36 'Impairment of Assets'.
2.8.1 Investments at fair value through profit or loss Investments at fair value through profit or loss includes financial assets held for trading designated upon initial recognition as at fair value through profit or loss.
Investments which are acquired principally for the purpose of generating profit from short term fluctuations in price or dealers margin are classified as held for trading. After initial recognition, these are stated at fair values with any resulting gains or losses recognized directly in the profit and loss account. Transaction costs are charged to profit and loss account when incurred.
2.8.2 Held-to-maturity investments Investments with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long-term investments that are intended to be held-to-maturity, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit and loss account when the investments are derecognised or impaired, as well as through the amortisation process.
37
2.8.3 Available for sale investments
Investments intended to be held for an indefinite period of time, which may be sold in response to need for liquidity, or changes to interest rates or equity prices are classified as available for sale. These are sub-categorized as under:
Quoted
After initial recognition, investments which are classified as available-for-sale are measured at fair value. Gains or losses on available-for-sale investments are recognized directly in statement of other comprehensive income until the investment is sold, derecognized or is determined to be impaired, at which time the cumulative gain or loss previously reported in statement of other comprehensive income is included in profit and loss account. Fair value is determined by reference to stock exchange quoted market bids at the close of business on the balance sheet date.
Unquoted
The investments that do not have a quoted market price in an active market and whose fair value can not be reliably measured, subsequent to after initial recognition are carried at cost less any identified impairment loss.
2.8.4 Investment in an associate The Companys investment in its associate is accounted for under the equity method of accounting. An associate is an entity in which the Company has significant influence and which is neither a subsidiary nor a joint venture. Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the Companys share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortized. The profit and loss account reflects the share of the results of operations of the associate. Where there has been a change recognized directly in the equity of the associate, the Company recognizes its share of any changes and discloses this, when applicable, in the statement of changes in equity. The reporting dates of the associate and the Company are identical and the associates accounting policies conform to those used by the Company for like transactions and events in similar circumstances. 2.9 Inventories Inventories, except for stock in transit and waste materials, are stated at lower of cost and net realizable value. Net realizable value signifies the estimated selling price in the ordinary course of business less costs necessary to be incurred in order to make such sale. Cost is determined as follows:
38
Stores, spare parts and loose tools Usable stores, spare parts and loose tools are valued at moving average cost, while items considered obsolete are carried at nil value. Items-in-transit are stated at invoice amount plus other charges paid thereon. Stock-in-trade Stock of raw materials, except for stock-in-transit, is valued principally at the lower of weighted average cost and net realizable value. Raw materials-in-transit are valued at cost comprising invoice value plus other charges paid thereon. Cost of work-in-process and finished goods comprises of cost of direct materials, labour and appropriate manufacturing overheads. Stock of waste materials is stated at net realizable value. 2.10 Cash and cash equivalents Cash and cash equivalents comprise cash in hand, cash at banks on current accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values. 2.11 Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized: Sale of goods and electricity Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on the delivery of the goods. Revenue from sale of electricity is recognized at the time of transmission. Interest income Revenue is recognized as interest accrues (using the effective interest method that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset). Dividends Dividend income is recognized when right to receive the dividend is established.
39
2.12 Financial instruments Financial instruments carried on the balance sheet include investments, deposits, trade debts, loans and advances, interest accrued, other receivables, cash and bank balances, long term financing, short term borrowings, accrued mark-up and trade and other payables etc. Financial assets and liabilities are recognized at the time the Company becomes a party to contractual provisions of the instruments. Initial recognition is made at fair value plus transaction costs directly attributable to acquisition, except for "financial instruments at fair value through profit or loss which is measured initially at fair value. The particular measurement methods adopted are disclosed in the following individual policy statements associated with each item and in the accounting policy of investments. a) Interest bearing loans and borrowings All loans and borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, long term interest-bearing loans and borrowings are measured at amortized cost using the effective interest method while short term borrowings are measured at fair value. Gains and losses are recognized in net profit or loss when the liabilities are derecognized as well as through the amortization process. b) Trade debts Trade debts originated by the Company are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. Known bad debts are written off and provision is made against debts considered doubtful when collection of the full amount is no longer probable. c) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortized cost using the effective interest method. Gains and losses are recognized in profit and loss account when the loans and receivables are derecognised or impaired, as well as through the amortization process. d) Trade and other payables Liabilities for trade and other amounts payable are initially recognized at fair value, which is normally the transaction cost.
40
2.13 Derivative financial instruments The Company uses derivative financial instruments such as forward currency contracts and forward currency swaps to hedge its risks associated with interest rate and foreign currency fluctuations. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting are taken directly to profit or loss. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of cross currency swap contracts is determined by reference to market values for similar instruments. If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognized in equity are transferred to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognized in equity remain in equity until the forecast transaction or firm commitment occurs. 2.14 Borrowing cost Interest, mark-up and other charges on long term finances are capitalized upto the date of commissioning of respective qualifying assets acquired out of the proceeds of such long term finances. All other interest, mark-up and other charges are charged to profit and loss account. 2.15 Impairment a) Impairment of assets other than financial assets The carrying amounts of the assets other than financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of such asset is estimated. An impairment loss is recognized wherever the carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss account. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss account.
41
b) Impairment of financial assets The Company assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. Assets carried at amortized cost If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of the loss shall be recognized in profit or loss. The Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the income statement, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date. Assets carried at cost If there is objective evidence that an impairment loss on an unquoted equity instrument that is carried at cost, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
42
Available for sale financial assets If an available for sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortization) and its current fair value, less any impairment loss previously recognized in profit or loss, is transferred from equity to the income statement. Reversals in respect of equity instruments classified as available for sale are not recognized in profit. Reversals of impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognized in profit or loss. 2.16 Derecognition of financial assets and liabilities Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized where: the rights to receive cash flows from the asset have expired; the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass-through arrangement; or the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Companys continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Companys continuing involvement is the amount of the transferred asset that the Company may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Companys continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.
43
Financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss. 2.17 Related party transactions and transfer pricing Transactions and contracts with related parties are carried out at arm's length price determined in accordance with comparable uncontrolled price method. 2.18 Off setting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements when there is legally enforceable right to set off and the Company intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. 2.19 Foreign currencies The financial statements are presented in Pak Rupees, which is the Company's functional currency. Transactions in foreign currency during the year are initially recorded in the functional currency at the rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at functional currency using the rate of exchange prevailing at the balance sheet date. All differences are taken to the profit and loss account. 2.20 Segment reporting Segment reporting is based on the operating (business) segments of the Company. An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to the transactions with any of the Company's other components. An operating segment's operating results are reviewed regularly by the Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Chief Executive Officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Those income, expenses, assets, liabilities and other balances which can not be allocated to a particular segment on a reasonable basis are reported as unallocated.
44
The Company has six reportable business segments. Spinning (Producing different quality of yarn using natural and artificial fibres), Weaving (Producing different quality of greige fabric using yarn), Processing and Home Textile (Processing greige fabric for production of printed and dyed fabric and manufacturing of Home Textile articles), Trading (Buying and selling of garments and Home Textile articles), Power Generation (Generating and distributing power) and Cold Storage (Making of ice and warehousing of perishable goods). Transactions among the business segments are recorded at arm's length prices using admissible valuation methods. Inter segment sales and purchases are eliminated from the total.
3.
ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL 2010 2009 (Number of Shares) Ordinary shares of Rupees 10 each fully paid in cash Ordinary shares of Rupees 10 each issued as fully paid bonus shares 2010 2009 (Rupees in thousand)
19 781 136
19 781 136
197,811
197,811
29 428 787 49 209 923

3.1
29 428 787 49 209 923
294,288 492,099
294,288 492,099
Ordinary shares of the Company held by related parties as at year end are as follows: 2010 2009 (Number of Shares) Crescent Sugar Mills and Distillery Limited Crescent Foundation Crescent Steel and Allied Products Limited The Crescent Textile Mills Limited-Employees Provident Fund-Trustee Premier Insurance Limited Shakarganj Mills Limited Ahsan Associates (Private) Limited Jubilee Spinning and Weaving Mills Limited
2 681 875 1 030 861 452 379 313 122 262 000 5 898 1 563 827 4 748 525
2 681 875 1 030 861 452 379 313 122 264 000 5 898 1 563 827 4 750 525
45
4. RESERVES 2010 2009 (Rupees in thousand) Composition of reserves is as follows: Capital Fair value reserve (Note 4.1) Revenue Dividend equalization General Unappropriated profit / (accumulated loss)
75,789
21,131
30,000 1,773,643 300,908 2,104,551 2,180,340
30,000 1,773,643 (55,036) 1,748,607 1,769,738
4.1
This represents the unrealized gain on remeasurement of investments at fair value and is not available for distribution. This will be transferred to profit and loss account on realization. Reconciliation of fair value reserve is as under: Balance as at July 01, Add / (less): Fair value adjustment during the year Balance as at June 30,
21,131 54,658 75,789
350,507 (329,376) 21,131
5.
SURPLUS ON REVALUATION OF OPERATING FIXED ASSETS - NET OF DEFERRED TAX Surplus on revaluation of operating fixed assets as at July 01, Less: Transferred to unappropriated profit Net of deferred tax Related deferred tax liability
1,640,539 12 1 13 1,640,526 146 (26) (1) 119 1,640,407
1,640,552 8 5 13 1,640,539 151 (5) 146 1,640,393
Less: Deferred tax liability as at July 01, Adjustment of deferred tax liability due to re-assessment at year end Incremental depreciation charged during the year transferred to profit and loss account
5.1
This represents surplus resulting from revaluation of freehold land and leasehold land carried out on June 30, 2007 by Messrs Hamid Mukhtar and Company (Private) Limited, an independent valuer enrolled on panel of the State Bank of Pakistan (SBP) as per the basis stated in Note 12.1.1 to the financial statements.
46
2010 2009 (Rupees in thousand) 6. LONG TERM FINANCING - SECURED Financing from banking companies (Note 6.1) Term finance certificates (Note 6.2) Less: Current portion shown under current liabilities
1,008,034 99,985 1,108,019 451,668 656,351
1,264,894 199,970 1,464,864 356,845 1,108,019
6.1 Lender 2010 2009
Rate of interest per annum 6 months KIBOR
Number of installments
Date of repayment Of first installment
Interest Payable
Security
(Rupees in thousand) 99,955 National Bank of Pakistan 62,576 162,531 National Bank of Pakistan 125,000 75,091 241,682 145,833 166,591 plus 2% without any floor or cap SBP refinance rate for LTF-EOP plus 2% SBP refinance rate for LTF-EOP plus 2% Allied Bank Limited 150,000 250,000 6 months KIBOR plus 1.90% without any floor or cap Allied Bank Limited 92,667 104,250 SBP refinance rate for LTF-EOP plus 2% Habib Bank Limited 340,029 377,811 SBP refinance rate for LTF-EOP plus 2% Allied Bank Limited 50,541 55,135 SBP refinance rate for LTF-EOP plus 2% Habib Bank Limited 32,083 35,000 SBP refinance rate for LTF-EOP plus 3% Habib Bank Limited 1,008,034 6.2 Lender 2010 2009 1,264,894 55,183 55,183 SBP refinance rate for LTF-EOP plus 3% 12 equal half yearly installments 10 equal half yearly installments 12 equal half yearly installments 10 equal half yearly installments 12 equal half yearly installments 12 equal half yearly installments 12 equal half yearly installments June 08, 2011 Quarterly Ranking charge over fixed assets of the Company. March 03, 2010 Quarterly February 23, 2010 Quarterly Ranking charge over fixed assets of the Company and lien over import documents. Ranking charge over fixed assets of the Company. January 23, 2010 Quarterly December 29, 2007 Quarterly Joint pari passu charge over fixed assets of the Company and lien over import documents. March 29, 2007 Half yearly September 22, 2006 Quarterly First pari passu charge amounting to Rupees 335 million over fixed assets (plant and machinery) of the company. Joint pari passu charge over fixed assets of the Company. 12 equal half yearly installments January 03, 2006 Half yearly First pari passu charge over fixed assets of the Company.
Joint pari passu charge over fixed assets of the Company.
Rate of interest per annum
Number of installments
Date of repayment Of first installment
Interest Payable
Security
(Rupees in thousand) United Bank Limited 99,985 199,970 6 months KIBOR plus 1.45% without any floor or cap 11 equal half yearly installments December 17, 2006 Half yearly First pari passu charge over fixed assets of the Company.
47
6.2.1 Syndicated loan facility of Rupees 550 million (2009: Rupees 550 million) obtained from United Bank Limited for Balancing, Modernization and Replacement (BMR) of existing facilities of the Company was converted in financial year 2004 to privately placed term finance certificates having face value of Rupees 5,000 each. United Bank Limited has been appointed to act as trustee for the issue. The trust deed, dated March 27, 2004 between the Company and United Bank Limited, specifies the rights and obligations of the trustees. The deed requires that the trustees will ensure adherence to terms and conditions of the security documents.
2010 2009 (Rupees in thousand) 7. DEFERRED TAX LIABILITY
Taxable temporary differences Tax depreciation allowance Tax on investment in associate Surplus on revaluation of operating fixed assets Deductible temporary differences Unused tax losses
118,107 34,861 119 153,087 (144,274) 8,813
8.
TRADE AND OTHER PAYABLES

Creditors (Note 8.1) Accrued liabilities Advances from customers Retention money due to contractors Income tax deducted at source Unclaimed dividend Payable to Employees Provident Fund Trust Workers' profit participation fund (Note 8.2) Other payables Workers' welfare fund
286,972 169,293 26,204 455 2,472 5,956 943 17,380 3,222 8,496 521,393
123,393 150,597 20,729 403 6,097 5,963 354 3,932 2,103 1,494 315,065
8.1 8.2
This includes amounts in aggregate of Rupees 5.619 million (2009: Rupees 6.530 million) due to related parties.
Workers' profit participation fund
Balance as on July 01, Interest for the year (Note 32) Add: Provision for the year (Note 30) Less: Payments during the year
3,932 206 17,380 21,518 4,138 17,380
3,932 3,932 3,932
48
8.2.1 The Company retains workers' profit participation fund for its business operations till the date of allocation to workers. Interest is paid at prescribed rate under the Companies Profit (Workers' Participation) Act, 1968 on funds utilized by the Company till the date of allocation to workers. 2010 2009 (Rupees in thousand) 9. ACCRUED MARK-UP Long term financing Short term borrowings
22,938 83,781 106,719
64,654 112,553 177,207
10.
SHORT TERM BORROWINGS From banking companies - secured
1,243,802 Short term finances (Note 10.1 and Note 10.4) State Bank of Pakistan (SBP) refinance (Note 10.2 and Note 10.4) 1,847,600 Short term foreign currency finances (Note 10.3 and Note 10.4) 1,748,616 4,840,018
2,025,772 1,409,600 1,447,835 4,883,207
10.1 The finances aggregating to Rupees 2,209 million (2009: Rupees 2,438 million) are obtained from banking companies under mark-up agreements and carry mark-up ranging from KIBOR plus 1.50 to 2.90 percent (2009: KIBOR plus 1.00 to 4.00 percent) per annum. 10.2 Export refinances have been obtained from banking companies under SBPs refinance scheme on which service charges at the rate of 7.50 to 9.00 percent (2009: 7.20 to 7.50 percent) per annum are payable. These form part of aggregate borrowing limits of Rupees 1,856 million (2009: Rupees 1,460 million).
10.3 Short term foreign currency finances amounting to Rupees 1,748 million (2009: Rupees 1,462 million) are available at mark-up ranging from LIBOR plus 2.75 to 5.00 percent (2009: LIBOR plus 2.40 to 5.00 percent) per annum.
10.4 The aggregate short term finances are secured by way of hypothecation on all present and future current assets of the Company, pledge on finished stocks and lien on export letters of credit or firm contracts.
49
11. CONTINGENCIES AND COMMITMENTS Contingencies Letters of guarantee of Rupees 115.143 million (2009: Rupees 120.848 million) are given by the banks of the Company to Sui Northern Gas Pipeline Limited against gas connection and Collector of Customs against import of raw material and supplies. Post dated cheques of Rupees 9.807 million (2009: Rupees 19.176 million) are issued to Custom Authorities in respect of duties on imported material availed on the basis of consumption and export plans. If documents of exports are not provided on due dates, cheques issued as security shall be encashable. The Company is contingently liable to the extent of Rupees 84.385 million (2009: Rupees 117.240 million) as its share of contingent liabilities of its associate. Commitments Contracts for capital expenditure amounting to Rupees 59.273 million (2009: Rupees 8.985 million). Letters of credit other than for capital expenditure amounting to Rupees 190.297 million (2009: Rupees 51.872 million). 2010 2009 (Rupees in thousand) 12. PROPERTY, PLANT AND EQUIPMENT Operating fixed assets (Note 12.1) Capital work in progress (Note 12.2)
3,948,372 32,809 3,981,181
4,180,127 2,260 4,182,387
50
12.1 Operating fixed assets Factory tools Gas and Buildings on Furniture Plant and Office Land - Buildings on and electric Vehicles Total leasehold and machinery equipment Leasehold freehold land equipment Installations land fixtures ------------------------------------------------------------------------- (RUPEES IN THOUSAND) -------------------------------------------------------------------------------Land Freehold At July 01, 2008 Cost / revalued amount Accumulated depreciation Net book value Year ended June 30, 2009 Opening net book value Additions Disposals: Cost Accumulated depreciation Depreciation charge Closing net book value At June 30, 2009 Cost / revalued amount Accumulated depreciation Net book value Year ended June 30, 2010 Opening net book value Additions Disposals: Cost Accumulated depreciation Depreciation charge Closing net book value At June 30, 2010 Cost / revalued amount Accumulated depreciation Net book value Annual rate of depreciation (%)
1,652,700 1,652,700
6,000 (813) 5,187
299,581 (172,260) 127,321
49,431 4,117,353 (28,483) (1,761,544) 20,948 2,355,809
64,979 (58,705) 6,274
50,906 61,050 (43,538) (25,644) 7,368 35,406
5,371 (3,759) 1,612
33,305 6,340,676 (29,830) (2,124,576) 3,475 4,216,100
1,652,700 1,652,700
5,187 (61) 5,126
127,321 7,324 (10,958) 123,687
20,948 (2,095) 18,853
2,355,809 222,074 (86,051) 65,103 (20,948) (246,566) 2,310,369
6,274 458 (1,283) 5,449
7,368 4,479 (1,833) 10,014
35,406 23,354 (9,705) 6,295 (3,410) (9,680) 45,670
1,612 2,326 (574) 3,364
3,475 4,216,100 4,234 264,249 - (95,756) - 71,398 - (24,358) (2,814) (275,864) 4,895 4,180,127
1,652,700 1,652,700
6,000 (874) 5,126
306,905 (183,218) 123,687
49,431 4,253,376 (30,578) (1,943,007) 18,853 2,310,369
65,437 (59,988) 5,449
55,385 74,699 (45,371) (29,029) 10,014 45,670
7,697 (4,333) 3,364
37,539 6,509,169 (32,644) (2,329,042) 4,895 4,180,127
1,652,700 1,652,700
5,126 (61) 5,065
123,687 (626) 489 (137) (10,505) 113,045
18,853 (1,850) 17,003
2,310,369 17,213 (1,907) 1,788 (119) (232,200) 2,095,263
5,449 1,918 (15) 13 (2) (1,350) 6,015
10,014 712
45,670 11,464
3,364 (431) 390 (41) (672) 2,651
4,895 4,180,127 1,527 32,834 (3,934) (15,757) 3,911 13,420 (23) (2,337) (2,925) (262,252) 3,474 3,948,372
(2,602) (6,242) 2,394 4,435 (208) (1,807) (2,147) (10,542) 8,371 44,785
1,652,700 1,652,700 -
6,000 (935) 5,065 1.01
306,279 (193,234) 113,045 5-10
49,431 4,268,682 (32,428) (2,173,419) 17,003 2,095,263 5-10 10
67,340 (61,325) 6,015 20
53,495 79,921 (45,124) (35,136) 8,371 44,785 20 20
7,266 (4,615) 2,651 20
35,132 6,526,246 (31,658) (2,577,874) 3,474 3,948,372 50
51
12.1.1 The land of the Company, except the land situated at Faisalabad, had been revalued as on June 30, 2007 using the present market value at Rupees 62 million. Whereas the land situated at Faisalabad granted to the Company by the Government of Punjab in 1958 under Land Acquisition Act, 1894 for the specific purpose of using it as an industrial undertaking had been revalued at Rupees 1,597 million taking into account conditions specified under various directives of the Government by an independent valuer, Messrs Hamid Mukhtar and Company (Private) Limited. The Company had revalued this land based on the advice from its legal counsel.
12.1.2
Fixed assets of the Company with carrying amount Rupees 3,904 million (2009: Rupees 3,280 million) are subject to first pari passu charge to secured bank borrowings. If the freehold and leasehold land were measured using the cost model, the carrying amount would be as follows:
12.1.3
Cost
2010 Accumulated Net book depreciation value
Cost
2009 Accumulated Net book depreciation value
Land - Freehold Land - Leasehold
13,403 4,719 18,122
883 883
13,403 3,836 17,239
13,403 4,719 18,122
834 834
13,403 3,885 17,288
12.1.4
Depreciation charge for the year has been allocated as follows:
2010 2009 (Rupees in thousand) Cost of sales (Note 27) Administrative expenses (Note 29)
246,078 16,174 262,252
260,834 15,030 275,864
52
12.1.5 Detail of operating fixed assets, exceeding the book value of Rupees 50,000 disposed of during the year is as follows:
Description
Qty.
Cost
Accumulated Net book Sale depreciation value proceeds
Mode of disposal
Particulars of purchasers
(Rupees in thousand) Plant and Machinery Cone winder Comber, step cleaner Vehicles Honda Civic Suzuki Mehran Toyota Corolla Suzuki Cultus Toyota Corolla Honda City Suzuki Mehran Suzuki Mehran
1 5
178 206 384
125 146 271 989 238 823 311 778 609 294 294 4,336
53 60 113 206 220 366 298 335 242 65 65 1,797
1,535 Negotiation 630 Negotiation 2,165
H.A. Haq Spinning Mills, Montgomery Bazar, Faisalabad. Mr. Azam Javaid, House No. 332-A, Canal Road, Faisalabad.
1 1 1 1 1 1 1 1
1,195 458 1,189 609 1,113 851 359 359 6,133
Mr. Muhammad Raees-Ud-Din, House No. 14/7-A-5, Nazim Abad, Karachi. 337 Insurance claim Premier Insurance Limited. 500 Negotiation Mr. Muhammad Rizwan, House No. 205, Fatima Jinnah Road, New Town, Karachi. 475 Insurance claim Premier Insurance Limited. 800 Negotiation Mr. Muhammad Idrees Ch., House No. P-298, Tariq Chowk, Samanabad, Faisalabad. 720 Negotiation Mr. Sakhi Hussain Shah, House No. P-5857, Street No. 5, Mansoorabad, Faisalabad. 215 Negotiation Mr. Abid Iqbal, Company Employee. 247 Negotiation Mr. Asmat Ali Javed, P-1013/12-C, Shahabad, Noor Pur Road, Faisalabad. 3,794
500 Negotiation
Aggregate of other items of property, plant and equipment with individual book values not exceeding 9,240 Rupees 50,000
15,757
8,813 13,420
427 2,337
336 6,295
2010 2009 (Rupees in thousand) 12.2 Capital work in progress Building Plant and machinery Advances for vehicles
3,762 27,232 1,815 32,809
2,260 2,260
53
2010 2009 (Rupees in thousand) 13. INVESTMENT IN AN ASSOCIATE Crescent Bahuman Limited - unquoted 26 926 433 (2009: 26 926 433) ordinary shares of Rupees 10 each (Note 13.1) Share of post acquisition profit: As at July 01, For the year Realised surplus on revaluation of property, plant and equipment As at June 30,
269,264 216,071 120,022 12,513 348,606 617,870
269,264 50,764 165,307 216,071 485,335
13.1
The Company holds 32.99% (2009: 32.99%) interest in Crescent Bahuman Limited (CBL), an unquoted public limited company involved in manufacturing of textile products. The summarized financial information of CBL is as follows: Associate's balance sheet: Current assets Non-current assets Current liabilities Non-current liabilities Net assets Associate's revenue and profit: Revenue Profit before taxation for the year Profit after taxation for the year
4,087,826 3,610,875 (4,052,726) (2,544,459) 1,101,516
3,591,010 3,165,973 (3,635,768) (2,941,088) 180,127
7,172,726 434,514 363,813
6,031,587 560,238 501,080
54

14. LONG TERM INVESTMENTS Available for sale Related parties Quoted Crescent Jute Products Limited 2 738 637 (2009: 2 738 637) fully paid ordinary shares of Rupees 10 each. Equity held 11.52% (2009: 11.52%) Crescent Sugar Mills and Distillery Limited 975 944 (2009: 975 944) fully paid ordinary shares of Rupees 10 each. Equity held 4.56% (2009: 4.56%) Shams Textile Mills Limited 812 160 (2009: 812 160) fully paid ordinary shares of Rupees 10 each. Equity held 9.40% (2009: 9.40%) Shakarganj Mills Limited 5 427 488 (2009: 5 427 488) fully paid ordinary shares of Rupees 10 each. Equity held 7.81% (2009: 7.81%) 2 746 050 (2009: 2 746 050) fully paid preference shares of Rupees 10 each. Equity held 7.94% (2009: 7.94%) (Note 14.1) Premier Insurance Limited 169 573 (2009: 147 455) fully paid ordinary shares of Rupees 5 each. Equity held 0.31% (2009: 0.31%) Jubilee Spinning and Weaving Mills Limited 182 629 (2009: 182 629) fully paid ordinary shares of Rupees 10 each. Equity held 0.56% (2009: 0.56%) Crescent Steel and Allied Products Limited 6 209 676 (2009: 6 209 676) fully paid ordinary shares of Rupees 10 each. Equity held 11% (2009: 11%) Unquoted Renfro Crescent (Private) Limited 4 317 252 (2009: 4 317 252) fully paid ordinary shares of Rupees 10 each. Equity held 11.98% (2009: 11.98%) Others Quoted Crescent Fibres Limited 351 657 (2009: 351 657) fully paid ordinary shares of Rupees 10 each. Equity held 2.83% (2009: 2.83%) Crescent Spinning Mills Limited 466 800 (2009: 466 800) fully paid ordinary shares of Rupees 10 each. Equity held 3.08% (2009: 3.08%) Crescent Knitwear Limited 1 200 000 (2009: 1 200 000) fully paid ordinary shares of Rupees 10 each. Equity held 12.50% (2009: 12.50%)
4,105
20,359
5,124
5,854
4,629
15,181
27,680 27,186
46,160 27,461
35
35
546
702
91,625
91,625
43,159
43,159
2,162
3,130
4,668
12,000
55

Unquoted Premier Financial Services (Private) Limited 500 (2009: 500) fully paid ordinary shares of Rupees 1,000 each. Equity held 2.22% (2009: 2.22%)
500 206,751 (27,343) 75,789 255,197
500 270,834 (64,082) 21,131 227,883
Less: Impairment loss charged to profit and loss account (Note 30.2) Add: Fair value adjustment
14.1
The Company has the right to convert these shares into ordinary shares at end of every financial year in whole or in part through a tender offer by the Issuing Company. The conversion is set in the ratio of 167 ordinary shares for every 1,000 preference shares at a face value of Rupees 10 each.
LONG TERM LOANS AND ADVANCES Considered good: Loan and advances to Crescent Bahuman Limited associate (Note 15.1) Secured: Executives (Note 15.3) Other employees
15.
1,927,188
1,809,317
2,050 1,930 3,980 1,931,168 1,800 648 2,448 1,928,720
3,650 1,195 4,845 1,814,162 1,800 266 2,066 1,812,096
Less: Current portion shown under current assets (Note 21) Executives Other employees
15.1
This represents balance transferred from current account of Crescent Bahuman Limited (CBL) as at September 30, 2000 and further long term loan contributed under the Restructuring of CBL, Memorandum of Understanding (MOU) signed on January 25, 2001 amongst The Crescent Textile Mills Limited (CTML), CBL, Investment Finance Corporation (IFC) and other senior lenders for revival of the project. The principal figures and carrying amount of such balances are:
56

Principal amount a) Principal (short term converted advance) b) Accrued mark-up on short term converted advance upto September 30, 2000 c) Long term convertible subordinated loan
428,400 504,000 342,000 1,274,400
428,400 504,000 342,000 1,274,400
Carrying amount a) Principal (short term converted advance) b) Accrued mark-up on short term converted advance upto September 30, 2000 c) Long term convertible subordinated loan d) Effect of amortization and mark-up on principal portion of short term converted advance and long term convertible subordinated loan
428,400 504,000 342,000
428,400 504,000 342,000
652,788 1,927,188
534,917 1,809,317
The loan including accrued mark-up are unsecured and subordinated to all loans owed by CBL or to be obtained by CBL under the Restructuring Plan for repayment. The principal portion of short term converted advance and long term convertible loan, amounting to Rupees 770.400 million (2009: Rupees 770.400 million), carries markup at the rate of 15.30 percent per annum (2009: 15.30 percent). During the year, maximum aggregate amount at the end of any month was Rupees 1,927 million (2009: Rupees 1,809 million). 15.2 Board of Directors and shareholders of the Company have resolved the conversion of all the sums due from Crescent Bahuman Limited on account of long term loan and interest receivable thereon till date of conversion into Preference Shares of the investee company subject to regulatory approvals to be obtained by the said company. The terms of Preference Shares as approved by the shareholders are 5%, unlisted, non-voting, cumulative, participatory and convertible preference shares of Rupees 10 each. 15.3 Reconciliation of carrying amount of loans to executives: Opening balance as at July 01, Less: Repayments Closing balance as at June 30,
3,650 1,600 2,050
5,390 1,740 3,650
57
15.3.1
Maximum aggregate balance due from executives at the end of any month during the year was Rupees 3.650 million (2009: Rupees 5.390 million). These represent Qarz-e-Hasna given to executives and employees and are secured against balance to the credit of employee in the provident fund trust. These are recoverable in equal monthly installments. The fair value adjustment in accordance with the requirements of IAS 39 'Financial Instruments: Recognition and Measurement' arising in respect of staff loans is not considered material and hence not recognized. 2010 2009 (Rupees in thousand)
15.3.2
15.3.3
16.
LONG TERM DEPOSITS AND PREPAYMENTS Security deposits Prepayments Less: Current portion shown under current assets (Note 22)
2,138 1,492 3,630 803 2,827
2,138 252 2,390 173 2,217
17.
DEFERRED TAX ASSET Taxable temporary differences Tax depreciation allowance Tax on investment in associate Surplus on revaluation of operating fixed assets Deductible temporary differences Unused tax losses
(138,605) (21,607) (146) (160,358) 180,702 20,344
18.
STORES, SPARE PARTS AND LOOSE TOOLS Stores (Note 18.1) Spare parts Loose tools
155,146 14,516 107 169,769
150,699 23,376 41 174,116
18.1
This includes stores in transit amounting to Rupees 16.103 million (2009: Rupees 8.778 million). Stores and spare parts include items which may result in fixed capital expenditure but are not distinguishable at this stage.
18.2
58
2010 2009 (Rupees in thousand) 19. STOCK IN TRADE Raw materials Work in process Finished goods Waste 20. TRADE DEBTS Considered good: Secured (against letters of credit) Unsecured (Note 20.2)
178,672 84,732 781,145 2,601 1,047,150
179,013 76,838 680,142 4,428 940,421
189,715 2,390,186 2,579,901
215,565 2,346,783 2,562,348
Considered doubtful: Others - unsecured Less: Provision for doubtful debts As at July 01, Add: Provision for the year As at June 30,
33,747 33,747 33,747 -
33,747 33,747 33,747 -
20.1
As at June 30, 2010, trade debts of Rupees 1,295.647 million (2009: Rupees 105.136 million) were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default. The ageing analysis of these trade debts is as follows: Upto 1 month 1 to 6 months More than 6 months
570,201 703,756 21,690 1,295,647
15,263 287 89,586 105,136
20.2
It includes amount receivable from the associate, Crescent Bahuman Limited, amounting to Rupees 4.610 million (2009: Rupees 128.258 million).
59
20.3
As at June 30, 2010, trade debts of Rupees 33.747 million (2009: 33.747) were impaired and provided for. The ageing of these trade debts was more than six months. 2010 2009 (Rupees in thousand)
21.
LOANS AND ADVANCES Considered good: Employees - interest free Current portion of long term loans (Note 15) Advances to suppliers (Note 21.1) Letters of credit Income tax
67 2,448 38,181 1,195 182,665 224,556
142 2,066 73,050 2,818 161,115 239,191
21.1
These include advances to related parties amounting to Rupees 4.824 million (2009: Rupees 23.767 million) SHORT TERM DEPOSITS AND PREPAYMENTS Margin deposit Short term prepayments Current portion of long term prepayments (Note 16)
22.
5,001 152 803 5,956
701 548 173 1,422
23.
OTHER RECEIVABLES Considered good: Due from related parties Export rebate and claims Sales tax and special excise duty refundable Miscellaneous Considered doubtful: Export rebate and sales tax refundable Less: Provision for doubtful debts As at June 30,
330 15,239 89,645 4,232 109,446 12,952 12,952 109,446
25 22,656 37,865 1,363 61,909 12,744 12,744 61,909
60
2010 2009 (Rupees in thousand) 24. SHORT TERM INVESTMENTS Available for sale Others - quoted Samba Bank Limited 21 897 007 (2009: 21 897 007) fully paid ordinary shares of Rupees 10 each. Equity held 2.50% (2009: 2.50%) Less: Impairment loss charged to profit and loss account (Note 30.2) 25. CASH AND BANK BALANCES With banks: On current accounts Including US$ 70,975 (2009: US$ 164,445) Cash in hand 26. SALES Export Local (Note 26.1) Cold storage Export rebate Duty drawback 26.1 Local Sales Waste Energy Less: Sales tax Processing income
65,253 (15,547) 49,706
179,747 (114,494) 65,253
15,402 1,017 16,419
17,638 1,293 18,931
7,555,046 3,241,217 11,928 51,037 4,158 10,863,386
7,986,149 2,707,685 10,123 46,555 10,750,512
2,946,019 166,061 102,036 3,214,116 14,074 3,200,042 41,175 3,241,217
2,403,059 135,890 147,789 2,686,738 20,385 2,666,353 41,332 2,707,685
61
26.2
Exchange gain due to currency rate fluctuations relating to export sales amounting to Rupees 115.525 million (2009: Rupees 194.292 million) has been included in export sales. 2010 2009 (Rupees in thousand)
27.
COST OF SALES Raw material consumed (Note 27.1) Cloth and yarn purchased Stores, spare parts and loose tools Packing materials consumed Processing and weaving charges Salaries, wages and other benefits (Note 27.2) Fuel and power Repair and maintenance Insurance Depreciation (Note 12.1.4) Other factory overheads Work-in-process Opening stock Closing stock Cost of goods manufactured Finished goods Opening stock Closing stock
2,848,255 1,204,721 564,983 369,779 376,885 623,514 976,607 50,328 15,716 246,078 9,022 7,285,888 76,838 (84,732) (7,894) 7,277,994 684,570 (783,746) (99,176) 7,178,818 2,227,826 9,406,644
2,619,331 816,290 533,471 325,025 286,817 557,345 859,546 55,981 17,211 260,834 7,096 6,338,947 75,605 (76,838) (1,233) 6,337,714 755,309 (684,570) 70,739 6,408,453 2,766,814 9,175,267
Cost of sales - purchased for resale
27.1
Raw material consumed Opening stock Add: Purchased during the year Less: Closing stock
179,013 2,847,914 3,026,927 (178,672) 2,848,255
392,449 2,405,895 2,798,344 (179,013) 2,619,331
27.2
Salaries, wages and other benefits include provident fund contribution of Rupees 10.996 million (2009: Rupees 11.557 million) by the Company.
62
2010 2009 (Rupees in thousand) 28. DISTRIBUTION COST Salaries, wages and other benefits (Note 28.1) Freight and shipment Distribution Commission to selling agents Advertisement
16,071 182,877 70,162 201,101 202 470,413
18,740 150,425 48,973 174,530 217 392,885
28.1
Salaries, wages and other benefits include provident fund contribution of Rupees 0.258 million (2009: Rupees 0.359 million) by the Company. ADMINISTRATIVE EXPENSES Salaries, wages and other benefits (Note 29.1) Meeting fee to non-executive directors Traveling, conveyance and entertainment Rent, rates and taxes Repair and maintenance Insurance Printing and stationery Communication Subscription Legal and professional Auditors' remuneration (Note 29.2) Software maintenance Depreciation (Note 12.1.4) Other charges
29.
97,367 105 11,219 1,797 6,831 3,207 18,643 4,521 2,325 4,213 1,285 8,568 16,174 5,763 182,018
92,766 115 9,248 1,543 7,629 2,222 15,845 3,892 3,145 2,591 1,285 4,920 15,030 8,119 168,350
29.1
Salaries, wages and other benefits include provident fund contribution of Rupees 3.684 million (2009: Rupees 3.294 million) by the Company. Auditors' remuneration: Riaz Ahmad and Company Audit fee Half yearly review Reimbursable expenses
29.2
1,000 160 125 1,285
1,000 160 125 1,285
63
2010 2009 (Rupees in thousand) 30. OTHER OPERATING EXPENSES Donations (Note 30.1) Impairment loss on investments (Note 30.2) Exchange loss Provision for doubtful debts Debit balances written off Workers' profit participation fund Workers' welfare fund
4,394 42,890 58,056 7,115 35 17,380 7,002 136,872
5,690 178,576 139,854 46,491 247 3,932 1,494 376,284
30.1
The directors and their spouses have no interest in donations made by Company during the year. Impairment loss on investments Long term investments (Note 14) Short term investments (Note 24)
30.2
27,343 15,547 42,890
64,082 114,494 178,576
31.
OTHER OPERATING INCOME Income from financial assets Dividend Income (Note 31.1) Mark-up on loans and advances (Note 31.2) Gain on fair value of derivative financial instrument Income from non-financial assets Sale of empties and scrap Rental income Gain on sale of property, plant and equipment Credit balances added back Research and development refund Sundry receipts
12,567 131,358 27,533 171,458 15,212 227 3,958 197 20,458 790 40,842 212,300
134 202,721 202,855 16,155 214 2,791 29,418 48,578 251,433
64
2010 2009 (Rupees in thousand) 31.1 Dividend Income From related parties: Premier Insurance Limited Crescent Steel and Allied Products Limited
148 12,419 12,567
134 134
31.2
Mark-up on loans and advances Associate Crescent Bahuman Limited Mark-up on principal portion of short term converted advance and long term convertible subordinated loan Amortization of accrued mark up on short term converted advance upto September 30, 2000 Amortization of long term convertible subordinated loan Mark-up on overdue receivables
117,871 13,487 131,358
117,709 56,000 6,931 22,081 202,721
32.
FINANCE COST Mark-up on: Long term financing Short term borrowings Workers' profit participation fund (Note 8.2) Loss on fair value of derivative financial instrument Bank charges and commission
125,111 404,280 206 6,673 536,270
172,184 542,109 87,421 14,234 815,948
33.
PROVISION FOR TAXATION Charge for the year: Current (Note 33.1) Deferred (Note 33.2)
90,890 27,931 118,821
73,361 (13,863) 59,498
33.1
Provision for current taxation represents the tax deducted against export sales, minimum tax on local sales and tax on other operating income under the relevant provisions of the Income Tax Ordinance, 2001. Tax losses available as at June 30, 2010 are Rupees 412.212 million (2009: Rupees 516.292 million). Reconciliation of tax expenses and product of accounting profit multiplied by the applicable tax rate is not presented, being impracticable.
65
2010 2009 (Rupees in thousand) 33.2 Deferred tax effect due to : Tax depreciation allowance Unused tax losses Tax on investment in associate Surplus on revaluation of operating fixed assets Opening balance as at July 01 Related to surplus on revaluation of operating fixed assets 34. EARNINGS PER SHARE - BASIC AND DILUTED (RUPEES) Profit for the year (Rupees in thousand)
118,107 (144,274) 34,861 119 8,813 20,344 (1,226) 27,931
138,605 (180,702) 21,607 146 (20,344) 6,642 (161) (13,863)
344,670
179,020
(NUMBER OF SHARES) Weighted average number of ordinary shares
49 209 923
49 209 923
(RUPEES) Earnings per share
7.00
3.64
No figure for diluted earnings per share has been presented as the Company has not issued any instrument carrying options which would have an impact on earnings per share when exercised. 35. CASH GENERATED FROM OPERATIONS Profit before taxation Adjustments for non-cash charges and other items: Depreciation Gain on disposal of property, plant and equipment Debit balances written off Impairment loss on investments Credit balances added back Provision for workers' profit participation fund Provision of workers' welfare fund Share in profit of associate Income from loans and advances Finance cost Working capital changes (Note 35.1)
463,491 262,252 (3,958) 35 42,890 (197) 17,380 7,002 (120,022) (117,871) 536,270 72,513 1,159,785
238,518 275,864 (2,791) 247 178,576 (29,418) 3,932 1,494 (165,307) (180,640) 815,948 (126,780) 1,009,643
66
2010 2009 (Rupees in thousand) 35.1 Working capital changes Decrease / (increase) in current assets: Stores, spare parts and loose tools Stock in trade Trade debts Loans and advances Short term deposits and prepayments Interest accrued Other receivables
4,347 (106,729) (17,588) 36,185 (4,534) 22,081 (47,537) (113,775) 186,288 72,513
41,114 300,233 (456,289) (6,423) 133 (11,925) 53,365 (79,792) (46,988) (126,780)
Increase / (decrease) in current liabilities: - Trade and other payables
36.
REMUNERATION OF CHIEF EXECUTIVE OFFICER, DIRECTOR AND EXECUTIVES The aggregate amount charged in the financial statements for the year for remuneration including all benefits to Chief Executive Officer, Director and Executives of the Company is as follows: Chief Executive Officer 2010 2009 Director 2010 2009 Executives 2010 2009
------------------------ (RUPEES IN THOUSAND) --------------------------Managerial remuneration Allowances House rent Utilities Servant Medical Special allowance Reimbursable expenses Cost of living allowance Contribution to provident fund 4,800 2,160 480 240 624 300 8,604 1 4,800 2,160 480 240 609 300 8,589 1 1,980 891 198 240 124 3,433 1 1,980 891 198 240 124 3,433 1 39,498 8,883 3,860 444 3,272 3,505 628 165 2,343 62,598 38 40,557 9,084 3,972 393 3,378 3,611 663 155 2,157 63,970 36
Number of persons
67
36.1
Certain Executives are provided with rent free furnished accommodation and free use of Company maintained vehicles. The Chief Executive Officer is provided with free use of the Company maintained vehicles and residential telephone. Meeting fee amounting to Rupees 105,000 (2009: Rupees 115,000) has been paid to non-executive directors. 2010 2009 (Rupees in thousand)
36.2
37.
EMPLOYEES RETIREMENT BENEFITS Contribution to Employees Provident Fund Trust Contribution to Employees Old Age Benefit Institution
14,938 18,640 33,578
15,210 17,974 33,184
38.
TRANSACTIONS WITH RELATED PARTIES The related parties comprise associated companies, staff retirement fund and key management personnel. The Company in the normal course of business carries out transactions with various related parties. Detail of transactions with related parties, other than those which have been specifically disclosed elsewhere in these financial statements are as follows: ASSOCIATED COMPANIES Purchase of goods and services Sale of goods and services Processing income Dividend income Insurance premium paid Interest income
189,437 207,538 1,827 12,567 23,212 131,358
403,604 248,593 2,477 134 20,988 202,721
(Number) Bonus shares received
22 118
577 921
68
2010 2009 (Rupees in thousand) Companys contribution to Employees' Provident Fund Trust
14,938
15,210
(Figures in thousand) 39. PLANT CAPACITY AND ACTUAL PRODUCTION Spinning 100 % plant capacity converted to 20s count based on 3 shifts per day for 1 095 shifts (2009: 1 095 shifts) (Kgs.) Actual production converted to 20s count based on 3 shifts per day for 1 095 shifts (2009: 1 095 shifts) (Kgs.) Weaving 100 % plant capacity at 50 picks based on 3 shifts per day for 1 095 shifts (2009: 1 095 shifts)
38 562
38 562
36 281
36 091
(Sq.Mt.)
97 078
97 078
Actual production converted to 50 picks based on 3 shifts per day for 1 089 shifts (2009: 1 095 shifts) (Sq.Mt.) Dyeing, Finishing and Home Textile
75 527
78 220
The plant capacity of these divisions are indeterminable due to multi product plants involving varying processes of manufacturing. (Figures) Power Plant Generation capacity Actual generation 39.1 Reason for low production Under utilization of available capacity of textile facilities is mainly due to normal maintenance. Power plant is operated according to the requirement of electricity. (MWH) (MWH)
257 544 138 413
257 544 143 713
69
40.
40.1
SEGMENT INFORMATION
Processing & Home Textile 2010 2009 2010 2009 2010 2009 ---------------------------- (RUPEES IN THOUSAND) ----------------------------Spinning Weaving Trading
2010 2009 ------------------------
Sales Cost of sales Gross profit Distribution cost Administrative expenses
5,043,738 3,895,528 4,081,199 3,855,542 962,539 39,986 64,296 72,254 136,550 42,973 71,737 114,710
4,264,873 2,761,084 4,204,279 2,577,643 60,594 183,441 41,479 14,256 55,735 43,925 16,975 60,900
7,830,717 6,376,593 7,566,793 5,565,435 263,924 811,158 363,506 84,331 447,837 287,487 71,975 359,462
2,336,566 3,294,2 2,229,209 2,937,4 107,357 356,7 -
17,4
17,4
Profit / (loss) before taxation and unallocated income and expenses Unallocated income and expenses Other operating expenses Other operating income Finance cost Share of profit of associate Provision for taxation
825,989
(74,724)
4,859
122,541
(183,913)
451,696
107,357
339,3
40.2
Profit after taxation Reconciliation of reportable segment assets and liabilities:

Spinning 2010 2009 Weaving 2010 2009 Processing & Home Textile 2010 2009 Trading 2010
2009
---------------------------- (RUPEES IN THOUSAND) -----------------------------
Total assets for reportable segments Unallocated assets
1,036,633 1,135,097
1,097,170 1,102,707
1,426,442 1,439,956
1,688,574 1,482,7
All segment assets are allocated to reportable segments other than those directly relating to corporate and Total liabilities for reportable segments Unallocated liabilities All segment liabilities are allocated to reportable segments other than trade and other
1,298,593 1,438,065
909,862 1,033,833
855,461
935,162
payables, corpor
70
Processing & Home Textile 2009 2010 2009 USAND) -----------------------------
Elimination of InterTotal - Company segment transactions 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 ------------------------------------------------------- (RUPEES IN THOUSAND) ------------------------------------------------------------Trading Power Generation Cold Storage
761,084 577,643 183,441 43,925 16,975 60,900
7,830,717 6,376,593 7,566,793 5,565,435 263,924 811,158 363,506 84,331 447,837 287,487 71,975 359,462
2,336,566 3,294,243 2,229,209 2,937,487 107,357 356,756 17,436 17,436
941,059 884,107 56,952 1,132 10,572 11,704
981,503 802,161 179,342 1,064 7,065 8,129
11,928 6,552 5,376 605 605
10,123 5,561 4,562 598 598
9,565,495 6,568,562 10,863,386 10,750,512 9,565,495 6,568,562 9,406,644 9,175,267 - 1,456,742 1,575,245 470,413 182,018 652,431 392,885 168,350 561,235
122,541
(183,913)
451,696
107,357
339,320
45,248
171,213
4,771
3,964
804,311 1,014,010
(136,872) (376,284) 212,300 251,433 (536,270) (815,948) 120,022 165,307 (118,821) (59,498) 344,670 179,020
2009
Processing & Home Textile 2010 2009
Trading 2010 2009
Power Generation 2010 2009
Cold Storage 2010 2009
Total - Company 2010 2009
USAND) -----------------------------
102,707
1,426,442 1,439,956
1,688,574 1,482,735
502,164
550,921
11,471
9,917
5,762,454 5,721,333 5,226,244 5,094,601 10,988,698 10,815,934
n those directly relating to corporate and tax assets.
033,833
855,461
935,162
321,658
397,570
1,183
888
3,386,757 3,805,518 3,289,095 3,108,186 6,675,852 6,913,704
han trade and other
payables, corporate borrowings and current and deferred tax liabilities.
71
40.3 40.3.1
Geographical Information The Company's revenue from external customers by geographical location is detailed below: 2010 2009 (Rupees in thousand) Europe America Asia, Africa, Australia Pakistan
2,662,267 1,640,087 3,307,887 3,253,145 10,863,386
3,761,764 1,696,003 2,574,937 2,717,808 10,750,512
40.3.2
All non-current assets of the Company as at reporting dates are located and operating in Pakistan. Revenue from major customers Revenue from major customers of Company's trading segment represent Rupees 2,294 million (2009: Rupees 3,040 million). Revenue from other segments of the Company does not include any major customer.
40.4
41. 41.1
FINANCIAL RISK MANAGEMENT Financial risk factors The Company's activities expose it to a variety of financial risks: market risk (including currency risk, other price risk and interest rate risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by the Company's finance department under policies approved by the Board of Directors. The Company's 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.
72
(a) Market risk (i) 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 exposed to currency risk arising from various currency exposures, primarily with respect to the United States Dollar (USD). Currently, the Company's foreign exchange risk exposure is restricted to bank balances, the amounts receivable / payable from / to the foreign entities. The Company uses forward exchange contracts to hedge its foreign currency risk, when considered appropriate. The Company's exposure to currency risk was as follows: 2010 Cash at banks - USD Trade debts - USD Trade and other payable - USD Derivative financial instruments -USD Net exposure - USD 2009
70,975 28,094,676 (350,161) (9,929,196) 17,886,294
164,445 27,451,487 (3,230) (7,706,770) 19,905,932
The following significant exchange rates were applied during the year: Rupees per US Dollar Average rate Reporting date rate Sensitivity analysis If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD with all other variables held constant, the impact on profit after taxation for the year would have been Rupees 71.104 million (2009: Rupees 75.149 million) higher / lower, mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis.
83.84 85.40
79.01 81.10
73
Currency risk management
The Company manages its exposure to currency risk through continuous monitoring of expected / forecast committed and non-committed foreign currency payments and receipts. Reports on forecast foreign currency transactions, receipts and payments are prepared on monthly basis, exposure to currency risk is measured and appropriate steps are taken to ensure that such exposure is minimized while optimizing return. This includes matching of foreign currency liabilities / payments to assets / receipts, using source inputs in foreign currency and arranging cross currency swaps. The Company maintains foreign currency working capital lines in order to finance production of exportable goods. Proceeds from exports are used to repay / settle / rollover the Company's obligations under these working capital lines which substantially reduces exposure to currency risk in respect of such liabilities. Balances in foreign currency are also maintained in current accounts with banking companies.
(ii) 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.
Sensitivity analysis
The table below summarises the impact of increase / decrease in the Karachi Stock Exchange (KSE) Index on the Company's profit after taxation for the year and on other comprehensive income (fair value reserve). The analysis is based on the assumption that the equity index had increased / decreased by 5% with all other variables held constant and all the Company's equity instruments moved according to the historical correlation with the index.
Index Impact on profit after Impact on other comprehensive income (fair value reserve) taxation 2010 2009 2010 2009 ----------------------- (Rupees in thousand) -------------------
KSE 100 (5% increase) KSE 100 (5% decrease)
3,659 (3,738)
5,353 (6,594)
9,132 (9,047)
6,723 (5,640)
Fair value reserve would increase / decrease as a result of gains / losses on equity investments classified as available for sale.
74
(iii) 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's interest rate risk arises from long term loans and advances, long term financing and short term borrowings. Borrowings obtained at variable rates expose the Company to cash flow interest rate risk. Borrowings obtained at fixed rate expose the Company to fair value interest rate risk. At the balance sheet date the interest rate profile of the Companys interest bearing financial instruments was: 2010 2009 (Rupees in thousand) Fixed rate instruments Financial assets Long term loans and advances Financial liabilities Long term financing Short term borrowings Floating rate instruments Financial liabilities Long term financing Short term borrowings
770,400
770,400
758,079 1,847,600
848,303 1,409,600
349,940 2,992,418
616,561 3,473,607
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.
75
Cash flow sensitivity analysis for variable rate instruments
If interest rates, at the year end date, fluctuates by 1% higher / lower with all other variables held constant, profit after taxation for the year would have been Rupees 31.117 million (2009: Rupees 38.079 million) lower / higher, as a result of higher / lower interest expense on floating rate borrowings. This analysis is prepared assuming that amounts of liabilities outstanding at balance sheet dates were outstanding for whole year.
Interest rate risk management
The Company manages interest rate risk by analyzing its interest rate exposure on dynamic basis. Cash flow interest rate risk is managed by simulating various scenarios taking into consideration refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the Company calculates impact on profit after taxation and equity of defined interest rate shift, mostly 100 basis points. Cross currency swaps are also arranged to transfer exposure to more stable markets. (b) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows: 2010 2009 (Rupees in thousand) Investments Loans and advances Deposits Trade debts Interest accrued Other receivables Bank balances
304,903 1,931,235 7,139 2,579,901 4,562 15,402 4,843,142
293,136 1,814,304 2,839 2,562,348 22,081 1,388 17,638 4,713,734
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate:
76
Short term
Rating Long term
2010 Agency
2009
Banks National Bank of Pakistan Allied Bank Limited Bank Alfalah Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited MCB Bank Limited NIB Bank Limited Samba Bank Limited Silkbank Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited Al-Baraka Islamic Bank Meezan Bank Limited
A-1+ A1+ A1+ A1+ A-1+ A1+ A1+ A1+ A-1 A-3 A1+ A-1+ A-1 A-1
AAA AA AA AA AA+ AA+ AA+ AA A AAAA AA+ A A+
JCR-VIS PACRA PACRA PACRA JCR-VIS PACRA PACRA PACRA JCR-VIS JCR-VIS PACRA JCR-VIS JCR-VIS JCR-VIS
884 2,797 15 100 273 1,601 7,755 646 11 104 240 794 36 146 15,402
5,433 1,298 14 527 297 11 2,664 1,003 11 99 330 64 2,295 3,592 17,638
The Company's exposure to credit risk and impairment losses related to trade debts is disclosed in Note 20.
Credit risk management
The Company's financial assets do not carry significant credit risk, with the exception of trade debts, which are exposed to losses arising from any nonperformance by counterparties. In respect of trade debts, the Company manages credit risk by limiting significant exposure to any single customer. Formal policies and procedures of credit management and administration of receivables are established and executed. In monitoring customer credit risk, the ageing profile of total receivables and individually significant balances, along with collection activities are reviewed on a regular basis. High risk customers are identified and restrictions are placed on future trading, including suspending future shipments and administering dispatches on a prepayment basis or confirmed letters of credit. Due to the Company's 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.
77
(c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Contractual maturities of financial liabilities including interest payments as at June 30, 2010:
Carrying Amount Contractual 6 month or Cash Flows less 6-12 month 1-2 Year More than 2 Years
--------------------------------- (Rupees in thousand) ---------------------------------
Long term financing Trade and other payables Accrued mark-up Short term borrowings
1,108,019 466,841 106,719 4,840,018 6,521,597
1,289,789 466,841 106,719 5,070,692 6,934,041
274,894 466,841 106,719 3,419,791 4,268,245
268,151 1,650,901 1,919,052
317,910 317,910
428,834 428,834
The following are the contractual maturities of financial liabilities as at June 30, 2009: Long term financing Trade and other payables Accrued mark-up Short term borrowings
1,464,864 282,459 177,207 4,883,207 6,807,737
1,612,964 282,459 177,207 5,245,647 7,318,277
212,316 282,459 177,207 2,571,717 3,243,699
239,741 5,325 2,673,930 2,918,996
488,681 488,681
672,226 672,226
The amounts disclosed in the table are undiscounted cash flows. The contractual cash flows relating to the above financial liabilities have been determined on the basis of interest rates / mark up rates effective as at June 30. The rates of interest / mark up have been disclosed in Note 6 and Note 10 to these financial statements.
Liquidity risk Management
The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. At June 30, 2010, the Company had Rupees 2,069 million (2009: Rupees 1,989 million) available borrowing limits from financial institutions and Rupees 16.419 million (2009: Rupees 18.931 million) cash and bank balances. Management believes the liquidity risk to be low.
78
41.2
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:
Level 1
Level 2
Level 3
Total
--------------------------- (Rupees in thousand) ---------------------------
As at June 30, 2010 Assets Available for sale financial assets
261,244
261,244
As at June 30, 2009 Assets Available for sale financial assets
249,477
249,477
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial instruments held by the Company is the current bid price. These financial instruments are classified under level 1 in above referred table. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value a financial instrument are observable, those financial instruments are classified under level 2 in above referred table. The Company has no such type of financial instruments as on June 30, 2010. If one or more of the significant inputs is not based on observable market data, the financial instrument is classified under level 3. The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments. The Company has no such type of financial instruments as on June 30, 2010.
79
41.3
Financial instruments by categories Loans and receivables Available for sale
Total
As at June 30, 2010 Assets as per balance sheet Investments Loans and advances Deposits Trade debts Other receivables Cash and bank balances
1,931,235 7,139 2,579,901 4,562 16,419 4,539,256
304,903 304,903
304,903 1,931,235 7,139 2,579,901 4,562 16,419 4,844,159
Financial liabilities at amortized cost (Rupees in thousand)
Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables
1,108,019 106,719 4,840,018 466,841 6,521,597

Loans and receivables Available for sale
Total
As at June 30, 2009 Assets as per balance sheet Investments Loans and advances Deposits Trade debts Interest accrued Other receivables Cash and bank balances
1,814,304 2,839 2,562,348 22,081 1,388 18,931 4,421,891
293,136 293,136
293,136 1,814,304 2,839 2,562,348 22,081 1,388 18,931 4,715,027
80
Financial liabilities at amortized cost (Rupees in thousand)
Liabilities as per balance sheet Long term financing Accrued mark-up Short term borrowings Trade and other payables
1,464,864 177,207 4,883,207 282,459 6,807,737
41.4
Capital risk management The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide 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 and the requirements of the lenders, the Company monitors the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital employed. Borrowings represent long term financing and short term borrowings obtained by the Company as referred to in note 6 and 10 respectively. Total capital employed includes 'total equity' as shown in the balance sheet plus 'borrowings'. The Company's strategy, which was unchanged from last year, was to maintain a gearing ratio of 60% debt and 40% equity. 2010 2009 (Rupees in thousand) Borrowings Total equity Total capital employed Gearing ratio Percentage
5,948,037 2,672,439 8,620,476 69.00
6,348,071 2,261,837 8,609,908 73.73
The decrease in the gearing ratio resulted primarily from decrease in borrowings from the banks, current year profits and increase in fair value reserves due to increase in market value of shares.
81
42.
NON ADJUSTING EVENT AFTER THE REPORTING PERIOD The Board of Directors in their meeting held on October 04, 2010 have proposed cash dividend of Rupees 1.50 per share for the year ended June 30, 2010 (2009: Nil) for approval of the members of the Company at the Annual General Meeting to be held on October 30, 2010. However, this event has been considered as non adjusting under IAS 10 and has not been recognized in these financial statement.
43.
DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on October 04, 2010 by the Board of Directors of the Company.
44.
CORRESPONDING FIGURES Comparative figures of balance sheet, profit and loss account, cash flow statement and statement of changes in equity and related notes have been re-arranged, wherever necessary for the purpose of comparison. However, no significant reclassifications have been made during the year except: Share of profit in associate has been shown net of taxation instead of showing share of profit of associate before taxation and related taxation separately. Figures of Cold Storage Unit in the notes of the profit and loss account have been aggregated instead of showing them separately because segment information is given in Note 40.
45.
GENERAL Figures have been rounded off to the nearest thousand of Rupees unless otherwise stated.
82
61st Annual General Meeting

The Corporate Secretary, The Crescent Textile Mills Limited, 40-A, Off: Zafar Ali Road, Gulberg-V , Lahore.
PROXY FORM
I/We______________________________________of______________________________________ a member/ members of The Crescent Textile Mills Limited and holder of _______________________ shares as per Registered Folio # / CDC Participant ID # / Sub A/C # / Investor A/C # ___________ __________________________________________________________________ do hereby appoint ___________________________________ of_________________________________ or failing him _____________________________________ of_________________________________ who is also member of the Company vide Registered Folio # / CDC Participant ID # / Sub A/C # / Investor A/C # _______________________ as my/ our Proxy to attend, speak and vote for me/ us and on my/ our behalf at the 61st Annual General Meeting of the Company to be held on Saturday the October 30, 2010 at 09:30 a.m. at registered office, 40-A, off: Zafar Ali Road, Gulberg-V, Lahore and at any adjournment thereof.
As witness my hand this _______________ day of ________________2010.
Member's:____________________ Witness's:____________________ Date:________________________ Place:________________________ Note: A member eligible to attend and vote at this meeting may appoint another member as his/her proxy to attend and vote instead of him/her. Proxies in order to be effective must be received by the Company at the Registered Office not less than 48 hours before the time for holding the meeting. Proxies of the member(s) through CDC shall be accompanied with attested copies of the CNIC(s). The shareholders through CDC are requested to bring original CNIC, Account Number and participant Account Number to be produced at the time of attending the meeting. Signature on Rs. 5/Revenue Stamp
83

Crescenet Textile

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Crescenet Textile

Uploaded by

Copyright:

Available Formats

1

Mr. Muhammad Anwar

Mills & Head Office

Chief Financial Officer

Registered Office Corporate Secretary

Head of Internal Audit

Stock Exchange Listing

Notice of Annual General Meeting

By Order of The Board

(Naseer Ahmad Chaudhary) Corporate Secretary

Mission, Vision and Values

Directors' Report to the Shareholders

Gross pr ofit to sales (%) Profit afte r tax to s ales (%)

Operating profit to sales (%)

Break up value (Rupe es/share )

50 s e 40 e p u 30 R 20 10 0 2005 2006 2007 2008 2009 2010

Profi t before tax and after tax

n o i l 400 l i m300 n i s e 200 e p 100 u R

Profit before tax

Profit after tax

Loans & advances

Equity & Liabilities

Equity Non cu rrent lia bilities

Surplus o n rev aluatio n Current liab ilities

Sales: Export & Local

Finance co st 5% Admin & o ther cos ts 3%

Cost ofsales 84%

Product mix 2010

Home Text ile 51%

393.725 4 1,608.305 15 2,347.550 21 3,260.662 30 7,610.242 70 10,863.386 100

257.404 2 1,507.640 14 3,375.417 32 2,892.243 27 8,032.704 75 10,750.512 100

Capital mix (Debt & Equity)

Year 2006 2007 2008 2009 2010

Yarn Million Rs. % 271 204 277 257 394 10 07 06 06 07

Fabric Million Rs. % 1,620 1,565 1,825 1,508 1,608 58 52 45 32 32

Home Textiles Million Rs. % 879 1,223 1,980 2,892 3,261 32 41 49 62 61

Factors responsible for increase in these costs were:

2010 2009 Change Million Rs. Million Rs. ( % )

Home Textiles: Fabric stitched (000 in linear meters) 21,282

(Muhammad Anwar) Chief Executive Officer

Key Operating / Financial Highlights

Statement of Compliance with Best Practices of Code of Corporate Governance

their remuneration and the terms of appointment as determined by the CEO.

Code and fully describes the salient matters required to be disclosed.

that disclosed in the pattern of shareholding.

Directors including the Chairman of the Committee.

Listing Regulations of the Karachi, Lahore and Islamabad Stock Exchanges.

(Muhammad Anwar) Chief Executive Officer

Faisalabad: October 05, 2010

Liaqat Ali Panwar (Riaz Ahmad & Company) Chartered Accountants

Pattern of Shareholding - (Form 34) as at June 30, 2010

Total Shares Held

Total Shares Held

Pattern of Shareholding - (Form 34) as at June 30, 2010

Pattern of Shareholding - (Form 34) as at June 30, 2010

(e) Insurance Companies

(h) Mutual Funds

(k) Abondand Property

(m) Shareholders More than 10%

(n) General Public

Auditors Report to the Members

Faisalabad: October 05, 2010

Liaqat Ali Panwar (Riaz Ahmad & Company) Chartered Accountants