Annual 2014 (1) Fazal

FAZAL TEXTILE MILLS LIMITED
Contents
Corporate Information....................................................................................02
Mission Statement..........................................................................................03
Notice of Annual General Meeting...............................................................04
Directors’ Report.......................................................................................05-07
Key Financial and Operational Data............................................................08
Pattern of Shareholding...........................................................................09-12
Statement of Compliance with

Best Practices of Corporate Governance.............................................13-14
Review Report to the Members....................................................................15
Auditor’s Report..............................................................................................16
Balance Sheet.................................................................................................17
Profit and Loss Account.................................................................................18
Statement of Comprehensive Income.........................................................19
Cash Flow Statement....................................................................................20
Statement of Changes in Equity.................................................................. 21
Notes to the Account................................................................................22-53
Form of Proxy .......................................................................................................
52nd Annual Report 2014
ANNUAL REPORT 2014

Corporate Information
BOARD OF DIRECTORS
Mr. Muhammad Younus Tabba (Chairman)
Mr. Muhammad Sohail Tabba (Chief Executive)
Mr. Muhammad Ali Tabba
Mr. Imran Yunus Tabba
Mr. Javed Yunus Tabba
Mrs. Mariam Tabba Khan
Mrs. Raheela Aleem
Mr. Ilyas Ismail
Mr. Abdul Kadir Adam
CHIEF FINANCIAL OFFICER & COMPANY SECRETARY
Mr. Toufique Yusuf
FCA FICS
HEAD OF INTERNAL AUDIT DEPARTMENT
Mr. Muhammad Faheem ullah
AUDIT COMMITTEE
Mr. Abdul Kadir Adam Chairman
Mr. Muhammad Javed Tabba Member
Mr. Muhammad Ali Tabba Member
Mr. Imran Yunus Tabba Member
HUMAN RESOURCE & REMUNERATION COMMITTEE
Mr. Imran Yunus Tabba Chairman
Mr. Javed Yunus Tabba Member
Mrs. Mariam Tabba Khan Member
AUDITORS
Kreston Hyder Bhimji & Co.
Chartered Accountants
LEGAL ADVISOR
Mr. Mohammad Aleem
(Advocate)
BANKERS
Bank Al-Habib Limited
Bank Al-Falah Limited (Islamic Division)
Habib Bank Limited
Habib Metropolitan Bank Limited
Meezan Bank Limited
REGISTERED OFFICE AND MILLS FACTORY SUPER HIGHWAY:
LA-2/B Block # 21, 57 Km Mile Stone, near Lucky

Rashid Minhas Road, Cement, Besides Edhi Village,
Federal ‘B’ Area, Karachi - 75950. Super Highway, Karachi.
Phones: 36321311-36322048
Fax: 92-21-36313372
E-mail: finance@fazaltextile.com
Website : www.fazaltextile.com
02 ANNUAL REPORT 2014

Mission Statement
Fazal Textile Mills Limited through its innovative technology and effective resource
management has maintained high ethical and professional standards. The core values are
its commitment, integrity, excellence, teamwork, transparency and creativity.
Fazal Textile is committed to:-
- produce quality and fault free products for its valued customers by continual
improvements by providing proper training and development programmes, upgrading
of resources, setting quality objectives by analyzing customer's feedback.
- provides good returns and security to its shareholders
- fulfill obligation towards creditors, employees and the society.
03
ANNUAL REPORT 2014
Notice of Annual General

Meeting
Notice is hereby given that the 52nd Annual General Meeting of the Members of the Fazal Textile Mills Limited
will be held at Registered office of the Company located at L-A, 2/B, Block 21, Rashid Minhas Road, Federal "B"
Area, Karachi on Friday the 31st October 2014 at 2.00 p.m to transact the following business.
1. To confirm the minutes of the Annual General Meeting held on 28th October 2013.
2. To receive consider and adopt the Audited accounts for the year ended June 30, 2014 together
with the Directors and Auditors report thereon.
3. To approve cash dividend of Rs 5.00 per share of Rs 10/- each for the year ended 30th June
2014 as recommended by the Board.
4. To appoint Auditors for the year ending 30th June 2015 and to fix their remuneration.
5 To transact any other business with the permission of the Chairman
By order of the Board
M. Toufique Yusuf
Karachi : September 10, 2014 Company Secretary
Notes :
1. The share transfer books of the Company will remain closed from October 29, 2014 to
November 05, 2014 (both days inclusive)
2. A member entitled to attend and vote at the meeting may appoint a proxy to attend and vote for
him/her. Proxy forms must be deposited at the registered office of the Company not later than 48
hours before the time of holding the meeting.
3. Nomination from shareholders for the office of Director must be received at least 14 days before
the time of meeting at the Registered Office of the Company.
4. An individual beneficial owner of shares from CDC must bring his/her original NIC or Passport,
Account and Participant's I.D numbers to prove his/her identity. A representative of corporate
member of the Company or CDC must bring the Board of Directors' Resolution and/or Power of
Attorney and the specimen signature of the nominee.
5. Members are requested to notify the Company of any change in their addresses immediately.
Directors’ Report To The Members

Dear Members
The Directors of your Company have pleasure in presenting before you the performance review together
with the audit report and financial statements of the Company for the year ended June 30, 2014.
Overview
The year under review was another challenging period for the company. During the year, a number of
external factors including weaker Chinese Currency, Availability of subsidized Indian yarn in the
market, higher conversion cost and rapid unprecedented appreciation of Pakistani Currency
adversely affected the profitability of company. However, extensive efforts by the management team
combined with the strong business relationships, we maintain with our customers, enabled us to
achieve the highest ever Sales Turnover of Rs. 6.536 billion (2013: Rs. 5.909 billion).
Financial Results
A comparison of the key financial results of the Company for the year ended June, 30, 2014 is as under:
Year Year Ended Percentage %

Ended June 30, 2013 Favorable /
June 30, 2014 (Restated) (Unfavorable)
(Rs.'000) (Rs.'000)
Sales (net) 6,536,510 5,909,410 10.61
Gross Profit 569,891 820,341 (30.52)

Finance Cost 148,224 89,656 (65.32)
Profit Before Tax 200,914 457,306 (56.06)
Profit After Tax 118,302 435,629 (72.84)
Earnings Per Share (Rupees) 19.12 70.40
Despite this increase in sales, gross profit stood at Rs.569.891 million, 30.52% lower than the corresponding
period last year. This was mainly due to the result of depressed cotton yarn demand in the domestic &
international market with the availability of subsidized cheaper Indian cotton yarn. The rapid appreciation of
Pakistani rupee in interbank trading dampened sentiment due to the realization of lesser amount of export
proceeds in Pak rupees for the finished goods made out from costlier imported raw materials.
The increase of Rs.58.568 million (65.32%) in finance cost over corresponding period last year is
mainly due to increase in working capital requirement. The rapid currency fluctuation and building up
of sufficient stock to cover the production before the starting of new season. The bottom line declined
by 72.84% translating into Rs 19.12 earnings per share as compared to last year's Rs. 70.40.
Major Corporate Events
During the year, shares held by directors and sponsors were transferred to Y.B. Holdings (Private) Limited.
By virtue of this transaction your company became a subsidiary of Y.B. Holdings (Private) Limited.
Your company has initiated the evaluation process to merge with M/s. Gadoon Textile Mills Limited.
The material information regarding these events were duly communicated to the members of the
company through stock exchanges.
ANNUAL REPORT 2014 05

Future Outlook
With the present economic conditions that are expected to prevail for a foreseeable future, the company
aims to develop and implement measures that will enable the company to minimize the adverse effects.
A sizeable cotton crop is anticipated in the country and the price, we foresee, during the current
season shall remain stable, inline with the international market. The price is at a level where the cost
of production is viable to maintain the profitability.
After a long spell of depressed yarn market for Pakistani yarn locally and internationally due to higher cost of production
as against subsidized cheaper Indian yarn, it seems that the market is taking a turn around. Taking the advantage of
cheaper new cotton crop and a relief in the overhead cost due to reversal of GIDC, as decided by the honorable
Supreme Court recently, the company will Insha Allah post better results in the forthcoming period.
Code of Corporate Governance
The Directors of your Company are aware of their responsibilities under the Code of Corporate
Governance, incorporated in the Listing Rules of the Stock Exchanges in the country under
instructions from the Security & Exchange Commission of Pakistan. We are taking all the necessary
steps to ensure Good Corporate Governance in your Company as required by the Code.
As a part of the Compliance of the Code, we confirm the following:
a) The financial statements, prepared by the management of the Company, present fairly its state of
affairs, the result of its operations, cash flows and changes in equity.
b) Proper books of account of the Company have been maintained.
c) Appropriate accounting policies have been consistently applied in preparation of financial statements and
accounting estimates are based on reasonable and prudent judgment. The system of internal controls is
sound in design and is being effectively implemented and reviewed by internal audit function.
e) International Accounting Standards, as applicable in Pakistan, have been followed in preparation

of financial statements and any departure there from has been adequately disclosed.
f) The Company has a very sound balance sheet with excellent debt:equity ratio and therefore
there is no doubt at all about the Company's ability to continue as a going concern.
g) There has been no material departure from the best practices of corporate governance, as
detailed in the Listing Regulations.
h) We have an Audit Committee the members of which are from the Board of Directors.
i) We have prepared and circulated a Statement of Ethics and Business Strategy among directors and employees.
j) The Board of Directors has adopted a Mission Statement and a Statement of Overall Corporate Strategy.
k) As required by the Code of Corporate Governance, we have included the following information in
this Report:

i) Statement of pattern of shareholding has been given separately.

ii) Statement of shares held by associated undertaking and related persons have been given separately.
iii) Statement of the Board meetings held during the year and attendance by each director.
iv) Key operating and financial statistics for the last six years has been given separately.
Auditors
The present Auditors, M/s. Kreston Hyder Bhimji & Co., Chartered Accountants, retire and being
eligible offer themselves for re-appointment.
As proposed by the Audit Committee, the Board recommends their appointment as auditors of the
Company for the year ending June 30, 2015.
Acknowledgements
The directors record their appreciation of the performance of the Company's workers, staff and executives.
For and on behalf of the Board
Karachi: September 10, 2014.

Chairman

Key Financial And Operational Data

Rupees “000”
Y E A R S
PARTICULARS Restated Restated
2013-2014 2012-2013 2011-2012 2010-2011 2009-2010 2008-2009 2007-2008
Export Sales 3,520,424 3,628,878 2,763,850 3,700,027 2,890,868 1,815,119 1,910,247
Local Sales 3,084,826 2,298,619 1,930,096 2,078,269 1,381,290 1,130,386 672,118
Gross Sales 6,605,250 5,927,497 4,693,946 5,778,296 4,272,158 2,945,505 2,582,365
Net Sales 6,536,510 5,909,410 4,698,249 5,775,193 4,075,778 2,819,019 2,444,146
Gross Profit 569,891 820,341 394,522 698,298 839,111 220,351 139,904

Gross Profit Ratio 8.72 13.88 8.40 12.09 20.59 7.82 5.72
Profit Before Tax 200,914 457,306 162,917 393,626 675,792 48,219 26,361
Profit Before Tax Ratio 3.07 7.74 3.47 6.82 16.58 1.71 1.08
Profit/(Loss) After Tax 118,302 435,629 131,709 354,096 624,583 25,293 10,040
Profit/(Loss) After Tax Ratio 1.81 7.37 2.80 6.13 15.32 0.90 0.41
Cost of Fixed Assets 4,510,867 3,878,659 3,298,307 1,609,644 1,636,775 1,625,504 1,597,122
Book Value of Fixed Assets 3,264,436 2,704,638 2,197,596 575,075 629,583 672,849 719,115
Total Assets Employed 7,708,703 7,437,335 5,225,951 4,270,909 3,679,757 2,884,682 3,328,731
Shareholders Equity 2,225,431 2,145,195 1,744,604 1,643,483 1,351,262 735,960 719,948
Breakup Value Per Share 359.67 346.70 281.96 265.61 218.39 119.10 116.35
Earning Per Share Before Tax 32.47 73.90 26.33 63.62 109.22 7.79 4.42
Earning/(Loss) Per Share After Tax 19.12 70.40 21.29 57.23 100.94 4.09 1.62
Production Capacity (20/s) (lbs) 50,983,863 48,990,026 48,990,026 48,990,026 48,990,026 48,990,026 48,990,026
Production converted into 20/s (lbs) 49,925,411 45,801,500 45,801,500 48,798,460 48,858,410 48,739,567 48,607,000
Capacity Utilization 97.92 93.49 93.49 99.61 99.73 99.49 99.22

Pattern of
Shareholding
As at June 30, 2014
NUMBER SHARE HOLDING TOTAL
OF SHARES
SHARE HOLDERS FROM TO HELD
447 1 to 100 23,373
132 101 to 500 44,028

32 501 to 1000 24,243
46 1001 to 5000 142,284
8 5001 to 10000 59,001
1 10001 to 15000 13,759
1 15001 to 20000 19,365
1 20001 to 25000 22,800
3 30001 to 35000 97,051
1 65001 to 70000 67,755
3 135001 to 140000 407,806
3 225001 to 230000 683,912
1 4580001 to 4585000 4,582,126
679 6,187,503
09
ANNUAL REPORT 2014
Pattern of Shareholding
As at June 30, 2014
Categories of Shareholders No. of Total Shares

Shareholders Held Percentage
Directors and their spouse(s) and minor children
MUHAMMAD YUNUS TABBA 1 5,000 0.08
SOHAIL M. YUNUS 1 5,000 0.08
MOHAMMAD ALI TABBA 1 5,000 0.08
IMRAN M. YUNUS 1 5,000 0.08
JAVED M. YUNUS 1 5,000 0.08
MARIAM TABBA KHAN 1 5,000 0.08
ILYAS ISMAIL 1 228,242 3.69
RAHILA ALEEM 1 5,000 0.08
ABDUL KADIR ADAM 1 2,500 0.04
KULSUM 1 5,000 0.08
AMINA A. RAZAK 1 5,000 0.08
ZULEKHA 1 5,000 0.08
MAIMOONA 1 136,050 2.20
NASREEN MOTAN 1 136,050 2.20
YASMEEN YAQOOB 1 135,706 2.19
MUHAMMAD ARIF ISMAIL MOTAN 1 228,242 3.69
ASLAM ISMAIL 1 227,428 3.68
Associated Companies, undertakings and related parties - - -
Executives - - -
Public Sector Companies and Corporations 7 36,911 0.60
Banks, development finance institutions, non-banking

finance companies, insurance companies, takaful,
modarabas and pension funds 1 6,195 0.10
Mutual Funds
GOLDEN ARROW SELECTED STOCKS FUND LIMITED 1 22,800 0.37
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 1 67,755 1.10
General Public
a. Local 637 293,867 4.75
b. Foreign - - -
Others 15 4,615,757 74.60
Totals 679 6,187,503 100.00

Share holders holding 5% or more Shares Held Percentage
Y.B. HOLDING (PRIVATE) LIMITED 4,582,126 74.05

As at June 30, 2014
S.No. Folio # Name of shareholder Number of shares Per %

Directors and their spouse(s) and minor children
1 03277-2885 MUHAMMAD YUNUS TABBA 5,000 0.08

2 03277-1481 SOHAIL M. YUNUS 5,000 0.08
3 03277-1480 MOHAMMAD ALI TABBA 5,000 0.08
4 03277-1484 IMRAN M. YUNUS 5,000 0.08
5 03277-1485 JAVED M. YUNUS 5,000 0.08
6 03277-1483 MARIAM TABBA KHAN 5,000 0.08
7 215 ILYAS ISMAIL 228,242 3.69
8 03277-1482 RAHILA ALEEM 5,000 0.08
9 500 ABDUL KADIR ADAM 2,500 0.04
10 03277-5903 KULSUM 5,000 0.08
11 03277-1469 AMINA A. RAZAK 5,000 0.08
12 03277-11752 ZULEKHA 5,000 0.08
13 216 MAIMOONA 136,050 2.20
14 217 NASREEN MOTAN 136,050 2.20
15 218 YASMEEN YAQOOB 135,706 2.19
16 219 MUHAMMAD ARIF ISMAIL MOTAN 228,242 3.69
17 220 ASLAM ISMAIL 227,428 3.68
17 1,144,218 18.49
Associated companies, undertakings and related parties
NIL -
- - -
Executive
NIL -
- - -
Public sector companies and corporations
1 00083-36 IDBL (ICP UNIT) 150 0.00
2 03889-28 NATIONAL BANK OF PAKISTAN 38 0.00
3 03889-44 NATIONAL BANK OF PAKISTAN 34,527 0.56
4 07088-39 THE BANK OF PUNJAB, TREASURY DIVISION. 98 0.00
5 11353-22 NATIONAL INVESTMENT TRUST LIMITED 1,746 0.03
6 334 NATIONAL BANK OF PAKISTAN 81 0.00
7 335 NATIONAL DEVELOPMENT FIN.CORP. 271 0.00
7 36,911 0.60
Banks, development finance institutions, non-banking finance companies, insurance companies, takaful,
modarabas and pension funds
1 03277-78335 TRUSTEE NATIONAL BANK OF PAKISTAN
EMPLOYEES PENSION FUND 6,195 0.10
1 6,195 0.10

As at June 30, 2014
S.No. Folio # Name of shareholder Number of shares Per %

Mutual Funds
1 05520-28 GOLDEN ARROW SELECTED STOCKS
FUND LIMITED 22,800 0.37

2 14902-21 CDC - TRUSTEE NATIONAL INVESTMENT
(UNIT) TRUST 67,755 1.10
2 90,555 1.46
General Public Foreign
NIL -
- - -
Others
1 1 ADMIST. ABANDONED PROP. 600 0.01

2 156 FATEH TEXTILE MILLS LTD. 90 0.00
3 230 JAHANGIR SIDDIQUI & CO. LTD 50 0.00
4 00307-46 IGI FINEX SECURITIES LIMITED 1 0.00
5 02287-14 ISLAMABAD STOCK EXCHANGE LIMITED 600 0.01
6 03277-2937 INTERNATIONAL BRANDS (PVT) LTD. 1,000 0.02
7 03277-82127TRUSTEE NATIONAL BANK OF PAKISTAN
EMP BENEVOLENT FUND TRUST 217 0.00
8 03277-84227 Y.B. HOLDING (PRIVATE) LIMITED 4,582,126 74.05
9 03525-63416 H M INVESTMENTS (PVT) LIMITED 21 0.00
10 03525-63817 NH SECURITIES (PVT) LIMITED. 386 0.01
11 04705-73101 SECURITIES & EXCHANGE COMMISSION OF PAKISTAN 1 0.00
12 05264-26398 ABANDONED PROPERTIES ORGANIZATION 19,365 0.31
13 07385-17 ISMAIL ABDUL SHAKOOR SECURITIES (PRIVATE) LIMITED 100 0.00
14 07443-27 Y.H. SECURITIES (PVT.) LTD. 10,000 0.16
15 14241-22 FIKREE'S (SMC-PVT) LTD. 1,200 0.02
15 4,615,757 74.60

Statement of Compliance with the

Code of Corporate Governance
For the year ended June 30, 2014
This statement is being presented to comply with the Code of Corporate Governance (CCG) contained in
related clauses of Listing Regulations of Karachi Stock Exchange Limited, Lahore Stock Exchange Limited
and Islamabad Stock Exchange Limited, 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 CCG in the following manner;
1. The Company's Board includes :
Category Names
Independent Director Mr. Abdul Karim Adam

Executive Director Mr. Muhammad Sohail Tabba
Non-Executive Directors Mr. Muhammad Younus Tabba
Mr. Muhammad Ali Tabba
Mr.Imran Yunus Tabba
Mr. Javed Yunus Tabba
Mrs. Mariam Tabba Khan
Mrs. Raheela Aleem
Mr. Ilyas Ismail
The independent director meets the criteria of independence under clause i (b) of the CCG.
2. The directors have confirmed that none of them is serving as a director in more than seven listed
companies, including this company.
3. All the resident directors of the Company are registered as taxpayers and none of them has
defaulted in payment of any loan to a banking company, a DFI or NBFI or, being a member of a
stock exchange, has been declared as a defaulter by that stock exchange.
4. No casual vacancy occurred in the Board of Directors during the current year.
5. The company has prepared a "Code of Conduct", which is approved by the Board of Directors,
and has ensured that appropriate steps have been taken to disseminate it throughout the
company along with its supporting policies and procedures.
6. The board has developed a vision / mission statement, overall corporate strategy and significant
policies of the Company. A complete record of particulars of significant policies along with the
dates on which they were approved or amended has been maintained.
7. All the powers of the Board have been duly exercised and decisions on material transactions, including
appointment and determination of remuneration and terms and conditions of employment of the Chief
Executive Officer (CEO), other executive and non-executive directors, have been taken by the Board.
8. The meetings of the Board were presided over by the Chairman and, in his absence, by a Director
elected by the Board for this purpose 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.
9. The Directors of the Company are adequately trained to perform their duties except two directors
who will be trained within the specified time.

10. The CFO, Company Secretary and head of Internal Audit continued their service and no changes
were made during the financial year.
11. The directors' report for this year has been prepared in compliance with the requirements of the
CCG 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
of the Board.
13. The directors, CEO and executives do not hold any interest in the shares of the Company other
than disclosed in the pattern of shareholding.
14. The Company has complied with all the corporate and financial reporting requirement of the CCG.
15. The Board has formed an Audit Committee comprising of three non-executive directors being
members. However, audit committee has been reconstituted by including one independent
director as the Chairman of the committee.
16. The meetings of the audit committee were held at least once every quarter prior to approval of
interim and final results of the Company as required by the CCG. The terms of reference of the
committee have been formed and advised to the committee for compliance.
17. The Board has formed an HR and Remuneration Committee. It comprises three members who
are non-executive directors including chairman of the committee.
18. The Board has set up an effective internal audit function who are considered suitably qualified and
experienced for the purpose and are conversant with the policies and procedures of the Company.
19. The statutory auditors of the Company have confirmed that they have been given a satisfactory
rating under the quality control review programe of the Institute of Chartered Accountants of
Pakistan (ICAP), 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 ICAP.
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 'closed period' prior to the announcement of interim / final results, and business decisions,
which may materially affect the market price of company's securities, was determined and
intimated to directors, employees and stock exchanges.
22. Material / price sensitive information has been disseminated among all the market participants at
once through stock exchange.
23. We confirm that all other material principles enshrined in the CCG have been duly complied with.
Karachi: September 10, 2014 Muhammad Younus Tabba

Chairman

Review Report to the Members on the

Statement of Compliance With Best Practices
of the Code of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained in the Code of
Corporate Governance for the year ended June 30, 2014 prepared by the Board of Directors of Fazal
Textile Mills Limited ("the Company") to comply with the Listing Regulations of Karachi, Lahore and
Islamabad 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 Company's compliance with the provisions of the
Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company
personnel and review of various documents prepared by the Company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried
out any special review of the internal control system to enable us to express an opinion as to whether the Board's
statement on internal control covers all controls and the effectiveness of such internal controls.
Further, the Listing Regulations requires the Company to place before the Board of Directors for their
consideration and approval of related party transactions distinguishing between transactions carried out on terms
equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's
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 arm's 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 Company's 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, 2014.
KRESTON HYDER BHIMJI & CO.

Karachi: September. 10, 2014 Chartered Accountants

Auditors' Report to the Members

We have audited the annexed Balance Sheet of M/S. FAZAL TEXTILE MILLS LIMITED (the Company) as
at June 30, 2014 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 Company's 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 test basis evidence supporting the amounts and disclosures
in the above said statements. An audit also includes assessing the accounting policies and significant estimates made
by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit
provides a reasonable basis for our opinion and, after due verification, we report that:
a) in our opinion, proper books of account have been kept by the Company as required by
the Companies Ordinance, 1984;
b) in our opinion:
i) the balance sheet and profit and loss account together with the notes thereon have been
drawn up in conformity with the Companies Ordinance, 1984 and are in agreement with the
books of account and are further in accordance with the accounting policies consistently
applied except for the change as described in note 2.5.1 with which we concur;
ii) the expenditure incurred during the year was for the purpose of the Company's business; and
iii) the business conducted, investments made and the expenditure incurred during the
year were in accordance with the objects of the Company.
c) in our opinion and to the best of our information and according to the explanations given to us, the
Balance Sheet, Profit and Loss Account, 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 Company's affairs as at June 30, 2014 and of profit, total
comprehensive income, its cash flows and changes in equity for the year then ended; and
d) in our opinion, zakat deductible at source under the Zakat and Ushr Ordinance, 1980
(XVIII of 1980) was deducted by the company and deposited in the Central Zakat Fund
established under section 7 of that Ordinance.
We draw attention to note 1.1 to the financial statements, which more fully explains the board of directors'
intent for merger/amalgamation of the Company's textile business with and into Gadoon Textile Mills
Limited for exploring the potential opportunities to expand, grow and reorganize the Company subject to
financial and legal evaluation. Our opinion is not qualified in respect of this matter.
KRESTON HYDER BHIMJI & CO

Karachi: September 10, 2014 CHARTERED ACCOUNTANTS
Engagement Partner: Mohammad Hanif A. Razzak

Balance Sheet
As at June 30, 2014
Note June June June
2014 2013 2012
Restated Restated
ASSETS Rupees in '000'
NON-CURRENT ASSETS
Property, plant and equipment 4 5,617,963 4,674,184 3,298,455
Long term loans and advances 5 10,976 17,971 5,569
Long term security deposits 1,199 1,259 1,259
CURRENT ASSETS 5,630,138 4,693,414 3,305,283
Stores, spare parts and loose tools 6 76,603 78,386 64,240
Stock in trade 7 754,167 1,285,971 911,268
Trade debts 8 860,014 1,154,876 792,566
Loans and advances 9 69,528 57,787 47,465
Trade deposits and short term prepayments 10 681 298 38,673
Other receivables 11 60 6,203 237
Sales Tax refunds due from government 146,137 93,653 35,947
Income tax refundable 12 82,065 47,422 17,217
Cash and bank balances 13 89,310 19,325 13,054
2,078,565 2,743,921 1,920,667
TOTAL ASSETS 7,708,703 7,437,335
5,225,950
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital 14 150,000 150,000 150,000
Issued, subscribed and paid-up capital 15 61,875 61,875 61,875

Reserves 16 2,174,437 2,087,073 1,676,194
Reasurement on post retirement benefits obligation-net of tax (10,881) (3,753) 6,535
2,225,431 2,145,195 1,744,604
LIABILITIES
NON-CURRENT LIABILITIES
Long term financing 17 1,633,333 2,175,000 675,000
Deferred Liabilities
Staff retirement benefits 18 82,083 60,460 39,898
Deferred taxation 19 77,476 18,505 26,707
159,559 78,965 66,605
1,792,892 2,253,965
741,605
CURRENT LIABILITIES
Trade and other payables 20 418,322 601,164 407,807
Accrued markup 84,390 51,947 33,621
Short term borrowings 21 2,896,001 2,385,064 2,298,313
Current portion of long term financing 291,667 - -
3,690,380 3,038,175 2,739,741
Contingencies and Commitments 22 - - -
TOTAL EQUITY AND LIABILITIES 7,708,703 7,437,335
5,225,950
The annexed notes from 1 to 44 form an integral part of these financial statements.
Karachi : September 10, 2014 Chairman Chief Executive

Profit and Loss Account

Note June June
2014 2013
Restated
Rupees in '000'
Sales 23 6,536,510 5,909,410

Cost of sales 24 5,966,619 5,089,069
Gross profit
569,891 820,341
Distribution Costs 25
137,901 194,889
Administrative expenses 26 67,337 60,364
Other operating expenses 27 40,595 25,253
245,833 280,506
324,058 539,835
Other Income 28 25,080 7,127
Operating profit 349,138 546,962

Finance cost 29 148,224 89,656
Profit before taxation 200,914 457,306

Taxation 30 82,612 21,677
Profit after taxation

118,302 435,629
Earning per share-basic and diluted (Rupees) 31 19.12 70.40

Statement of Comprehensive
Income
June June
2014 2013
Restated
Rupees in '000'
Profit after taxation 118,302 435,629
Other comprehensive income
Items that will never be reclassified to profit or loss
Remeasurement of post retirement benefits obligation (7,716) (11,136)

Impact of tax 588 848
(7,128) (10,288)
Total comprehensive income for the year
111,174 425,341

Cash Flow Statement

For the year ended 30 June 2014
Note June June
2014 2013
Restated
CASH FLOW FROM OPERATING ACTIVITIES Rupees in '000'
Cash generated from operations 32 1,197,554 133,729
Gratuity paid (15,275) (12,691)

Finance cost paid (115,781) (71,330)
Income tax paid (57,696) (59,237)
Long term loans and advances 1,825 (12,402)
Long term security deposit 60 -
Net cash inflow/(Outflow) from operating activities (186,867) (155,660)
CASH FLOW FROM INVESTING ACTIVITIES 1,010,687 (21,931)
Direct additions to Property Plant and Equipment

(13,654) (489,834)
Additions to capital work in progress (1,192,697) (1,055,623)
Sale proceeds from disposal of Property plant and equipment 35,318 11,389
Net cash (Outflow) from investing activities (1,171,033) (1,534,068)
CASH FLOW FROM FINANCING ACTIVITIES
Net (decrease) / increase inlong term financing

(250,000) 1,500,000
Dividend paid (30,606) (24,481)
Net cash In / (Outflow) from financing activities (280,606) 1,475,519
Net decrease in cash and cash equivalents
(440,952) (80,480)
Cash and cash equivalents at the beginning of the year (2,365,739) (2,285,259)
Cash and cash equivalents at the end of the year 33

(2,806,691) (2,365,739)
Karachi : September 10, 2014
Chairman Chief Executive

Statement of Changes in Equity

RESERVES Reasureme
Issued, Capital Revenue Reserves nt on post
Reserve retirement
Description Subscribed benefits Total
Unappro-
and Paid Share General Sub total- obligation Equity
priated net
up Capital premium Reserve reserves
Profit of tax
----------------------------------Rupees in "000"-------------------------------------
Balance as on June 30, 2012 as originally reported 61,875 34,416 1,485,584 156,194 1,676,194 - 1,738,069
Impact of change in accounting policy Note 2.5.1
Gain on Remeasurment of defined benefit plan - - - - - 7,074 7,074

Less: Related Deferred Tax Liability - - - - - (539) (539)
6,535 6,535
Balance as on June 30, 2012 - Restated 61,875 34,416 1,485,584 156,194 1,676,194 6,535 1,744,604
- - 120,000 (120,000) - - -
Transfer to revenue reserves
- - - (24,750) (24,750) - (24,750)
Transaction with owners
Final Dividend for the year ended
June 30, 2012 Cash Rs. 4 per share - - - 435,629 435,629 (10,288) 425,341
Total comprehensive income for

the year ended June 30, 2013
Balance as on June 30, 2013 - Restated 61,875 34,416 1,605,584 447,073 2,087,073 (3,753) 2,145,195
Balance as on July 01, 2013 as previously reported

61,875 34,416 1,605,584 447,690 2,087,690 - 2,149,565
Net Impact of change in accounting policy Note 2.5.1 - - - - - (3,753) (3,753)

Reversal of Provision for Gratuity of previous period - - - (617) - - (617)
- - - (617) - (3,753) (4,370)
Balance as on July 01, 2013 - Restated 61,875 34,416 1,605,584 447,073 2,087,073 (3,753) 2,145,195
- - 400,000 (400,000) - -
Transfer to revenue reserve
- - - 118,302 118,302 (7,128) 111,174
Total comprehensive income for
the year ended June 30, 2014
- - - (30,938) (30,938) - (30,938)
Transaction with owners
Final Dividend for the year ended
June 30, 2013 Cash Rs. 5 per share
Balance as on June 30, 2014 61,875 34,416 2,005,584 134,437 2,174,437 (10,881) 2,225,431

Notes to the Financial Statements

1. LEGAL STATUS AND OPERATION:
The Company was incorporated on July 6, 1963 as a Private Limited Company under the
Companies Act, 1913 (Companies Ordinance, 1984) and was converted into a Public Limited
Company on May 04, 1966. The Company is listed on stock exchangesof Pakistan. The Company
is engaged in manufacturing, selling, buying and dealing in all types of yarn and knitted fabrics.
The address of its registered office is LA-2/B, Block 21, Rashid Minhas Road, Federal "B" Area,
Karachi, Pakistan. The Company has also undertaken a joint venture building construction project
at Plot # LA-2/B, Block 21, Rashid Minhas Road, Federal "B" Area, Karachi. As disclosed in note
15.1, during the year Y.B. Holding (Private) Limited became holding company of the Company.
1.1 MERGER/ AMALGAMATION
The Board of Directors of the Company have, while exploring the potential opportunities to
expand, grow and reorganize the Company, identified opportunity for expansion / reorganization
by virtue of merging the textile business of the company with and into the Gadoon Textile Mills
Limited (GTML) and is in process of discussion with the Management of GTML to explore the
viability and feasibility of the merger. The Company has engaged Consultants and Advisors to
evaluate feasibility of the merger including Due Diligence and Valuation and formation of scheme
of compromises, arrangements and reconstruction for amalgamation / merger.
2. BASIS OF PREPARATION
2.1 Basis of measurement
These financial statements comprise of balance sheet, profit and loss account, statement of
comprehensive income, cash flow statement and statement of changes in equity together
with notes and have been prepared under the 'historical cost convention' except as has been
specifically stated below in respective notes.
2.2 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 (IFRSs) 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. Wherever, the requirements of the Ordinance or directives issued by the Securities
and Exchange Commission of Pakistan differ with the requirements of these standards, the
requirements of the Ordinance or the requirements of the said directives take precedence.
2.3 Functional and presentation currency, and rounding off
These financial statements have been prepared in Pak Rupees, which is the Company's functional
currency. All financial information presented in Pak Rupees has been rounded to nearest thousand.
2.4 Significant accounting judgments and estimates
The preparation of financial statements in conformity with approved accounting standards requires
the use of certain critical accounting estimates. It also requires management to exercise its
judgments in the process of applying the company's accounting policies. Estimates and judgments
are continually evaluated and are based on historic experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. In the
process of applying the company's accounting policies, management has made following
estimates and judgments which are significant to the financial statements.

a) Property, plant and equipment

The company has made certain estimation with respect to residual value, depreciation
method and useful lives of property, plant and equipment. Further, the company reviews
the value of assets for possible impairment on each reporting period.
b) Provision for stores and spares

The Company has made estimation with respect to provision for slow moving, damaged
and obsolete items and their net realizable value.
c) Staff retirement benefits

Certain actuarial assumptions have been adopted as disclosed in note no. 18.4 to these
financial statements for valuation of present value of defined benefit obligations.
d) Income Taxes
The company takes into account relevant provision of current income tax laws while providing
for current and deferred taxes as explained in note 3.2 of these financial statements.
e) Contingencies
The assessment of the contingencies inherently involves the exercise of significant judgment as the
outcome of the future events cannot be predicted with certainty. The Company based on the
availability of the latest information, estimates the value of contingent assets and liabilities which
are dependent upon the occurrence/non-occurrence of the uncertain future events.
2.5 NEW STANDARDS,INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED

ACCOUNTING AND FINANCIAL REPORTING STANDARDS
2.5.1 New and amended standards and interpretations became effective:
The following amendments to existing standards have become effective for the Company's
current financial statements which are either irrelevant or have no effect on the Company's
financial statements except as disclosed as follows:
- IAS 19 (revised) 'Employee Benefits' has eliminated the corridor approach and requires
calculating finance cost on net funding bases. The Company has applied this change in
accounting policy retrospectively in accordance with IAS 8 'Accounting Policies, Changes
in Accounting Estimates and Errors' and recorded unrecognized actuarial losses net of
taxes associated with retirement benefit plan by adjusting the opening balance of
unappropriated profit and retirement benefit for the prior years' presented.
Effect of adoption of amendments in IAS 19 (Revised) "Employee Benefits"
The adoption of the amendments has led to change in accounting policy in respect of recognition of re-
measurement gain/loss related to post retirement defined benefits plan retrospectively, the effects
whereof have been accounted for retrospectively in accordance with IAS 8 'Accounting Policies,
Changes in Accounting Estimates and Errors', resulting in restatement of financial statements of prior
periods. Resultantly, the cumulative effect of adjustments that arose as at 01 July 2012 have been
presented and disclosed as part of the statement of changes in equity, while the corresponding period
adjustment through other comprehensive income and profit or loss is restated and disclosed as part of
the Statement of Comprehensive Income and Profit and Loss Account respectively. The Balance Sheet
also presents the prior years' numbers as restated, due to the said changes.

2013 2012
As Impact due As As Impact due As
previously to change in restated previously to change in restated
reported policy reported policy
Rupees in “000”
Effect on balance sheet
Staff retirement benefits 55,781 4,679 60,460 46,972 7,074 54,046
Deferred Taxation 18,814 (309) 18,505 26,169 (539) 25,630

Unappropriated profit 447,690 (617) 447,073 156,194 6,535 162,729
Effect on profit & loss account 2014 2013
(Decrease) in profit - (617)

(Decrease) in EPS - (0.10)
Effect on other comprehensive income
Recognition of actuarial gain/(loss) (7,716) (11,136)

Impact of tax 588 848
(7,128) (10,288)
(7,128) (10,288)
- IFRS 7 Financial Instruments: Disclosures - Disclosures about offsetting of financial assets and
liabilities; These amendments require entities to disclose gross amount subject to right of
set off, amounts set off in accordance with accounting standards followed, and the related
net credit exposure. These disclosures are intended to facilitate the evaluation of the
effect or potential effect of netting arrangements on an entity's financial position.
- IAS 27 Separate Financial Statements (2011) - Amendment; The Standard requires that when
an entity prepares separate financial statements, investments in subsidiaries, associates,
and jointly controlled entities are accounted for either at cost, or in accordance with IFRS
9 Financial Instruments / IAS 39 Financial Instruments: Recognition and Measurement.
The Standard also deals with the recognition of dividends, certain group reorganizations
and includes a number of disclosure requirements.
- IAS28 Investments in Associates and Joint Ventures - Amendment; This Standard supersedes IAS
28 Investments in Associates and prescribes the accounting for investments in associates
and sets out the requirements for the application of the equity method when accounting
for investments in associates and joint ventures. The Standard defines 'significant
influence' and provides guidance on how the equity method of accounting is to be applied
(including exemptions from applying the equity method in some cases). It also prescribes
how investments in associates and joint ventures should be tested for impairment.
2.5.2 Standards, Interpretations and Amendments issued but not yet effective:
The following standards, amendments and interpretations of approved accounting standards
will be effective for accounting periods beginning on or after July 01, 2014:
- IFRIC 21 'Levies, an Interpretation on the accounting for levies imposed by governments' (effective
for annual periods beginning on or after 01 January 2014).
IFRIC 21 is an interpretation of IAS 37 'Provisions, Contingent Liabilities and Contingent
Assets'. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement
for the entity to have a present obligation as a result of a past event (known as an obligating
event). The Interpretation clarifies that the obligating event that gives rise to a liability to pay a
levy is the activity described in the relevant legislation that triggers the payment of the levy.

- Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) -

(effective for annual periods beginning on or after 01 January 2014).
The amendments address inconsistencies in current practice when applying the

offsetting criteria in IAS 32 'Financial Instruments: Presentation'. The amendments
clarify the meaning of 'currently has a legally enforceable right of set-off'; and that
some gross settlement systems may be considered equivalent to net settlement.
- Amendment to IAS 36 'Impairment of Assets' Recoverable Amount Disclosures for Non-

Financial Assets (effective for annual periods beginning on or after 01 January 2014).
These narrow-scope amendments to IAS 36 Impairment of Assets address the

disclosure of information about the recoverable amount of impaired assets if that
amount is based on fair value less costs of disposal.
- Amendments to IAS 39 'Financial Instruments: Recognition and Measurement'

Continuing hedge accounting after derivative novation (effective for annual periods
beginning on or after 01 January 2014).
The amendments add a limited exception to IAS 39, to provide relief from
discontinuing an existing hedging relationship when a novation that was not
contemplated in the original hedging documentation meets specific criteria.
- Amendments to IAS 19 'Employee Benefits' Employee contributions - a practical

approach (effective for annual periods beginning on or after 01 July 2014).
The practical expedient addresses an issue that arose when amendments were made in
2011 to the previous pension accounting requirements. The amendments introduce a
relief that will reduce the complexity and burden of accounting for certain contributions
from employees or third parties. The amendments are relevant only to defined benefit
plans that involve contributions from employees or third parties meeting certain criteria.
- Amendments to IAS 38 'Intangible Assets' and IAS 16 'Property, Plant and Equipment'
(effective for annual periods beginning on or after 01 January 2016)
This amendment introduces severe restrictions on the use of revenue-based amortization for
intangible assets and explicitly state that revenue-based methods of depreciation cannot be
used for property, plant and equipment. The rebuttable presumption that the use of revenue-
based amortization methods for intangible assets is inappropriate can be overcome only when
revenue and the consumption of the economic benefits of the intangible asset are 'highly
correlated', or when the intangible asset is expressed as a measure of revenue.
These amendments / clarification to the standards are either irrelevant or will not have any
material effect on the Company's financial statements.
Annual Improvements 2010-2012 and 2011-2013 cycles (most amendments will apply
prospectively for annual period beginning on or after 01 July 2014). The new cycle of
improvements contain amendments to the following standards:
- IFRS 2 'Share-based Payment'; IFRS 2 has been amended to clarify the definition
of 'vesting condition' by separately defining 'performance condition' and 'service
condition'. The amendment also clarifies both how to distinguish between a market
condition and a non-market performance condition and the basis on which a
performance condition can be differentiated from a vesting condition.

- IFRS 3 'Business Combinations'; these amendments clarify the classification and

measurement of contingent consideration in a business combination. Further IFRS 3
has also been amended to clarify that the standard does not apply to the accounting
for the formation of all types of joint arrangements including joint operations in the
financial statements of the joint arrangement themselves.
- IFRS 8 'Operating Segments' has been amended to explicitly require the disclosure of judgments
made by management in applying the aggregation criteria. In addition, this amendment clarifies that
a reconciliation of the total of the reportable segment's assets to the entity assets is required only if
this information is regularly provided to the entity's chief operating decision maker. This change
aligns the disclosure requirements with those for segment liabilities.
- Amendments to IAS 16 'Property, plant and equipment' and IAS 38 'Intangible Assets'.
The amendments clarify the requirements of the revaluation model in IAS 16 and IAS
38, recognizing that the restatement of accumulated depreciation (amortization) is not
always proportionate to the change in the gross carrying amount of the asset.
- IAS 24 'Related Party Disclosure'. The definition of related party is extended to

include a management entity that provides key management personnel services to
the reporting entity, either directly or through a group entity.
- IAS 40 'Investment Property'. IAS 40 has been amended to clarify that an entity
should: assess whether an acquired property is an investment property under IAS 40
and perform a separate assessment under IFRS 3 to determine whether the
acquisition of the investment property constitutes a business combination.
These amendments / clarification are not likely to have any material impact on the Company's
financial statements.
2.5.3 New Standards issued by ISAB and notified by SECP but not yet effective
Following new standards issued by IASB have been adopted by the Securities and Exchange
Commission of Pakistan for the purpose of applicability in Pakistan through SRO 633(1) / 2014 dated
July 10, 2014 and will be effective for annual periods beginning on or after January 01, 2015.
- IFRS-10 'Consolidated Financial Statements'
This is a new standard that replaces the consolidation requirements in SIC - 12 Consolidation:
Special Purpose Entities and IAS 27 - Consolidated and Separate Financial Statements. The
proposed standard builds on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within the consolidated financial
statements of the parent company and provides additional guidance to assist in the
determination of control where this is difficult to assess.
- IFRS-11 'Joint Arrangements'
This is a new standard that deals with the accounting for joint arrangements and focuses
on the rights and obligations of the arrangements, rather than its legal form. Standard
requires a single method for accounting for interests in jointly controlled entities.
- IFRS-12 'Disclosure of Interest in Other Entities'
This is a new and comprehensive standard on disclosure requirements for all forms of
interests in other entities including joint arrangements, associates, special purpose
vehicles and other off balance sheet vehicles.

- IFRS-13 'Fair Value Measurement'
This standard applies to IFRSs that require or permit fair value measurement or disclosures and
provides a single IFRS framework for measuring fair value and requires disclosures about fair
value measurement. The standard defines fair value on the basis of an 'exit-price' notion and uses
'a fair value hierarchy', which results in market-based, rather than entity-specific measurement.
These new standards are either irrelevant or will not have any material effect on the
Company's financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Staff retirement benefits
The Company operates unfunded gratuity scheme covering all employees eligible to the benefit.
The present value of the defined benefit obligation has been determined on the basis of actuarial
valuation carried out on the Balance Sheet date. In accordance with the requirements of IAS 19,
Employees Benefits, actuarial valuation has been carried out using Projected Unit Credit Actuarial
Cost Method. Main valuation assumptions used for actuarial valuation were as under:
Discount Rate 13.75% per annum

Expected rate on increase in salaries 12.75% per annum
Any actuarial gains / losses on re-measurement are immediately recognized in the "Other
Comprehensive Income".
3.2 Taxation
Current
Provision for current taxation is based on taxable income at current rates of taxation after
taking in to account tax credits available rebate and exemption if any, subject to treatment in
respect of tax deducted at source on export as final discharge of tax liabilities.
Deferred
Deferred tax is provided using the liability method, on all temporary differences at the balance
sheet date between the tax assets and liabilities and their carrying values for financial
reporting purposes and amount used for taxation purpose.
Deferred tax assets and liabilities are measured at the tax rate that are expected to apply to
the year when the asset is realized or the liability is settled, based on the tax rates that have
been enacted or substantially enacted at the balance sheet date.
3.3 Foreign currency translation
Monetary assets and liabilities in foreign currencies are translated into rupee at the rates of
exchange ruling on the balance sheet date except for liabilities covered under forward
exchange contracts which are translated at the contract rates. The gain or loss due to the rate
fluctuation is adjusted against the plant and machinery acquired under the loan.
3.4 Property, Plant & Equipment
Operating assets
These are stated at cost less accumulated depreciation and impairment loss, if any except
leasehold land which is stated at cost.

Depreciation is charged on diminishing balance method at rates specified in the note 4.1. In
respect of addition/deletion during the year, depreciation is charged from the month of
acquisition and up to the month preceding the disposal respectively.
The costs of replacing part of an item of property, plant and equipment is recognized in the
carrying amount of the item if it is probable that the future economic benefits associated with
the part will flow to the Company and its cost can be measured reliably.
The costs of day-to-day servicing of property, plant and equipment are recognized in profit or
loss as incurred.
Major spare parts, stand-by equipment and servicing equipment which qualify as property, plant
and equipment when an entity expects to use them during more than one year are classified as
property, plant and equipment under category of major stores and spares and are carried at cost
less accumulated depreciation and accumulated impairment, if any. These will be transferred to
relevant operating assets category as and when such items are available for use. However,
currently there are no such items hence there is no effect thereof in financial statements.
Gains and losses on disposal of operating assets are included in profit and loss account.
Capital Work-in-progress
Capital work-in-progress is stated at cost accumulated up to the balance sheet date less impairment, if
any. Cost represents expenditure incurred in the course of construction, implementation or installation of
the items of property, plant and equipment. These expenditures are transferred to relevant category of
property, plant and equipment as and when the assets are available for use and start operation.
3.5 Stores, spare parts, loose tools and packing materials
These are valued at weighted average cost less provision for slow moving and obsolescence.
Adequate provision is made for obsolete and slow moving items as and when required based
on parameters set out by management.
Goods-in-transit are valued at invoice amount plus other costs incurred thereon up to balance
sheet date.
3.6 Stocks
These are valued as follows:
Raw materials - At lower of cost or net realizable value on FIFO basis.

Finished goods - At lower of average cost or net realizable value including portion of related
factoryoverheads.
Work-in-process - At average cost of raw material and proportionate manufacturing overheads.
Waste - At net realizable value
Net realizable value signifies the estimated selling prices in the ordinary course of business
less costs necessarily to be incurred in order to make the sale.

3.7 Trade debts and other receivables
Trade debts and other receivables are recognized and carried at original invoice amount less any
estimated allowance made for doubtful receivables based on review of outstanding amount at the
year end. Balances considered irrecoverable are written off as and when identified.
3.8 Cash and Cash equivalent
Cash and cash equivalent are carried in the balance sheet at cost. For the purpose of the cash flow statement,
cash and cash equivalents comprise cash on hand, balances with banks in current and deposit accounts,
other short term highly liquid investments less short term bank borrowings and running finance.
3.9 Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the
Company and the revenue can be measured reliably. Revenue is measured at the fair value
of the consideration received or receivable, and is recognized on following basis:
. Sales/ Service charges are recorded on dispatch of goods to customers;
. Rental Income is recognized as and when earned on annual basis; and
.Income of deposits is recognized on receipt basis.
3.10 Financial instruments
All financial assets and liabilities are initially measured at cost, which is the fair value of the
consideration given and received respectively. These financial assets and liabilities are
subsequently measured as fair value or amortized cost, as the case may be.
3.11 Loans and Receivables
Financial assets which have fixed or determinable payments and are not quoted in an active market are
classified as loans and receivables. These are measured at amortized cost less impairment, if any.
3.12 Employees Leave Entitlement
Employees' entitlements to annual leaves are recognized when they accrue to employee. A
provision is made for the estimated liability as a result of services rendered by employees up
to the balance sheet date.
3.13 Borrowing and their Cost
Borrowings are recorded at the amount of proceeds received.
Borrowing costs incurred on finances obtained for the construction/installation of qualifying assets
are capitalized up to date the respective assets are available for the intended use. All other mark-
up, interest and other related charges are taken to the profit and loss account currently.
3.14 Provisions
Provisions are recognized when the company has a present legal or constructive obligation as a
result of past event, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate of obligation can be made. Provisions
are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

3.15 Impairment of Assets
Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence
that it is impaired. A financial asset is considered to be impaired if objective evidence indicated that one or
more events have had a negative effect on the estimated future cash flows of that asset.
The company considers evidence of impairment for receivable and other financial assets at specific asset level.
Impairment losses are recognized as expense in profit and loss account. An impairment loss is reversed only to
the extent that the asset's carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized.
Non-Financial assets
The carrying amount of non-financial assets is assessed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, then the assets
recoverable amount of such assets is estimated. Recoverable amount is higher of an asset's fair
value less cost to sell and value in use. An impairment loss is recognized as expense in the profit
and loss account for the amount by which asset's carrying amount exceeds its recoverable amount.
3.16 Dividend
Dividend distribution to the company shareholders' is recognized as a liability in the company's

financial statements in the period in which the dividends are approved.
3.17 Related Party Transactions
Transactions and contracts with related party are carried out at arm's length prices determined
in accordance with comparable uncontrolled price method.
3.18 Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if
the Company has a legally enforceable right to set-off the recognized amounts and the Company intends
to settle either on a net basis or realize the assets and settle the liability simultaneously.
Note June June

2014 2013
4. PROPERTY, PLANT AND EQUIPMENT Rupees in '000'
Operating Fixed Assets 4.1 3,264,436 2,704,638
Capital Work in Progress 4.2 2,353,527 1,969,546

5,617,963 4,674,184

4.1 OPERATING FIXED ASSETS - TANGIBLE

2014
Leasd Main factory Other factory
Plant & Testing
Office Furniture Computer
building - On building - On equipment, Vehicles
hold Total
Leasehold Leasehold Machinery Scales, Equipments & Fixtures Equipments
land Land Land Weighments
Net Carrying Value Basis Year ended June 30, 2014 ----------------------------------Rupees in "000"------------------------------------
Opening net book value 545,338 562,969 402,729 1,162,116 783 4,224 202 23,155 3,122 2,704,638
Additions at cost
Direct Addition - - - - - 406 - 12,149 1,099 13,654

Transfer from CWIP - 549,742 27,846 231,128 - - - - - 808,716
Disposals / Adjustment - 549,742 27,846 231,128 - 406 - 12,149 1,099 822,370
Cost - 31,250 96,676 56,397 - - - 5,839 - 190,162
Accumulated depreciation - 28,700 57,828 47,916 - - - 4,024 - 138,468
- 2,550 38,848 8,481 - - - 1,815 - 51,694
Depreciation for the year - 56,709 19,915 125,492 78 453 20 6,937 1,274 210,878
Closing net book value
545,338 1,053,452 371,812 1,259,271 705 4,177 182 26,552 2,947 3,264,436
Gross Carrying Value Basis at June 30, 2014
Cost 545,338 1,171,692 438,622 2,278,653 7,488 9,071 2,158 50,923 6,922 4,510,867
Accumulated depreciation - 118,240 66,810 1,019,382 6,783 4,894 1,976 24,371 3,975 1,246,431
Net Book Value
545,338 1,053,452 371,812 1,259,271 705 4,177 182 26,552 2,947 3,264,436
Rate - 10% 5% 10% 10% 10% 10% 20% 33%
2013
Leasd
Main factory Other factory Plant & Testing Office Furniture Computer
building - On building - On equipment, Vehicles Total
hold
Leasehold Leasehold Machinery Weighments Equipments & Fixtures Equipments
land Land Land Scales,

---------------------------------- Rupees in "000"------------------------------------
Net Carrying Value Basis Year ended June 30, 2013
Opening net book value 545,338 485,487 397,340 739,599 869 3,515 225 22,083 3,140 2,197,596
Additions at cost
Direct Addition - - - - - 1,150 - 5,898 1,567 8,615

Transfer from CWIP - 127,090 25,362 515,703 - - - - - 668,155
Disposals / Adjustment - 127,090 25,362 515,703 - 1,150 - 5,898 1,567 676,770
Cost - - - 87,855 - - - 882 7,681 96,418
Accumulated depreciation - - - 79,138 - - 830 7,538 87,506
- - - 8,717 - - - 52 143 8,912
Depreciation for the year - 49,608 19,973 84,469 86 441 23 4,774 1,442 160,816
Closing net book value
545,338 562,969 402,729 1,162,116 783 4,224 202 23,155 3,122 2,704,638
Gross Carrying Value Basis At June 30, 2013
Cost 545,338 653,200 507,452 2,103,922 7,488 8,665 2,158 44,613 5,823 3,878,659
Accumulated depreciation - 90,231 104,723 941,806 6,705 4,441 1,956 21,458 2,701 1,174,021
Net Book Value
545,338 562,969 402,729 1,162,116 783 4,224 202 23,155 3,122 2,704,638
Rate - 10% 5% 10% 10% 10% 10% 20% 33%
ANNUAL REPORT 2014 3 1

June June
2014 2013
Rupees in '000'
4.1.1 Depreciation charge for the period has been allocated as follows :
Cost of sales 202,194 154,136

Administrative expenses 7,899 6,009
Selling and distribution expenses 785 671
210,878 160,816
4.1.2 Details of Disposal of Property, Plant and Equipment

Particulars Cost Accumulated Book Sale Gain / Mode of Sold to
depreciation value proceeds (Loss) disposal
(Rupees in ‘000’) ..............................

Building .... .. .. ... .. ... .. .. .
Building Scrap on demolishing 127,926 * 86,528 41,398 20,403 (20,995) Negotiation Mohammad Zahid
Motor Vehicles
REG.# APC-894 641 459 182 449 267 To employee Saima Waseem
as per company
policy
REG.# AMU-574 610 482 128 427 299 -do- Khurram Junaid
REG.# AMW-159 606 479 127 424 297 -do- Rasib Hussain
REG.# ARK-713 776 509 267 574 307 -do- Asim Raza
REG.# KGS-2986 48 5 43 41 (2) Negotiation Insurance claim
REG.# ATJ-296 858 441 417 600 183 Negotiation Fazal Karim
REG.# ACW-959 494 473 21 330 309 Negotiation Syed Babar Ali
REG.# CN-1381 347 325 22 250 228 Negotiation Muhammad Jamil
REG.# KDL-4384 59 40 19 12 (7) Negotiation Asif Ahmed Khan
REG.# AKK-492 620 532 88 150 62 Negotiation Toufique Yousuf
REG.# AXP-454 742 246 496 675 179 Negotiation Insurance claim
REG.# KBM-0919 40 35 5 5 - Negotiation Zahir Ur Rehman
5,840 4,025 1,815 3,936 2,121
Plant and Machinery
Ring Spinning Frame 6,949 6,253 696 900 204 Negotiation M/s Gadoon Textile Mills Ltd
(related Party)
Ring Spinning Frame 6,949 6,265 684 900 216 Negotiation M/s Gadoon Textile Mills Ltd
(related Party)
Simplex Machine 4,053 3,764 289 1,200 911 Negotiation M/s Abdul Majeed Sons
Carding Machine 27,712 22,338 5,374 6,000 626 Negotiation M/s Fazal Awais Textile
Winding Machine 1,400 1,258 142 148 6 Negotiation Raees Ahmed
Drawing Machine 3,239 2,930 309 339 30 Negotiation Adnan Ali
Comber Machine 250 233 17 42 25 Negotiation Adnan Ali
Drawing Machine 2,369 1,728 641 1,000 359 Negotiation M/s Gadoon Textile Mills Ltd
(related Party)
Ring Frame 3,475 3,147 328 450 122 Negotiation M/s Fazal Awais Textile
56,396 47,916 8,480 10,979 2,499
Total June 2014 190,162 138,469 51,693 35,318 (16,375)
Total June 2013
88,737 79,968 8,769 11,389 2,620
* This represents cost of building situated at Plot No. LA-2/B, block 21, FB Area, Rashid
Minhas Road, Karachi, which have been demolished in view of company's decision to
commercalise the land and develop the project as disclosed in note 4.2.4.

Note June June

2014 2013
4.2 CAPITAL WORK IN PROGRESS Rupees in '000'
Civil Works 4.2.1 - 495,031
Plant and Machinery 4.2.2 - -
Construction Cost - Civil Works of the project 4.2.3 2,353,527 1,474,515
2,353,527 1,969,546
4.2.1 Civil Works
Opening Balance 495,031 413,856
Addition during the year 4.2.5 82,557 194,826

Borrowing Cost Capitalized - 38,801
Amount transferred to factory building (577,588) (152,452)
Closing Balance - 495,031
4.2.2 Plant and Machinery
Opening Balance - -
Addition during the year 4.2.6 188,356 481,219

Stores amount capitalized 42,772 34,484
Amount transferred to Plant and Machinery (231,128) (515,703)
Closing Balance - -
4.2.3 Construction Cost - Civil Works of the project
Opening Balance 1,474,515 687,003
Expenditure incurred during the year 18,131 19,014

Borrowing Cost Capitalized during the year 191,313 102,886
Mobilization advance to Lucky One (Pvt) Ltd paid during the year 665,000 665,612
Supervision fees 4.2.7 4,568 -
Closing Balance 4.2.8 2,353,527 1,474,515
4.2.4 The company had decided to shift its production facility from Plot No LA-2/B, Block 21, F.B Area, Rashid
Minhas Road, Karachi to Super Highway, Nooriabad and converted the plot from industrial to commercial
use and the company in its Annual General Meeting held on 8th October 2008 approved the construction
of mega mall and luxurious residential towers (the project) on the commercialized land in joint venture
with Lucky Textile Mills. Moreover keeping in view the large scale of the project, both in term of size and
investment, the shareholders further resolved to setup a Special Purpose Vehicle (SPV) for the purpose
of construction, development and maintenance of the project. In pursuance of the resolution Lucky One
(Private) Limited has been incorporated to carry out construction, development , maintenance of the
project and to carry out and conduct all the formalities relating thereto.
4.2.5 This represent the expenditures incurred for civil work for building production facility at Nooriabad.
4.2.6 This represent the expenditures incurred for shifting existing plant and machinery, cost of new items of
stores and machinery and cost of installation and upgradation of plant and machinery at Nooriabad.
4.2.7 This represents supervision fees charged by Lucky one (Pvt) Limited @ 0.25% of the sub-
contractors charges plus its coordination charges as per agreement.
4.2.8 This represents commercialization, development and other charges of land situated at the existing
premises and expenses for civil work incurred for the purpose of construction of the project, as under:

Note June June

2014 2013
Rupees in '000'
Payments to consultants, contractors and suppliers 259,291 241,160
Mobilization advance to Luckyone (Pvt) Ltd 1,487,687 822,687
Miscellaneous 7,459 7,459
Supervision fee to Lucky One (Pvt) Ltd 4,568 -
Borrowing cost capitalized 594,522 403,209
2,353,527 1,474,515
5 LONG TERM LOANS AND ADVANCES
Considered good - Unsecured
Loan to Employees
- Executives 5.1 12,011 14,540

- Non-executive 11,109 10,405
Current maturity 23,120 24,945
- Executives 4,232 1,620

- Non-executive 7,912 5,354
12,144 6,974
5.1 Reconciliation of outstanding amount of loans to Executives: 10,976 17,971
Balance at the beginning of the year 14,540 7,616
Disbursement during the year 1,500 11,020

Recoveries during the year (4,029) (4,096)
Balance at the end of the year 12,011 14,540
5.2 These interest free long term loans and advances represent the amounts given to executive
and non executive employees for the purpose of housing assistance, medical expenses and for
the support of children's marriage. These are recoverable in monthly installments within 3 years
following the balance sheet date.
5.3 The maximum aggregate amount due from Executives at any month end during the year was
Rs 15.07 million (2013:Rs 15.220 million).
6 STORES, SPARE PARTS AND LOOSE TOOLS

Stores 18,512 17,786
Spare parts 42,108 49,332
Loose tools 338 896
Packing material 19,886 12,996
80,844 81,010
Less : Provision for slow moving and obsolete items 6.1 4,241 2,624
76,603 78,386
6.1 Provision for slow moving and obsolete items

Opening balance 2,624 2,152
Provision during the year 1,617 472
Closing balance 4,241 2,624

Note June June

2014 2013
7 STOCK IN TRADE Rupees in '000'
Raw materials 94,260 928,951
Work in process 39,596 34,728

Finished goods 620,311 322,292
754,167 1,285,971
8 TRADE DEBTS
Considered good
Export against letters of credit 717,607 963,158

Local - unsecured 8.2 142,407 191,718
Considered doubtful 860,014 1,154,876
Local- unsecured 5,093 4,887

865,107 1,159,763
Less: Provision for doubtful trade debts 8.1 5,093 4,887
860,014 1,154,876
8.1 Provision for doubtful trade debts:
Provision during the year 206 517

8.2 It includes amount of Rs. 31.053 million (June 2013: Rs. 26.809 million) due from related
parties. Aging of these is as follows:
----------------- June-2014-------------------
Upto 1 1-6 6 - 12 More than Total
month months months one year
Lucky Textile Mills Limited 1,624 2,555 1,472 - 5,651
Lucky Knits (Pvt.) Limited 24,949 406 - 25,355
Gadoon Textile Mills Limited 47 - - - 47
26,620 2,555 1,878 - 31,053
----------------- June-2013-------------------
Upto 1 1-6 6 - 12 More than Total
month months months one year
Lucky Textile Mills Limited 17,222 3,916 5,307 2 26,447
Yunus Textile Mills - - - 362 362
17,222 3,916 5,307 364 26,809
8.3 The maximum aggregate amount due from related parties at any month end during the year
was Rs. 81.304 million (2013: Rs. 29.164 million).

Note June June

2014 2013
9 LOANS AND ADVANCES Rupees in '000'
Considered good
Current maturity of long term loans 5 12,144 6,974
Advances to
Employees against salaries 7,531 6,367
Suppliers 49,853 44,446
57,384 50,813
Considered doubtful 69,528 57,787
Advances to suppliers 2,470 -
71,998 57,787
Less: Provision against doubtful advances to suppliers 9.1 2,470 -
9.1 Provision against advances to suppliers: 69,528 57,787
Opening balance - -
Provision during the year 2,470 -
Closing balance 2,470 -
10 TRADE DEPOSITS AND SHORT TERM PREPAYMENTS
Trade deposits 391 298
Prepayments 290 -
11 OTHER RECEIVABLES 681 298
Receivables against disposal of property, plant and equipment 55 6,198
Central excise duty 5 5

12 INCOME TAX REFUNDABLE 60 6,203
Opening 47,422 4,706

Prior Years Adjustments 19,199 -
Taxes paid / deducted in advance 57,696 59,237
Provision for current year taxation 30.1 (42,252) (16,521)
13 CASH AND BANK BALANCES 82,065 47,422
Cash in hand 578 403

Balance with banks :
Local accounts
- Current Accounts 88,651 18,841
- Deposit Accounts 13.1 8 81
88,659 18,922
Foreign currency current account 73 -
88,732 18,922
89,310 19,325
13.1 These balances carry profit at the average rate of 6% to 7% (2013: 6% ).
14 AUTHORIZED CAPITAL
15,000,000 Ordinary shares of Rs 10/- each 150,000 150,000

June June
Note
2014 2013
15 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL Rupees in '000'
2014 2013
4,579,094 4,579,094 Ordinary shares of Rs 10/- each 45,791
fully paid issued for cash.
1,608,409 1,608,409 Ordinary shares of Rs 10/- each 45,791
issued as fully paid bonus shares

16,084
6,187,503 6,187,503
16,084
61,875
61,875
15.1 During the year, a group of individual shareholders has transferred their shared to Y.B. Holdings
(private) Limited, a Company established and beneficially owned by the transferors, as follows:
Name of Shareholders Shares Transferred
Muhammad Yunus Tabba 467,213
Muhammad Sohail Tabba 472,754
Imran Yunus Tabba 728,431
Jawed yunus Tabba 695,674
Muhammad Ali Tabba 710,310
Kulsum Razzak Tabba 394,537
Amina Abdul Aziz Bawani 520,057
Zulekha Razzak Tabba 152,912
Mariam Tabba Khan 139,443
Rahila Aleem 300,795
4,582,126
Consequently to above, Y.B. holdings (Private) Limited has now become the holding company of the Company.
16 RESERVES
Capital Reserve
Share premium 34,416 34,416

Revenue Reserve
General Reserve
Opening balance 1,605,584 1,485,584
Transfer from unappropriated profit 400,000 120,000
2,005,584 1,605,584
Unappropriated profit 134,437 447,073
2,174,437 2,087,073
17 LONG TERM FINANCING
Long Term Loans From Related Parties - Unsecured 17.1 425,000 675,000
Long Term Loans From Banking Companies - Secured 17.2 1,500,000 1,500,000
1,925,000 2,175,000
Less: Current portion of long term financing (291,667) -
1,633,333 2,175,000
17.1 Long Term Loans From Related Parties - Unsecured
Lucky Energy (Pvt) Ltd 425,000 250,000
Lucky Knits (Pvt) Ltd. - 425,000

425,000 675,000
37
ANNUAL REPORT 2014
17.1.1 These represent interest free loan from related parties. Loan of Lucky Knits (Private) Limited has been
adjusted during the year, where as the other loan represents power bills which have been deferred and
are repayable at the convenience of the company, however not repayable in next twelve months.
17.2 Long Term Loans From Banking Companies - Secured

Number of Commencement Installment
Installments of Repayment Amount
(Millions)
Bank Al- Habib Limited 12 quarterly Dec-14 83.33 1,000,000 1,000,000
Bank Al- Habib Limited 12 quarterly Jun-15 41.67 500,000 500,000
1,500,000 1,500,000
17.2.1These loans carry markup at the rate of average Six Month KIBOR plus 0.25% and are secured
against ranking hypothecation charge over all present and future plant and machinery and
constructive mortgage charge over commercial land bearing plot # LA-
2/B, Block 21, Federal B Area Karachi of single and combined charge of Rs. 2,000 million.
Note June June

2014 2013
Restated
Rupees in '000'
18 STAFF RETIREMENT BENEFITS
Present value of defined benefit obligation 82,083 60,460
18.1 Movement / Reconciliation of Net Liability recognized
Opening Net Liability 60,460 39,898
Charge for the year 18.2 29,182 22,117

Remeasurement loss on valuation 7,716 11,136
Benefits paid during the year (15,275) (12,691)
Closing Net Liability 82,083 60,460
18.2 Charge for the year
Current service cost 23,107 17,420
Interest cost 6,075 4,697

29,182 22,117
18.3 Charge for the year has been allocated as under:
Cost of sale 26,344 13,230

Administrartive Expenses 2,062 6,575
Distribution Cost 776 2,312
29,182 22,117
18.4 Actuarial Assumptions:
Valuation Discount Rate (p.a) 13.75% 11.50%
Salary Increase Rate (p.a) 12.75% 10.50%

18.5 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Impact on defined benefit obligation
Change in Increase in Decrease in
assumptions assumption assumption
Rupees in 000
Discount rate 1% 72,647 93,676
Salary increase rate 1% 93,676 72,495
June June
2014 2013
19 DEFERRED TAXATION Note Rupees in '000'
Opening 18,505 26,707
Charge / (reversal) to profit & loss account 59,559 (7,355)

Reversal to other comprehensive income (588) (848)
77,476 18,505
Deferred tax liabilities arising in respect of
Accelerated depreciation 87,137 60,760
Deferred tax assets arising in respect of
Provision for slow moving items and obsolescence (323) (164)

Provision for doubtful debt (388) (1,662)
Provision for Leave Encashment (1,090) (687)
Provision against advances to suppliers (188) -
Provision for Gratuity (6,253) (3,787)
Unabsorbed tax losses (1,419) (35,955)
(9,661) (42,255)
77,476 18,505
20 TRADE AND OTHER PAYABLES
Trade creditors 20.1 122,234 156,674
Accrued expenses 20.1 264,368 271,303

Advance from customers 14,376 142,591
Unclaimed dividend 2,987 2,655
Workers profit participation fund 20.2 10,640 24,121
Advances from employees under vehicle scheme 20.3 3,717 3,820
418,322 601,164
20.1 It includes aggregate amount due to related parties of Rs 36.121 million (June 2013 : Rs 191.208 million).
20.2 Workers Profit Participation Fund

Allocation for the year 10,640 24,121
Add: Interest provided during the year 1,255 378
11,895 24,499
36,016 33,089
Less : Payments during the year (25,376) (8,968)
ANNUAL REPORT 2014 3 9

20.3 This amount represents the accumulation of monthly installments adjustable after a specified
period against vehicles to be disposed under vehicle scheme.
June June
2014 2013
21 SHORT TERM BORROWINGS Rupees in '000'
Secured
Running finances under mark-up arrangements 2,379,176 520,459
Export Finance and Import bills 516,825 1,864,605
2,896,001 2,385,064
21.1 Running finances carry markup at the rates ranging between 10.15% to 12.0% (2013: 9.15% to 13.5%) payable
on quarterly basis, whereas export finances and Import bills are in foreign currency carrying markup at the rates
ranging from 1.15% to 2.0% (2013: 1.15% to 1.5%) payable on quarterly basis. As at the balance sheet date the
aggregate sanctioned limit of these short term borrowing facilities aggregated to Rs. 3,105 million (2013: 2,700
million) out of which un availed facilities amounted Rs. 209 million (2013: 315 million).
21.2 These finances are secured by first / joint / subordinated pari passu hypothecation charge over
all the present and future movables and receivables including but not limited to stocks, book
debts and other receivables of the company and by Lien on duly accepted foreign bills.
22 CONTINGENCIES AND COMMITMENTS
22.1 Contingencies:
22.1.1 The Company has made a reference in the Honorable High Court of Sindh at Karachi u/s 133(i) of the Income
Tax Ordinance, 2001 against rejection of loss of Rs 1,461,000 by the Appellate Tribunal vide M.A (Rect) No
402/KB/2005 dated January 25, 2006 for the assessment year 2002-03. The case is pending before Court for
adjudication and in view of legal advisor there is no likelihood of any unfavourable outcome.
22.1.2Deemed assessment for the tax year 2008, 2009, 2010, 2011 has subsequently been amended
against which the company's appeals at first stage were successful, however the department
preferred second appeal which are pending for the hearing. The tax advisor confirmed that the
amount involved is Rs. 15.266 million out of which 14.540 million is in respect of deletion of
WWF by the appellate commissioner. The company intends to defend appeals vigoursly.
22.1.3 The Company had filed Constitutional Writ Petitions in the Honorable Supreme Court of Pakistan against the
order of Honorable High Court of Sindh, Karachi, in respect of confirmation of levy of workers welfare fund for
the years from the tax years 2009 to 2013. The case is pending for hearing, however the management and the
legal council of the company are of the opinion that the case will be decided favorably as the company is
engaged in exports hence no provision is made in these financial statements. The aggregate amount involved is
Rs. 41.605 millions which includes amount of Rs. 14.540 Million as stated in Note 23.1.2.
22.1.4Bills discounted Rs. 168.175 million (2013: Rs. 45.997 million).
June June
22.2 Guarantees: 2014 2013
Bank guarantees for: Rupees in '000'

Lucky One (Pvt.) Limited against financing
for project approved under Sec 208. 49,918 49,918
Others 81,945 75,248
131,863 125,166
Post dated cheques issued to collector of customs 104,141 75,916
236,004 201,082
22.3 Commitments:
Outstanding letter of credits in respect of - capital expenditure 16,720 71,901
- non capital expenditure 16,965 27,080
33,685 98,981
Note June June

2014 2013
Rupees in '000'
23 SALES - Net
Export
3,520,424 3,628,878
Local 3,084,826 2,298,619
Export rebate 3,560 5,419
Research & Development Support 125 2,350
Gross sales 6,608,934 5,935,266
Less:
- Sales tax 61,165 17,381
- Export duty and surcharge 11,259 8,475
72,424 25,856
6,536,510 5,909,410
24 COST OF SALES (Restated)
Raw material consumed
Opening inventory 928,951 701,392

Purchases 3,557,112 3,996,692
Available for consumption 4,486,063 4,698,084
Closing inventory (94,260) (928,951)
Raw material consumed 4,391,803 3,769,133
Manufacturing expenses
Stores, spare parts and loose tools consumed 232,292 200,154
Salaries, wages & other benefits 407,305 369,091
Staff retirement benefits 26,344 13,786
Power and electricity 682,003 489,284
Knitting, dyeing and printing charges 286,777 199,699
Insurance 9,928 8,620
Repairs and maintenance 15,737 18,252
Labor welfare 6,427 5,120
Depreciation 202,194 154,136
Other manufacturing expenses 8,695 8,938
1,877,702 1,467,080
Work in process - opening inventory 6,269,506 5,236,213
34,728 12,206
Work in process - closing inventory (39,596) (34,728)
Cost of goods manufactured (4,868) (22,522)
6,264,638 5,213,691
Finished goods - opening inventory 322,292 197,670
Available for sales 6,586,930 5,411,361

Finished goods - closing inventory (620,311) (322,292)
5,966,619 5,089,069

Note June June

2014 2013
Restated
Rupees in '000'
25 DISTRIBUTION COSTS
Salaries and Benefits 11,998 10,297
Staff retirement benefits 776 2,329

Traveling and conveyance 4,816 3,829
Commission 58,524 79,978
Marine Insurance 1,212 1,153
Export freight 46,497 47,998
Forwarding and other distribution costs 13,293 48,634
Depreciation 785 671
137,901 194,889
26 ADMINISTRATIVE EXPENSES
Salaries and Benefits 31,872 22,855
Staff retirement benefits 2,062 6,002

Postages, telegram and telephone 3,953 3,201
Printing and stationery 4,054 5,895
Fees and subscriptions 1,044 1,181
Entertainment 3,268 3,119
Rent, rates and taxes 756 1,129
Motor car expenses 7,674 6,746
Insurance 1,417 673
Legal and professional charges 1,361 701
Auditors' remuneration 26.1 900 908
Advertisements 76 72
Donations 26.2 884 883
Other expenses 117 990
67,337 60,364
26.1 Auditors' remuneration
Audit fee 750 750
Half Yearly Review fee 100 100

Review of Code of Corporate Governance 50 50
Other certification - 8
900 908
26.2 None of the directors and their spouses had any interest in the donees fund.
27 OTHER OPERATING EXPENSES

Workers profit participation fund 10,640 24,121
Loss on disposal of property, plant and equipment 21,004 -

Provision for slow moving items 1,617 472
Provision for doubtful debts 206 517
Provision against doubtful advances to suppliers 2,470 -
Receivables / adavances written off 4,658 143
40,595 25,253

Note June June

2014 2013
Rupees in '000'
28 OTHER INCOME
Income from financial assets
- Profit on bank deposits 1,648 51

Income from non-financial assets
- Miscellaneous income - 781

- Profit on disposal of property, plant and equipment 4,629 2,620
Others 4,629 3,401
- Service charges 15,313 3,675

- Liabilities written back 3,490 -
18,803 3,675
25,080 7,127
29 FINANCE COST
Markup on short term finance 132,588 34,143
Interest on workers profit participation fund 1,255 378

Bills discounting & other bank charges and exchange differences 14,381 55,135
148,224 89,656
30 TAXATION
Provision for current year taxation 42,252 16,521
Prior years (19,199) 12,511

Deferred Taxation 19 59,559 (7,355)
82,612 21,677
30.1 The charge for the current year is as under.
Tax charge on exports 54,046 42,623
Minimum tax on local sales 11,319 -

Tax on profit from local sales - 9,949
Tax charge on Other income not falling under F.T.R - 49
Tax credit - BMR (23,113) (36,099)
42,252 16,522
31 EARNING PER SHARE (Restated)
Profit after taxation (Rs in "000") 118,302 435,629
Weighted average number of ordinary shares 6,187,503 6,187,503
Earning per share (Rs) 19.12 70.40
31.1 There is no dilutive effect on the basic earnings per shares of the Company.

Note June June

2014 2013
Rupees in '000'
32 CASH GENERATED FROM OPERATION
Profit before taxation 200,914 457,306
Adjustment for non cash charges:

Provision For Slow Moving / Obselete Items 1,617 472
Provision for Doubtful Debts 206 517
Provision against doubtful advances to suppliers 2,470
(Gain)/loss on sale of fixed assets 16,375 (2,620)
Finance cost 148,224 89,656
Provision for gratuity 29,182 22,117
Other Non Cash Item - 143
408,952 271,101
Changes in working capital - Note 32.1 587,688 (594,678)
1,197,554 133,729
32.1 Changes in working capital
(Increase)/Decrease in current assets
Stores, spare parts and loose tools 166 (14,618)

Stock in trade 531,804 (374,703)
Trade debts 294,656 (362,827)
Loans and advances (9,040) (10,322)
Trade deposits and short term prepayments (383) 38,375
Other receivable 6,143 (5,966)
Sales Tax refunds due from government (52,484) (57,705)
770,862 (787,766)
Increase/(Decrease) in current liabilities
Trade and other payables (183,174) 193,088
Net Increase/(Decrease) in working capital 587,688 (594,678)
33 CASH AND CASH EQUIVALENTS
Cash & cash equivalent comprise the following items
Cash and bank balances 89,310 19,325

Short term borrowings (2,896,001) (2,385,064)
(2,806,691) (2,365,739)
34 TRANSACTION WITH RELATED PARTIES
Related parties comprise of associated companies, directors of the Company, companies in

which directors also hold directorship, related group companies and key management
personnel. Balances outstanding with related parties have been disclosed at relevant and
appropriate notes where as the transactions with related parties during the year are as follows:

June June
2014 2013
Rupees in '000'
With Associates:
Sale of Goods and Providing of Services
- Lucky Knits (Pvt) Ltd. 404,200 354,798

- Lucky Textile Mills Ltd. 651,070 78,185
- Gadoon Textile Mills Ltd. 18,420 3,790
- Younus Textile Mills Ltd. - 2,357
- Feroze 1888 Mills 7,382 7,086
1,081,072 446,216
Purchase of Goods and Receipt of Services
- Lucky Cement Ltd. 12,415 32,665

- Lucky Textile Mills Ltd. 7,940 216
- Gadoon Textile Mills Ltd. 161,200 289,917
- Lucky Knits (Pvt) Ltd. 35,799 19,192
- Lucky Energy (Pvt) Ltd. 856,629 542,745
- ICI Pakistan Ltd. 305,624 360,201
1,379,607 1,244,936
Sale proceeds from disposal
- Gadoon Textile Mills Ltd. 2,800 600

Rent, Allied and Other Charges Received
- Lucky Energy (Pvt) Ltd. - 781

Mobilization advance
- Lucky one (Pvt) Ltd 665,000 665,612

Long Term Loan Received/adjusted
- Lucky Energy (Pvt) Ltd. 425,000 250,000

- Lucky Knits (Pvt) Ltd. - 425,000
Dividend Paid
- Directors 25,757 16,870

With other related parties:
Benefits to key management personnel
- Long term loans to executives (net) (2,529) 6,924

- Bonus and earned leaves 4,353 3,069
- Sale proceeds on sale of Car 150 -

35 REMUNERATION TO CHIEF EXECUTIVE, DIRECTORS & EXECUTIVES
June 2014 June 2013

CHIEF OTHER CHIEF OTHER
EXECUTIVE EXECUTIVES EXECUTIVE EXECUTIVES
Rupees in “000”
Remuneration 1,000 8,418 1,000 7,156
House rent 400 3,367 400 2,863

Bonus / compensated absences - 4,353 - 3,261
Utilities 100 842 100 716
1,500 16,980 1,500 13,996

Number of persons
1 8 1 9
35.1 Chief Executive and other executives are provided company maintained car and security guards.
35.2 Meeting fee and remuneration is not paid to any director.
36 CAPACITY AND ACTUAL PRODUCTION
Note June June

2014 2013
Rupees in '000'
SPINNING
Total numbers of spindles at the end of the year 62,716 59,160
Average number of spindles worked 62,546 60,100

Capacity after conversion into 20's (lbs) 50,983,863 48,990,026
Production after conversion into 20's (lbs) 49,925,411 45,801,500
KNITTING
Total number of knitting machines installed 12 12
Average number of days worked 46 152

Installed capacity (kgs) 1,485,000 1,485,000
Actual Production (kgs) 123,762 537,990
Reason for shortfall in production of knitting
The reason for shortfall in the production of knitting is due to the difference in specification of
machinery installed which resulted in the outsourcing of the orders received from customers.

37 FINANCIAL INSTRUMENTS BY CATEGORY
Financial Assets and Liabilities of the company, interest and non interest bearing, along with their
maturities are as follows:
June 2014
Markup/Interest Bearing Non Markup / Interest Bearing
Maturity Maturity Sub-total Maturity Maturity Sub-total Total
upto after upto after
one year one year one year one year
FINANCIAL ASSETS ..................................(Rupeesin“000”)..................................
Loans and receivables
Long term loans and advances - - - 12,144 10,976 23,120 23,120

Long term security deposits - - - - 1,199 1,199 1,199
Trade debts - - - 865,107 - 865,107 865,107
Loans and advances - - - 7,531 - 7,531 7,531
Trade Deposits - - - 290 - 290 290
Other receivables - - - 60 - 60 60
Cash and bank balances 8 - 8 89,302 - 89,302 89,310
8 - 8 974,434 12,175 986,609 986,617
FINANCIAL LIABILITIES
At Amortized cost
Long term financing 291,667 1,208,333 1,500,000 - 425,000 425,000 1,925,000

Staff retirement benefits - - - - 82,083 82,083 82,083
Trade and other payables 10,640 - 10,640 389,589 - 389,589 400,229
Accrued markup - - - 84,390 - 84,390 84,390
Short term borrowings 2,896,001 - 2,896,001 - - - 2,896,001
3,198,308 1,208,333 4,406,641 473,979 507,083 981,062 5,387,703
OFF BALANCE SHEET ITEMS
Bank Guarantees 81,945 49,918 131,863 - - - 131,863

Letters of credit 33,685 - 33,685 - - - 33,685
Bills Discounted - - - 168,175 - 168,175 168,175
115,630 49,918 165,548 168,175 - 168,175 333,723

June 2013
Markup/Interest Bearing Non Markup / Interest Bearing
Maturity Maturity Sub-total Maturity Maturity Sub-total Total
upto after upto after
one year one year one year one year
FINANCIAL ASSETS ..................................(Rupeesin“000”)..................................
Loans and receivables
Long term loans and advances - - - 6,974 17,971 24,945 24,945

Long term security deposits - - - - 1,259 1,259 1,259
Trade debts - - - 1,159,763 - 1,159,763 1,159,763
Loans and advances - - - 6,367 - 6,367 6,367
Trade Deposits - - - - - - -
Other receivables - - - 6,203 - 6,203 6,203
Cash and bank balances 81 - 81 19,244 - 19,244 19,325
81 - 81 1,198,551 19,230 1,217,781 1,217,862
FINANCIAL LIABILITIES
At Amortized cost
Long term financing - 1,500,000 1,500,000 - 675,000 675,000 2,175,000

Staff retirement benefits - - - - 60,460 60,460 60,460
Trade and other payables 24,121 - 24,121 430,632 - 430,632 454,753
Accrued markup - - - 51,947 - 51,947 51,947
Short term borrowings 2,385,064 - 2,385,064 - - - 2,385,064
2,409,185 1,500,000 3,909,185 482,579 735,460 1,218,039 5,127,224
OFF BALANCE SHEET ITEMS
Bank Guarantees 49,918 69,945 119,863 - - 239,726 359,589

Letters of credit 2,574 - 2,574 - - - 2,574
Bills Discounted - - - 221,992 - 221,992 221,992
52,492 69,945 122,437 221,992 - 461,718 584,155
The effective interest / markup rates for the financial assets and liabilities are mentioned in
respective notes to the financial statements. While commission chargable on off balance sheet items
is chargable as advised by the banks.
38 FINANCIAL INSTRUMENTS
FINANCIAL RISK MANAGEMENT OBJECTIVES
The Company's activities expose it to a certain financial risks:

- Credit risk
- Liquidity risk
- Market risk (including currency risk, interest rate risk and other price risk)
The Company's overall risk management programs focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the financial performance.

Risk management is carried out by the Treasury Sub Committee (the Committee) of the Executive Committee
(EXCO) of the Board of Directors (the Board) under policies approved by the board. The Board
provides formal principles for overall risk management, as well as significant policies covering
specific areas such as foreign exchange risk, interest rate risk, credit risk, and investment of excess
liquidity. All treasury related transactions are carried out within the parameters of these policies.
The information about the company's exposure to each of the above risk, the company's objectives, policies and
procedures for measuring and managing risk, and the company's management of capital, is as follows;
38.1 Credit Risk and Concentration of Credit Risk
Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations.
Exposure to Credit Risk

Company's credit risk is mainly attributable to loans and advances, balances with banks and
financial institutions, and credit exposure to customers, including trade receivables and committed
transactions. The maximum exposure of the company to credit risk is as follows:
June June
2014 2013
Rupees in '000'
Loans and advances 30,651 31,312
Long term security deposit 1,199 1,259
Trade debts 865,107 1,159,763
Other receivables 60 6,203
Bank balances 88,732 18,922
985,749 1,217,459
Loans and Advances
These loans and advances are due from employees and are usually adjustable against their
salaries and retirement benefit balances. The Company actively pursue for the recovery of the
these and the Company does not expect these employees will fail to meet their obligations.
Hence the company believes that no impairment allowance is necessary in respect of loans.
Trade Debts
Trade debts are essentially due from local and foreign customers. Export debts are secured under
irrevocable letter of credit, document acceptance, cash against documents and other acceptable
banking instruments. Advance and trade deposits are obtained in case of local debts.
The Company actively pursue for the recovery of the debts and considering the strong business
relationship and financial soundness of the customers. The Company does not expect these
parties will fail to meet their obligations except for certain doubtful trade debts.
Other Receivables
The Company believes that no impairment allowance is necessary in respect of receivables. The Company
actively pursue for the recovery and the Company does expect that the recovery will be made soon.
Bank Balances
The company maintains balances with banks that have good and stable credit rating. Given these credit
ratings, management does not expect that any counter party will fail to meet their obligations. The bank
balances along with credit ratings are stated below:

Long Term Short Term June June

Rating Rating 2014 2013
Rupees in '000'
Allied Bank Limited AA+ A1+ 84,026 7,041
Bank Al Falah Limited AA A1+ 1,467 1,424
Bank Islami Pakistan Limited A A1 268 -
Bank Al Habib Limited AA+ A1+ 74 7,130
Dubai Islamic Bank Pakistan Limited A+ A-1 47
Citi Bank Limited A2 P-1 52 18
Faysal bank Limited AA A1+ 97 97
Habib Bank Limited AAA A-1+ - -
Habib Metropolitan Bank Limited AA+ A1+ 2,397 1,903
Meezan Bank Limited AA A-1+ 251 1,255
NIB Bank Limited AA- A1+ 52 52
Standard Chartered Bank Limited AAA A1+ 1 1
88,732 18,921
Financial Assets that are either Past Due or Impaired
The credit quality of financial assets that are either past due or impaired can be assessed by
reference to historical information and external ratings or to historical information about counter
party default rates and advances. These relates to a number of independent parties for whom
there is no recent history of default. The aging analysis of the financial assets is as follows:
Financial Assets not past due 981,524 1,212,975
Financial Assets Past due but not impaired
- 06 - 12 months 1,375 1,320
- more than one year 3,718 3,567
5,093 4,887
986,617 1,217,862
The Company actively pursue for the recovery of these financial assets and considering the strong
business relationship with the counterparties since long and giving due consideration to their
financial soundness the management does not expect non-performance by these counter parties of
their obligations to the company and hence it is not exposed to any significant credit risk.
38.2 Liquidity risk
Liquidity risk represent the risk where the Company will encounter difficulty in meeting obligations
associated with financial liabilities when they fall due. Contractual maturities of financial liabilities,
including interest payments excluding the impact of netting arrangements, are shown in the Note 38.
The Company manages liquidity risk by maintaining sufficient cash and the availability of
funding through an adequate amount of committed credit facilities. The management forecasts
liquidity risks on the basis of expected cash flow considering the level of liquid assets
necessary to meet such risk. This involves monitoring balance sheet liquidity ratios against
internal and external regulatory requirements and maintaining debt financing plans.
The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company's reputation. The Company ensures that
it has sufficient cash on demand to meet expected working capital requirements.
At June 30, 2014, the Company unutilized borrowing facilities of Rs. 315 million (2013: Rs. 322
million) and Rs. 89 million (2013: Rs.19 million) being balances at banks and also has trade
debts of Rs. 874.383 Million (2013: 1,159.763 Million) realisable within three to six months.
Based on the above, management believes the liquidity risk is insignificant.

38.3 Market Risk

Market risk is the risk that the fair value or future cash flows of the financial instrument may
fluctuate as a result of changes in market interest rates or the market price due to a change in
credit rating of the issuer or the instrument, change in market sentiments, speculative activities,
supply and demand of securities, and liquidity in the market. Market risk comprises of three
types of risks: Foreign Exchange / Currency risk, interest rate risk and other price risk. The
company is exposed to currency risk and interest rate risk only.
a) Foreign exchange / Currency risk
Foreign exchange risk represents the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. Foreign exchange risk arise mainly from future
economic transactions or receivables and payables that exist due to transaction in foreign exchange.
Currently, the Company’s foreign exchange risk exposure is restricted to the amount receivable / payable
from / to the foreign entities and outstanding letters of credit. The Company is exposed to foreign currency
risk arising from foreign exchange fluctuations due to the following financial assets and liabilities:
June June
2014 2013
------USD in thousands------
Trade Debts 7,198 9,656
Short Term Borrowing (5,244) (18,693)
Net Exposure 1,954 (9,037)
Net Balance Sheet Exposure in PKR (000) 192,598 (901,447)
Rupees in '000'
Foreign currency commitments outstanding at year end are as follows:
USD 21,562 23,891
EURO 12,123 3,189
CHF - 71,901
33,685 98,981
The following significant rates applied during the year:
Rupee per USD
Average rate 102.87 98.49
Reporting date rate 98.55 99.75
Foreign exchange sensitivity analysis
A 10 percent strengthening / weakening of the PKR against the USD at June 30, 2014 would have
increased / decreased the shareholders equity and profit / loss after tax by Rs.12.904 million (2013:
58.594 million). This analysis assumes that all other variables, in particular interest rates, remain
constant. The analysis is performed on the same basis for June 30, 2013. The sensitivity analysis is
not necessarily indicative of the effects on profit for the year and liabilities of the company.
b) Interest / Markup rate risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will
fluctuate due to change in the interest / mark-up rates. The exposure to interest rate risk
mainly arises in respect of variable markup / interest bearing long term and short borrowings
from banks. The Company's net exposure to markup/interest rate risk is as follows:

June June
2014 2013
Rupees in '000'
Long term finance 1,500,000 1,500,000

Short term borrowings 2,896,001 2,385,064
Worker's profit participation fund 10,640 24,121
Bank balances (8) (81)
4,406,633 3,909,104
The Company is significantly subject to variable mark-up / interest rates risk on long and
short term financing. The company actively monitors the markup / interest rate fluctuations
and take appropriate actions to cover any adverse effect these fluctuations.
Cash flow sensitivity analysis
As at the balance sheet date, if the interest rates would have been 1% higher / lower with all
other variables held constant, post tax profit for the year and shareholders equity would have
been Rs 14.543 million (2013: 25.410 million) lower / higher, mainly as a result of higher / lower
interest expense on the net exposure.
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 would not effect
profit or loss of the Company.
c) Other price risk
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 or currency rate risk), whether
those changes are caused by factors specified to the individual financial instrument or its issuer, or factors
affecting all similar financial instruments traded in the market. The Company is not exposed to equity price
risk since there are no investment in equity securities. The Company is also not exposed to commodity
price risk since it has a diverse portfolio of commodity supplier.
39.4 Fair value of Financial Assets and liabilities
The carrying value of all financial assets and liabilities reflected in the financial statements
approximate their fair value except those which are described in policy notes.
39 CAPITAL RISK MANAGEMENT
The Company's objective when managing capital are to safeguard the Company's ability to
continue as a going concern in order to provide returns for shareholders and benefit for other
shareholders and to maintain an optimal capital structure to reduce the cost of capital.
The Company finance its operations through equity, borrowings and management of working capital with
a view to maintaining an appropriate mix between various sources of finance to minimize risk. In order to
maintain or adjust capital structure, the company may adjust the amount of dividend paid to shareholders,
return capital to shareholders or issue new shares or sell assets to reduce debt. Consistent with others in
industry , the company manages its capital risk by monitoring its debt levels and liquid assets and keeping
in view future investment requirements and expectations of shareholders.
During year the Company's strategy was to maintain gearing. The gearing ratio as at balance
sheet date is as follows:

June June
2014 2013
Rupees in '000'
Total borrowings
4,821,001 4,560,064
Cash and bank (89,310) (19,325)
Net debt / (cash) 4,731,691 4,540,739
Total equity 2,225,431 2,145,195
Total capital 6,957,122 6,685,934
Gearing ratio 68.01% 67.91%
40 SUBSEQUENT EVENT
The Board of Directors at their meeting held on September 10, 2014 have recommended cash
dividend of Rs. 5/- per share (2013: Rs 5/- per share) for the year ended June 30, 2014,
amounting to Rs. 30.938 million (2013: 30.938 million), and transfer to general reserve of Rs.
85 million (2013: 400 million) subject to the approval of members at the annual general meeting
to be held on October 31, 2014. Since it is a non-adjusting event, the financial statements for
the year ended June 30, 2014 do not include the effect of the recommendations of the board.
41 RECLASSIFICATION
For correct and better presentation, following reclassification have been made in the
comparative financial statements:
RECLASSIFICATION FROM COMPONENTS RECLASSIFICATION TO COMPONENTS

Sales Tax Refunds Due from Government Income Tax Refundable - Payments less Provision
Income Tax Refundable Income Tax Refundable 4,706
COST OF SALES, ADMIN & DISTRIBUTION COST OF SALES, ADMIN & DISTRIBUTION
EXPENSES EXPENSES
Salaries, wages & other benefits Staff retirement benefits 29,182 22,117
42 NO OF EMPLOYEES
As on balance sheet date 766 761

Average during the year 741 753
43 DATE OF AUTHORIZATION FOR ISSUE
These Financial Statements were authorized for issue by the Board of Directors on September 10, 2014.
44 GENERAL
Figures have been rounded off to the nearest thousand rupees.
Chairman Chief Executive

Karachi : September 10, 2014

Form of Proxy
The Company Secretary
FAZAL TEXTILE MILLS LTD.
LA-2/B Block # 21, Rashid Minhas Road,
Federal ‘B’ Area, Karachi - 75950.
I / We ____________________________________________________________________________________
of ___________________________________________________________________________(full address)
being a member of FAZAL TEXTILE MILLS LTD. hereby appoint _________________________________

of ___________________________________________________________________________(full address) or
failing him _____________________________________________________________________________
of ___________________________________________________________________________(full address)
another member of the Company to attend and vote for me / us and on my / our behalf at the
52nd Annual General Meeting of the Company to be held on October 31, 2014 at 02:00 Hrs and
at any adjournment thereof.
As witness my / our hand this ____________________ day of _________________________ 2014.
Witness No.1
Name
Rs.5/-
Address Revenue
Stamp
NIC No.
Signature of Member(s)
Witness No. 2
Name
(Name in Block letters)
Address Folio No
Participant ID No
NIC No. Account No. in CDS
Important:
1. A member entitled to attend a General Meeting is entitled to appoint a proxy to attend and vote instead of him / her. No person
shall act as a Proxy (except for a corporation) unless he / she is entitled to be present and vote in his / her own right.
2. Members are requested:
(a) to affix Revenue Stamp of Rs. 5/- at the place indicated above.
(b) to sign across the Revenue Stamp in the same style of signature as is registered with the Company.
(c) to write down their Folio Numbers/Participant ID Numbers/Account Numbers in CDS(as applicable) at the place
indicated above.
3. The instrument appointing a proxy, together with the Board of Directors' resolution / Power of Attorney (if any) under
which it is signed or a notarially certified copy thereof, should be deposited at the Registered Office not less than 48
hours before the time for holding the meeting.
4. CDC Account Holders are requested to strictly follow the guidelines mentioned in Circular No.1 dated January 26, 2000 of SECP.
5. CDC Account Holders or their proxies are each requested to attach an attested photocopy of their National Identity Card
or Passport to this proxy form when submitting the same to the Company.
ANNUAL REPORT
2014

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FAZAL TEXTILE MILLS LIMITED

Notice of Annual General Meeting...............................................................04

Key Financial and Operational Data............................................................08

Statement of Compliance with

Review Report to the Members....................................................................15

Profit and Loss Account.................................................................................18

Statement of Comprehensive Income.........................................................19

Cash Flow Statement....................................................................................20

Statement of Changes in Equity.................................................................. 21

Notes to the Account................................................................................22-53

Form of Proxy .......................................................................................................

52nd Annual Report 2014

ANNUAL REPORT 2014

LA-2/B Block # 21, 57 Km Mile Stone, near Lucky

02 ANNUAL REPORT 2014

its commitment, integrity, excellence, teamwork, transparency and creativity.

Fazal Textile is committed to:-

improvements by providing proper training and development programmes, upgrading

of resources, setting quality objectives by analyzing customer's feedback.

- provides good returns and security to its shareholders

- fulfill obligation towards creditors, employees and the society.

Notice of Annual General

5 To transact any other business with the permission of the Chairman

By order of the Board

Directors’ Report To The Members

Year Year Ended Percentage %

Gross Profit 569,891 820,341 (30.52)

Major Corporate Events

ANNUAL REPORT 2014 05

Code of Corporate Governance

As a part of the Compliance of the Code, we confirm the following:

b) Proper books of account of the Company have been maintained.

e) International Accounting Standards, as applicable in Pakistan, have been followed in preparation

06 ANNUAL REPORT 2014

i) Statement of pattern of shareholding has been given separately.

For and on behalf of the Board

Karachi: September 10, 2014.

ANNUAL REPORT 2014 07

Key Financial And Operational Data

Gross Sales 6,605,250 5,927,497 4,693,946 5,778,296 4,272,158 2,945,505 2,582,365

Net Sales 6,536,510 5,909,410 4,698,249 5,775,193 4,075,778 2,819,019 2,444,146

Gross Profit 569,891 820,341 394,522 698,298 839,111 220,351 139,904

08 ANNUAL REPORT 2014

132 101 to 500 44,028

Categories of Shareholders No. of Total Shares

Public Sector Companies and Corporations 7 36,911 0.60

Banks, development finance institutions, non-banking

Totals 679 6,187,503 100.00

Y.B. HOLDING (PRIVATE) LIMITED 4,582,126 74.05

10 ANNUAL REPORT 2014

S.No. Folio # Name of shareholder Number of shares Per %

1 03277-2885 MUHAMMAD YUNUS TABBA 5,000 0.08

ANNUAL REPORT 2014 11

S.No. Folio # Name of shareholder Number of shares Per %

1 05520-28 GOLDEN ARROW SELECTED STOCKS

FUND LIMITED 22,800 0.37

1 1 ADMIST. ABANDONED PROP. 600 0.01

12 ANNUAL REPORT 2014