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INTRODUCTION

Sun Rays Textile Mills is working under INDUS GROUP OF COMPANI S! It was in"or#orated on August $%& '()% wit* an aut*ori+ed "a#ital o, Rs! '-- Million di.ided into '- Million Ordinary s*ared o, Rs '-/0 ea"*! T*e Paid u# Ca#ital o, t*e "o1#any is Rs! 2- Million di.ided into 2 Million Ordinary s*ared o, Rs! '-/0ea"* ,ully #aid in "as*! T*e 3ran"* o,,i"e o, t*e "o1#any is in Multan 3ut its *ead o,,i"e is lo"ated in 4ara"*i and t*e "o1#any is listed in 4ara"*i Sto"k x"*ange! T*e #rin"i#al 3usiness o, t*e "o1#any& as 3y t*e o35e"t "lause& is to 1anu,a"ture and sale o, yarn! T*e 1ills is lo"ated in Mu+a,,argar*& Dera Ga+i 4*an Di.ision w*i"* is in t*e #ro.in"e o, Pun5a3!

BANKER'S OF THE COMPANY


T*e 6ankers o, t*e Co1#any are7 8 9a3i3 6ank :i1ited 8 Musli1 Co11er"ial 6ank 8 National De.elo#1ent Finan"e Cor#oration

AUDITOR'S OF THE COMPANY


T*e auditors o, t*e Co1#any are M/s M! ;ousa,Adil! Salee1 < Co1#any! Sun rays Textile Mills *as 9ead O,,i"e in 4ara"*i 3ut a 6ran"* O,,i"e is in Multan! Co1#any *as a "*air1an& a "*ie, exe"uti.e! And ,i.e dire"tors! T*e dire"tors are res#onsi3le ,or7 Planning Finan"e Co11er"ial Personnel x#ort T*e "o1#any *as "entrali+ed 1anage1ent syste1! x"e#t #rodu"tion& all 1a5or a"ti.ities are #er,or1ed in 6ran"* O,,i"e! T*e "o1#any is 1anaged 3y #ro,essional 1anage1ent! T*e relations*i# 3etween workers an 1anage1ent is "ordial! T*e e1#loyees are =uite satis,ied wit* t*eir 1anage1ent! T*e workers are drawing *andso1e salaries! T*e 1anage1ent is also satis,ied wit* t*e #er,or1an"e o, e1#loyees!

FINANCIAL YEAR
T*e Finan"ial ;ear o, t*e "o1#any 3egins ,ro1 'st O"to3er and ends at >-t* Se#te13er!

AN OVERVIEW OF COMPANY'S PERFORMANCE


Sun Rays Textile Mills started its "o11er"ial #rodu"tion ,ro1 ?uly '& '(('! Co1#any earned a #ro,it o,Rs! '&)-'&$'@ in ,irst t*ree 1ont*s! In '(($ su,,ered a loss o, Rs!

A&('%&-A$! T*is loss was t*e result o, de"line in sale #ri"es o, "otton yarn 3ot* in international and lo"al 1arket! In t*e year '((> "o1#any earned a #ro,it o,Rs! '&')2& '%$! T*is was due to t*e redu"ing "ost& ex#ort 1arketing ad in"reased e,,i"ien"y! T*is year t*e s#inning "a#a"ity o, t*e "o1#any in"reased ,ro1 '$@)- s#indles to '($-- s#indles! x#ort in"reased ,or1 A2!% 1illion to )>!>'' 1illion! In t*e year '((@ "o1#any su,,ered a loss o,Rs! '>&A>>&2A@! T*is was due to t*e in"reased "ost o, in#uts i!e!& #ower& 1ard0u#& and wages ets! T*us all t*ese in"reased t*e "ost o, #rodu"tion! In t*e year '((A "o1#any su,,ered a loss o, Rs! $(&%'%&2>>! T*e sale o, yarn in"reased as "o1#ared to t*e last year! 6ut t*e loss was due to t*e ,ailure o, "otton "ro# w*i"* in"reased t*e "otton #ri"es! Furt*er1ore& t*e #ri"es o, "otton yarn were not in"reased in #ro#ortion to t*e in"reased "otton #ri"es! In t*e year '((2 textile industry re1ained under "rises as in t*e #re.ious year! So& t*e a""u1ulated loss #osition in"reased to Rs! A>& 2$2&A>A! In t*e year '((% "o1#any earned a,ter tax #ro,it o, Rs! A& ')(& 2A(! T*is year t*e "o1#any was also in "rises as in t*e #re.ious year 3ut t*e 1anage1ent worked *ard to en*an"e ex#orts! As a result o, w*i"* ex#orts o, t*e "o1#any in"reased $> B!

COMPANY PROFILE BOARD OF DIRECTORS Mian RiazAhmed Mr. Kashif Riaz Mian Muhammed Ahmed Mr. Shahzad Ahmed Mr. Naveed Ahmed Mr. ImranAhmad Mr. ShafqatMasood Mrs.Rehana Attaullah Khan Mr. Mutiullah Khan (Chairman) (Chief Exe utive) (!ire tor) (!ire tor) (!ire tor) (!ire tor) (!ire tor) (!ire tor) (!ire tor) (Nominee N.!.".C) C#IE" FINANCIAL OFFICER C$M%AN& SECRETARY AUDIT C$MMI''EE Mr. Sha((ir Kausar Mr. Ahmad "ahim Niazi Mr. Shahzad Ahmad Mr. Naveed Ahmad Mr. ShafqatMasood Mr. Ahmad "ahim Niazi (Chairman) (Mem(er) (Mem(er) (Se retar)) REGISTERED OFFICE FACTORY

BANKERS AUDITORS S*"Ioor+ $ffi e ,+ -./+ 0eaumont %laza+ 0eaumont Road+ Civil 1ines 2uarters.Kara hi. Khan3ur Shomali 0a44a Sher M+ M. Road Muzaffar5arh. Muslim Commer ial 0an6 1imited. Soneri 0an6 1imited "a)sal 0an6 1imited M7s M+ &ousufAdil+ Saleem 8 Com3an). Chartered A ountants

9ISI$N 'o (e a most su essful om3an) in terms of qualit) 3rodu ts+servi es 8 "inan ials. MISSI$N 'o 3rovide qualit) 3rodu ts 8 Servi es to our ustomers and handsome return to the shareholders.

NAME OF DIRECTOR Mian Mohammad Ahmed MianRiazAhmed Shahzad Ahmed Naveed Ahmed Im ran Ahmed KashifRiaz Shafqat Masood Rehana Attaullah Khan MutiullahKhan PRODUCTION 'he %rodu tion for the )ear under revie: :as satisfa tor). 1A0$;R7MANA5EMEN' 'he 1a(our 7 Mana4ement relations remained ordial throu4hout the )ear. &our Com3an) is 3rovidin4 various fa ilities and amenities to the :or6ers. PATTERN OF SHAREHOLDING 'he %attern of Shareholdin4 is annexed+

COMMERCIAL DEPARTMENT
Main 9ussain A*1ad Fa+al w*o is a dire"tor o, t*e "o1#any *eads t*e "o11er"ial de#art1ent! Co11er"ial de#art1ent #lay a key role in t*e 3usiness! T*e "o11er"ial de#art1ent o, t*e 9ussain textile is di.ided into two 1ain se"tions! 1 Purchase department 2. Sales department

Purchase Department
T*e #ur"*ase de#art1ent is di.ided also into two se"tions7 '! Cotton Pur"*ase De#art1ent $! Store Pur"*ase De#art1ent

COTTON PURCHASE DEPARTMENT Cotton is #ri1ary raw 1aterial in textile industry! As "otton is seasonal "ro# so t*is re=uires *uge in.est1ent and e,,i"ient de"ision 1aking a3ilities! Daily sto"k #ositions are re"ei.ed ,ro1 t*e 1ills! T*e dire"tor *i1sel, is res#onsi3le ,or t*e #ur"*ase o, raw 1aterial!

T*e set u# o, t*is de#art1ent is under7 Dire"tor

Ci"e President

Field Manager

Cotton Sele"tor

Purchase Process
T*e ,ollowing ste#s are in.ol.ed in t*e #ur"*ase o, raw 1aterial! Select rs !"s"t Sample select" n Sample test"n# Dec"s" n A#reement

$"s"t % C tt n Select r T*e "otton sele"tors o, 9ussain Textile! So1eti1es "otton sele"tors .isit on t*eir 3e*al, and so1e ti1es t*e "otton ,a"tories "all t*e1!

Select" n

% Sample

D*en t*e "otton sele"tor ,inds any suita3le "otton t*ey take t*e sa1#le o, t*at "otton wit* t*e #ri"e o,,ered 3y t*e sellers! Test"n# % Sample T*e "otton sele"tor sends t*ese sa1#les to t*e la3oratory ,or testing! Dec"s" n % r purchase As t*ee is "entrali+ed 1anage1ent syste1 so t*e dire"tor "onsidering tests results& *e takes t*e de"ision ,or t*e #ur"*ase o, "otton *i1sel,! A#reement On t*e "o1#lexion o, t*e a3o.e #ro"ess written agree1ent is 1ade wit* t*e Store #ur"*ase de#art1ent

Dire"tor Pur"*ase o,,i"er Assistant Pur"*ase o,,i"er Pur"*ase "lerk

T*e store #ur"*ase de#art1ent is res#onsi3le ,or t*e #ur"*ase o, ,ollowing ite1s7 Spare parts

General Stores i!e! stationary #a"king 1aterial oil lu3ri"ants &u"ld"n# Mater"al T*e store #ur"*ase de#art1ent #re#ares t*e ,ollowing do"u1ents! Demand Re'u"s"t" n Order % rm ( ds rece"!ed n te.

Procedure
T*e ,ollowing is t*e #ro"edure o, lo"al #ur"*ase de#art1ent& T*e #ur"*ase de#art1ent re"ei.es indent ,ro1 t*e store in "*arge at 1ills! T*e indent *as ,ull detail a3out t*e =uantity and =uality o, re=uired ite1s! T*e #ur"*ase de#art1ent on t*e 3asis o, indent doesnEt in=uiry ,or rate ,ro1 at least two su##liers& a,ter in=uiry 1anager #ur"*ase dis"uss t*e rate and ot*er ne"essary in,or1ation wit* dire"tor! A,ter t*e Pur"*ase de#art1ent #ur"*ases ite1s ,ro1 t*e a##ro.ed su##liers and sent t*e1 dire"tly to t*e 1ills wit* t*ree "o#ies o, deli.ery orders!

In "ase o, no re5e"tion o, ste1s store in "*arge send one "o#y o, t*e deli.ery order 3a"k to #ur"*ase de#art1ent along wit* one "o#y o, inward gate #ass!

Store in "*arge also kee#s a "o#y o, deli.ery order ,or *is own re"ord!
IN

"ase re5e"tion o, items store in "*arge sends all "o#ies o, deli.ery

orders wit* ite1s 3a"k to t*e #ur"*ase de#art1ent o,,i"e!

SA: S D PARTM NT

Sates de#art1ent is one o, t*e i1#ortant in any industry! I, a unit #rodu"e 3est =uality goods 3ut *a.e not "o1#etiti.e sta,, t*an it would 3e di,,i"ult to sell t*e #rodu"ts! T*e stru"ture o, Sales De#art1ent is as under7 Dire"tor Manager :o"al Sales Co11er"ial Assistant Manager x#ort Sales

x#ort Assistant

Sun Rays Textile Mills is selling its #rodu"t to lo"al as well as in international 1arket! T*us t*e sales de#art1ent o, t*e Sun Rays Textile Mills is di.ided into two se"tions7 8 :o"al Sales De#art1ent 8 x#ort De#art1ent LOCAL SALES DEPARTMENT In t*e 3eginning Sun Rays Textile Mills :i1ited sold its 1a5or #ortion o, #rodu"t to t*e lo"al 1arket and t*en it gradually entered in t*e international 1arket! In '((' t*e ration o, lo"al sales to total sales was (%!%@B 3ut t*is ration de"reased to @@!('B to total sales o, t*e year '((%!

PROCEDURE T*e ,ollowing a"ti.ities are #er,or1ed in t*e lo"al sales de#art1ent! 8 T*e dire"tors re"ei.es orders 1ainly 3y #*one 8 Dire"tor e.aluates t*e "a#a3ility to ,ul,ill t*e order 3y "onsulting daily sto"k re#ot ,ro1 1ills! 8 Dire"tors gi.es t*e instru"tion to lo"al sales 1anager t*at trans,er t*e in,or1ation on lo"al sale "ontra"t sli#! 8 6e,ore issuing/sending "ontra"t sli#& sales 1anager "*e"ks t*e selling li1its o, t*e #arti"ular #arty/3ro"ker& and dis"uss t*e 1atte wit* t*e Dire"tor i, it is ex"eeding t*e selling li1it!

8 Sale De#art1ent 1ake t*ree "o#ies o, Deli.ery Order signed 3y t*e Dire"tor! 8 Original "o#y is dis#at"*ed to t*e #arty and kee#s one "o#y ,or re"ord and one "o#y to a""ount se"tion!

Export Department
9ussain textile 1ills started sales ,ro1 lo"al 1arket and now 1a5or #ortion o, #rodu"ts is ex#orted outside Pakistan! Mr! 9a,i+ *eads t*e ex#ort de#art1ent! T*e stru"ture o, t*is de#art1ent is as under! Dire"tor Manager x#ort

x#ort Assistant Ty#ist

Export Process
T*e ex#ort #ro"ess starts ,ro1 3argaining! A 3uyer "ontra"ts t*e "o1#any ,or t*e #ur"*ase o, yarn! T*e "ontra"t 1ay 3e dire"t or t*roug* 1iddle1an! D*en t*e #ri"e is sent and "ontorts ,or1 is ,illed! T*e dire"tor o, t*e "o1#any settles t*e ter1s and "onditions!

COMMERC)A* )N$O)CE

6I:: OF :ADING FORM FC9ANG

> 6I:: OF

CFRTTFTCATF OF ORIGIONS 6 N FICIAR;G S C RTIFICAT' C RTIFICAT OF S9IPPING COMPAN;

PAC4ING :IST

C mmerc"al "n! "ce )t "s a s rt % l"st sh +s +hat are the, e-p rt"n# sh +"n# the C ntract *.C .ORM E Sh"nn"n# C mpan, name T*is "o11er"ial in.oi"e is sent to t*e 3uyerGs Central *ank ! One "o#y o, t*is in.oi"e is kept in Hussain Mills Ltd

Bill of Lading
It is a list o, goods issued 3y t*e s*i##ing line stating t*at t*e goods *a.e 3een loaded on 3oard ,reig*t #re#aid and ot*er s#e"i,i"ations!

E form
For1 is t*e 3asi" do"u1ent o, ex#ort Go.ern1ent "ontrol ,oreign x#ort ,ills and signs it! 6ank also "ountersigns t*is ,or1! It ex"*ange t*roug* t*is ,or10 T*us it 3 one o, t*e 1ost i1#ortant do"u1ents *as ,our "o#ies! T*e original and du#li"ate "o#y is sent to t*e Custo1 De#art1ent ,or "learan"e! A,ter .eri,i"ation t*e "usto1 de#art1ent sends "o#y and one "o#y t*e "o#y is ke#t wit* t*e "usto1! T*e tri#li"ate "o#y o, t*is ,or1 is sent to t*e negotiating 3ank! T*e =uadru#li"ate "o#y is o,,i"e "o#y!

Bill of Exchange
A 3ill o, ex"*ange *as 3een de,ined as an un"onditional order in writing addressed 3y one #erson to anot*er& signed 3y t*e #erson gi.ing it! Re=uiring t*e #erson to w*o1 it is addressed to #ay on de1and or at a ,ixed or deter1ina3le ,uture ti1e& a "ertain su1 o, 1oney to or to t*e order o, a s#e"i,ied #erson!

Certificate of Origin
T*e "*a13er o, "o11er"e and industry issue t*is "erti,i"ate! T*is "erti,i"ate only "erti,ies t*e origin! T*e 3uyer issues 3ene,i"iary "erti,i"ate re=uires t*e seller! Usually t*e wording o, t*is "erti,i"ate is as7

HCerti,i"ate t*at goods *a.e 3een s*i##ed #er .essel s*i##ing "o1#any na1e and t*e s*i##ing do"u1ents *a.e 3een dis#at"*ed to t*e a##li"ant under :" No!I Cert"%"cate %r m sh"pp"n# c mpan, Sh"pp"n# c mpan, )ssues t"lls cert"%"cate n the re'uest % /u,er.

Packing list
Pa"king list "ontain t*e detail o, all t*e ite1s 3eing ex#orted! T*is list s*ows t*e "arton nu13er& "ontainer nu13er goods des"ri#tion gross and net weig*t o, total "artons and ea"* "arton!

IMPORT DEP RTME!T


9ussain textile *as also an i1#ort de#art1ent! T*e i1#ort de#art1ent o, 9TM is res#onsi3le to i1#ort t*ose ite1s t*at are not a.aila3le in t*e Pakistan! T*e stru"ture o, t*is de#art1ent is as under7

Ch"e% E-ecut"!e

D"rect r

Sen" r Mana#"n# )mp rt

Ass"stant PROCEDURE

Senior Manager is res#onsi3le ,or i1#ort o, 1a"*inery e=ui#1ent s#are #arts raw 1aterial et"! An indent ,or i1#ort o, ite1s a,ter t*e a##ro.al o, C*ie, i1#ort de#art1ent! T*e Senior Manager I1#ort sele"ts a su3"ontra"tor ,ro1 a##ro.ed su##liers list! xe"uti.e is not

In re#lay a =uotation ,ro1 t*e su3"ontra"tor re"ei.ed! A "o#y o, =uotation is to "on"erned ,or e.aluation and "*e"king o, s#e"i,i"ation! A,ter re"ei.ing t*e "on,ir1ation letter o, "redit is esta3lis*ed and su3"ontra"tor is in,or1ed eit*er 3y #*one or ,ax or telex! T*e re"ei.ed ite1s are sending to t*e 1ills w*ere t*ese are o#ened! T*e ite1s are "*e"ked against =uotations! In "ase o, any da1age t*e i1#ort de#art1ent is in,or1ation de#art1ent do t*e ne"essary arrange1ents ,or sur.ey o, goods ,ro1 insuran"e agen"ies and "lai1s! A ,ile is 1aintained wit* detailed in,or1ation o, i1#ort de#art1ent and

FINANC D PARTM NT Finan"e de#art1ent is t*e 3a"k 3one o, e.ery organi+ation! Finan"e de#art1ent is "o1#osed o, two de#art1ents su"* as7 8 A""ounts de#art1ent 8 Internal Audit de#art1ent! A CCOUNTS DEPAR TMENT T*e a""ount de#art1ent is res#onsi3le ,or t*e entire a""ounting #ro"ess o, t*e organi+ation regarding t*e re"ording o, transa"tion& designing t*e a""ounting syste1& #re#aration o, ,inan"ial state1ents and "o1#uter a##li"ation to t*e a""ounting #ro"ess! FUNCTIONS OF THE ACCOUNTING DEPARTMENT '! T*e 1ain ,un"tion o, t*e a""ounting de#art1ent are to re"ord t*e 3usiness transa"tions! $! T*is de#art1ent also design t*e a""ounting #oli"ies! >! T*e de#art1ent is res#onsi3le to 1aintain t*e 3ooks o, a""ounts! @! T*is de#art1ents also #re#ares t*e ,inan"ial state1ents and o,,er t*ese to t*e s*are*olders! T*us 3y studying t*e a3o.e ,un"tions it is "lear t*at t*e ,inan"e de#art1ent is restri"ted u#to t*e re"ording and 1aintain t*e a""ounting data! All t*e ,inan"ial 1attes are "ontrolled 3y t*e dire"tors! T*is de#art1ent is *eaded 3y C*ie, A""ountant Mr! S*a33ir 4ausar! 7 T*e set u# o, t*is de#art1ent is as under7 C*ie, A""ountant A""ountant Cas*ier Ty#ist Data ntry O#erator T*e a""ounting de#art1ent is 1ainly di.ided into ,ollowing t*ree se"tionsJ Stores Se"tion Salaries and Dages Se"tion General A""ounting Se"tion

1. STORE SECT)ON $! Store se"tion is 1ainly "on"erned wit* store a""ounting! T*is se"tion is *eaded 3y t*e C*ie, A""ountant! T*e 1a5or res#onsi3ilities o, t*is se"tion are 8 To re"ord all t*e store #ur"*ases 8 To re"ord all t*e store issues 8 To #re#are .arious re#orts relating to store i!e! 1aterial "onsu1#tion re#ort& #arty wise #ur"*ase re#ort! 8 To kee# a "*e"k on all stores 3y sur#risingly "*e"king t*eir re"ord and #*ysi"al existen"e o, ite1s stored! 6e"ause o, t*e a3o.e 1entioned duties& t*is se"tion *as a key #osition in t*e "o1#any! NO #ay1ent is 1ade to any3ody unless it is "*e"ked and .eri,ied 3y t*is se"tion! 2. SA*AR)ES AND 0A1ES SECT)ON T*is se"tion is res#onsi3le o, 1aking #ay1ents to t*e e1#loyees! T*is se"tion #lays an i1#ortant role in sa,eguarding t*e interest o, t*e "o1#any as well as e1#loyees! T*is se"tion also ensures all t*e la3our laws! Certain laws relating to t*e "o1#any are as under7 a. *EA$E PROCEDURE As ,ar as lea.es are "on"erned t*ere are t*ree ty#es o, lea.es7 S)C2 *EA$ES Si"k lea.es are eig*t in a year! CASUA* *EA$ES Casual lea.es are ten in ea"* year! ANNUA* OR EARNED *EA$ES T*ere are twel.e earned lea.es! Co1#anies rules do not allow any e1#loyee to do ,our days lea.e wit*out a##li"ation! In "ase i, an e1#loyee does so t*en *e "annot a.ail annual lea.es! /. ATTENDANCE A**O0ANCE I, an e1#loyee works ,or ,ull one 1ont* t*en *e gets attendan"e allowan"e o, Rs! '--/K

c. SA*AR)ES AND 0A(ES Mini1u1 Salary is not less t*en '(A-/S T*e 3reak0u# o, salary is as under7 6asi" Salary 6adii Allowan"e AAttendan"e Allowan"e '-Cost o, :i.ing Allowan"e ')B o, 6asi" Salary Pun5a3 1#loyees S#e"ial Allowan"e Mini1u1 Dages Ad5a"ent Allowan"e 9ouse Rent Allowan"e '-B o, 6asi" Salary Utility Allowan"e '-B o, 6asi" Salary S#e"ial Allowan"e >-d. )NCOME TA3 In"o1e Tax is dedu"ted ,ro1 alt t*ose e1#loyees w*ose annual salary is greater t*an Rs! @-&---/K e. AD$ANCES AND :OANS Ad.an"es and loans are gi.en to t*e e1#loyees w*i"* are ad5usted against salaries! It is t*e sole dis"retion o, t*e 1anage1ent w*et*er t*ey a##ro.e ad.an"es and loans or not! %. (RATU)T4 Gratuity is gi.en to t*e e1#loyees! 5. (ENERA* ACCOUNT)N( S CTION General a""ounting se"tion is 1ainly "on"erned wit* utilities like gas& ele"tri"ity& ,uel& tele#*one et"! T*e 1a5or res#onsi3ility o, t*is se"tion to kee# t*e re"ord o, 3ills regarding utilities!

)NTERNA* AUD)T

Sun Rays Textile Mills *as also a s#e"ial de#art1ent ,or #er,or1ing t*e internal audit! T*is de#art1ent is *eaded 3y t*e internal auditor! T*e audit de#art1ent de.elo#s audit #rogra1s 3e,ore "ondu"ting and audit! T*is de#art1ent work on "ontinual 3asis! T*e internal auditor o, t*e "o1#any .isits t*e 1ills on weekly 3asis and "ondu"t t*e audit a""ording to t*e "*e"klist ,ra1ed 3y t*e internal audit de#art1ent! T*e de#art1ent is res#onsi3le to kee# its eyes on t*e i1#le1entation o, 1anage1ent #oli"ies! T*is de#art1ent is also res#onsi3le to in,or1 t*e to# 1anage1ent regarding t*e a""ura"y o, all a""ording in,or1ation and t*eir analysis! MAIN FUNCTIONS OF THE INTERNAL AUDIT DEPARTMENT Following are t*e 1ain ,un"tions o, t*e internal audit de#art1ent! 1. Re!"s" n % the S,stem T*e internal audit de#art1ent re.ises t*e syste1 i, t*ere arises any dis"re#an"y! 2. Chec6 n the s,stem T*e internal audit de#art1ent "*e"k w*et*er t*e re.ised syste1 is 3eing ,ollowed or not! I, t*ere arises any de.iation t*at is re#orted to t*e 1anage1ent! 5. Chec6 n Mana#ement p l"c"es @! T*is de#art1ent also exa1ines w*et*er 1anage1ent #oli"ies are 3eing ,ollowed or not! 7. Pr per ma"ntenance % / 6s % acc unts T*e internal audit de#art1ent also exa1ines w*et*er #ro#er 3ooks o, a""ounts are 3eing ke#t as re=uired 3y t*e Co1#anies Ordinan"e '()@! 8. Assets Sa%e#uard"n# T*is de#art1ent also sa,eguard t*e "o1#any assets! T*e ,ollowing are t*e 1ain ,un"tions #er,or1ed 3y t*e internal audit de#art1ent at 3ran"* o,,i"e Multan w*ile "ondu"ting an audit! i! C*e"king o, #ostings ,ro1 "lo"k "ards to wages s*eets& ii! Re"o.ery o, ad.an"es

iii! Pri"e "*e"king i.! C*e"king o, Credit Notes issued 3y t*e Sales De#art1ent! .! C*e"king o, De3it Notes issued 3y t*e Sales De#art1ent! .i! C*e"king o, re3ates& dis"ounts .ii! Continuous "*e"king o, assets o, t*e "o1#any! .iii! C*e"king o, 3ank .ou"*ers! ix! C*e"king o, #ay1ents .ou"*ers x! C*e"king o, "redit .ou"*ers -"! C*e"king o, general .ou"*ers

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED SEPTEMBER 30. 2003 <. S'A';S AM! AC'I9I'IES 'he om3an) is limited () shares in or3orated in %a6istan on Au4ust =>+<?/> under the Com3anies $rdinan e+ <?/@ and listed at Kara hi Sto 6 Ex han4e. 'he 3rin i3al (usiness of the Com3an) ! manufa ture and sale of )arn. 'he Mills is lo ated at !istri t Muzaffar4arh+ !era5nazI Khan !ivision+ in the 3rovin e of %unAa(. 2. SIGNIFICANT ACCOUNTING POLICIES 2." Accou#$ #% Co#&e#$ o# 'hese Bman lal statements have (een 3re3ared under C#istori al ost onventionC ex e3t that ertain fixed assets have (een in luded at revaluation and ertain ex han4e differen es stated in note =.- have (een in or3orated In the ost of relevant assets. 2.2 S$'$e(e#$ o) co(*+ '#ce 'hese finan ial statements have (een 3re3ared in a ordan e :ith a33roved A ountin4 Standards as a33li a(le in %a6istan and requirements of Com3anies $rdinan e+ <?/@+ A33roved a ountin4 standards om3rise of su h International A ountin4 Standards as notified under the 3rovisions of the Com3anies $rdinan e+ <?/@ Dherever+ the requirements of Com3anies $rdinan e <?/@ or dire tives issued () the

Se urities and Ex han4e Commission of %a6istan differ :ith the requirements of these standards+ the requirements of Com3anies $rdinan e <?/@ or requirements of the said dire tives ta6e 3re eden e. 2.3 S$')) Re$ re(e#$ Be#e) $! 'he Com3an) o3erates an unfunded 4ratuit) s heme overin4 all its em3lo)ees. 'he ost of 3rovidin4 (enefit is determined usin4 the 3roAe ted unit redit method+ :ith a tuarial valuation. 'he a tuarial valuation is arried out as at Se3tem(er E.+ =..E. A tuarial 4ains and losses :hi h ex eed <. 3er ent of the 3resent value of the om3an)Fs 4ratuit) o(li4ations are amortized over the ex3e ted avera4e remainin4 :orld lives of the em3lo)ees. %ast servi e ost is re o4nized immediatel) to the extent that the (enefits are alread) vested+ and other:ise is amortized on a strai4ht line (asis over the avera4e 3eriod until the amended (enefits (e ome vested. 2., T'-'$ o# Curre#$ %rovision for urrent taxation is (ased on taxa(le in ome at the urrent tax rates after ta6in4 into a ount tax re(ates and tax redits availa(le+ if an). 'he har4e for urrent tax is al ulated usin4 3revailin4 tax rates ex3e ted to a33l) to the 3rofit for the )ear. 'he har4e for urrent tax also in ludes adAustments :here onsidered ne essar) to 3rovision for tax made in 3revious )ears arisin4 from assessments framed durin4 the )ear for su h )ears. De)erred !eferred tax is a ounted for usin4 the (alan e sheet lia(ilit) method in res3e t of all tem3orar) differen es arisin4 from differen e (et:een the arr)in4 amount of assets and lia(ilities In the finan ial statements and the orres3ondin4 tax (ases used in the om3utation of the taxa(le 3rofit. !eferred tax lia(ilities are 4enerall) re o4nized for all taxa(le tem3orar) differen es and deferred tax assets are re o4nized to the extent that It Is 3ro(a(le that taxa(le 3rofits :ill (e availa(le a4ainst :hi h the dedu ti(le tem3orar) differen es+ unused tax losses and redits an

!eterred tax is al ulated at rates that are ex3e ted to a33l) to the 3eriod :hen the differen es reverse (ased on tax rates that have (een ena ted orsu(stantivel) ena ted () the (alan es sheet date. !eferred tax is har4ed or redited in the in ome statement+ ex e3t in the ase of items redited or har4ed to equit) in :hi h ase it is in luded in the equit).
2.. O*er'$ #% A!!e$!

$3eratin4 assets ex e3t freehold land are stated al ost or valuation less a umulated de3re iation and an) identified im3airment loss. "reehold land is stated at ost7valuation. !e3re iation is har4ed to in ome a33l)in4 the redu in4 (alan e method at the rates s3e ified in the o3eratin4 assets note. Ex han4e differen es in res3e t of loans o(tained for a quisition of fixed assets are in or3orated in the ost of relevant assets+ !e3re iation on additions durin4 the )ear is har4ed on the (asis of :hole )ear. #o:ever+ de3re iation for 3ro3ortionate 3eriod of use is har4ed on maAor 3roAe t ost a3italized durin4 the )ear. No de3re iation is har4ed on deletions durin4 the )ear. Im3airment loss or its reversal+ if an)+Fis har4ed to in ome. Dhere an im3airment loss is re o4nized+ the de3re iation har4e is adAusted in the future 3eriods to allo ate the assets revised arr)in4 amount over its estimated useful life. Maintenan e and normal re3airs are har4ed to in ome as and :hen in urred+ MaAor rene:als and im3rovements are a3italized. 5ains and losses on dis3osal of assets are in luded in urrent)earFs in ome. =G C'* $'+ Dor6 In Pro%re!! All osts7ex3enditure onne ted :ith s3e ifi assets are olle ted under this head. 'hese are transferred to s3e ifi assets as and :hen assets are availa(le for use. $!% Stores and S#ares Stores and s3ares are stated at lo:er of ost (determined () the movin4 avera4e method) and net realiza(le value+ ex e3t those in transit :hi h are valued at a tual ost.
2./ S$oc0 # Tr'de

'hese are valued at lo:er of ost and net realiza(le value. Cost is determined () a33l)in4 follo:in4 (asisH Ra: material Dei4hted avera4e ost Dor6 in 3ro ess Avera4e manufa turin4 ost "inished 4oods Avera4e ost of 4oods manufa tured Daste Net realiza(le value 2.1 Tr'de De2$or! Kno:n (ad de(ts are :ritten off and 3rovision is made for de(ts onsidered dou(tful. 2."0 Fore %# Curre#c3 Tr'#!+'$ o# Assets and lia(ilities in forei4n urren ies are translated into %a6 ru3ees at the rates of ex han4e rulin4 on the (alan e sheet date+ ex e3t those overed under for:ard ex han4e ontra t and ex han4e ris6 over s heme :hi h are translated at the over rate. 'ransa tions In forei4n urren ) are translated into %a6 ru3ees at the rate of ex han4e rulin4 at the date of transa tion ex e3t for those overed under for:ard ex han4e ontra t :hi h are translated at the over rate. Ex han4e differen es other than those mentioned in note =.- are in luded in urrent )earFs in ome. 2."" F #'#c '+ #!$ru(e#$! "inan ial instrument is re o4nized usin4 trade date a ountin4 (asis+ :hen the om3an) (e omes the 3art) to the ontra tual 3rovisions of the instrument. Financial '!!e$! All finan ial assets are initiall) re o4nized at nominal value of onsideration 4iven for it. Su(sequent to initial re o4nition+ finan ial assets are re o4nized at fairvalue ex e3t finan ial assets :hose fair value annot (e measured relia(l). An) 4ain or loss is in luded in urrent )ear in ome. Financial liabilities All finan ial lia(ilities are initiall) re o4nized at nominal value of onsideration re eived. Su(sequent to initial re o4nition+ finan ial lia(ilities are re o4nized at fair value+ amortized ost or ost as the ase ma) (e. An) 4ain or loss is in luded in urrent )ear in ome. 2."2 Pro& ! o#

A 3rovision is re o4nized in the (alan e sheet :hen the om3an) has a le4al or onstru tive o(li4ation as a result of a 3ast event+ it is 3ro(a(le that an outflo: of resour es em(od)in4 e onomi (enefits :ill (e required to settle the o(li4ation+ and a relia(le estimate an (e made to the amount of o(li4ation+ 2."3 I(*' r(e#$ An assessment is made at ea h (alan e sheet da'-e to determine :hetherthere is an eviden e that a finan ial asset or 4rou3 of finan ial assets ma) (e im3aired. If su h eviden e exists+ the estimated re overa(le amount of that asset is determined and an) im3airment loss re o4nized for the differen e (et:een the re overa(le amount and the arr)in4 amount. 2.", Tr'de '#d o$4er *'3'2+e! 1ia(ilities for trade and other amounts 3a)a(le are arried at ost :hi h is the fairvalue of the onsideration to (e 3aid in the future for 4oods and servi es re eived+ :hether or not (illed to the om3an). 2.". A!!e$! !u25ec$ $o ) #'#ce +e'!e 'hese are stated at the lo:er of 3resent value of minimum lease 3a)ments under the lease a4reements and the fair value of the assets. 'he related o(li4ations of lease are a ounted for as lia(ilities. "inan ial har4es are allo ated to a ountin4 3eriods in a manner so as to 3rovide a onstant 3eriodi rate of finan ial ost on the remainin4 (alan e of 3rin i3al lia(ilit) for ea h 3eriod. !e3re iation is har4ed at the rates stated in note <E a33l)in4 redu in4 (alan e method to :rite off a ost of the assets over its estimated useful life in vie: of ertaint) of o:nershi3 of assets at the end of the lease 3eriod. 2."6 Re&e#ue Reco%# $ o# Sales are re orded on dis3at h of 4oods to ustomers.

DIRECTOR7S REPORT
&our !ire tors are 3leased to 3resent the <=th Annual Re3ort on the affairs of )our om3an) alon4 :ith 'he Audited A ounts for the "inan ial )ear ended E.th Se3tem(er+=..E. 'he Com3an) earned 3retax 3rofit of Rs.-G.==-(M). 0riefs of finan ial results for the )ear under revie: are as underI %rofit for the )ear (efore taxation %ro vision for taxation %rofit afterJtaxation ;na33ro3riated 3rofit (rou4ht for:ard %rofit availa(le for a33ro3riation 'ransfer to 5eneral Reserve %ro3osed Cash !ividend 'ransfer from sur3lus on revaluation of fixed assets ;na33ro3riated 3rofit arried for:ard
Rs.$$$ -@+..< (>+@<E) @G+-// =<+?@< G/+-=? (E.+...) (G+?..) G<+>/< ?E+@<.

'he earnin4 3er share is Rs.G.>- (%ar value Rs.<.7K3er share


PRESEMT YEAR ASSESSMENT

0) the 4ra e of almi4ht) Allah the om3an) earned reasona(le 3rofits. &our !ire tors are 3leased to 3ro3ose <.L Cash !ividend for the )ear under revie:. 'he total sale amounted to Rs./=E+<EE+@<= as om3ared to Rs.>?=+<??+?-- Last )ear. 'hou4h there :as In rease in the total sale () E.?.L+the 4ross 3rofit ho:ever redu e from Rs.<G@+//.+.@? to Rs. <=>+>@=+>>@ i.e. from =../< L of sales last )earfo <-+-= L this )ear. 'he de rease in 4ross 3rofit is mainl) attri(uted to the in rease in ost of ra: material and ele tri it) over last )ear. An amount of a33roximatel) Rs. <./ (M) has (een invested on 0MR of the ma hiner)+ land+ and onstru tion of ne: (uildin4 et . 'his 0MR:ill hel3 to 3rodu e the (etterquallt)of)arn and :ill also hel3 to redu e the ost of 3rodu tion. ':o ne: rin4 frames alon4 :ith (a 6 3ro ess ma hines :ere added durin4 this )ear. All lia(ilities in re4ard to the the 3a)ment on a ount of taxes+ duties+ levies and har4es have (een full) 3rovided.
FUTURE PROSPECTS

De ho3e )our om3an) :ill earn handsome 3rofit in the next finan ial )ear () in reasin4 ex3ort at (etter 3ri es+ (etter 3rodu tion+ la(our ost savin4s et .'hree 4as 4enerator of E.EE. MD :ere installed at our mill and the) are runnin4 su essfull) sin e Novem(er=..E. De ho3e that the lo: ost of ener4) :ill hel3 the om3an) to mainatain its 3rofita(ilit). De further stale thatI Hi) 'he "inan ial Statements 3re3ared () the Mana4ement+ 3resent fairl) its state of affairs+ the result of its o3erations+ Cash "lo:s and han4es in equit)H () %ro3er (oo6s of A ounts have (een maintainedH ) A33ro3riate a ountin4 3oli ies have (een onsistentl) a33lied in 3re3aration of "inan ial Statements and a ountin4 estimates are (ased on reasona(le and 3rudent Aud4ment. d) International A ountin4 Standards+ as a33li a(le in %a6istan have (een follo:ed in 3re3aration of "inan ial Statements. e) 'here are no si4nifi ant dou(ts u3on the om3an)Fs a(ilit) to ontinue as a 4oin4 on ern. f) Internal auditor is ontinuousl) revie:in4 the existin4 s)stem of internal ontrol and other 3ro edures. 'he 3ro ess of revie: :ill ontinue and an) :ea6ness in ontrols :ill have immediate attention of the Mana4ement.

AUDITORS7 REPORT TO THE MEMBERS


De have audited the annexed (alan e sheet of S;NRA&S 'EM'I1E MI11S 1IMI'E!+ as at Se3tem(er E.+ =..E and the related 3rofit and loss a ount+ statement of han4es in equit) and ash flo: statement to4ether :ith the notes formin4 3art thereof+ for the )ear then ended and :e state that :e have o(tained all the information and ex3lanations :hi h to the (est of our 6no:led4e and (elief+ :ere ne essar) for the 3ur3oses of our audit. It is the res3onsi(ilit) of the om3an)Fs mana4ement to esta(lish and maintain a s)stem of internal ontrol+ and 3re3are and 3resent the a(ove statements in onformit) :ith the a33roved a ountin4 standards and the requirements of Com3anies $rdinan e+ <?/@. $ur res3onsi(ilit) is to ex3ress an o3inion on these statements (ased on our audit. De ondu ted our audit In a ordan e :ith the auditin4 standards as a33li a(le in %a6istan. 'hese standards require that :e 3lan and 3erform the audit to o(tain reasona(le assuran e a(out :hether the a(ove said statements are free of an) material misstatement. An audit in ludes examinin4+ on a test (asis+ eviden e su33ortin4 the amounts and dis losures in the a(oFve said statements. An audit also in ludes assessin4 the a ountin4 3oli ies and si4nifi ant estimates made () mana4ement+ as :ell as+ evaluatin4 the overall 3resentation of the a(ove said statements. De (elieve that our audit 3rovides a reasona(le (asis for our o3inion and+ after due verifi ation+ :e re3ort thatI a) in our o3inion+ 3ro3er (oo6s of a ount have (een 6e3t () the Com3an) as required () the Com3anies $rdinan e+ <?/@H () in our o3inion H (i) the (alan e sheet and 3rofit and loss a ount to4ether :ith the notes thereon have (een dra:n u3 In onformit) :ith the Com3anies $rdinan e+ <?/@+ and are in a4reement :ith the (oo6s of a ount and are further in a ordan e :ith the a ountin4 3oli ies onsistentl) a33lied ex e3t for the han4e as stated in note =.- :ith :hi h :e on urH (ii) the ex3enditure in urred durin4 the )ear :as for the 3ur3ose of the Com3an)Fs (usinessH and (lii) the (usiness ondu ted+ investments made and the ex3enditure in urred durin4 the )ear :ere in a ordan e :ith the o(Ae ts of the Com3an) H ) in our o3inion and to the (est of our information and a ordin4 to the ex3lanations 4iven to us+ the (alan e sheet+ 3rofit and loss a ount+ statement of han4es in equit) and ash flo: statement to4ether :ith the notes formin4 3art thereof on form :ith a33roved a ountin4 standards as a33li a(le in %a6istan+ and 4ive the information required () the Com3anies $rdinan e+ <?/@+ in the manner so required and res3e tivel) 4ive a true and fair vie: of the state of the om3an)Fs affairs as at Se3tem(er E.+ =..E and of the 3rofit+ han4es in equit) and its ash flo:s for the )ear then ended H and d) in our o3inion+ Na6at dedu ti(le at sour e under the Na6at and ;shr $rdinan e+ <?/. (M9III of <?/.)+ :as dedu ted () the om3an) and de3osited in the Central Na6at "und esta(lished under se tion > of that $rdinan e. !atedI !e em(er =?+ =..E Chartered A ountants M. &$;S;"A!I1 SA1EEM 8 C$. %la eI Multan

'his statement is (ein4 3resented to om3l) :ith the ode of or3orate 5overnan e ontained in Re4ulation No.E> of listin4 re4ulations of Kara hi Sto 6 Ex han4e (5uarantee 1td.) for the 3ur3ose of esta(lishin4 a frame:or6 of 4ood 4overnan e+ :here() a listed om3an) is mana4ed in om3lian e :ith the (est 3ra ti e of or3orate 4overnan e. 'he om3an) has a33lied the 3rin i3les ontained in the ode in the follo:in4 manner. <. 'he Com3an) en oura4e re3resentation of inde3endent nonJexe utive dire tors and dire tors re3resentin4 the minorit) interests on its 0oard of !ire tors. At 3resent the 0oard in ludes at least t:o inde3endent nonJexe utive dire tors and none re3resentin4 minorit) shareholders. =. 'he dire tors have onfirmed that none of them is servin4 as a dire tor in more than ten listed om3anies+ in ludin4 the Com3an). E. All the resident dire tors of the Com3an) are re4istered as tax3a)ers and none of them has defaulted in 3a)ment of an) loan to a (an6in4 om3an)+ a !"I or an N0"I or+ (ein4 a mem(er of a sto 6 ex han4e+ has (een de lared as a defaulter () that sto 6 ex han4e. @. 'here :as no asual va an ) o urred durin4 the )ear. -. 'he Com3an) has 3re3ared a FStatement of Ethi s and 0usiness %ra ti esO+ :hi h has (een si4ned () all the dire tors and em3lo)ees of the Com3an). G. 'he 0oard has develo3ed a vision7mission statement+ overall or3orate strate4) and si4nifi ant 3oli ies of the Com3an). A om3lete re ord of 3arti ulars of si4nifi ant 3oli ies alon4 :ith the dates on :hi h the) :ere a33roved or amended has (een maintained. >. All the 3o:ers of the 0oard have (een dul) exer ised and the 0oard has ta6en de isions on material transa tions+ in ludin4 a33ointment and determination of remuneration and terms and ondition of em3lo)ment of the CE$ and other exe utive dire tors. /. 'he meetin4s of the 0oard :ere 3resided over () the Chairman and+ in his a(sen e+ () a dire tor ele ted () the 0oard for this 3ur3ose and the 0oard met at least on e in ever) quarter. Dritten noti es of the 0oard meetin4s+ alon4 :ith a4enda and :or6in4 3a3ers+ :ere ir ulated at least seven da)s (efore the meetin4s. 'he minutes of the meetin4 :ere a33ro3riatel) re orded and ir ulated. ?. 'he 0oard arran4ed an $rientation Course for the dire tors durin4 the finan ial )ear to a33rise them of their duties and res3onsi(ilities. 'he ourse :as ondu ted () Mr.ShafqatMasood "CA and its duration :as four hours. <.. 'he 0oard has a33roved a33ointment of C"$+ Com3an) Se retar) and #ead of Internal Audit+ in ludin4 their remuneration and terms and onditions of em3lo)ment+ as determined () the CE$. <<. 'he dire torsF re3ort for this )ear has (een 3re3ared in om3lian e :ith the requirements of the Code and full) des ri(es the salient matters required to (e dis losed. <=. 'he finan ial statements of the Com3an) :ere dul) endorsed () CE$ and C"$ (efore a33roval of the 0oard. <E. 'he dire tors+ CE$ and exe utives do not hold an) interest in the share of the Com3an) other than that dis losed in the 3attern of shareholdin4. <@. 'he Com3an) has om3lied :ith all the or3orate and finan ial re3ortin4 requirements of the Code. <-. 'he 0oard has formed an audit ommittee. It om3rises three mem(ers+ of :hom t:o are nonJexe utive dire tors. <G. 'he meetin4 of the audit ommittee :ere held at least on e ever) quarter 3rior to a33roval of interim and final results of the Com3an) and as required () the Code. 'he terms of referen e of the ommittee have (een formed and advised to the ommittee for om3lian e. <>. 'he 0oard has setJu3 an internal audit fun tion. </. 'he statutor) auditors of the Com3an) have onfirmed that the) have (een 4iven a satisfa tor) ratin4 under the qualit) ontrol revie: 3ro4ram of the Institute of Chartered A ountants of %a6istan+ that the) or an) of the 3artners of the firm+ theirs3ouses and minor hildren do not hold shares of the Com3an) and that the firm and all its 3artners are

in om3lian e :ith International "ederation of A ountants (I"AC) 4uidelines on ode either as ado3ted () institute of Chartered A ountants $f %a6istan. <?. 'he statutor) auditors or the 3ersons asso iated :ith them have not (een a33ointed to 3rovide other servi es ex e3t in a ordan e :ith the listin4 re4ulations and the auditors have onfirmed that the) have o(served I"AC 4uidelines in this re4ard. De onfirm that all other material 3rin i3les ontained in the Code have (een om3lied :ith.

ON BEHALF OF THE BOARD OF DIRECTORS Sd89KASHIFRIA: CHIEF E;ECUTI<E

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