FINANCIAL MANAGEMENT

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NCBA&E
National College of Business Administration & Economics
WCC

A Project on

FINANCE DEPARTMENT OF
PACKAGES LIMITED

Project Advisor
Prof. YASIR HASSAN
Department of Business Administration Session 2013-2017
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This write-up has been prepared and submitted to fulfill the partial
requirement for the degree of Business Administration.

Submitted by:

Student Id. Student Name Signature

BS-FA02-10 FARIA ANWAAR

BBS-FA01-O5 MOHSIN KHAN

Approved by:
Prof. YASIR HASSAN

Department of Business administration

NCBA&E JULY 27, 2015

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Undertaking:

The project title HORIZONTAL, VERTICAL & RATIO ANALYSIS

OF PACKAGES LIMITED has been done by Faria Anwaar
and Mohsin Khan as a partial fulfillment of the requirements for
the degree of business administration from National College of
Business Administration and Economics.

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Acknowledgments:

First of all, we are grateful to ALMIGHTY ALLAH for grant

of the endurance and patience required in carrying out the
Project. We are also thankful to our respected and capable
teachers for their timely advice and cooperation. We are also
grateful to our loving parents, for the prayers and
encouragement that helped us at every stage of the Project.

The assignment was carried out under the able guidance of

Prof. YASIR HASSAN, a true professional who has excellent
command over the subject. He helped us to conceive the project
to start with and later-on sorted out our numerous queries and
enabled to complete the project. We are extremely thankful to
him for his precious time and dedication.

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Dedications:

We dedicate this project to our loving parents, whose prayers are

always with us. I confer this project to all the teachers in our whole
educational career. Along with all, we bestow our project to some
special personalities, whose help led us towards the completion of this
project.

Faria Anwaar
Mohsin Khan

Declaration:

This project is the result of indigenous efforts and this will not be
presented in any other University/Institute for any other degree or
qualification.

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COMPANY PROFILE
INTRODUCTION
HISTORICAL OVERVIEW
Packages Limited is
Pakistans leading packaging Packages Limited was established in 1957 as a joint
solution provider. Our job is to
deliver high quality Packaging venture between the Ali Group of Pakistan and Akerlund
in the most efficient, profitable & Rausing of Sweden, to convert paper and paperboard
and sustainable way.
We are primarily a into packaging for consumer industry. Over the years,
business to business company
Packages has continued to enhance its facilities to meet the
and our customer base includes
some of the worlds best-known growing demand of packaging products. In 1968, with IFC
branded consumer products
companies across industries. We participation, Packages integrated upstream by
are also a leading manufacturer establishing a Pulp and Paper Mill with a capacity of
of tissue paper products.
Our leadership position 24,000 tons per year based on waste paper and agricultural
in tissue products is a result of
our ability to offer products by-products i.e. wheat straw and river grass.
manufactured under highest
standards of hygiene and quality With growing demand the capacity was increased
to meet the household and
cleanliness needs of our periodically and in
consumers. We provide a January 2003, total
complete range of tissue paper
products that are convenient, capacity was nearly
quick and easy to use.
100,000 tons per year. In 1982, Packages modified a paper
machine to produce tissue paper in response to growing
awareness and demand for hygienic and disposable tissues. The
Rose Petal brand name was launched with facial tissues and

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was later expanded to include toilet paper, kitchen roll, and

2014
In 2014, the company table napkins.
invested in a new offset
printing line in continuation of In 1986, the Company established a flexible
its efforts to remain abreast of
improved technological packaging unit to cater to the increasing demand from
development in the Packaging consumers for sophisticated packaging used primarily in the
business.
The new offset printing food industry. In 1993, a joint venture agreement was
line commented its commercial
operations during the first signed with Mitsubishi Corporation of Japan for the
quarter of 2014 and has made manufacture of Polypropylene films at the Industrial Estate
available capacity to meet
growing customer demands in in Hattar, KPK. This project, Tri-Pack Films Limited,
the folding carton business.
commenced production in June 1995 with equity
As part of its asset and
income diversification strategy, participation by Packages Limited, Mitsubishi Corporation,
the company, in May 2014
initiated development of a high and Altawfeek Company for Investment Funds, Saudi
quality retail mall at its Lahore Arabia and general public.
land through its wholly owned
subsidiary, packages
construction (private) limited. Packages Limited owns 33% of Tri-Pack Films
Limiteds
equity. In July, 1994, Coates Lorilleux Pakistan
limited (currently DIC Pakistan Limited), in which
Packages Limited has 55% ownership, commenced
production and sale of printing inks. During the
same year, the Company initiated the capacity
expansion of its Paper and Board Mill to 65,000
tons per year and conversion capacity to 56,000
tons per year. At the same time, the Company also

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upgraded the quality of Packages products and substantially

2013 improved pollution control to meet the World Bank
The Joint Venture
Agreement with Store Enso environmental guidelines.
OYJ Group, signed in 2012,
was implemented in 2013 and The said expansion was completed in 1998 at a cost of
Packages completed the
transfer of assets and related PKR 2.7 billion. In 1996, Packages entered into a joint
obligations of Paper &
Paperboard and Corrugated venture agreement with Print care (Ceylon) Limited for the
business operations to Bulleh production of flexible packaging materials in Sri Lanka. The
Shah Packaging (Private)
Limited along with cash project Packages Lanka (Private) Limited, in which Packages
equity injection. Limited has 79% ownership, commenced production in 1998.
Packages now holds
65% equity in Bulleh Shah During 1999-2000, Packages successfully completed the
Packaging (Private) Limited.
The joint venture partner, expansion of the flexible packaging line by installing a new
Store Enso OYJ Group, is rotogravure printing machine and enhancing the carton line by
actively involved in providing
technical expertise to further putting up a new Lemanic rotogravure inline printing and
enhance the Paper &
Paperboard and Corrugated cutting creasing machine.
business operations.
In addition, a new 8 color Flexor graphic printing
machine was also installed in the flexible packaging line in 2001. Packages commenced
production of corrugated boxes from its plant in Karachi in 2002. In 2005, the Company embarked
upon its Paper & Board expansion plan at a new site Bulleh Shah Paper Mills (currently Bulleh
Shah Packaging (Private) Limited), almost tripling its capacity from 100,000 tons per annum to
300,000 tons per annum. Capacity expansion at Bulleh Shah Paper Mills was completed in two
phases., In the first phase, Brown Board Machine PM-6 along-with high yield straw pulping &
OCC plants and its back processes such as 11 MW
Power House, Gas Turbine and Primary Effluent
Treatment Plant were capitalized and commercial
operations were commenced during the year 2007.
Second phase comprising of Writing and Printing
Paper Machine PM-7, De-inking Pulp Plant,
41MW Power House, Steam Turbine and
Secondary Effluent Treatment Plant was completed
in the year 2009. In 2008, the Company embarked
upon capacity expansion in its tissue division

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2012 through installation of a new tissue paper manufacturing

To enable continuous machine PM-9 with production capacity of 33,000 tons per
growth and technical development
in the Paper & Paperboard annum.
segment, the Board of Directors of
Packages Limited have signed an With this capacity expansion, the Company is now
agreement on September 17, 2012
with Store Enso OYJ Group in a position to take benefit from export potential of tissue
(Store Enso) of Finland entering
into 50/50 Joint Venture in its
products in the international market, particularly the
100% wholly owned subsidiary Middle East. During 2011, a lamination machine was
Bulleh Shah Packaging (Private)
Limited [formerly Bulleh Shah installed in the flexible department at a cost of PKR 96
Paper Mill (Private) Limited] million. This is Pakistans first high speed solvent-less
(BSPL).
This Joint Venture automatic lamination machine. It has turret winders for
Agreement would enable greater
focus on Paper & Paperboard and automatic reel and a capacity of 450 meters per minute.
Corrugated businesses which are
integrally linked and have specific The rebuild project of Paper Machine PM-6,
capital and technology
requirements. installed at Bulleh Shah Paper Mills, was completed in the
As part of its efforts to second quarter of 2011 leading to capacity expansion of
remain abreast with improved
technological developments in the 30,000 tons. The machine started commercial operations
Packaging business, the Company
with enhanced capability of producing high value added
has invested in a New Rotogravure
Machine for its Flexible Packaging liquid packaging and bleached board. Moreover, the
Business with total estimated
project cost of Rs. 326 million. Corrugator Machine in Kasur Plant was upgraded in 2011
to improve efficiency, reliability, enhance capacity and
reduce waste. This upgrade activity resulted in increased capacity of 14%. In 2012, to enable
continuous growth and technical development in the Paper & Paperboard segment, Packages
signed a 50/50 Joint Venture agreement with Store Enso OYJ
Group of Finland in its 100% wholly owned
subsidiary, Bulleh Shah Packaging (Private) Limited.

The Joint Venture included Paper & Paperboard

and Corrugated business operation at Kasur and
Karachi and involved initial equity participation by
Store Enso OYJ Group of 35% by way of subscription
of right shares with a commitment to increase the
shareholding to 50% at a later stage. In the same year,

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Packages also invested in a New Rotogravure Machine for its Flexible Packaging Business with a
total estimated project cost of PKR 326 million as part of the Companys efforts to remain abreast
of improved technological developments in the Packaging business.

PRODUCT LINE

PACKAGING DIVISION

Packages provides multi-dimensional and multi product packaging solutions to its clients
that are involved in manufacturing consumer products across industries

The Packaging Division comprises of two business units based on packaging material categories:

Folding Cartons

Flexible Packaging

FOLDING CARTONS

With over 56 years of experience in providing reliable service and quality, Folding Cartons
business provides a wide range of packaging products to tobacco, pharmaceutical, Fast Moving
Consumer Goods, personal & home care and food industries. Folding Cartons business is equipped
with state of the art machinery and a dedicated and qualified workforce that is supported by strong
backward and lateral integration. These factors contribute to provide high volumes and consistent
quality at a competitive price for our customers.

FLEXIBLE PACKAGING
To accommodate increasing demand for
sophisticated packaging, Packages established a
Flexible Packaging business unit in 1986 at its Lahore
Plant. Flexible Packaging business provides a one
stop packaging solution by providing high quality
detailed graphics in Flexographic and Rotogravure
printing. Flexible packaging business also provides
lamination for plastic films, aluminum foil, paper,
multi-layer blown film extrusion for high speed

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technology in multi-lane slitting, standalone spout inserted bags, poly-bags, zipper-bags, sleeves
and ice cream-cones.

CONSUMER PRODUCTS DIVISION

Packages started commercial production of tissue and other consumer products in 1982 at the
Lahore Plant. We currently provide a complete range of tissue and personal hygiene products that
are convenient, quick and easy to use; ranging from facial tissues to tissue rolls, table napkins,
pocket packs, kitchen rolls, wet tissues, party packs, paper plates, cups and adult diapers. We
provide consumers complete convenience with tissue and paper products for every occasion. With
its high-quality tissue and consumer products, business unit makes life more comfortable for
consumers every day.

Brands

Key brands of Consumer Products divisions are:

Rose Petal
Tulip
Double Horse
Tena

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BALANCE SHEET
PACKAGES LIMITED
BALANCE SHEET
as at December 31, 2014
Note Rupees in thousands
EQUITY AND LIABILITIES
2014 2013 2012
CAPITAL AND RESERVES
Authorized share capital
150,000,000 (2013: 150,000,000) ordinary
shares of PRs. 10 each
22,000,000 (2013: 22,000,000) 10% non-voting
preference shares / convertible stock of PRs.
1,500,000 1,500,000 1,500,000
190 each

Issued, subscribed and paid up capital

863,795 843,795 843,795
86,379,504 5
Reserves 6 44,766,414 38,054,142 31,075,416
Preference shares / convertible stock reserve 7 1,571,699 1,605,875 1,605,875
Accumulated profit 2,800,819 1,585,716 2,902,364
50,002,727 42,089,528 30,622,722
NON - CURRENT LIABILITIES
Long term finances 7 4,228,815 5,170,577 4,470,577
Liabilities against assets subject to finance
lease 8 25,685 24,182 -
Deferred taxation 9 292,841 513,563 320,089
Retirement benefits 10 - 578 306,808
Deferred liabilities 11 174,581 139,576 121,061

4,721,922 5,848,476 5,218,535

CURRENT LIABILITIES
Current portion of long-term liabilities 12 204,696 203,702 1,000,000
Finances under markup arrangements -
1,262,596 1,517,638 808,942
secured 13
Derivative financial instruments 14 - 27,272 164,559
Trade and other payables 15 3,144,680 3,052,362 1,977,498
Accrued finance costs 16 517,634 530,324 530,501
5,129,606 5,331,298 4,481,500
LIABILITIES OF DISPOSAL GROUP CLASSIFIED
- - 5,669,197
AS HELD FOR SALE 17
TOTAL LIABILITIES 59,854,255 53,269,302 45,991,954

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PACKAGES LIMITED
BALANCE SHEET
as at December 31, 2014
Rupees in thousands
ASSETS Note
2014 2013 2012
NON - CURRENT ASSETS
Property, plant and equipment 18 3,685,677 3,665,286 3,459,115
Investment property 19 90,838 25,473
137,787
Intangible assets 20 32,185 41,411
37,652
Investments 21 41,048,030 20,795,660
47,304,365
Long term loans & deposits 22 67,006 97,105
52,558
Retirement benefits 10 6,540 -
87,881
51,305,920 4,909,885 24,418,764
CURRENT ASSETS
Stores and Spares 23 568,593 461,625
492,967
Stock in trade 24 2,230,500 2,064,901 1,909,807
Trade debts 25 1,527,372 1,622,809 2,279,915
Loans, advances, deposits, prepayments and
26 1,797,214 1,691,387 412,866
other receivables
Income tax receivable 27 2,247,790 2,175,853 1,603,306
Cash & bank balances 28 235,874 362,380
252,492
8,548,335 8,359,417 7,029,899
Assets of disposal group classified as held for
17 - - 14,543,291
sale
TOTAL ASSETS 59,854,255 53,269,302 45,991,954

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PROFIT & LOSS ACCOUNT

PACKAGES LIMITED
Profit And Loss Account
For the period of December 31,2014
Note Rupees'000
2014 2013 2012
CONTINUING OPERATIONS
Local sales 17,581,898 17,245,668 13,808,154
Export sales 45,460 68,615 63,220
17,627,358 17,314,283 13,871,374
Less: Sales tax & excise duty 2,515,545 2,405,078 2,110,315
Commission 24,463 21,348 15,769
2,540,008 2,426,426 2,126,084
Net Sales 15,087,350 14,887,857 11,745,290
Cost of sales 29 12,872,825 12,892,590 10,270,143
GROSS PROFIT 2,214,525 1,995,267 1,475,147

Administrative expenses 30 787,249 587,636 321,836

Distribution and marketing costs 31 580,062 586,466 399,987
Other operating expenses 32 221,968 153,971 30,888
Other Income 33 322,147 329,377 288,492
PROFIT FROM OPERATIONS
947,393 996,571 1,010,928
Finance Cost 34 751,551 845,253 528,371
Investment income 35 2,553,678 2,043,111 1,534,453
Reversal of Impairment on
38 - - 361,161
investments
PROFIT BEFORE TAXATION 2,749,520 2,194,429 2,378,171
Taxation 36
213,216 398,617 890,089

PROFIT FOR THE YEAR FROM

2,536,304 1,795,812 1,488,082
CONTINUING OPERATIONS
Loss for the year from discontinued
37 - (249,103) (3,929,101)
operations
PROFIT FOR THE YEAR 2,536,304 1,546,709 (2,441,019)

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Vertical analysis balance sheet

Equity and liabilities
PACKAGES LIMITED
Vertical Analysis
Equity and liabilities
2014 2013 2012 Average
Issued, subscribed and paid up capital 1.44% 1.58% 1.83% 1.62%
Reserves 74.79% 71.44% 67.57% 71.27%
Preference shares / convertible stock reserve 2.63% 3.01% 3.49% 3.04%
Accumulated profit 4.68% 2.98% 6.31% 4.66%
Long term finances 7.07% 9.71% 9.72% 8.83%
Liabilities against assets subject to finance lease 0.04% 0.05% 0.00% 0.03%
Deferred taxation 0.49% 0.96% 0.70% 0.72%
Retirement benefits 0.00% 0.00% 0.67% 0.22%
Deferred liabilities 0.29% 0.26% 0.26% 0.27%
Current portion of long-term liabilities 0.34% 0.38% 2.17% 0.97%
Finances under markup arrangements - secured 2.11% 2.85% 1.76% 2.24%
Derivative financial instruments 0.00% 0.05% 0.36% 0.14%
Trade and other payables 5.25% 5.73% 4.30% 5.09%
Accrued finance costs 0.86% 1.00% 1.15% 1.00%
Liabilities of disposal group classified as held for sale 0.00% 0.00% 12.33% 4.11%
TOTAL LIABILITIES 100.00% 100.00% 100.00% 100.00%

Bar vertical analysis of balance sheet

Equity & liabilities

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00% 2014
0.00%

2013

2012

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Vertical analysis balance sheet

Assets
PACKAGES LIMITED
Vertical Analysis
ASSETS
2014 2013 2012 Average
Property, plant and equipment 6.16% 6.88% 7.52% 6.85%
Investment property 0.23% 0.17% 0.06% 0.15%
Intangible assets 0.06% 0.06% 0.09% 0.07%
Investments 79.03% 77.06% 45.22% 67.10%
Long term loans & deposits 0.09% 0.13% 0.21% 0.14%
Retirement benefits 0.15% 0.01% 0.00% 0.05%
Stores and Spares 0.82% 1.07% 1.00% 0.96%
Stock in trade 3.73% 3.88% 4.15% 3.92%
Trade debts 2.55% 3.05% 4.96% 3.52%
Loans, advances, deposits, prepayments and other receivables 3.00% 3.18% 0.90% 2.36%
Income tax receivable 3.76% 4.08% 3.49% 3.78%
Cash & bank balances 0.42% 0.44% 0.79% 0.55%
Assets of disposal group classified as held for sale 0.00% 0.00% 31.62% 10.54%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%

Bar vertical analysis of balance sheet

Assets

80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
2014
10.00%
2013
0.00%
2012

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Horizontal analysis
Equity & liabilities
PACKAGES LIMITED
Horizontal Analysis
Equity and liabilities
2014-13 2013-12
Issued, subscribed and paid up capital 2.37% 0.00%
Reserves 17.64% 22.46%
Preference shares / convertible stock reserve -2.13% 0.00%
Accumulated profit 76.63% -45.36%
Long term finances -18.21% 15.66%
Liabilities against assets subject to finance lease 6.22% -
Deferred taxation -42.98% 60.44%
Retirement benefits -100.00% -99.81%
Deferred liabilities 25.08% 15.29%
Current portion of long-term liabilities 0.49% -79.63%
Finances under markup arrangements - secured -16.81% 87.61%
Derivative financial instruments -100.00% -83.43%
Trade and other payables 3.02% 54.35%
Accrued finance costs -2.39% -0.03%
Liabilities of disposal group classified as held for sale 0.00% -100.00%
TOTAL LIABILITIES 12.36% 15.82%

Bar horizontal analysis of balance sheet

Equity & liabilities
100.00%

80.00%

60.00%

40.00%

20.00%
2014-13
0.00%
2013-12
-20.00%

-40.00%

-60.00%

-80.00%

-100.00%

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Horizontal analysis
Assets
PACKAGES LIMITED
Horizontal Analysis
ASSETS
2014-13 2013-12
Property, plant and equipment 0.56% 5.96%
Investment property 51.68% 256.61%
Intangible assets 16.99% -22.28%
Investments 15.24% 97.39%
Long term loans & deposits -21.56% -31.00%
Retirement benefits 1243.75% -
Stores and Spares -13.30% 23.17%
Stock in trade 8.02% 8.12%
Trade debts -5.88% -28.82%
Loans, advances, deposits, prepayments and other receivables 6.26% 309.67%
Income tax receivable 3.31% 35.71%
Cash & bank balances 7.05% -34.91%
Assets of disposal group classified as held for sale - -100.00%
TOTAL ASSETS 12.36% 15.82%

Bar horizontal analysis of balance sheet

Assets
1400.00%

1200.00%

1000.00%

800.00%

600.00%

400.00%

200.00%
2014-13
0.00%
2013-12
-200.00%

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Vertical analysis PROFIT & LOSS ACCOUNT

PACKAGES LIMITED
Vertical Analysis
Vertical Analysis
2014 2013 2012 Average
Local sales 116.53% 115.84% 117.56% 116.64%
Export sales 0.30% 0.46% 0.54% 0.43%
Sales tax & excise duty 16.67% 16.15% 17.97% 16.93%
Commission 0.16% 0.14% 0.13% 0.15%
Net Sales 100.00% 100.00% 100.00% 100.00%
Cost of sales 85.32% 86.60% 87.44% 86.45%
Gross profit 14.68% 13.40% 12.56% 13.55%
Administrative expenses 5.22% 3.95% 2.74% 3.97%
Distribution and marketing costs 3.84% 3.94% 3.41% 3.73%
Other operating expenses 1.47% 1.03% 0.26% 0.92%
Other Income 2.14% 2.21% 2.46% 2.27%
Profit from Operations 6.28% 6.69% 8.61% 7.19%
Finance Cost 4.98% 5.68% 4.50% 5.05%
Investment income 16.93% 13.72% 13.06% 14.57%
Reversal of Impairment on investments 0.00% 0.00% 3.07% 1.02%
Profit before taxation 18.22% 14.74% 20.25% 17.74%
Taxation 1.41% 2.68% 7.58% 3.89%
Profit for the year from continuing operations 16.81% 12.06% 12.67% 13.85%
Loss for the year from discontinued operations 0.00% -1.67% -33.45% -11.71%
Profit for the year 16.81% 10.39% -20.78% 2.14%

Bar vertical analysis

PROFIT & LOSS ACCOUNT
120.00%
100.00%
80.00%
60.00%
40.00%
20.00% 2014
0.00% 2013
Distribution and

Profit for the year from

Reversal of Impairment

Loss for the year from

Taxation
Net Sales

Gross profit
Local sales

Other Income
Commission

Cost of sales

Administrative expenses
Export sales
Sales tax & excise duty

Finance Cost
Profit from Operations

Profit before taxation

Investment income

Profit for the year

Other operating expenses

-20.00% 2012
-40.00%

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Horizontal analysis PROFIT & LOSS ACCOUNT

Horizontal Analysis
2014-13 2013-12
Local sales 1.95% 24.89%
Export sales -33.75% 8.53%
Less: Sales tax & excise duty 4.59% 13.97%
Commission 14.59% 35.38%
Net Sales 1.34% 26.76%
Cost of sales -0.15% 25.53%
Gross profit 10.99% 35.26%
Administrative expenses 33.97% 82.59%
Distribution and marketing costs -1.09% 46.62%
Other operating expenses 44.16% 398.48%
Other Income -2.20% 14.17%
Profit from Operations -4.93% -1.42%
Finance Cost -11.09% 59.97%
Investment income 24.99% 33.15%
Profit before taxation 25.30% -7.73%
Taxation -46.51% -55.22%
Profit for the year from continuing operations 41.23% 20.68%
Loss for the year from discontinued operations -100.00% -93.66%
Profit for the year 63.98% -163.36%
Bar horizontal analysis
PROFIT & LOSS ACCOUNT
400.00%

300.00%

200.00%

100.00%
2014-13

0.00% 2013-12

-100.00%

-200.00%

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RATIO ANALYSIS
Ratio Analysis Formulas 2014 2013 2012

Liquidity Ratio
Current Asset / 8,548,335 / 5,129,606 8,359,417 / 5,331,298 7,029,899 / 4,481,500
Current Ratio
Current Liability
Current Asset- 8,548,335 - 492,967 - 8,359,417-568,593- 7,029,899 - 461,625 -
Quick Ratio Inventories / 2,230,500 / 5,129,606 2,064,901 / 5,331,298 1,909,807 / 4,481,500
Current Liability

Asset Management Ratio

Sales / 17,627,358/2,230,500 17,314,283/2,064,901 13,871,374/1,909,807
Inventory Turnover
Inventory
A.R / Average 1,527,372/ 1,622,809/ 2,279,915/
Days Sales
Per Day (17,627,358/365) (17,314,283/365) (13,871,374/365)
Outstanding
Sale(Sales/365)
Fixed Asset Sales/ Fixed 17,627,358/51,305,920 17,314,283/44,909,885 13,871,374/24,418,764
Turnover Asset
Total Assets Sales / Total 17,627,358/59,854,255 17,314,283/53,269,302 13,871,374/45,991,954
Turnover Assets

Debt Ratio
Total Liabilities / 4,228,815 /59,854,255 5,170,577 /53,269,302 4,470,577 /45,991,954
Debt Ratio
Total Assets
Earnings Before
Tie(Time Interest
Interest & Tax / 947,393 / 751,551 996,571 / 845,253 1,010,928 / 528,371
Earned) Ratio Interest Tax
Total Assets/ 59,854,255/50,002,727 53,269,302/42,089,528 45,991,954/30,622,722
Equity Multiplier
Common Equity

Profitability Ratio
Net Incomes / 2,536,304/17,627,358 1,795,812/17,314,283 1,488,082 /13,871,374
Net Profit Margin
Sales
Operating Profit
EBIT / Sales 947,393 /17,627,358 996,571 /17,314,283 1,010,928 /13,871,374
Margin
Basic Earning EBIT / Total 947,393 /59,854,255 996,571 /53,269,302 1,010,928 /45,991,954
Power Assets
Sales - Cogs / 2,214,525 /17,627,358 1,995,267 /17,314,283 1,475,147 /13,871,374
Gross Profit Margin
Sales
ROA(Return On Net Incomes/ 2,536,304 /59,854,255 1,546,709/53,269,302 (2,441,019)/45,991,954
Assets) Total Assets
Roe (Return On Net Incomes / 2,536,304 /50,002,727 1,546,709/42,089,528 (2,441,019)/ 30,622,722
Equity) Common Equity

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RATIO ANALYSIS solutions

Ratio Analysis Formulas 2014 2013 2012

Liquidity Ratio
Current Asset / 1.67 1.57 1.57
Current Ratio
Current Liability
Current Asset-
Quick Ratio Inventories / 1.14 1.07 1.04
Current Liability

Asset Management Ratio

Sales / 7.9 8.38 7.26
Inventory Turnover
Inventory
A.R / Average
Days Sales
Per Day 31.62 34.21 59.99
Outstanding
Sale(Sales/365)
Fixed Asset Sales/ Fixed 0.34 0.38 0.56
Turnover Asset
Total Assets Sales / Total 0.29 0.32 0.3
Turnover Assets

Debt Ratio
Total Liabilities / 7% 10% 10%
Debt Ratio
Total Assets
Earnings Before
Tie(Time Interest
Interest & Tax / 1.26 1.18 1.91
Earned) Ratio Interest Tax
Total Assets/ 1.19 1.26 1.50
Equity Multiplier
Common Equity

Profitability Ratio
Net Incomes / 0.14 0.1 0.1
Net Profit Margin
Sales
Operating Profit
EBIT / Sales 0.05 0.05 0.07
Margin
Basic Earning EBIT / Total 0.01 0.01 0.02
Power Assets
Sales - Cogs / 12.56 11.52 10.63
Gross Profit Margin
Sales
ROA(Return On Net Incomes/ 0.04 0.02 0.05
Assets) Total Assets
Roe (Return On Net Incomes / 5.07 3.67 0.00079
Equity) Common Equity

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NOTES TO & FORMING PARTS OF THE FINANCIAL STATEMENT

NOTE 5.
Rupees in thousands
Ordinary shares of PRs. 10 each as at the beginning of the year
2014 2013 2012
fully paid in cash 336,033 336,033 336,033
fully paid for consideration other than cash 1,488 1,488 1,488
fully paid bonus shares 506,274 506,274 506,274
843,795 843,795 843,795
Issuance of shares upon conversion of preference shares / convertible stock 20,000 - -

Ordinary shares of PRs. 10 each as at the end of the year

fully paid in cash 336,033 336,033 336,033
fully paid for consideration other than cash 1,488 1,488 1,488
fully paid against conversion of preference shares / convertible stock 20,000 - -
fully paid bonus shares 506,274 506,274 506,274
863,795 843,795 843,795

NOTE 6.
Reserves
Rupees'000
Movement in and composition of reserves is as follows: 2014 2013 2012
Capital
Share premium
At the beginning of the year 2,876,893 2,876,893 2,876,893
Conversion of preference shares / convertible stock 355,938 - -
3,232,831 2,876,893 2,876,893
Fair value reserve
At the beginning of the year 23,566,916 13,288,190 9,141,841
Fair value gain during the year 5,656,334 10,278,726 4,146,349
29,223,250 23,566,916 13,288,190
32,456,081 26,443,809 16,165,083
Revenue
General reserve
At the beginning of the year 11,610,333 14,910,333 16,160,333
Transferred from / (to) profit and loss account 700,000 (3,300,000) (1,250,000)
12,310,333 11,610,333 14,910,333
44,766,414 38,054,142 31,075,416

NOTE 7.
Long-term finances Rupees in thousands
These are composed of: Local currency loan - secured 2014 2013 2012

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Term Finance Loan 300,000 900,000 1,000,000

Long Term Finance Facility 2,000,000 2,000,000 2,000,000
2,300,000 2,900,000 3,000,000
Preference shares / convertible stock - unsecured 2,128,815 2,470,577 2,470,577
4,428,815 5,370,577 5,470,577
Current portion shown under current liabilities (200,000) (200,000) (1,000,000)
4,228,815 5,170,577 4,470,577

Movement in equity component - classified under capital & reserves

Opening balance 1,605,875 1,605,875 1,605,875
Transfer from long-term finances to capital and reserves 341,762 - -
Conversion into ordinary share capital and share premium (375,938) - -
Closing balance 1,571,699 1,605,875 1,605,875

NOTE 8.
Liabilities against assets subject to finance lease Rupees'000
2014 2013 2012
Present value of minimum lease payments 30,381 27,884 -
Current maturity shown under current liabilities (4,696) (3,702) -
25,685 24,182 -

NOTE 9.
Deferred Income Tax liabilities
Rupees in thousand
2014 2013 2012
Accelerated tax depreciation 558,430 564,728 551,041
Unused tax losses (199,491) - (132,163)
Provision for accumulating compensated absences (60,881) (48,588) (63,829)
Provision for doubtful debts (13,239) (11,870) (18,508)
Preference shares / convertible stock transaction cost - liability portion 8,022 9,293 9,267
Net losses on retirement benefits - - (25,719)
292,841 513,563 320,089

NOTE 10.
Retirement benefits Rupees in thousands
Classified under non-current assets 2014 2013 2012
Pension fund 29,629 - -
Gratuity fund 58,252 6,540 -
87,881 6,540 -
Classified under non-current liabilities
Pension fund 0 578 306,808
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NOTE 11.
Deferred liabilities
Rupees in thousands
2014 2013 2012
Opening balance 139,576 183,865 161,795
Provision for the year 52,084 64,198 50,740
191,660 248,063 212,535
Payments made during the year (17,079) (20,131) (28,670)
Payments made to employees of discontinued operations - (61,724) -
(17,079) (81,855) (28,670)
Liability transferred to BSPL - (26,632) -
174,581 139,576 183,865
Settlement to be made for employees of discontinued operations - - (62,804)
Closing balance 174,581 139,576 121,061

NOTE 12.
Rupees in thousands
2014 2013 2012
200,000 200,000 1000000
4,696 3,702 0
204,696 203,702 1,000,000

NOTE 13.
Rupees in thousands
2014 2013 2012
862,596 1,017,638 225,883
- - -
400,000 500,000 583,059
1,262,596 1,517,638 808,942

NOTE 14.
Derivative financial instruments
Liability in respect of arrangements under the JV Agreement
This represents amount in respect of arrangements under the Joint Venture Agreement (the JV
Agreement) between the Company and Stora Enso OYJ Group (Stora Enso) of Finland entered into on
September 17, 2012; which provided Stora Enso the right, in case certain conditions specified in the JV
Agreement are not met, and obligates Stora Enso, in case certain conditions specified in the JV Agreement
are met, to subscribe to the share capital of Bulleh Shah Packaging (Private) Limited (BSPL). The
liability has been derecognized in the current year and included in other income as the outstanding option
lapsed during the current year.

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NOTE 15.
Trade and other payables Rupees'000
2014 2013 2012
Trade Creditors 1,118,642 815,961 863,366
Accrued liabilities 379,448 466,657 668,542
Bills payable 1,245,493 1,433,633 171,271
Retention money payable - - 59,250
Sales tax payable 2,467 13,839 80,061
Advance from Customers 54,691 88,971 49,623
Payable to employees retirement benefit funds 13,237 11,817 15,480
Deposits - interest free repayable on demand 7,226 8,523 11,136
TFCs payable 1,387 1,387 1,387
Unclaimed dividends 17,290 13,938 12,448
Workers profit participation fund 147,665 106,636 -
Workers welfare fund 96,635 40,522 -
Others 60,499 50,478 44,934
3,144,680 3,052,362 1,977,498

NOTE 16.
Accrued finance cost
Rupees in thousands
2014 2013 2012
Accrued mark-up / return on:
Long-term local currency loans - secured 148,704 98,751 49438
Preference shares / convertible stock - unsecured 355,047 412,050 412050
Finances under markup arrangements - secured 13,883 19,523 69013
517,634 530,324 530,501

NOTE 17.
Liabilities directly associated with assets classified as held for sale
Rupees in thousands
2014 2013 2012
Deferred income tax liabilities - - 551,513
Short-term finances - secured - - 5,100,000
Other payables - - 17,684
- - 5,669,197
Assets classified as held for sale Rupees in thousands
2014 2013 2012
Operating assets - - 10,249,450
Capital work-in-progress - - 162,365
Intangible assets - - 10,021
Stores and spares - - 695,153
Stock-in-trade - - 3,426,302
Total assets of the disposal group - - 14,543,291

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NOTE 18.
Property, plant and equipment
Rupees in thousands
2014 2013 2012
Owned assets 3,400,833 3,270,563 3,068,122
Assets subject to finance lease 30830 28349 0
Capital work-in-progress 254014 366374 390993
3,685,677 3,665,286 3,459,115

NOTE 19.
2014
Accumulated Accumulated
Depreciation charge Book value as at
Depreciation as at Transfer in / out Depreciation as at
for the year December 31, 2014
December 31, 2013 December 31, 2014
- - - - 117,917
30,259 2,696 - 32,955 8,196
11,140 927 - 12,067 11,674
41,399 3,623 - 45,022 137,787
2013
Accumulated Accumulated
Depreciation Book value as at
Depreciation as at Transfer in / out Depreciation as at
charge for the year December 31, 2013
December 31, 2012 December 31, 2013
- - - - 67,345
4,404 1,873 23,982 30,259 10,892
13,885 969 (3,714) 11,140 12,601
18,289 2,842 20,268 41,399 90,838
2012
Accumulated Accumulated
Depreciation Book value as at
Depreciation as at Transfer in / out Depreciation as at
charge for the year December 31, 2012
December 31, 2011 December 31, 2012
- - - - 8,594
3,984 420 - 4,404 1,892
19,771 1,209 (7,095) 13,885 14,987
23,755 1,629 (7,095) 18,289 25,473

NOTE 20.
Intangible Assets
Rupees in thousands
2014 2013 2012
This represents computer software and ERP system.

As at January 1 169,335 176,651 165,620

Additions 20,814 2,108 11,668

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Deletions (879) (9,424) (637)

As at December 31 189,270 169,335 176,651
Accumulated amortization
As at January 1 (137,150) (135,240) (126,732)
Amortization for the year (15,347) (11,335) (9,145)
Deletions 879 9,425 637
As at December 31 (151,618) (137,150) (135,240)
37,652 32,185 41,411

NOTE 21.
Investments
Rupees in thousands
2014 2013 2012
These represent the long-term investments in:
Related parties 14,081,183 13,481,183 3,507,540
Others 33,223,182 27,566,847 17,288,120
47,304,365 41,048,030 20,795,660

NOTE 22.
Long-term loans and deposits
Rupees in thousands
2014 2013 2012
Considered good
Loans to employees 4,350 4,634 5,269
Loan to SNGPL 49,200 65,600 82,000
Security deposits 16,782 14,433 27,454
70,332 84,667 114,723
Receivable within one year
Loans to employees (1,374) (1,261) 1,218
Loan to SNGPL (16,400) (16,400) 16,400
(17,774) (17,661) 17,618
52,558 67,006 97,105

NOTE 23.
Stores and Spares
Rupees in thousands
2014 2013 2012
Stores 270,611 337,526 261,120
Spares 222,356 231,067 200,505
492,967 568,593 461,625

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NOTE 24.
Stock-in-trade
2014 2013 2012
Raw material 1,340,227 1,316,332 970,058
Work-in-process 211,698 222,373 243,018
Finished goods 678,575 526,196 696,731
2,230,500 2,064,901 1,909,807

NOTE 25.
Trade debts
Rupees in thousands
2014 2013 2012
Considered good:
Related parties - unsecured 11,965 68,964 16,311
Others 1,515,407 1,553,845 2,263,604
1,527,372 1,622,809 2,279,915
Considered doubtful 37,964 36,922 54,550
1,565,336 1,659,731 2,334,465
Provision for doubtful debts (37,964) (36,922) (54,550)
1,527,372 1,622,809 2,279,915

NOTE 26.
Loans, advances, deposits, prepayments and other receivables
Rupees in thousands
2014 2013 2012
Current portion of loans to employees 1,374 1,261 1,218
Current portion of loan receivable from SNGPL 16,400 16,400 16,400
Advances - considered good
To employees 8,388 10,615 22,514
To suppliers 53,881 41,702 40,729
62,269 52,317 63,243
Due from related parties - unsecured 1,583,634 1,466,388 14,700
Trade deposits 45,946 85,018 108,633
Prepayments 11,357 19,422 22,134
Balances with statutory authorities
Customs duty 21,966 5,103 6,937
Sales tax recoverable 26,409 17,791 13,970
48,375 22,894 20,907
Mark-up receivable on
Loan to SNGPL 46 54 64
Term deposits and saving accounts 85 85 348
131 139 412

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Insurance claim receivable in respect of assets written off due to

fire from IGI Insurance Limited - an associate - - 89,412
Other receivables 27,728 27,548 75,807
1,797,214 1,691,387 412,866

NOTE 27.
Income Tax Receivable
Rupees in thousands
2014 2013 2012
Income tax refundable 2,211,777 2,139,840 1,567,293
Income tax recoverable 36,013 36,013 36,013
2,247,790 2,175,853 1,603,306

NOTE 28.
Cash and bank balances
Rupees in thousands
2014 2013 2012
At banks:
On saving account 13,481 56,315 259,947
On current accounts 232,428 174,130 96,628
245,909 230,445 356,575
In hand 6,583 5,429 5,805
252,492 235,874 362,380

NOTE 29.
Cost of Sales
Rupees in thousands
2014 2013 2012
Material Consumed 9,130,892 9,131,266 7,406,733
Salaries, wages and amenities 961,884 874,407 755,895
Travelling 26,620 23,305 12,278
Fuel and power 1,080,433 899,376 920,546
Production supplies 368,763 305,690 232,923
Excise duty and sales tax 3,359 3,843 754
Rent, rate and taxes 139,367 264,795 313,037
Insurance 42,133 36,916 26,714
Repairs and maintenance 325,962 303,071 306,975
Packing expenses 263,983 194,760 42,044
Depreciation on owned assets 485,716 405,011 327,956
Depreciation on assets subject to finance lease 1,039 548 -
Amortization of intangible assets 7,329 2,599 194
Technical fee and royalty 20,073 10,394 7,440

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Other expenses 156,975 131,449 110,193

13,014,528 12,587,430 10,463,682
Opening work-in-process 222,374 245,126 250,247
Closing work-in-process (211,698) (222,374) (245,126)
Cost of goods produced 13,025,204 12,610,182 10,468,803
Opening stock of finished goods 526,196 808,604 609,944
13,551,400 13,418,786 11,078,747
Closing stock of finished goods (678,575) (526,196) (808,604)
12,872,825 12,892,590 10,270,143

NOTE 30.
Administrative expenses
Rupees in thousands
2014 2013 2012
Salaries, wages and amenities 381,549 327,287 155,368
Travelling 43,686 23,108 15,438
Rent, rate and taxes 66,554 21,206 9,917
Insurance 12,540 9,459 4,970
Printing, stationery and periodicals 17,195 17,437 12,578
Postage, telephone and telex 12,989 14,225 9,603
Motor vehicles running 15,530 17,350 12,438
Computer charges 21,293 17,615 9,237
Professional services 98,076 26,590 28,663
Repairs and maintenance 16,920 14,201 7,837
Depreciation on owned assets 20,767 18,857 10,858
Depreciation on assets subject to finance lease 2,548 - -
Amortization of intangible assets 8,018 8,736 4,789
Depreciation on investment property 3,623 2,842 1,629
Other expenses 65,961 68,723 38,511
787,249 587,636 321,836

NOTE 31.
Distribution and marketing costs
Rupees in thousands
2014 2013 2012
Salaries, wages and amenities 146,333 161,095 106,389
Travelling 27,027 22,202 18,721
Rent, rate and taxes 7,670 6,660 8,374
Freight and distribution 141,234 150,439 109,786
Insurance 23,678 16,646 4,981
Advertising 177,613 174,119 96,870
Depreciation on owned assets 6,413 6,967 5,757
Depreciation on assets subject to finance lease 65 - -
Provision for doubtful debts 2,784 - 12,281

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Other expenses 47,245 48,338 36,828

580,062 586,466 399,987
NOTE 32.
Other operating expenses
Rupees in thousands
2014 2013 2012
Workers profit participation fund 147,665 104,621 -
Workers welfare fund 56,113 39,756 -
Exchange loss - net - 8,842 30,128
Donations 18,190 752 760
221,968 153,971 30,888

NOTE 33.
Other Income
Rupees'000
2014 2013 2012
Income from financial assets
Income on bank deposits 3,315 20,200 9,912
Interest on loan to SNGPL 976 1,220 1,463
4,291 21,420 11,375
Income from non-financial assets
Rental income from investment property 65,310 56,861 -
Profit on disposal of property, plant and equipment 79,285 11,505 29,722
Scrap sales 32,426 80 -
177,021 68,446 29,722
Others
Management and technical fee from related parties 19,673 21,054 35,919
Insurance commission from related party 2,660 6,175 1,873
Provisions and unclaimed balances written back 40,828 40,853 35,092
Exchange gain - net 16,224 - 150,084
Gain on re-measurement of financial instrument 27,272 137,287 90
Net gain on insurance claim of assets written off due to fire - 9,478 22,429
Others 34,178 24,664 1,908
140,835 239,511 247,395

322,147 329,377 288,492

NOTE 34.
Finance Costs
Rupees in thousands

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2014 2013 2012

Interest and markup including commitment charges on
Long-term finances - secured 302,270 278,761 -
Finances under markup arrangements - secured 87,646 143,954 103,917
Liabilities against assets subject to finance lease 2,193 132 -
Return on preference shares / convertible stock 355,050 412,050 412,050
Loan handling charges 1,232 6,464 10,732
Bank Charges 3,160 3,892 1,672
751,551 845,253 528,371

NOTE 35.
Investment income
Rupees in thousands
2014 2013 2012
Dividend income from related parties 109,244 153,201 310470
Dividend income from others 2,444,434 1,889,910 1223970
Gain on sale of short-term investments - - 13
2,553,678 2,043,111 1,534,453

NOTE 36.

Taxation
Rupees in thousands
2014 2013 2012
Current
Current year 356,000 115,611 68,000
Prior year 106,925 (112,668) (16,190)
462,925 2,943 51,810
Deferred (249,709) 395,674 838,279
213,216 398,617 890,089

NOTE 37.
PROFIT AND LOSS ACCOUNT - DISCONTINUED OPERATIONS
Paperboard & Corrugated
Paper & Paperboard
Business Operations At Kasur Total
Operations At Lahore
& Karachi
14 13 12 14 13 12 14 13 12
Local sales - 2,942,776 10,039,377 - - 42,002 - 2,942,776 10,081,379
Export sales - 7,213 27,642 - - - - 7,213 27,642
- 2,949,989 10,067,019 - - 42,002 - 2,949,989 10,109,021
Less: Sales tax & excise - 381,372 1,357,088 - - 3,523 - 381,372 1,360,611

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Commission - - 34 - - - - - 34
- 2,568,617 8,709,897 - - 38,479 - 2,568,617 8,748,376
continuing operations - - - - -
sales 448,623 1,954,155 448,623 1,954,155
- 3,017,240 10,664,052 - - 38,479 - 3,017,240 10,702,531
Cost of sales - (2,839,762) (10,043,601) - (8,664) (294,164) - (2,848,426) (10,337,765)
Gross profit / (loss) - 177,478 620,451 - (8,664) (255,685) - 168,814 364,766
Administrative expenses - (112,929) (321,442) - (440) (40,879) - (113,369) (362,321)
Distribution & marketing - (62,146) (179,094) - (222) (16,718) - (62,368) (195,812)
Other O.E. - (5,065) (38,472) - (2,781) (15,942) - (7,846) (54,414)
Other Income - 1,151 36,729 - 49,636 7,963 - 50,787 44,692
Profit from Operations - (1,511) 118,172 - 37,529 (321,261) - 36,018 (203,089)
Finance Cost - (244,876) (974,093) (3,411) (244,876) (977,504)
(Loss) / profit before tax
from discontinued - - -
(246,387) (855,921) 37,529 (324,672) (208,858) (1,180,593)
operations
Taxation - (26,000) 139,811 (14,245) 113,828 - (40,245) 253,639
(Loss)/profit for the
year discontinued - - -
(272,387) (716,110) 23,284 (210,844) (249,103) (926,954)
operations
Loss before tax
recognized on the re-
- - - - - - - (4,618,688)
measurement of assets (4,618,688)
of disposal group
Taxation 1,616,541 1,616,541
Loss after tax
recognized on the re-
- - - - - - -
measurement of assets (3,002,147) (3,002,147)
of disposal group
(Loss) / profit for the
year from Discontinued - - (210,844) - (249,103) (3,929,101)
(272,387) (3,718,257) 23,284
operations

NOTE 38.
Reversal of Impairment on investments
Rupees in thousands
2014 2013 2012
Associates - quoted
IGI Insurance Limited - - 354,890
IGI Investment Bank Limited - - 6,271
- - 361,161

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