AL-QAIM TEXTILE MILLS LIMITED

ANNUAL REPORT 2004

FUTURE OUT LOOK

After a long period of depression and losses, the company has a year of relief. The management has
decided to invest in the future in order to cut down its expenses so that the company may also enjoy the
same position in the future. Addition and modernization will result in the decrease of costs Further
regular repayment of loans to all banks especially to Habib Bank Ltd. will result in future reduction in the
financial charges and thus helps us to achieve even better results in future. Future out look of raw cotton
is also very charming and therefore management has decided to produce cotton yarn instead of PC yarn.

CORPORATE AND FINANCIAL REPORTING

In compliance with the provisions of the Code, the Board Members are pleased to place the following
statements on record:

• The financial statements for the year ended September 30, 2004 present fairly its state of affairs,
the results of its operations, cash flows and changes in equity;

• Proper books of account of the company have been maintained;

• Appropriate accounting policies have been consistently applied in preparation of financial

statements and accounting estimates are based on reasonable and prudent judgment;

• International Accounting Standards as applicable in Pakistan have been followed in preparation

of financial statements and departure, if any, has been adequately disclosed;

• The system of internal control is sound in design. The process of monitoring will continue and
control strengthened where ever considered necessary;

• There has been no material departure from the best practices of corporate governance as
detailed in listing regulations;

• The key financial data of last six years is annexed;

• There have been six Board meetings during the year and the attendance of each Director is
stated below:

NAME OF DIRECTORS NO OF BOARD MEETING ATTENDED

Haji Ashiq Hussain - Chairman 1
Muhammad Ali Awan- Chief Executive 6
Haji Ghulam Hussain 6
Naeem Mustafa 6
Haji Shaukat Mehmood Awan 6
Hassan Ali Awan 4
Mst. Anayat Begum 4
Mst. Naseem Begum 4
Mst. Bhag Bhari 3
DIRECTORS' REPORT

The Directors take pleasure in presenting to you the Eighteenths Annual Report of the Company together
with the Audited Accounts for the year ended September 30, 2004.

OPERATING AND FINANCIAL RESULTS

The current year ending on September 30, 2004 witnessed marked improvement in your company's
performance in comparison with the previous years. The significant improvement in operating results of
the company was mainly due to higher capacity utilization, improved performance of the P.C yarn and
reduction in financial charges.

FINANCIAL OBLIGATIONS

The management of your company was successful in restructuring the financial liabilities of Habib Bank
Limited which were renegotiated on favorable terms thereby reducing the financial cost from Rs. 6.812
million in the year 2003 to Rs. 5.306 million in the year 2004. We are confident to further bring down
financial cost in the next financial year.

MANAGEMENT'S COMMITTMENT

The Directors of your company have surrendered their loans as subordinated loan till the company earns
profit and accumulated losses are wiped off. The above loan is interest free and the Directors of your
company will not demand this amount till that time and are repayable at the convenience of the company.

KEY FINANCIAL DATA FOR LAST SIX YEARS

Rupees in '000
2004 2003 2002 2001
Net Sales (Rs.) 306,120 230,981 214,715 249,339
Profitability (Rs.)
Gross Profit 17.433 -9,935 11,248 22,273
ProfiV(Loss) before taxation 2.601 -6,208 -5,318 4,149
Income tax -1,533 1,355 -1,074 -1,247
Profit/(Loss) after taxation 1,068 -4,853 -6,392 2,902
Financial Position (Rs.)
Tangible fixed assets-net 493,274 230,882 241,487 252,565
Other Assets - 320 580 840
493,274 231,202 242,067 253,405
Current assets 20,094 19,895 21,682 15,598
Current Liabilities 35,741 56,004 80,015 69,123
Net Working Capital -15,647 -36,109 -58,333 -53,525
Capital Employed 74,530 74,530 74,530 74,530
Less:Long term loans & other Liabiliti 117,309 202,073 134,564 140,592
Shareholders Equity
Represented by:
Share capital 74,530 74,530 74,530 74,530
Surplus on revaluation of fixed assets 418,896 103,523 250,061 250,061
Reserve on redemption of loan - - - - -
Accumulated Profit/(Loss) -101,106 -109,399 -275,421 -269,029
 392,320 68,654 49,170 55,562
Ratios:
Gross Profit to Sales (%age) 5.69 -4.3 5.24 8.93
Net Profit/(Loss) to sales (%age) 0.35 -2.1 -2.98 1.16
Debt : Equity Ratio 30 294 274 2.53
Current Ratio 56 0.36 27 23
Quantitative Data
Yarn (Kgs)
Production (Count. Into 20/s) 4,247 4,197 4,706 4,703

STATEMENT OF COMPLIANCE
WITH THE CODE OF CORPORATE GOVERNANCE
FOR THE YEAR ENDED SEPTEMBER 30, 2004

This statement is being presented to comply with the Code of Corporate Governance as
contained in the Listing regulations of Karachi & Lahore Stock Exchanges for the purpose of
establishing a framework of good governance, whereby a listed company is managed in
compliance with the best practices of corporate governance.

The Company has applied the principles contained in the Code in the following manner:

1. The Company encourages representation of independent non-executive directors

and directors representing minority interests on its Board of Directors.

2. The directors have confirmed that none of them is serving as director in more than
ten 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 DPI or an NBFI
or, being a member of a stock exchange, has been declared as a defaulter by that
stock exchange.

4. The Company has prepared a 'Statement of Ethics and Business Practices' which
has been signed by all the directors and employees of the Company.

5. The Board has developed a 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.

6. All the powers of the Board had been duly exercised and decisions on material
transactions, including appointment and determination of remuneration and terms
and conditions of employment of the CEO and other executive directors, have been
taken by the Board.

7. 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.

8. The Board arranged an orientation course for its directors during the year to apprise
them of their duties and responsibilities.

9. The Board has approved appointment of CFO, Company Secretary and Head of
Internal Audit, including their remuneration and terms and conditions of employment,
as determined by the CEO.

10. The Directors Report for this year has been prepared in compliance with the
requirements of the Code and fully describes the silent matters required to be
disclosed.

AUDITOR'S REPORT TO THE MEMBERS

We have audited the annexed balance sheet of AL-QAIM TEXTILE MILLS LIMITED as at September 30,
2004 and the related profit and loss account, 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 a test
basis, evidence supporting the amounts and disclosures in the above said statements. An audit also
includes assessing, the accounting policies and significant estimates made by management, as well as,
evaluating the overall presentation of the above said statements We believe that our audit provides a
reasonable basis for our opinion and, after due verification, we report that:

The previous audit of the Company has been conducted by another auditors namely M/s S. Zafar Shah
Naveed Imran & Co. Chartered Accountants Islamabad, who have issued qualified report on the accounts
for the year ended September 30, 2003 regarding the following matters;

1. The provision for gratuity has not been based on actuarial valuation to determine the present
value of gratuity obligation in accordance with International Accounting Standare-19

2. Non-confirmation of written back liabilities amounting to Rs. 17.903 million.

In addition to above points, we report that;

3. Deferred taxation in respect of surplus on revaluation of fixed assets has not been accounted
for in the books of accounts in contrary to the requirements of IAS-12.

4. The Company during the year has transferred creditors balances amounting to Rs 25 292
million to deferred liabilities as the creditors have deferred the repayments from company as
a result of negotiations. However, no direct confirmation from creditors in this regard has
been received.

a) In our opinion, proper books of accounts have been kept by the Company as required by the

Companies Ordinance, 1984

REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH

THE BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

We have reviewed the Statement of Compliance with the best practices contained in the Code of
Corporate Governance prepared by the Board of Directors of AL-QAIM TEXTILE MILLS LIMITED to
comply with the Listing Regulation No 37 of the Karachi Stock Exchange (Guarantee) Limited and
Chapter XIII of Listing Regulation of Lahore Stock Exchange (Guarantee) Limited 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.

Based on our review, except for our reservations detailed in our report on the Company's financial
statements for the year ended 30 September, 2004 nothing has come to our attention which causes us to
believe that the statement of compliance does not appropriately reflect the status of the Company's
compliance, in all material respect, with the best practices contained in the Code of Corporate
Governance as applicable to the Company for the year ended 30 September, 2004.

BALANCE SHEET

Note 2004 2003

(Rupees) (Rupees)
CAPITAL AND LIABILITIES
Share Capital and Reserves
Share Capital 3 74,530,000 74,530,000
Accumulated loss -175,636,053 -183,928,740
-101,106,053 -109,398,740
SURPLUS ON REVALUATION OF FIXED ASSETS 4 418,895,874 103,522,652
SUBORDINATED LOAD 5 42,529,096 47,120,634
LONG TERM LOANS AND DEFERRED LIABILITIES
Long term loans - banks 6 80,693,988 95,408,311
Deferred tax - 47,683,433
Deferred liabilities 7 36,615,252 36,772,235
117,309,240 179,863,979
CURRENT LIABILITIES
Current portion of long term liabilities 8 15,817,793 11,611,773
Creditors, accrued and other liabilities 9 15,181,631 14,152,693
Provision for taxation 4,066,828 3,550,361
Unclaimed Dividend 674,364 674,364
35,740,616 29,989,191
CONTINGENCIES AND COMMITMENTS 10- -
513,368,773 251,097,716

Note 2004 2003

(Rupees) (Rupees)

PROPERTY AND ASSETS

OPERATING FIXED ASSETS 11 493,274,334 230,882,924
DEFERRED COST 320,000
CURRENT ASSETS
Stores and spares 12 3,991,650 3,323,893
Stock in trade 13 5,561,790 8,522,629
Trade debts 14 4,494,977 3,573,018
Advances, deposits, prepayments 15 2,754,138 4,327,258
Cash and bank balances 16 3,291,884 147,994
20,094,439 19,894,792
513,368,773 251,097,716

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED SEPTEMBER 30, 2004

Share Capital Profit/(Loss) Total

Rupees Rupees Rupees
Balance as at September 30, 2002 74,530,000 -275,420,950 -200,890,950
Net Profit/(Loss) for the Period -4,853,038 -4,853,038
Transfer of incremental depreciation 96,345,248 96,345,248
Balance as at September 30, 2003 74,530,000 -183,928,740 -109,398,740
Net Profit/(Loss) for the Period 1,067,925 1,067,925
Transfer of incremental depreciation 7,224,762 7,224,762
Balance as at September 30, 2004 74,530,000 -175,636,053 -101,106,053

CASH FLOW STATEMENT

FOR THE YEAR ENDED SEPTEMBER 30, 2004

2004 2003
Rupees Rupees
CASH FLOW FROM OPERATING ACTIVITIES
Net profit/floss) before taxation 2,601,316 -6,207,786
Adjustment for non cash charges
Depreciation 11,139,336 11,831,857
Deferred cost written off 320,000 260,000
Loss on Sale of Fixed Assets 1,750,637-
15,811,2895.884,071
Income tax paid -1,016,924 -3,123,081
Cash flow from operating activities
before working capital changes 14,794,365 2,760,990
Changes in working capital
(Increase)/Decrease in current assets
Stores and spares -667,757 -962.109
Stock in trade 2,960,8397.166,449
Trade debts -921,959 -3.541776
Advances, deposits, prepayment
and other receivables 1,573,120 -1,528,839
2,944,241 1,133,725
lncrease/(Decrease) in current liabilities
Short term borrowings from directors . 276,000
Short term borrowings - others - -12,142,500
Creditors, accrued and other liabilities 1,028,951 2,718,382
1,028,951 -9,148,118
Net cash generated from operations 18,767,557 -5,253,403
CASH FLOW FROM INVESTING ACTIVITIES
Fixed Capital expenditure -966,843 -1,227,920
Sale proceeds of fixed assets sold 600,000-
Net cash used in investing activities -366,843 -1,227,920
CASH FLOW FROM FINANCING ACTIVITIES
Subordinated Loan -4,591,538-
Long term loans - Banks -10,508,303 10,004.64
Long term loans - Others - 11,204,953
Directors Loan - -621,000
Deferred liabilities -156,983 -14,780,071
Dividend Paid - -4,200
Net cash used in financing activities -15,256,824 5,804,317
Net lncrease/(0ecrease) in cash and cash
equivalent 3,143,890 -677,006
Cash and cash equivalent at the beginning
of the year 147,994 825,000
Cash and cash equivalent at the end
of the year 3.291884 147,994

Foreign Currency Translations

Transactions in foreign currency are translated in Pak Rupees at the rate of exchange ruling at
the date of transaction. Monetary assets and liabilities in foreign currencies are translated in Pak
Rupees at the rate of exchange ruling on the balance sheet date. The resultant gain or loss on
translation of monetary foreign currency liabilities are capitalized against the cost of respective
tangible operating assets acquired from the proceeds of such liabilities. All other exchange gains
or losses are included in income currently.

Taxation

Current

Charge for the current taxation is based on taxable income at the current rate of taxation after
considering the tax credits and rebates or minimum tax liability under section 113 of Income Tax
Ordinance, 2001, whichever is applicable

Deferred

The company accounts for deferred taxation, if any, by using the liability method on all timing
differences between the carrying amounts of assets and liabilities in the financial statements and
their tax base. The company recognizes deferred tax assets on all deductible temporary
differences to the extent it is probable that taxable profits will be available in the foreseeable
future against which these deductible temporary differences can be utilized. Deferred Tax is
calculated at the tax rates that are expected to apply to the period when the asset is realized or
the liability is settled.

Store and Spares

These are valued at moving average cost basis.

Stock in Trade

a) Valuation basis are as follows:-

Raw Material at lower of annual average cost or NRV

Work-in-Process at the average manufacturing cost including a proportion

of related overheads.
Finished Goods at lower of average manufacturing cost including a

proportion of related overheads or NRV

Waste at NRV

Net realizable value

b) It is determined on the basis of selling prices prevailing at the balance sheet date less
estimated cost of completion and selling expenses incidental to sales.

Trade Debtors & Receivables

Bad debts considered irrecoverable, are written off and provision is made for debts and
receivables considered doubtful, based on review of outstanding amount at the end of the year.

Financial Instruments

Financial instruments carried on the balance sheet including Trade Debtors, Advances &
Receivables, Cash & Bank Balances and Creditors, Accrued and Other Liabilities. The particular
recognition method adopted is disclosed in the individuals policy statements associated with each
item.

NOTES TO THE ACCOUNTS

For The Year Ended September 30, 2004

COMPANY AND ITS OPERATIONS

The Company was incorporated in September 09, 1986 as a public limited company in Pakistan
under the Companies Ordinance, 1984 and is quoted on Karachi and Lahore Stock Exchanges.
The Company is engaged in the business of Textile Spinning.

The Company has earned a net profit of Rs. 1.068 million during the year ended September 30,
2004. It has accumulated loss of Rs. 175.636 million and its current liabilities exceed its current
assets by Rs. 14.646 million as at September 30, 2004.

As stated in note 10 the company has unpaid income tax liability of Rs. 3.884 million. As at
Balance Sheet date, relating to the Assessment Years ended 1997-98 to 2001-02

Continuation of the Company as a going concern is dependent upon its ability to:

attain satisfactory levels of profitability in future

obtain support from the direction through injection of funds for working capital

requirements.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

These accounts have been prepared in compliance with Companies Ordinance,

1984 and the International Accounting Standards as applicable in Pakistan.

Accounting Convention

These accounts have been prepared under the historical cost convention except
as referred to a note 2.4 which are stated at revalued amounts.

Staff Retirement Benefits

The Company operates an unfunded gratuity scheme covering all eligible employees completing
the minimum qualifying period of service as specified by the scheme. Provision is made annually,
with reference to the latest pay drawn and length of service of the employee, to cover obligations
under the scheme.

Tangible Fixed Assets

Fixed assets are stated at cost or revalued amount less accumulated depreciation except capital
work in progress, which is stated at cost.

Depreciation on operating fixed assets is charges to profit and loss account on reducing balance
method at the rates specified in Note 11.

Full year's depreciation is charged in the year the asset is acquired while no depreciation is
charged in the year the asset is disposed off.
Normal repairs and maintenance are charged to profit and loss account as and when incurred
while major renewals and replacements are capitalized.

Gains or losses on disposal of fixed assets are charged to profit and loss account.

2004 2003
RUPEES RUPEES
SHARE CAPITAL
Authorised:
8,000,0007- Ordinary Shares of
Rupees. 10/- each 80,000,000 80,000,000
Issued, subscribed and paid-up
7,453, 0007- ordinary shares of
RS. 10/- each, fully paid in cash 74,530,000 74,530,000
SURPLUS ON REVALUATION OF FIXED ASSETS
Movement is as under
Opening Balance 103,522,652 250,060,987
Addition during the year 274.914,541 -
378,437,193 250,060.99
Incremental depreciation on revalued assets for previous years - 91,249,889
Incremental depreciation on revalued assets for the year 7,224,762 5,095,359
deferred tax liability as at October 01 , 2002 - 50,193,087
7,224,762 146,538,335
Adustment 4.1 47,683,443-
Closing Balance 418,895,874 103,522,652

SUB-ORDINATED LOAN-Unsecured
From Associated Undertakings 17,464,566 24,879,953
From Directors 25,064,530 22,240,681
5.1 42,529.10 47,120,634

Cash & Cash Equivalents

Cash & cash equivalents are carried in balance sheet at cost. For the purposes of cash flow
statements, cash and cash equivalents includes cash in hand and with banks.

Trade & Other Payables

Liabilities for trade and other amounts payables are carried at cost which is the fair value
considered to be paid in the future for goods and services received, whether or not billed to the
company.

Revenue Recognition

Sales are recorded on dispatch of goods to the customers.

Deferred Cost
Deferred cost incurred is carried forward and written off over a period of five years commencing
from the year of incurrence

Provisions

A provision is recognized in the balance sheet when the company has a legal on constructive
obligation as a result of past event and it is probable that an out flow of resources embodying
economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of obligation.

Creditors, Accrued and other Liabilities

Liabilities for trade and other amounts payable are carried at cost which is the fair value of the
consideration to be paid in the future for goods and services received, whether or not billed to the
company.

Tangible-Assets Subject to Finance Lease

These are stated at lower of present value of minimum lease payments under the lease
agreements and the fair value of assets Aggregate amount of obligation relating to leased assets
subject to finance lease is accounted for that net present value of liabilities The related obligation
under the lease less financial charges allocated to future period are shown as a liability. The
financial charges are allocated to accounting periods in a manner so as to provide a constant
periodic rate of charge on the outstanding liability in the case of sale and lease back transactions,
any access of sale proceeds over the carrying amount is deferred over the lease period. Assets
so acquired are depreciated over the useful life of the assets on the reducing balance method

Trade Debts and Other Receivables

Trade debts originated by the company are recognized and carried at original invoice amount less
provision for any uncollectible amounts Provision for doubtful debt is made when collection of the
full amount is no longer probable. Bad debts are written off as incurred.

CURRENT PORTION OF LONG TERM LIABILITIES

Term Finance Certificate 219,365 292,490
Demand Finance 1 9,398,428 9,119,283
Demand Finance II 6,200,000 2,200,000
15,817,793 11,611,773
CREDITORS, ACCRUED & OTHER LIABILITIES
Un-Secured
Creditors 9.14,804,754 3,675,615
Advances from customers - 154,834
Accrued expenses 6,925,095 6,312,336
W.P.P.F 9.2- 625,636
Sales tax payable 1,852,071 2,304,773
Income tax payable suppliers & staff 1,485,021 964,809
Zakat Payable 114,690 114,690
15,181,631 14,152,693

Workers' profit participation fund

Opening balance 625,636 556,121
Paid during the year 9.2.1 -625,636-
Interest accrued - 69,515
- 625,636

CONTINGENCIES AND COMMITMENTS

Unsettled reconciliation difference amounting to Rs. 1,912,082 (2003 Rs. 1,634,925) with National Bank of
Pakistan and Rs. 3,594,229 (2003; Rs. 3,317,072) with Banker's Equity Ltd. In respect of Term Finance
Certificates have not been accounted for in these financial statements. These maters are under
negotiation with respective banks and the management is confident that the differences will be settled in
future.

The Collectorate of Sales Tax Rawalpindi has levied sales tax on sale of waste and advances from
customers amounting to Rs. 529,3547- which has not been recognized in these financial statements. The
Company has preferred an appeal against these levies and the management is confident that the case
will be settled in favor of the Company.

The Collectorate of Sales Tax Audit has levied sales tax regarding snap audit in 2003 amounting to Rs.
27845967- which have not been recognized in these financial statements The company has preferred
appeal against these levies and management is confident that the case will be settled in their favour

The Company has outstanding income tax liabilities amounting to Rs. 3,884,257 (2003 Rs 3,459,310)
relating to assessment years 1997-98 to 2001-02. These demands have not been recognized in these
financial statements which have been imposed by the Income Tax Department. The Company has filed
appeal against the above demands. The management is confident that the cases will be settled in favour

2004 2003
RUPEES RUPEES
. DEFERRED LIABILITIES
Gratuity Others Liabilities-Deffered 7.11,659,250 1,780,880
34,956,002 34,991,355

36,615,252 36,772,235
1 Gratuity
Balance as on October 01 1,780,800 1,873.86
Add: Provision for the year 1,067,630 654,270
2,848,430 2,528,130
Less: Payments 1,189,260 747.25
Balance as on September 30 1,659,170 1,780,880

2004 2003
STORES AND SPARES Rupees Rupees
Stores 1,496,771 742,278
Spares 2,494,879 2,367,915
Store in transit - 213,700
3,991,650 3,323,893
STOCK IN TRADE
Raw Material 2,126,958 5,801,950
Work in process 2,365,236 1,237,713
Finished goods 1,069,596 1,482,966
5,561,790 8,522,629
TRADE DEBTS
Un-Secured, Considered good 4,494,977 3,573,018
ADVANCES, DEPOSITS, PREPAYMENTS, AND OTHER RECIEVEABLES
Advances-Considered Good
Suppliers 800,069 2,037,311
Employees 370,683-
Deposits:
Margin against Letter Of guarantee 68,800 68,800
Security Deposits 153,050 153,050
Prepaid Insurance 55,401-
Income Tax deducted at source 687,892 608,358
Sales Tax receiveable - 841,496
Custom Duty receivables 618,243 618,243
2,754,138 4,327,258
CASH AND BANK BALANCES
Cash in hand 827,614 31,135
Cash at bank - Deposit accounts 16.1 42,212 42,212
- Current accounts 16.1 2,422,058 74,647
3,291,884 147,994
SALES-Net
Local 306,678,111 230,693,889
Waste 878,056 1,380,041
307,556,167 232,073,930
Less: Commission to selling agents -1,436,211 -1,092,692
306,119,956 230,981,238

2004 2003
FINANCIAL & OTHER CHARGES Rupees Rupees
Interest/Mark-up on:
Term Finance Certificates - 3,196
Demand finance - 1 5,107,316 4,380,000
Demand finance - II - 2,308,000
Workers profit participation fund - 69,515
Bank charges and commission 198,642 55,509
Bank Monitoring fee - -
5,305,958 6,816,220
OTHER INCOME
- 17.903,671
Trade creditors written off - 300,000
Insurance claim received - 18,203,671

2004 2003
Rupees Rupees
COST OF SALES
Raw material consumed 18.1 210,160,529 169,611,502
Salaries, wages and other benefits 18.2 20,336,150 14,113,432
Fuel and power 35,999,846 32,500,443
Packing Material 4,857,002 3,940,866
Stores & Spares consumed 4,950,995 3,793,200
Repair & Maintenance 1,218,548 933,589
Cotton cess 78,018 49,807
Other manufacturing expenses 167,984 75,938
Depreciation 11.1 11,000,758 11,685,064
Insurance 631,517 400,467
289,401,347237.104,308
Work-in-process
Opening Stock 1,237.71 4,152,181
Closing Stock -2,365,236 -1,237,713
Cost of goods manufactured 288,273,824 240,018,776
Finished goods
Opening Stock 1,482,96$ 2,379,929
Closing Stock -1,069,596 -1,482,966
288,687,194 240,915,739
Raw material consumed
Opening Stock 5,801,950 9,156,968
Purchases 206,485,537 166,256,484
212,287,487 175,413,452
Closing stock -2,126,958 -5,801,950
210,160,529 169,611,502
. ADMINISTRATIVE EXPENSES
Salaries and benefits 19.1 2,518,316 1,343,637
Electricity 1,894,729 1,952,896
Travelling and conveyance 653,041 200,336
Printing and stationery 141,253 322,806
Communication 511,166 353,082
Newspaper and periodicals 17,268 32,955
Entertainment/guest house expenses 394,564 112,040
Repair & Maintenance 49,945 9,645
Auditor's remuneration 19.2 125,000 125,000
Legal and professional 363,870 372,500
Fee and subscription 448,798 640,355
Depreciation 11.1 138,578 146,793
Insurance 35,293 47,859
Advertisement 27,000 7,100
Deferred Cost amortized 320,000 260,000
Charity and donation 0 58,097
Others 136,030
7,774,851 5,985,101

Auditor's remuneration
Audit fee 75,000 75,000
Interm review service 50,000 50,000
125,000 125,000

NUMBER OF EMPLOYEES

The company had 375 (2003: 350) employees at the year end.
 Rupees
in '000
Long Term Loans - others to Subordinated Loan 24,879
Directors Loan - others to Subordinated Loan 21,130
Borrowings from Directors - others to Subordinated Loan 1,110
Creditors - to Deferred Liabilities 11,538
Advances from Customers- to Deferred Liabilities 13,366
Short Term Borrowing - to Creditors 2,210

Patterns of Holding of Shares Held by the Shareholders

As at September 30, 2004

NUMBER OF SHARE HOLDERS SHARE HOLDINGS TOTAL SHARES HELD

103 1 100 16,300
2362 101 500 1,064,600
51 501 1000 49
75 1001 5000 203,400
21 5001 10000 169,300
31 10001above 5,950,400
2,643 TOTAL 7,453,000

CATEGORIES OF SHARESHOLDERS
As at September 30, 2004

Categories of Share Holders Number of Share Share Held Percantage

Individual 2638 6700200 89.9
Investment Company 3 7000 0.09
Joint Stock Company 1 500 1
Financial Institution 1 745300 10
TOTAL 2643 7453000 100