10 Years at a Glance

2009 2008 2007 2006 2005 2004 2003 2002* 2001 2000

Net Sales 11,428 10,747 7,578 6,127 5,194 4,534 4,031 4,390 3,126 2,806
Rs. Million

Cost of Sales 8,993 8,006 5,480 4,556 3,997 3,259 3,001 3,329 2,345 2,134
Rs. Million

Gross Profit 2,435 2,741 2,098 1,571 1,198 1,275 1,030 1,061 781 672
Rs. Million

%age of Sales 21 26 28 26 23 28 26 24 25 24

Profit After Tax 1,297 1,492 1,089 809 615 670 521 527 347 307
Rs. Million

Capital Expenditure 848 606 114 122 302 448 415 239 121 90
Rs. Million

Dividend Amount 831 924 831 647 323 286 259 259 134 125
Rs. Million

Dividend Percentage 900 1,000 900 700 350 310 280 280 145 135

Earnings per Share 140.43 161.57 117.92 87.62 66.57 72.51 56.43 57.06 37.62 33.26
Rupees

* Data for 15 months

 1

Contents

In the name of Allah The Most Merciful, The Compassionate

02 Company Information
03 Notice of Meeting
06 Chief Executive’s Review
15 Major Events 2009
16 Horizontal Analysis - P&L and B / S
17 Vertical Analysis - P&L and B / S
18 Directors’ Report
25 Forward Looking Statement
26 Stakeholders’ Information
27 Summary of Cash Flow Statements
28 Statement of Value Added & its Distribution
29 Review Report
30 Statement of Compliance
31 Auditors’ Report
32 Balance Sheet
34 Profit and Loss Account
35 Statement of Comprehensive Income
36 Cash Flow Statement
37 Statement of Changes in Equity
38 Notes to the Financial Statements
61 Pattern of Shareholding
Proxy Form
2 Rafhan Maize Products Co. Ltd.

Company Information

Chairman Business Strategy and Planning Committee Shares Registrar

John F. Saucier - Non-Executive John F. Saucier FAMCO Associates (Pvt.) Ltd.

Rashid Ali 1st Floor, State Life Building 1-A,
Vice Chairman Ansar Yahya I.I. Chundrigar Road, Karachi-74000:
Rashid Ali - Non-Executive Anis A. Khan Tel: (92-21) 32427012 - 32425467
Fax: (92-21) 32426752 - 32428310
Chief Executive & Managing Director Shares Transfer Committee
Registered Office
Ansar Yahya - Executive Rashid Ali
Ansar Yahya 1st Floor, Finlay House,
Directors Anis A. Khan I.I. Chundrigar Road,
Sh. Gulzar Hussain Karachi-74000, Pakistan
Cheryl K. Beebe - Non-Executive Ph: (92-21) 32442516 – 32410848
Mary A. Hynes - Non-Executive Fax: (92-21) 32428651
Zulfikar Mannoo - Non-Executive Bankers
Mian M. Adil Mannoo - Non-Executive Citibank, N.A. Head Office & Shares Department
Wisal A. Mannoo - Non-Executive Habib Bank Ltd.
Anis A. Khan - Executive Rakh Canal East Road, Faisalabad,
Meezan Bank Ltd.
Sh. Gulzar Hussain - Non-Executive Pakistan
MCB Bank Ltd.
Ph: (92-41) 8540121-22-23
National Bank of Pakistan
Chief Financial Officer Fax: (92-41) 8711016 - 8502197
Standard Chartered Bank (Pakistan) Ltd.
Website: www.rafhanmaize.com
Anis A. Khan E-mail: corporate@rafhanmaize.com
Auditors
Secretary KPMG Taseer Hadi & Co.
M. Yasin Anwar Chartered Accountants
Lahore – Karachi
Audit Committee
Legal Advisor
Cheryl K. Beebe - Non-Executive
Rashid Ali - Non-Executive M. Ali Seena
Zulfikar Mannoo - Non-Executive C/o Surridge & Beecheno,
Sh. Gulzar Hussain - Non-Executive Karachi

Annual Report
for the year ended December 31, 2009

Notice of Meeting
Notice is hereby given that the 117th General Meeting (Annual
Ordinary) of the shareholders of Rafhan Maize Products Company
Limited will be held on Monday, March 29, 2010 at 10:00 a.m. at the
Overseas Investors Chamber of Commerce and Industry’s Hall, Talpur
Road, Karachi to transact the following business:
1. To confirm minutes of the last General Meeting
(Extraordinary) of the shareholders of the Company held on
Monday, September 7, 2009 at Karachi.
2. To receive, consider and adopt the Audited Accounts of the
Company for the year ended December 31, 2009 together
with the Directors and Auditors Reports thereon.
3. To approve final cash dividend @400% for the year ended
December 31, 2009 as recommended by the Board of
Directors.
4. To appoint auditors and fix their remuneration. The
present auditors Messrs KPMG Taseer Hadi & Co., Chartered
Accountants, retire and being eligible, offer themselves for
re-appointment. The Board of Directors, on recommendations
of the Audit Committee, has proposed appointment of
Messrs KPMG Taseer Hadi & Co., Chartered Accountants for
the year 2010.
Special Business
5. To consider and if thought fit to approve remuneration
payable to Chief Executive and Managing Director.
A Statement U/S 160(1)(b) of the Companies Ordinance,
1984 pertaining to the Special Business is annexed to this
Notice.
By order of the Board
M. Yasin Anwar
Company Secretary
Karachi
March 6, 2010
3
Notes:
1. The Share Transfer Book of the Company will remain closed
from 20th to 29th March, 2010 (both days inclusive) and no
transfer will be accepted for registration during this period.
2. A member entitled to attend, speak and vote at the meeting
shall be entitled to appoint another person as his/her proxy
to attend, speak and vote instead of him/her, and a proxy so
appointed shall have such rights with respect to attending,
speaking and voting at the meeting as are available to a
member. Proxies in order to be effective must be received
by the Company not less than 48 hours before the meeting.
A proxy need not be a member of the Company. Form of
proxy is attached.
3. Shareholders are requested to notify change of address, if
any, to Company’s Shares Registrar immediately.
4. CDC shareholders desiring to attend the meeting are
requested to bring their original Computerized National
Identity Cards, Account and Participant’s ID numbers, for
identification purpose, and in case of proxy, to enclose an
attested copy of his/her CNIC.
Statement U/S 160(1)(b) of the Companies Ordinance 1984
This statement sets out material facts concerning the Special Business
to be transacted at the meeting.
Mr. Ansar Yahya was appointed as Chief Executive and Managing
Director of Rafhan Maize Products Company Limited by the Board on
September 11, 2009. This is the senior most position in the Company.
With the increase in responsibilities, the remuneration of Mr. Ansar
Yahya was to be increased for the financial year 2009.
The Board, in its meeting held on September 11, 2009 has approved
monthly remuneration of Rs.750,000/- including medical and utilities
allowances and provision to him of two Company maintained cars,
life/healthcare insurance cover, personal security, club membership,
leave encashment, retirement and other benefits and allowances in
accordance with Company’s service policy. In addition to performance
bonus (AIP), he will also be entitled to one month statutory bonus.
For this purpose, the following Ordinary Resolution which sets out
terms of appointment of the Chief Executive and Managing Director
will be moved at the meeting.
“RESOLVED that the Company hereby approves and authorizes the
payment to Mr. Ansar Yahya, Chief Executive and Managing Director,
as monthly remuneration of Rs.750,000/- (Rupees seven hundred
fifty thousand only) including medical and utilities allowances;
and provision to him of two Company maintained cars, life/
healthcare insurance cover, personal security, club membership,
leave encashment, retirement and other benefits and allowances in
accordance with Company’s service policy. In addition to performance
bonus (AIP), he will also be entitled to one month statutory bonus.”
“FURTHER RESOLVED that for subsequent years, increase will be up to
30% of the annual remuneration, the specific amount to be determined
by the Chairman of the Board of Directors or his designee.”
4 Rafhan Maize Products Co. Ltd.

Vision

Vision
To be the Premier Provider of Refined
Agriculturally Based Products and
Ingredients in the Region.

Mission Statement
To grow business consistently through positive relationship
with customers to attain full customer satisfaction and
to bring continual improvement by adopting only those
business practices which add value to our customers,
employees and shareholders.

Mr. Rashid Ali, Vice Chairman receiving Top 25 Companies of Pakistan Award from the Karachi Stock Exchange for 13th consecutive year from
Mr. Shaukat Tareen, Federal Minister of Finance

Annual Report
for the year ended December 31, 2009
 5

Our Core Values

Define and direct every decision we make and

every action we take at Rafhan Maize.
Integrity

Excellence Respect

Financial Success

Integrity Respect
We adhere to a code of conduct, We deal with and treat others the
which produces consistently way we want to be dealt with
ethical behaviour. and treated.

Excellence Financial Success

We do the right things in a superior We consistently focus on our
manner while striving for business to create economic value
continuous improvement. today and into the future.
6 Rafhan Maize Products Co. Ltd.

Chief Executive’s Review

It is my pleasure to present the Annual Report and review

of the performance of your Company for the year ended
December 31, 2009. It is encouraging to note that by
the grace of Almighty Allah, the fundamentals of our
Company remained strong despite the volatile economic
and political situation and a highly competitive business
environment.

ECONOMIC ENVIRONMENT OPERATING RESULTS

The year 2009 is termed as a year of
turbulence. The general economic
recession slowed down global and
domestic demand, a massive energy
shortfall with sharp increase in tariffs badly
impacted the working of the industrial
sector and terror incidents and other
security concerns resulted in a huge loss
of human lives, as well as business and
property. Pakistan’s economy could not
maintain its momentum of growth due
to these multiple factors. Real economic
growth, as measured by the GDP, was
reduced to mere average of 2 percent, after
exhibiting an average of 6.6 percent in the
preceding five years. The inflation rate
peaked at 20.8 percent in FY09 versus an
average of 8.3 percent in the previous five
years, largely due to a surge in the global
commodity prices. All these combined
factors negatively impacted the demand
for our products from the industrial and
trade segments.
Net Sales Rs. (Million)
Net Income after Tax Rs. (Million)
Earnings per Share Rupees
Given the scenario of this business and
economic situation during the year 2009,
your Company has been successful, by
the grace of Almighty Allah, generating
net sales of Rs.11,428 million as against
Rs.10,747 million last year; showing an
increase of 6% despite this most difficult
and challenging business environment.
This increase in sales was mainly driven
through better product mix. Unfortunately,
the higher sales volume could not be
translated into better margins due to
the significant increase in the cost of raw
material, utilities and other manufacturing
supplies. The economic recession further
prevented these increased costs of
production from being passed on to the
selling prices. Despite our strong focus
on increasing productivity, reducing
operating costs and increasing volumes,
the profit after tax declined by 13% against
last year.
BUSINESS REVIEW
Your Company has come a long way
from its modest start as a small corn
refiner in the early 50’s and has currently
become one of the premier supplier of
refined agriculturally based products
and ingredients in Pakistan. Our journey
towards excellence is a result of strict
adherence to our core values - Integrity,
Excellence, Respect and Financial Success.
Year ended December 31
2009 2008
11,428 10,747
1,297 1,492
140.43 161.57
Your Company continues to be a leader
in manufacturing and delivering a
diversified range of quality products. A key
factor in our success is the ability to offer
innovative products, customized solutions
and effective customer service. This is a
consequence of our untiring efforts to
assess and focus on the changing needs
of our customers, in addition to proactively
addressing their interests. It is our pride to
offer one of the widest range of ingredients
to our customers in the Industrial, Food and
Animal Nutrition & Health segments and
to serve diversified type of industries like
textile, confectionery, paper & corrugation,
desserts, beverages, ice cream, baking,
pharmaceuticals, poultry, dairy & livestock,
aquaculture, edible oil and many other
food and non–food industries.
INDUSTRIAL BUSINESS
Market conditions in 2009 remained
unfavorable for the industrial ingredients
business due to slowed industrial activities
as a consequence of the severe energy crisis
throughout the country, a highly competitive
domestic and global business environment
and an increase in costs of production.
Moreover, unprecedented liquidity challenges
and high interest rates were other main factors
impacting industrial performance negatively
and resulting in lower sales volumes of our
industrial grade starches.

Annual Report
for the year ended December 31, 2009

The textile industry, the largest consuming
segment of starches, continued to confront
major challenges. With the rising cost of
production, the energy shortage, and
weak global demand, performance of
the country’s biggest export revenue
generating sector remained sluggish.
Due to heavy exports of raw cotton and
cotton yarn, the local prices of cotton yarn
rose to uneconomical levels for the value-
added textile industries. Hence, demand
for starches from the textile sizing and
processing sectors remained weak.
The paper and board industry also
faced adverse effects of the economic
slowdown along with short availability of
fiber for pulping and competition from
cheaper imports. An overall decline in the
consumption of industrial grade starches
was witnessed from this segment as well.
However, demand for Q-TAC® starches
remained steady due to capacity expansions
made by large scale paper mills to meet the
growing demand for paper & board for the
printing of books and for industrial uses.
Whereas overall demand for corrugated
boxes declined, particularly from the textile
sectors, stronger demand for packaging for
food, vegetables and fruits provided support
to Coragum® starches and dextrins for use in
the preparation of corrugated boxes.
FOOD BUSINESS
The quality of food ingredients distinguishes
your Company from other suppliers and
has allowed your Company to become the
preferred supplier of food ingredients. Your
Company has built the food ingredients
business successfully by applying scientific
knowledge and technological innovation.
Our food business line includes GLOBETM
and Snowflake® starches, Rafhan® Liquid
Glucose, Cerelose® Dextrose Monohydrate,
Rafhan® Liquid Caramel and Golden Syrup.
The food business continued to deliver
growth driven by higher volumes of liquid
glucose, dextrose and food grade starches.
The confectionery industry is the largest
consuming segment of liquid glucose. This
industry continued to face a tough time
owing to the scarcity of and an increase
in prices of sugar as well as the security
situation in the northern areas of the
country. Moreover, an increase in the cost
of utilities and the energy shortage also
affected production in the semi and small
scale confectionery sector. However, export
oriented units performed comparatively
well due to a better demand from global
markets which kept the sale of liquid glucose
steady. The high rate of inflation eroded the
purchasing power of the common man,
resulting in curtailed consumer demand in
other food segments. Despite these adverse
external factors, we were able to achieve
the Company’s goals in the food business
through market driven strategies, product
innovation and expansion of the customer
base.
The food business maintains its rising trend
due to new emerging trends in food and
eating habits, growing urbanization with an
increased number of working women and
a trend for high consumption of packaged,
processed and fast foods. The introduction
of new food ingredients to meet the
changing needs of customers and for new
applications provides your Company with
a competitive edge in the market as the
quality supplier of first choice.
7
The demand for dextrose monohydrate
for food applications also remained strong
due to increased consumption in the
food and beverages segments. Our efforts
continued to focus on exploring new
applications for dextrose monohydrate to
widen the customer base.
ANIMAL NUTRITION AND HEALTH
BUSINESS
Your Company also sought to grow
customer interest in animal nutrition
ingredients, including Prairie Gold® and
Rafhan® Maize Gluten Meals, BuffaloTM
Maize Bran, Enzose® Hydrol and Rafhan®
Maize Germ Cake in light of growing
demand from poultry, dairy & livestock
and aquaculture. The prices of poultry
products remained firm due to high
demand which provided sound footing
to the poultry industry business. The
dairy and livestock sector has also made
appreciable progress due to governmental
policies which promote dairy farming. A
good number of dairy farms have been
established in the private sector to meet
the growing demand for milk and allied
products. Consequently, the use of formula
rations for cattle feeding has significantly
increased. The activities of the aquaculture
segment remained promising. Whereas all
of these factors contributed to generate
fair demand for corn gluten meals, feeds
and germ cake; our plants suffered from
production constraints caused by the
energy shortage.
8 Rafhan Maize Products Co. Ltd.
Chief Executive’s Review
EXPORTS
Your Company seeks to expand into new
potential export markets in the region, as
well as to diversify the products offered and
business segments served by our export
business, and are making strategic efforts
to increase export business. Maintaining
close relationships with our customers
allow us to identify and meet their needs
in the export arena.
In 2009, our efforts continued to explore
new customers in the existing and new
markets. However, the overall business
Annual Report
for the year ended December 31, 2009
recession, the liquidity crunch in trade, an
increase in sea freights and tough price
competition from China, India, and Far-
East and European countries constrained
our export volumes. We believe that based
on our future strategies for geographical
expansion into high growth segments and
markets, we will be able to grow our export
business in the future.
RAW MATERIAL
Changes in crop patterns and usage are
putting more pressure on the cost of
agricultural raw materials. In fact, in some
areas, a food surplus situation is turning
into food scarcity.
As you are aware, your Company is a
pioneer in introducing the spring maize
crop in Pakistan and seeks to meet much
of its raw material requirements from local
resources. We are endeavoring to establish
best farming practices and provide the
farmers who supply your Company
with the latest technology. Our team of
agricultural experts works hand in hand
with the farmer community to provide on
the spot agro-technical advice and shares
research findings. We also provide quality
seeds to improve quality and yields. Our
close relationship with the growers began
36 years ago. Our experts have not only
contributed towards growth in the land
area under maize cultivation but also
helped farmers to increase production
yields. Our maize contract farming
program is not only ensuring raw material
supply to our Company but also making
a significant contribution towards the
prosperity of farmers’ community and the
overall agricultural sector.
The outcome of the maize crop remains
very challenging. Planting areas will face
stiff competition from other crops like
wheat, cotton, rice and sugarcane. Due to
the high cost of agricultural inputs and the
prices of other competing crops, the price
of maize grain is projected to maintain
a rising trend which will increase your
Company’s cost of production.

INVESTMENT
Your Company believes in a market driven
approach and stands committed to invest
to meet our customers changing needs.
We are currently manufacturing more
than 50 types of quality products for
our valued customers and our focus has
been increased value added products
to provide customized solutions to our
customers. The Company has strategically
invested to expand production capacity
and value addition of its plant, systems and
facilities to meet the diversified needs of
our customers in Pakistan and the export
region. The Company is closely monitoring
the changing economic, business and
market scenarios and is taking necessary
steps to keep up the pace of growth.
Production capacity of major products has
been enhanced to meet the ever growing
demand.
Your Company has been investing on a
continual basis and during the year under
review, the capital expenditures stood at
Rs.846 million. These investments have
enabled your Company to grow and
continue to compete in the corn refining
industry.
9
OPERATIONS
Our team continued to work tirelessly
to overcome the challenges faced by
the Company due to the energy crisis. In Four international certifications which
particular, your Company continued to reflect our strong commitment to adhere
pursue the strategy of optimization of the to quality, environment, health and safety
manufacturing processes. Several cost standards. Your Company has obtained ISO
and energy saving measures were taken 9001:2000 Quality Management System
to partially offset the financial impact of (QMS), ISO 14001:2004 Environment
escalating costs. Management System (EMS), 18001:2007;
Occupational Health and Safety
Your Company continued to focus on Assessment Series (OHSAS) and HALAL -
upgrading of manufacturing facilities in 2009 certification. These certifications are
order to improve quality and enhance an authentication of the excellence of our
productivity. Processes were reengineered management systems.
and employees were trained for better
coordination and team work. Strict
monitoring of quality and supply of
manufacturing supplies continued
to achieve maximum output. Capital
investment was planned in such a way that
the money spent would add value to our
products and processes.
INTEGRATED MANAGEMENT SYSTEMS
In this competitive world, every
organization is facing tough competition.
Survival requires satisfaction and
confidence of the customers, which is only
possible through strict quality control and
monitoring.
Quality has always been an integral part of
your Company’s operations.
10 Rafhan Maize Products Co. Ltd.
Chief Executive’s Review
Your Company is committed to produce
quality products to match our customers’
requirements and to strengthen our
position as a quality managed Company.
We emphasize customer driven, service
oriented and dynamic quality and
environment systems.
PRODUCT DEVELOPMENT
Development is an integral part of
Company’s operational strategies.
Development allows us to keep pace with
technological advancement and to create
innovative products to maintain market
competitiveness. Rafhan is committed to
enhancing its product base by diversifying
into new functionalities. In order to support
our strategy, the Company has established
Product Development and analytical
support facilities to generate new and
innovative ideas for further development
into market based products.
Technology will play a leading role in our
growth initiatives. The Company has a very
efficient and dedicated team specialized
in developing market driven products
to create more value for its business and
to make sure that we are addressing our
customers’needs. Your Company intends to
meet new challenges and to convert those
challenges into business opportunities.
Several new products have been added
to our product range in addition to
enhancing the customer base. Our
Development Department works in close
collaboration with the parent Company for
Annual Report
for the year ended December 31, 2009
the improvement of existing products and
development of new products to meet the
changing needs of existing customers as
well as new customers. Our endeavor is to
make technology the real differentiator in
the corn refining business in the coming
years.
INFORMATION TECHNOLOGY
Substantial progress has been achieved in
the area of Information Technology (IT) in
line with the long term vision and business
growth strategies. We are using the best
of information technology resources
for quick, real time and effective flow of
information for ourselves, customers and
suppliers. Improvements are being made
in IT applications in order to attain business
efficiency to match international standards.
Your Company has finalized a significant
step towards modernization and
enhancement of companywide IT systems.
It has been planned to implement a new
system to support enterprise resource
planning (ERP). Presence of a strong ERP
system will help optimize all key business
processes.
The new system will support sales
management, supply chain management,
quality assurance and will provide real
time information for prompt management
decisions. Extensive training programs, in-
house and abroad, were initiated for the
orientation and training of key users.
OCCUPATIONAL SAFETY AND HEALTH
Safety of your Company’s employees,
contractors, visitors and the community
is our top priority. This year’s safety theme
was “Safety is Everyone’s Responsibility”.
The importance of safety is demonstrated
in our day to day activities. For example, a
newsletter is frequently issued to increase
safety awareness among employees. A
training program has been developed over
a period of time in line with the Company’s
processes and activities. Employee
participation was enhanced by adopting
new practices which helped to motivate
employees for safe working environment
and enhanced productivity.
November 2009 was observed as
Safety Month at both plants. Practical
demonstrations and drills on fire fighting,
rescue operations, first aid and confined

place entry were conducted. 136 safety
talks were delivered to 1,863 employees
during the month. Safety training was
arranged and on the job talks were
delivered on various other related topics. In
total safety training was provided to 5,558
employees through 450 training sessions
and safety talks. Some employees attended
multiple trainings.
The Company’s goal is to provide a safe
and healthy environment for all. As a result
of our sustained focus on both behavioral
and process aspects of safety, employees
at the Rakh Canal Plant achieved over
5.9 million exposure hours without a lost
workday accident. Employees at the
Cornwala Plant achieved over 10.8 million
exposure hours up to December 31, 2009,
reflecting exposure hours achieved since
1st January 2005.
All efforts remain focused on the
maintenance, preservation and
improvement of environment. We also
ensure that our products are transported
in a safe mode complying with safety
standards. Our program of developing
green belts and tree plantation inside and
around the plants, which we began in
2006 continued. In order to improve the
environment, 800 new plants were planted
at the Cornwala Plant for a total of 9,505
such plantings, and the number of plants
at the Rakh Canal Plant was increased to
1,020. The total area of our green patches
was increased to 202,484 sq. ft. at the
Cornwala Plant and 54,217 sq. ft. at the
Rakh Canal Plant.
ENVIRONMENTAL STEWARDSHIP
PROGRAM
Your Company’s Environmental
Stewardship Program continued with a
goal of building a Better Business and a
Better World using the Earth’s harvest wisely
and responsibly. Environment committees
Mr. Hameedullah Jan Afridi, Federal Minister of
Envirnoment presenting 6th Annual Environment
Excellence Award to Mr. Ansar Yahya CE & MD
have been formed at both plants. An
environmental impact assessment is
carried out for new projects and necessary
measures are taken to minimize adverse
impacts on the environment. Employee’s
awareness of environmental stewardship
issues was enhanced through training
programs for both employees and
contractors. A monthly Stewardship
bulletin is provided to increase employee
awareness.
Environmental stewardship was also
introduced in the offices. We achieved a
17% reduction in the use of paper after
implementing steps to reduce paper
consumption, such as by reusing waste
paper and using electronic mail.
We continue to address the environmental
and health impact of our operations by
reducing waste, emissions discharge and
energy consumption. Your Company aims
to minimize its environmental impact as
much as practically possible. The Company
11
has a system of regular internal review
along with implementation of corrective
or preventive actions. All departments
have set targets for their significant
environmental aspects that are regularly
monitored and actions are taken to keep
them under control.
HR MANAGEMENT AND EMPLOYEES
RELATIONS
In the modern management systems,
the role of human resources (“HR”) has
become very important to allow any
company to compete in the market place
with increased productivity. Your Company
strongly believes in the importance of
having a dedicated and motivated team
to meet the modern challenges. Your
Company is committed to the policy
of equal opportunity employment. We
also believe that our employees are not
only the architects of the future of our
Company, but also the driving force behind
its success.
12 Rafhan Maize Products Co. Ltd.
Chief Executive’s Review
Our employees are dynamic and
vibrant, highly professional, ethical and
result oriented. The Company values its
employees as partners in progress and
believes that the members of Rafhan
family have always made a difference
through their hard work, dedication and
commitment. Our quest to remain the
Employer of Choice continues with various
initiatives to attract and retain talent,
including career development programs,
to motivate and reward performance.
Our HR Department is dedicated to the
Company’s employees and ensures that
the Company has the right people with
the right skills in the right place at the
right time. During the year, your Company
continued to have cordial and harmonious
relationship with its employees. HR Policies
are continually reviewed. Performance
management has taken into account the
industry norms to bring about effective
change needed to meet future challenges.
Your Company firmly believes in providing
a work environment which is conducive for
success. We try to provide employees with
the opportunity for professional fulfillment
and an appropriate work-life balance and
to acknowledge their ability to contribute
equally as part of a diverse workforce.
282 long serving employees were
rewarded with the long service awards,
recognizing service ranging from 10 to
Annual Report
for the year ended December 31, 2009
The Counsellor Sales Person (CSP) Training Programme, October 5-8-2009
40 years. Educational scholarships were
also awarded to children of employees to
both honour the achievements of these
children and their parents, and to confirm
our commitment to higher education.
TRAINING AND MANAGEMENT
DEVELOPMENT
We believe that our employees are the
driving force for success and growth of the
Company. Their contribution is vital to the
Company’s success. Our training programs
are designed to meet our strategic
business needs. Employee development
remained one of the pivotal areas for HR
during the year. The Company’s training
activities are focused on building talent
for future assignments and on providing
the knowledge and knowhow about new
techniques and methods used in the
modern business environment to keep
employees abreast of changes taking place
in the business and market place.
Training is perceived as an investment in
human capital. Based on assessment of
training needs through the Performance
Enhancement Plan, the employees are
exposed to various trainings, technical
courses, workshops and seminars both
in-house and abroad. The Company
regularly conducts in-house seminars/
training courses to enrich organizational
competency levels. New training
programs were initiated encompassing
Performance Management and
Salesperson Competency Development.
2,475 employees were given training
during the year. Some employees also
attended multiple training sessions.
Internships were provided to 43 students
during the year. 14 employees were sent
abroad for training on SAP modules to be
implemented in the Company.
We have nourished an organizational
culture which provides an opportunity to
all employees to learn and develop their
creative skills and professional expertise.
We believe in equality and encourage
our employees to excel in their individual
careers based upon their professional
merit. We are committed to peaceful
working environment for our people that
foster innovation and a culture of mutual
respect and honour.
VALUES AND BUSINESS CONDUCT
POLICIES
The Company’s Core Values and Business
Conduct Policies are critical components
for the Company’s success. In order to
educate and reinforce our Core Values
and Policies on Business Conduct, a
training program titled, ”PILLARS – VALUES
AND BUSINESS CONDUCT WORKSHOP”
has been developed. The program is

Sheikh Muhammad Afzal, Provincial Minister of Envirnoment & Alternate Energy, Government of
Sindh presenting 4th Corporate Social Responsibility National Excellence Award - 2009 to
Mr. Ansar Yahya, Chief Executive and Managing Director
conducted by senior leaders trained by
an international consultant. The program,
which was started in 2008, was continued
during 2009 to promote core values and
business ethics as a competitive advantage.
The management has conducted 28 such
workshops and 100% of the permanent
employees, from senior manager to worker
level, have been trained. This is an ongoing
program. Every new employee attends
this workshop as a part of his induction
program.
SOCIAL RESPONSIBILITY AND
COMMUNITY WORK
Your Company believes in playing a
positive role in the communities in which
we operate. We are committed to follow
the highest social standards in every way
we conduct our business. Company took
several initiatives to meet its corporate
social responsibility obligation and
contributed reasonable financial support
for community welfare in the areas of
health, education and social development
every year and this year was no exception.
The Company has acted as a responsible
corporate citizen and is aware of its
social responsibilities both in terms of
environment and social welfare. We have
provided sites to a local bank, government
primary school and a post office to benefit
the general public and the neighboring
communities. We provide financial support
to the government school. Fully equipped
dispensaries are being maintained at
our Rakh Canal and Cornwala Plants
for Company employees. Educational
scholarships were provided to talented
students to promote higher education. The
management encourages employees to
support and take part in social activities for
the welfare of the community. A donation
of Rs.1.5 million was given to the Chief
Minister of Punjab Relief Fund for internally
displaced people in the northern areas.
Your Company also contributed Rs.1,430
million during the year 2009 to the national
exchequer on account of taxes, duties and
other levies.
We are also conscious of our responsibility
to preserve our natural resources and
have implemented initiatives to protect
the environment by continuing our
plantation drive inside the plants and
in the surrounding agricultural fields, in
addition to our Environmental Stewardship
Program, mentioned above.
Your Company believes in working as part
of a community and will continue to look
for ways to contribute to the general well-
being of the society and to promote social
awareness.
BUSINESS RISKS, CHALLENGES AND
FUTURE PROSPECTS
The economic situation in Pakistan
is showing signs of returning to
13
The Managing Sales Performance (MSP) Coaching
Programme for Business Managers
macroeconomic stability, with most of
the key indicators continuing to show
positive trends in the recent months. The
real GDP growth in the current fiscal year
is projected to be around 3.3 percent,
higher than 2 percent growth seen in
FY09. A modest improvement in aggregate
demand was seen as the manufacturing
sector posted 0.7% growth, according
to the latest report released by the State
Bank of Pakistan. However, improvement
in the business environment will largely
depend on the economic policies of the
government. The persistent inflation,
sluggish activity in the real sector, internal
security environment and weak recovery in
the global economy present a challenging
environment for reviving growth in the
economy. Controlling inflation has been
problematic due to the depreciation of
the Pak Rupee and the rising cost of food
items including wheat and sugar. Rising oil
prices in the international market will also
push up domestic energy costs, leading to
an increase in inflationary trends. On the
external sector front, rising commodity
14 Rafhan Maize Products Co. Ltd.
Chief Executive’s Review
Mr. Saleem Raza, Governor State Bank of Pakistan presenting Best Corporate Report Award to
Mr. Anis A. Khan, Chief Financial Officer and Director
prices, the high cost of inputs, the
energy deficit with increased tariffs and
dampened external demand pose barriers
for the rapid recovery of exports and
constraints on manufacturing capacity to
grow.
Maize is our basic raw material. Due to
shifting of the maize growing area to
wheat and cotton crops and a shortage
of water for irrigation, the land area for the
spring maize crop is projected to decrease
by 15-20%. The anticipated decrease
in crop area and consequent lower
production of maize may result in higher
raw material prices. It will be difficult to
pass on the total impact on cost of raw
material and utilities to the customers.
Your Company has a track record of
meeting challenges in this difficult
business environment. The management
is committed to maintaining its focus
on the implementation of growth
initiatives in all business segments and
will continue to take proactive measures
to mitigate potential risks. We recognize
that our strength lies in the strength of our
customers. Your Company will continue
to provide them with quality products and
services.
CORPORATE DISTINCTIONS
Your Company also continued to
demonstrate a high quality of corporate
excellence. Based on strong operating
results, your Company received the “Top
25 Companies of Pakistan Award” from
the Karachi Stock Exchange for the 13th
consecutive year. Your Company also
Annual Report
for the year ended December 31, 2009
ACKNOWLEDGMENTS
We are thankful to our customers for their
continuing confidence in our products
and services. Their continued support is
providing us confidence in our growth
initiatives.
We also want to express our gratitude
and appreciation to all our employees
who have worked tirelessly and delivered
outstanding performance in the backdrop
of the economic recession and a difficult
business situation. We also salute their hard
work, loyalty and dedication. We greatly
value the support and cooperation of our
suppliers, dealers, bankers and all stake
holders who are helping and contributing
towards the continued growth of our
Company.
was awarded the Best Corporate Report
Award for the eighth consecutive time for
We are thankful to the Board of Directors
best presented accounts from the Institute
for their guidance and valuable support
of Chartered Accountants of Pakistan
to deliver results despite challenging
and Institute of Cost & Management
businesses environment. We are also
Accountants of Pakistan. The special
thankful for the trust and confidence
Merit Export Trophy from the Federation
reposed by our shareholders in our
of Pakistan Chambers of Commerce and
management.
Industry on export of Corn (Maize) derived
products for the year 2008-09 was another
We pray to Almighty Allah to provide
corporate distinction. Your Company also
us the courage and wisdom to face the
received:
challenges ahead and work even harder
• Award on Best Practices of for the prosperity of the Company and its
Occupational Health, Safety & stake holders. May Allah give us success
Environment from Employers’ in our future endeavors and prosperous
Federation of Pakistan and growth to the Company! A’meen.
International Labour Organization
(ILO).
• CSR National Excellence Award
organized by CSR Association of
Pakistan.
• Annual Environment Excellence Ansar Yahya
Award from the National Forum for Chief Executive and
Environment and Health. Managing Director
Faisalabad
BOARD OF DIRECTORS February 15, 2010
Mr. E. A. Nomani, one of the most
senior members of the Board, retired
in September 2009. His guidance and
valuable contributions during decades of
long association with the Company are
laudable and will be long remembered.
We welcome Sh. Gulzar Hussain who
rejoined the Board in September
2009. The Company will benefit from
his farsightedness and thoughtful
observations in the current challenging
business environment.
 15

Rafhan Calendar of Major Events - 2009

March 14 “Top 25 Companies Awards” from The Karachi Stock Exchange

April 29 “Best Practices in Occupational Health, Safety & Environment (OHSE) Award 2008” from the
Employers’ Federation of Pakistan and International Labour Organization.

May 14 “26th Corporate Excellence Awards – Certificate of Excellence” in Food and Allied Sector from
the Management Association of Pakistan.

June 15 “Best Corporate Report Award – 2008” and got Ist position in Miscellaneous Sector from the
Joint Committee of Institute of Chartered Accountants of Pakistan/Institute of Chartered &
Management Accountants of Pakistan.

June 25 Haj balloting was held where 16 lucky winners amongst staff and workers were selected to
perform Haj.

July 02 “HALAL CERTIFICATION” from Jamia Ashrafia, Lahore and Moody International.

July 03 Long Service Awards Ceremony was held and awards were presented to employees who
completed 10 to 40 years’ service with the Company.

July 09 “6th Annual Environment Excellence Award – 2009” by National Forum for Environment &
Health.

September 10 Certified for OHSAS 18001:2007 (Occupational Health & Safety Assessment Series) by Moody
International, Pakistan.

October 07 – 09 Two days in-house training workshop was conducted on “The Counsellor Sales Person” where
services of a foreign Workshop Conductor were hired.

October 10 The Company arranges two picnic trips every year. This year, about 100 employees enjoyed
picnic party at Kalar Kahar.

November 03 Crisis Management Simulation on a mock crisis scenario was conducted.

November 14 The Special Merit Export Award from the Federation of Pakistan Chamber of Commerce and
Industry on export of Corn (Maize) derived products.

November November was observed as “Safety Month” at both plants. Safety slogan for the year was
“Safety is Everyone’s Responsibility”.

January - November Held 9 training workshops titled “Pillars – Values and Business Conduct Policies” with the
participation of 268 employees.

November 11 Second picnic party comprising 225 employees was arranged for Gatwala Park, Faisalabad.

December 12 Christian employees are also provided financial support to visit their religious places through a
draw.

December 14 “4th Corporate Social Responsibility National Excellence Award – 2009” by CSR Association of
Pakistan.
16 Rafhan Maize Products Co. Ltd.

Horizontal Analysis of Profit and Loss Account

2009 2008 2007 2006 2005 2004

Sales 106% 142% 124% 118% 115% 112%

Cost of sales 112% 146% 120% 114% 123% 109%
Gross profit 89% 131% 134% 131% 94% 124%
Distribution cost 73% 84% 179% 128% 142% 194%
Administrative expenses 113% 108% 107% 105% 119% 108%
Operating profit 88% 138% 133% 135% 89% 123%
Other operating income 87% 145% 141% 95% 147% 108%
Finance cost 135% 306% 58% 247% 162% 73%
Other operating expenses 88% 137% 135% 145% 82% 116%
Profit before taxation 88% 137% 134% 131% 91% 124%
Taxation 89% 136% 134% 131% 89% 116%
Profit after taxation 87% 137% 135% 132% 92% 128%

(Note: 2003 has been taken as base year and percentage variations have been worked out year on year basis.)

Horizontal Analysis of Balance Sheet

2009 2008 2007 2006 2005 2004

NON CURRENT ASSETS

Property, plant and equipment 114% 103% 112% 113% 91% 222%
Capital work-in-progress 196% 566% 33% 55% 38% 38%

Employees retirement benefits 22% 75% 290% 94% - -

Long term loans 451% 54% 58% 103% 90% 93%

CURRENT ASSETS
Stores and spares 99% 128% 125% 109% 114% 148%
Stock in trade 48% 177% 117% 84% 116% 118%
Trade debts 92% 105% 123% 123% 130% 122%
Loans and advances 48% 143% 197% 152% 72% 109%
Trade deposits and prepayments 85% 123% 84% 100% 75% 535%
Other receivables 102% 1609% 104% 48% 300% 27%
Cash and bank balances 4905% 4% 129% 1631% 44% 134%

TOTAL ASSETS 100% 134% 112% 100% 113% 125%

CURRENT LIABILITIES
Trade and other payables 96% 130% 107% 99% 113% 119%
Mark up accrued on short term running finances 101% 13970% 3% 61% 1245% -
Short term running finances - secured - - - - 102% -
(Refer note below)
Provision for taxation 143% 188% 143% 84% 201% 18%

NON CURRENT LIABILITIES

Deferred taxation 111% 93% 133% 132% 94% 500%

SHARE CAPITAL AND RESERVES

Share capital 100% 100% 100% 100% 100% 100%
Reserves 112% 119% 111% 107% 114% 132%

TOTAL LIABILITIES 100% 134% 112% 100% 113% 125%

1. No percentage has been worked out where there were no short term running finances in current or corresponding year.
2. 2003 has been taken as base year and percentage variations have been worked out year on year basis.

Annual Report
for the year ended December 31, 2009
 17

Vertical Analysis of Profit and Loss Account

2009 2008 2007 2006 2005 2004

Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Cost of sales 78.7% 74.5% 72.3% 74.4% 76.9% 71.9%
Gross profit 21.3% 25.5% 27.7% 25.6% 23.1% 28.1%
Distribution cost 1.0% 1.5% 2.5% 1.7% 1.6% 1.3%
Administrative expenses 1.6% 1.5% 2.0% 2.3% 2.6% 2.5%
Operating profit 18.6% 22.5% 23.2% 21.6% 18.8% 24.3%
Other operating income 0.7% 0.8% 0.8% 0.7% 0.9% 0.7%
Finance cost 0.4% 0.3% 0.2% 0.3% 0.2% 0.1%
Other operating expenses 1.3% 1.6% 1.6% 1.5% 1.2% 1.7%
Profit before taxation 17.6% 21.4% 22.2% 20.4% 18.3% 23.2%
Taxation 6.3% 7.5% 7.8% 7.2% 6.5% 8.4%
Profit after taxation 11.3% 13.9% 14.4% 13.2% 11.8% 14.8%

Vertical Analysis of Balance Sheet

2009 2008 2007 2006 2005 2004

NON CURRENT ASSETS

Property, plant and equipment 33.3% 29.4% 38.1% 38.2% 33.6% 41.9%
Capital work-in-progress 18.6% 9.5% 2.3% 7.7% 14.0% 7.7%

Employees retirement benefits 0.3% 1.4% 2.4% 0.9% 1.0% 0.0%

Long term loans 0.1% 0.0% 0.0% 0.1% 0.1% 0.1%

CURRENT ASSETS
Stores and spares 5.2% 5.3% 5.5% 5.0% 4.6% 4.5%
Stock in trade 22.0% 45.5% 34.5% 32.8% 39.1% 38.0%
Trade debts 5.9% 6.5% 8.3% 7.6% 6.1% 5.3%
Loans and advances 0.2% 0.5% 0.4% 0.2% 0.2% 0.3%
Trade deposits and prepayments 0.4% 0.5% 0.5% 0.7% 0.7% 1.1%
Other receivables 1.2% 1.2% 0.1% 0.1% 0.2% 0.1%
Cash and bank balances 12.7% 0.3% 7.7% 6.7% 0.4% 1.1%

TOTAL ASSETS 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

CURRENT LIABILITIES
Trade and other payables 13.8% 14.5% 14.8% 15.7% 15.8% 15.8%
Mark up accrued on short term running finances 0.2% 0.2% 0.0% 0.1% 0.1% 0.0%
Short term running finances - secured 0.0% 9.3% 0.0% 0.0% 5.4% 6.0%
Provision for taxation 5.5% 3.9% 2.0% 1.5% 1.8% 1.0%

NON CURRENT LIABILITIES

Deferred taxation 4.9% 4.4% 6.4% 5.4% 4.1% 4.9%

SHARE CAPITAL AND RESERVES

Share capital 1.7% 1.7% 2.3% 2.6% 2.6% 3.0%
Reserves 73.8% 65.9% 74.4% 74.7% 70.1% 69.2%

TOTAL LIABILITIES 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

18 Rafhan Maize Products Co. Ltd.

Directors’ Report

The Directors of your Company feel pleasure in presenting the annual audited accounts
along with auditors’ report thereon for the year ended December 31, 2009.
Financial Results
Profit and Appropriations
Year ended December 31
2009 2008
(Rupees in Thousands)

Profit after taxation 1,297,080 1,492,365

Actuarial gains/(losses) of employees
retirement benefits (36,513) (15,977)
Un-appropriated profit brought forward 3,447,983 2,895,238
4,708,550 4,371,626
Appropriations
Final Dividend 2008 @400% (2007: @400%) 369,457 369,457
1st Interim Dividend 2009 @250% (2008: @350%) 230,911 323,275
2nd Interim Dividend 2009 @250% (2008: @250%) 230,910 230,911
831,278 923,643
Un-appropriated Profit 3,877,272 3,447,983
Earnings per Share (Rupees) 140.43 161.57

Chief Executive’s Review

The Directors of the Company endorse the contents of the Chief Executive’s Review
which covers review of Company’s business and operations, outlook and investment
plans for strategic growth.

Distribution of Sales
(Percentage)

0.4% 0.1%
7.6%

11.3%

5.3%

75.3%

Material & Services Taxation

Employee Cost Finance Cost
Dividend & Retention Society Welfare

Annual Report
for the year ended December 31, 2009
 19

Sales Profit after Tax

(Rupees in Million) (Rupees in Million)

1,492
11,428
12,000 1500
10,747
1,297

9,600 1200
1,089

7,578
7,200 900
809
6,127
5,194 670
615
4,800 4,534 600

2,400 300

0 0
2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009

Corporate Governance
Your Company is committed to maintain
high standards of good corporate
governance without any exception. The
Directors are pleased to state that your
Company is compliant with the provisions
of the Code of Corporate Governance
as required by SECP and formed as part
of stock exchanges listing regulations.
Statement of compliance with Code of
Corporate Governance is annexed.
Disclosures under Code of Corporate
Governance
Corporate and Financial Reporting
Framework
(a) The financial statements prepared by
the management of the Company,
fairly present state of its affairs, the
result of its operations, cash flows and
changes in equity.
(b) Proper books of accounts of the
Company have been maintained.
(c) Appropriate accounting policies
have been consistently applied in
preparation of financial statements
and accounting estimates are based
on reasonable and prudent judgment.
(d) International Accounting Standards,
as applicable in Pakistan, have been
followed in preparation of financial
statements and any departure there-
from has been adequately disclosed.
(e) The system of internal control is sound
in design and has been effectively
implemented and monitored.
(f ) There are no significant doubts upon
the Company’s ability to continue as a
going concern.
(g) There has been no material departure
from the best practices of corporate
governance as detailed in the listing
regulations.
20 Rafhan Maize Products Co. Ltd.

Directors’ Report

Earnings per Share Capital Expenditure

(Rupees) (Rupees in Million)

161.57 848
170 900

140.43

136 720
117.92
606

102 540
87.62 448
72.51
68 66.57 360
302

34 180
122 114

0 0
2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009

Key operating and financial data of last six years are as follows:

2009 2008 2007 2006 2005 2004

Net Sales (Rs’Mio) 11,428 10,747 7,578 6,127 5,194 4,534

Cost of Sales (Rs’Mio) 8,993 8,006 5,480 4,556 3,997 3,259
Gross Profit (Rs’Mio) 2,435 2,741 2,098 1,571 1,198 1,275
%age of Sales 21 26 28 26 23 28
Operating Profit (Rs’Mio) 2,131 2,415 1,755 1,321 978 1,101
%age of Sales 19 22 23 22 19 24
Profit Before Tax (Rs’Mio) 2,012 2,299 1,681 1,252 953 1,050
Profit After Tax (Rs’Mio) 1,297 1,492 1,089 809 615 670
Earnings per Share Rupees 140.43 161.57 117.92 87.62 66.57 72.51
Dividend Amount (Rs’Mio) 831 924 831 647 323 286
Dividend Percentage 900 1,000 900 700 350 310
Capital Expenditure (Rs’Mio) 848 606 114 122 302 448

Ten Years Performance showing key indicators has been given on the inside cover sheet of this report.

Annual Report
for the year ended December 31, 2009
 21

Directors’ Report

Value of investments of employees retirement funds:

2009 2008
Rs. in million

Provident Fund as at June 30 683.457 600.706

Gratuity Fund as at December 31 464.553 582.149
Superannuation Fund as at December 31 271.036 242.847

Board of Directors
The Board of Directors comprises of two executive and eight non-executive directors. The
current members of the Board of Directors have been listed in the Company Information.
During the year under review, no casual vacancy occurred on the Board. However, election
of directors was held after completion of tenure of three years of the Board. One new
director was elected against one of the retired directors.

Attendance at Board Meetings

During the year ended December 31, 2009, five meetings of Board of Directors were held
and attended as follows:
Name of No. of meetings
Name of Director Alternate Director attended

John F. Saucier M. Maqbool Ahmad 4

Rashid Ali 5
Ansar Yahya 5
Cheryl K. Beebe Sh. Gulzar Hussain 3
S. Yousuf Hashmi
Mary A. Hynes S. Yousuf Hashmi 3
Abdul Khalil
Ehsan A. Nomani 2
Zulfikar Mannoo 4
Mian M. Adil Mannoo 3
Wisal A. Mannoo 4
Anis A. Khan 5
Sh. Gulzar Hussain 2

In September, 2009, Sh. Gulzar Hussain was elected as Director against the vacancy of
retired director Mr. Ehsan A. Nomani.

Sh. Gulzar Hussain remained Alternate Director of Ms. Cheryl K. Beebe up to Sep.9, 2009 and
onward, Mr. S. Yousuf Hashmi is her Alternate Director.

Mr. S. Yousuf Hashmi remained Alternate Director of Ms. Mary A. Hynes up to Sep.9, 2009
and onward, Mr. Abdul Khalil is her Alternate Director.

Transactions in Company’s Shares

CEO, Directors, CFO, Company Secretary and their spouses and minor children have made
no transactions in the Company’s shares during the year except as stated below:

No. of Shares
Purchased Transferred

Mian M. Adil Mannoo Director 200 -

Ehsan A. Nomani Director - 1

Parent Company
Corn Products International, Inc., USA is holding majority shares of the Company.
22 Rafhan Maize Products Co. Ltd.

Directors’ Report

Auditors
The retiring auditors, Messrs KPMG Taseer Hadi & Co., Chartered Accountants, being eligible, offer themselves for re-appointment. The Board of
Directors, on recommendations of Audit Committee, has proposed appointment of Messrs KPMG Taseer Hadi & Co., Chartered Accountants for the
year 2010.

Audit Committee
The Board of Directors has established an Audit Committee in compliance with the Code of Corporate Governance with the following members -
Cheryl K. Beebe - Chairperson - Non Executive Director
Rashid Ali - Member - Non Executive Director
Zulfikar Mannoo - Member - Non Executive Director
Sh. Gulzar Hussain - Member - Non Executive Director

Four meetings of the Audit Committee were held during the year. The Audit Committee reviewed the quarterly, half yearly and annual financial
statements before submission to the Board and their publication. CFO, Head of Internal Audit and a representative of external auditors attended
all the meetings where issues relating to accounts and audit were discussed. The Audit Committee also reviewed internal audit findings and held
separate meetings with internal and external auditors as required under the Code of Corporate Governance. The Audit Committee also discussed
with the external auditors their letter to the management. Related Parties Transactions were also placed before the Audit Committee. The Audit
Committee has fully adopted the terms of reference as specified in Code of Corporate Governance.

Business Strategy & Planning Committee

The Board of Directors has established Business Strategy & Planning Committee comprising of following Board members -
John F. Saucier - Chairman
Rashid Ali - Vice Chairman
Ansar Yahya - Member
Anis A. Khan - Member

Since the establishment of the Committee in September, 2009, one meeting of the Committee has been held. The Committee has to keep a vigilant
eye on the Company’s performance and work out strategy for enhancement of its business.

Shares Transfer Committee

The Board of Directors has established Shares Transfer Committee comprising of following Board members -
Rashid Ali - Chairman
Ansar Yahya - Member
Anis A. Khan - Member
Sh. Gulzar Hussain - Member

Eleven meetings of the Shares Transfer Committee were held during the year. The Committee met from time to time to consider and approve valid
transfers and transmissions of shares or any business related thereto.

Corporate Executive Management Committees

In order to strengthen team spirit and encourage participation in management decisions, following Corporate Executive Management Committees
have been formed -

Executive Management Committee

Ansar Yahya - Chief Executive & Managing Director
Anis A. Khan - Chief Financial Officer & Director
M. Saleem Rana - Director Operations, Safety & Environment

All business decisions are finalized by this team. This committee collaborates to achieve and improve overall performance of the Company, develop
and implement approved business plan objectives and strategies, identify potential problems, monitor investment projects, review expenditures,
identify opportunities/projects and implement good governance throughout Rafhan Maize.

Business Strategy Committee

Ansar Yahya - Chief Executive & Managing Director
Anis A. Khan - Chief Financial Officer & Director
M. Saleem Rana - Director Operations, Safety & Environment
Abdul Khalil - Deputy Director Finance
Muhammad Sarwar - Deputy Director Marketing & Business Development

Annual Report
for the year ended December 31, 2009
 23

Terms of Reference:
• To consider all matters pertaining to Company’s operations, day-to-day affairs requiring collective wisdom of the senior management.
• Preparation of annual business plan, budget, operational model and structure.
• Evaluate market, financial and operational risks, threats and opportunities and devise ways to mitigate the effects of risks on Company’s
performance efficiently and effectively.
• Monitor performance against achievement of goals.
• Provides inputs on new initiatives, products and projects.

Remuneration & Compensation Committee:

Ansar Yahya - Chief Executive & Managing Director
Anis A. Khan - Chief Financial Officer & Director
M. Saleem Rana - Director Operations, Safety & Environment
M. Fayyaz Anwar - Human Resource Manager

Terms of Reference:
The Company believes in happy and satisfied workforce. In order to ensure recruitment of dedicated and devoted employees and also retain
existing ones, the responsibility of this committee is to formulate and implement packages for new employees, consider promotions of existing
workforce through prescribed appraisal forms and review their remunerations.

Crisis Management Committee:

Ansar Yahya - Chief Executive & Managing Director
Anis A. Khan - Chief Financial Officer & Director
M. Saleem Rana - Director Operations, Safety & Environment
Muhammad Sarwar - Deputy Director Marketing & Business Development
Ali Masud Zaidi - Technical Advisor - Projects
S. Raza Haider - Senior Manager Projects
Iftikhar Anwer Khan - P&A & Commercial Manager – South Region
M. Fayyaz Anwar - Human Resource Manager
M. Yasin Anwar - Company Secretary
Nadeem Ahmad - Production Manager
M. Arshad Javed - Assistant Manager (HR & Admn.)

Terms of Reference:
• To assure that Rafhan Maize can effectively manage any unexpected crisis.
• To prepare Company as thoroughly as possible in advance for any crisis; whether involving personnel, plant, product, natural disaster or
any unexpected event of similar nature.
• Compliance of Crisis Management Procedures as per Company’s Crisis Management Manual and Emergency Action Plans.

Systems & Information Technology Committee

Ansar Yahya - Chief Executive & Managing Director
Anis A. Khan - Chief Financial Officer & Director
M. Saleem Rana - Director Operations, Safety & Environment
M. Tayyab Raza - Chief Information Manager (IT)

Terms of Reference:
Rapid changes and improvements are taking place in the IT world. The role of the committee is to adopt latest technologies and modern systems
for overall improvement in the IT area.

Policies on Business Conduct Compliance Committee:

Ansar Yahya - Chief Executive & Managing Director
Anis A. Khan - Chief Financial Officer & Director
M. Saleem Rana - Director Operations, Safety & Environment
Iftikhar A. Khan - P&A & Commercial Manager – South Region
M. Fayyaz Anwar - Human Resource Manager
M. Yasin Anwar - Company Secretary
Iftikhar Hussain - Internal Auditor
24 Rafhan Maize Products Co. Ltd.

Directors’ Report

Terms of Reference:
• Effective communication of Policies on Business Conduct and Core Values.
• Review of implementation and compliance of Company policies.
• Promote compliance and investigate violation of policies, if any.
• Recommendations for appropriate disciplinary actions for violation of policies, if any.

In addition to Corporate Executive Committees, Divisional Committees have also been formed which meet once in a month to review the performance of
the respective divisions and find ways and means to further improve and achieve even better results. The Team Leaders are responsible to hold the meetings
of the Committees.

Divisional Committees include -

1. Finance & IT Committee
2. CAPEX & Projects Review Committee
3. Human Resources Committee
4. Manufacturing Optimization and Regulatory Affairs Committee
5. Supply Chain Task Force
6. Quality Excellence Committee
7. Business Segmentation & New Ingredients Development Committee

One sub-committee under Finance & IT and one under Manufacturing Optimization and Regulatory Affairs have been formed. Moreover, following three
additional sub-committees have also been formed to include the bottom line management in decisions making –

1. Logistics & Inventory Control

2. Quality
3. Products Development

Pattern of Shareholding
Pattern of Shareholding as on December 31, 2009 according to requirements of Code of Corporate Governance and a statement reflecting distribution of
shareholding appears at pages 61 and 62 of this report.

Contribution to National Exchequer

Your Company has contributed Rs.1,299 million (2008:Rs.1,262 million) during the year 2009 to the national exchequer on payments towards sales tax,
income tax, import duties and statutory levies. An amount of Rs.131 million (2008:Rs.116 million) was also paid as withholding income tax deducted by the
Company from shareholders, employees, suppliers and contractors.

Corporate Social Responsibility

Your Company is fully aware of its responsibilities being a responsible corporate citizen. Detailed steps with figures have been mentioned in the Chief
Executive’s Review. A few steps taken by the Company are being given below –

- Provided sites to a local bank, government primary school and a post office to facilitate service to the general public.
- Provides financial support to the Government school.
- Fully equipped dispensaries at Rakh Canal Plant, Faisalabad and Cornwala Plant, Jaranwala are being maintained.
- Plantation drive at the plants and surrounding agri fields to protect the environment.
- Scholarships provided to various talented students to promote higher education.
- Company contributed Rs.1,430 Million during the year to the National Exchequer.
- Promoting maize cultivation in Punjab, Sind and NWFP to enhance agri-based contribution to national economy.
- Several cost and energy savings measures have been taken.
- Integrated Management System (IMS) has four international certifications which include QMS, EMS, OHSAS and HALAL 2009.
- Safety slogan for 2009 was ‘Safety is everyone’s responsibility’. Safety month was observed during 2009.
- Rs.1.5 million were contributed towards Internally Displaced People (IDPs) Fund.
- Internship was provided to 43 students from professional institutions during 2009.

Dividend
The Company has already paid two interim dividends of 250% each. The Directors now propose a final dividend of 400% making the total 900% for the year.

On behalf of the Board

Ansar Yahya
Faisalabad Chief Executive and
February 15, 2010 Managing Director

Annual Report
for the year ended December 31, 2009
 25

Forward Looking Statements

associated risk of hedging against such fluctuations; fluctuations

in the markets and prices for our co-products; particularly
corn oil; fluctuations in aggregate industry supply and market
demand; the behavior of financial markets, including foreign
currency fluctuations and fluctuations in interest and exchange
rates; continued volatility and turmoil in the capital markets; the
commercial and consumer credit environment; general political,
economic, business, market and weather conditions in the various
geographic regions in which we sell our products; future financial
performance of major industries which we serve, including,
without limitation, the food and beverage, pharmaceuticals, paper,
corrugated, textile industries; energy costs and availability, freight
and shipping costs, and changes in regulatory controls regarding
quotas, tariffs, duties, taxes and income tax rates; operating
difficulties; boiler reliability; our ability to effectively integrate
acquired businesses; labor disputes; genetic and biotechnology
This Annual Report contains or may contain forward-looking
issues; changing consumption preferences and trends; increased
statements. The Company intends these forward-looking
competitive and/or customer pressure in the corn-refining industry;
statements to be covered by the safe harbor provisions for such
and the outbreak or continuation of serious communicable disease
statements. These statements include, among other things, any
or hostilities including acts of terrorism. Our forward-looking
predictions regarding the Company’s prospects or future financial
statements speak only as of the date on which they are made
condition, earnings, revenues, expenses or other financial items,
and we do not undertake any obligation to update any forward-
any statements concerning the Company’s prospects or future
looking statement to reflect events or circumstances after the date
operations, including management’s plans or strategies and
of the statement as a result of new information or future events or
objectives therefor and any assumptions, expectations or beliefs
developments. If we do update or correct one or more of these
underlying the foregoing. These statements can sometimes be
statements, investors and others should not conclude that we will
identified by the use of forward looking words such as “may,” “will,”
make additional updates or corrections.
“should,” “anticipate,” “believe,” “plan,” “project,” “estimate,” “expect,”
“intend,”“continue,”“pro forma,”“forecast” or other similar expressions
or the negative thereof. All statements other than statements of
historical facts in this report or referred to in or incorporated by
reference into this report are “forward-looking statements.” These
statements are based on current expectations, but are subject to
certain inherent risks and uncertainties, many of which are difficult
to predict and are beyond our control. Although we believe our
expectations reflected in these forward-looking statements are
based on reasonable assumptions, shareholders are cautioned that
no assurance can be given that our expectations will prove correct.
Actual results and developments may differ materially from the
expectations expressed in or implied by these statements, based
on various factors, including the effects of the global economic
recession and its impact on our sales volumes and pricing of our
products, our ability to collect our receivables from customers
and our ability to raise funds at reasonable rates; fluctuations
in worldwide markets for corn and other commodities, and the
26 Rafhan Maize Products Co. Ltd.

Stakeholders’ Information
Six Years Summary

2009 2008 2007 2006 2005 2004

Investors’ Information

Gross profit ratio Percentage 21.31 25.51 27.69 25.64 23.06 28.12
EBITDA margin to Sales Percentage 19.35 23.03 24.14 23.84 21.76 25.85
Net profit to Sales Percentage 11.35 13.89 14.37 13.21 11.84 14.77
Return on equity Percentage 34.20 45.20 37.87 30.59 25.52 33.61
Return on capital employed Percentage 30.39 39.13 33.23 27.75 22.69 27.82
Weighted average cost of debt Percentage 13.73 12.66 8.91 9.28 6.17 2.16
Inventory turnover ratio Times 6.23 2.98 3.47 3.41 2.60 2.46
No. of days in inventory Days 58.59 122.48 105.19 107.04 140.38 148.37
Debtors turnover ratio Times 36.24 31.28 23.08 22.97 24.01 27.26
No. of days in receivables Days 10.07 11.67 15.81 15.89 15.20 13.39
Creditors turnover ratio Times 12.25 10.45 9.30 8.24 7.18 6.60
No. of days in payables Days 29.80 34.93 39.25 44.30 50.84 55.30
Operating cycle Days 63.89 77.78 73.43 85.11 96.38 97.25
Total assets turnover ratio Times 2.15 2.06 1.92 1.74 1.47 1.45
Fixed assets turnover ratio Times 6.47 6.92 5.05 4.56 4.38 3.47
Current ratio Times 2.44 2.19 3.38 3.08 2.21 2.20
Quick/ Acid test ratio Times 1.05 0.29 1.01 0.89 0.33 0.34
Price earning ratio Times 10.57 14.74 19.12 10.27 10.52 8.55
Cash dividend per share Rupees 90.00 100.00 90.00 70.00 35.00 31.00
Bonus shares issued Percentage - - - - - -
Dividend yield ratio Percentage 6.00 4.00 4.00 8.00 5.00 5.00
Dividend payout ratio Percentage 64.09 61.89 76.32 79.89 52.58 42.75
Dividend cover ratio Times 1.56 1.62 1.31 1.25 1.90 2.34
Debt : Equity ratio - - - - - -
Interest cover Times 42.26 64.65 143.38 62.38 116.33 206.25
Break-up value per share - Refer note below
- Without surplus on revaluation of fixed assets Rupees 433.91 387.43 327.58 295.21 277.72 243.99
- Including the effect of surplus
on revaluation of fixed assets Rupees 433.91 387.43 327.58 295.21 277.72 243.99
Market value per share Rupees 1,485.00 2,381.42 2,255.00 900.00 700.00 620.00
Market value per share during the year (High) Rupees 2,262.35 2,940.00 2,415.00 918.00 700.00 650.00
Market value per share during the year (Low) Rupees 1,286.87 2,300.00 945.00 700.00 594.00 510.00
Earnings before interest, taxes, depreciation
and amortization (EBITDA) Rs. Million 2,211.54 2,475.27 1,829.73 1,460.72 1,130.22 1,171.95

Note: The Company has not carried out any revaluation, hence there is no surplus on revaluation of fixed assets.

Annual Report
for the year ended December 31, 2009
 27

Summary of Cash Flow Statement

2009 2008 2007 2006 2005 2004

(Rupees in Thousand)

Cash flow from operating activities 2,830,047 741,549 1,011,781 1,179,228 599,956 553,329

Cash flow from investing activities (846,392) (604,368) (111,239) (119,926) (299,500) (446,663)

Cash flow from financing activities (1,324,451) (429,291) (831,423) (837,449) (318,987) (98,248)

659,204 (292,110) 69,119 221,853 (18,531) 8,418

Opening cash and cash equivalents 13,730 305,420 236,295 14,484 33,062 24,620

Effect of exchange rate fluctuations 475 420 6 (42) (47) 24

Closing cash and cash equivalents 673,409 13,730 305,420 236,295 14,484 33,062
28 Rafhan Maize Products Co. Ltd.

Statement of Value Added and its Distribution

2009 2008
(Rupees in thousand)

VALUE ADDED

Net sales 11,428,104 10,746,826

Material and services (8,536,013) (7,632,370)
Other income 79,259 90,911

2,971,350 3,205,367

DISTRIBUTION % %

EMPLOYEES AS REMUNERATION

Salaries, wages and amenities 608,737 20.5 559,202 17.4

FINANCIAL CHARGES TO PROVIDERS OF FINANCE

Finance Cost 48,766 1.6 36,123 1.1

GOVERNMENT AS TAXES

Tax 714,784 24.1 806,700 25.1

Workers profit participation fund 108,072 3.6 123,498 3.9
Workers welfare fund 41,500 1.4 47,398 1.5
864,356 29.1 977,596 30.5

SHAREHOLDERS AS DIVIDEND

Cash dividend 831,278 28.0 923,643 28.8

SOCIETY WELFARE

Donation to earthquake victims-IDPs 1,500 0.1 - -

RETAINED WITHIN THE BUSINESS

Depreciation 150,911 5.1 140,081
Retained profit 465,802 15.7 568,722 17.7
616,713 20.8 708,803 22.2

2,971,350 100 3,205,367 100

Annual Report
for the year ended December 31, 2009

Review Report to the Members
on Statement of Compliance with Best Practices of Code of Corporate Governance
We have reviewed the Statement of Compliance with the best
practices contained in the Code of Corporate Governance prepared
by the Board of Directors of Rafhan Maize Product Company Limited
(“the Company”) to comply with the Listing Regulations of Karachi
and Lahore Stock Exchanges.
The responsibility for compliance with the Code of Corporate
Governance is that of the Board of Directors of the Company. Our
responsibility is to review, to the extent where such compliance
can be objectively verified, whether the Statement of Compliance
reflects the status of the Company’s compliance with the provisions
of the Code of Corporate Governance and report if it does not. A
review is limited primarily to inquiries of the Company personnel
and review of various documents prepared by the Company to
comply with the Code. As part of our audit of financial statements
we are required to obtain an understanding of the accounting and
internal control systems sufficient to plan the audit and develop
an effective audit approach. We have not carried out any special
review of the internal control system to enable us to express an
opinion as to whether the Board’s statement on internal control
covers all controls and the effectiveness of such internal controls.
Further, Sub-Regulation (xiii a) of Listing Regulation No. 35
(previously Regulation No. 37) notified by The Karachi Stock
Exchange (Guarantee) Limited vide circular KSE/N-269 dated 19
January 2009 requires the Company to place before the Board
of Directors for their consideration and approval of related party
29
transactions distinguishing between transactions carried out on
terms equivalent to those that prevail in arm’s length transactions
and transactions which are not executed at arm’s length price
recording proper justification for using such alternate pricing
mechanism. Further, all such transactions are also required to be
separately placed before the audit committee.
We are only required and have ensured compliance of requirement
to the extent of approval of related party transactions by the Board
of Directors and placement of such transactions before the audit
committee. We have not carried out any procedures to determine
whether the related party transactions were undertaken at arm’s
length price.
Based on our review, nothing has come to our attention which
causes us to believe that the Statement of Compliance does not
appropriately reflect the Company’s compliance, in all material
respects, with the best practices contained in the Code of Corporate
Governance as applicable to the Company for the year ended 31
December 2009.
Lahore KPMG Taseer Hadi & Co.
February 15, 2010 Chartered Accountants
(Bilal Ali)
30 Rafhan Maize Products Co. Ltd.
Statement of Compliance
with the Code of Corporate Governance -Year ended December 31,2009
This statement is being presented to comply with the Code of
Corporate Governance contained in Listing Regulation No.35
of Karachi Stock Exchange (Guarantee) Limited and Chapter XI
of Lahore Stock Exchange (Guarantee) Limited for the purpose
of establishing a framework of good governance, whereby the
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 the Board has 8 independent
non-executive directors including 3 directors representing
minority shareholders.
2. The directors of the Company have confirmed that none of
them is serving as a 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. None of our directors is a member
of Stock Exchange.
4. No casual vacancy occurred in the Board during the year
under review. However, election of directors was held after
completion of tenure of three years of the Board. One new
director was elected against one of the retired directors.
5. The Company has prepared a ‘Statement of Ethics and
Business Practices’, which has been signed by all the directors
and employees of the Company.
6. The Board has developed a vision/mission statement, overall
corporate strategy and significant policies of the Company.
A complete record of particulars of significant policies along
with the dates on which they were approved or amended has
been maintained.
7. All the powers of the Board have been duly exercised and
decisions on material transactions, including appointment
and determination of remuneration and terms and conditions
of employment of the CEO and other executive directors, have
been taken by the Board.
8. The meetings of the Board were presided over by the Chairman,
and in his absence, by the Vice Chairman, and in their absence
by a director elected by the Board for this purpose and the
Board met at least once in every quarter. Written notices of
the Board meetings, along with agenda and working papers,
were circulated at least seven days before the meetings. The
minutes of the meetings were appropriately recorded and
circulated.
9. The Directors of the Board were apprised of their duties and
responsibilities from time to time during Board meetings.
10. The Board approves appointment of CFO, Company Secretary
and Head of Internal Audit, including their remuneration and
terms and conditions of employment, as determined by the
CEO. However, there was no new appointment against these
posts during the year.
Annual Report
for the year ended December 31, 2009
11. The directors’ report for the year has been prepared in
compliance with the requirements of the Code and fully
describes the salient matters required to be disclosed.
12. The financial statements of the Company were duly endorsed
by CEO and CFO before approval of the Board.
13. The CEO, directors, and executives do not hold any interest in
the shares of the Company other than that disclosed in the
pattern of shareholding.
14. The Company has complied with all the corporate and
financial reporting requirements of the Code.
15. The Board has formed an audit committee comprising of four
non-executive directors as members including the chairman
of the committee.
16. The meetings of the audit committee were held at least once
every quarter prior to approval of interim and final results
of the Company and as required by the Code. The terms of
reference of the committee have been formed and advised to
the committee for compliance. The related party transactions
were placed before the audit committee and approved by the
board of directors. All transactions were made at arm’s length
basis under “Comparable Uncontrolled Price Method”.
17. The related party transactions have been placed before the
audit committee and approved by the board of directors
to comply with the requirements of Listing Regulations of
Karachi and Lahore Stock Exchanges.
18. The Board has set-up an effective internal audit function. The
Internal Auditor is suitably qualified and experienced for the
purpose and is conversant with the policies and procedures
of the Company. The Internal Auditor is involved in internal
audit function on a full time basis.
19. The statutory auditors of the Company have confirmed
that they have been given a satisfactory rating under the
Quality Control Review program of the Institute of Chartered
Accountants of Pakistan, that they or any of the partners of
the firm, their spouses and minor children do not hold shares
of the Company and that the firm and all its partners are in
compliance with International Federation of Accountants
(IFAC) guidelines on code of ethics as adopted by Institute of
Chartered Accountants of Pakistan.
20. The statutory auditors or the persons associated with them
have not been appointed to provide other services except in
accordance with the listing regulations and the auditors have
confirmed that they have observed IFAC guidelines in this
regard.
21. We confirm that all other material principles contained in the
Code have been complied with.
On behalf of the Board
Ansar Yahya
Chief Executive and
Managing Director
Faisalabad
February 15, 2010

Auditors’ Report to the Members
We have audited the annexed balance sheet of Rafhan Maize
Products Co. Ltd. (“the company”) as at 31 December 2009 and
the related profit and loss account, cash flow statement, statement
of comprehensive income 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 auditing standards as
applicable in Pakistan. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the above said statements are free of any material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the above said statements. An audit
also includes assessing the accounting policies and significant
estimates made by management, as well as, evaluating the overall
presentation of the above said statements. We believe that our
audit provides a reasonable basis for our opinion and, after due
verification, we report that:
a) in our opinion, proper books of account have been kept by
the Company as required by the Companies Ordinance, 1984;
b) in our opinion:
i) the balance sheet and profit and loss account together
with the notes thereon have been drawn up in
conformity with the Companies Ordinance, 1984, and are
in agreement with the books of account and are further
in accordance with accounting policies consistently
applied except for changes referred to in note 2.2 to the
financial statements with which we concur;
31
ii) the expenditure incurred during the year was for the
purpose of the Company’s business; and
iii) the business conducted, investments made and the
expenditure incurred during the year were in accordance
with the objects of the Company;
c) in our opinion and to the best of our information and
according to the explanations given to us, the balance sheet,
profit and loss account, cash flow statement, statement of
comprehensive income and statement of changes in equity
together with the notes forming part thereof conform with
approved accounting standards as applicable in Pakistan, and,
give the information required by the Companies Ordinance,
1984, in the manner so required and respectively give a true
and fair view of the state of the Company’s affairs as at 31
December 2009 and of the profit, its comprehensive income,
its cash flows and changes in equity for the year then ended;
and
d) in our opinion Zakat deductible at source under the Zakat
and Ushr Ordinance, 1980(XVIII of 1980), was deducted by the
Company and deposited in the Central Zakat Fund established
under section 7 of that Ordinance.
Lahore KPMG Taseer Hadi & Co.
February 15, 2010 Chartered Accountants
(Bilal Ali)
32 Rafhan Maize Products Co. Ltd.

Balance Sheet
As at 31 December 2009

Note 2009 2008

( Rupees in thousands)

NON CURRENT ASSETS

Property, plant and equipment 5 1,765,365 1,553,156
Capital work in progress 6 987,851 503,559
2,753,216 2,056,715
Employees retirement benefits 7 15,784 71,957
Long term loans - Secured 8 3,564 791

Current assets
Stores and spares 9 277,972 279,768
Stock in trade 10 1,166,118 2,406,062
Trade debts 11 315,365 343,604
Loans and advances 12 11,840 24,493
Trade deposits and short term prepayments 13 22,227 26,256
Other receivables 14 65,029 63,995
Cash and bank balances 15 673,409 13,730
2,531,960 3,157,908
Current liabilities
Trade and other payables 16 734,202 765,924
Mark up accrued on short term running finances 8,601 8,522
Short term running finances - secured 17 - 493,709
Provision for taxation 293,670 205,502
1,036,473 1,473,657
Working capital 1,495,487 1,684,251
Total capital employed 4,268,051 3,813,714

NON CURRENT LIABILITIES

Deferred taxation 18 260,321 235,273

NET CAPITAL EMPLOYED 4,007,730 3,578,441

Ansar Yahya
Anis Ahmad Khan Chief Executive & Zulfikar Mannoo
Director Managing Director Director

Annual Report
for the year ended December 31, 2009
 33

Note 2009 2008

( Rupees in thousands)

Represented by:

Share capital and reserves

Share capital 19 92,364 92,364
Reserves 20 3,915,366 3,486,077

Contingencies and commitments 21

4,007,730 3,578,441

The annexed notes 1 to 38 form an integral part of these financial statements.

Ansar Yahya
Anis Ahmad Khan Chief Executive & Zulfikar Mannoo
Director Managing Director Director
34 Rafhan Maize Products Co. Ltd.

Profit and Loss Account

for the year ended 31 December 2009

Note 2009 2008

( Rupees in thousands)

Sales - Net 22 11,428,104 10,746,826

Cost of sales 23 (8,992,742) (8,005,580)
Gross profit 2,435,362 2,741,246

Distribution cost 24 (116,884) (160,563)

Administrative expenses 25 (187,535) (165,510)
(304,419) (326,073)
Operating profit 2,130,943 2,415,173
Other operating income 26 79,259 90,911
2,210,202 2,506,084

Finance cost 27 (48,766) (36,123)

Other operating expenses 28 (149,572) (170,896)
(198,338) (207,019)
Profit before taxation 2,011,864 2,299,065
Taxation 29 (714,784) (806,700)
Profit after taxation 1,297,080 1,492,365

Earnings per share - Basic and diluted (Rupees) 30 140.43 161.57

The annexed notes 1 to 38 form an integral part of these financial statements.

Ansar Yahya
Anis Ahmad Khan Chief Executive & Zulfikar Mannoo
Director Managing Director Director

Annual Report
for the year ended December 31, 2009
 35

Statement of Comprehensive Income

for the year ended 31 December 2009

2009 2008
( Rupees in thousands)

Profit for the year 1,297,080 1,492,365

Other comprehensive Income:
Acturial loss of retirement benefits recognized directly in equity (56,173) (24,580)
Deferred tax on acturial loss recognized directly in equity 19,660 8,603

Total comprehensive income for the year 1,260,567 1,476,388

The annexed notes 1 to 38 form an integral part of these financial statements.

Ansar Yahya
Anis Ahmad Khan Chief Executive & Zulfikar Mannoo
Director Managing Director Director
36 Rafhan Maize Products Co. Ltd.

Cash Flow Statement

for the year ended 31 December 2009

Note 2009 2008

( Rupees in thousands)

Cash flows from operating activities

Profit before tax 2,011,864 2,299,065
Adjustment for non-cash charges and other items:
Depreciation 150,911 140,081
Provision for employees retirement benefits 18,089 17,145
Provision for doubtful debts 780 3,209
Profit on sale of property, plant and equipment (4,727) (549)
Interest income (4,303) (25,420)
Finance cost 48,766 36,123
Gain on foreign exchange transactions (475) (420)
Markup capitalized 35,458 9,963
Operating profit before working capital changes 2,256,363 2,479,197
(Increase) / decrease in current assets:
Stores and spares 1,796 (60,947)
Stock in trade 1,239,944 (1,044,241)
Trade debts 27,459 (18,424)
Loans and advances 13,587 (7,944)
Trade deposits and short term prepayments 4,029 (4,829)
Other receivables (1,034) (1,405)
1,285,781 (1,137,790)
Increase / (decrease) in current liabilities:
Trade and other payables (32,258) 175,922
Net increase/(decrease) in working capital 1,253,523 (961,868)

Cash generated from operations 3,509,886 1,517,329

Taxes paid (581,908) (746,430)
Employees retirement benefits paid (18,089) (17,145)
Interest received 4,303 25,420
Finance cost paid (84,145) (37,625)
(679,839) (775,780)
Net cash generated from operating activities 2,830,047 741,549
Cash flows from investment activities
Capital Expenditure incurred (847,507) (606,325)
Sale proceeds from sale of property, plant and equipment 4,822 707
Long term loans disbursed (4,826) (230)
Repayment from long term loans 1,119 1,480
Net cash used in investing activities (846,392) (604,368)

Cash flows from financing activities

Dividend paid (830,742) (923,000)
Short term running finances - secured (493,709) 493,709
Net cash used in financing activities (1,324,451) (429,291)
Net (decrease)/increase in cash and cash equivalents 659,204 (292,110)
Cash and cash equivalents at the beginning of the year 13,730 305,420
Effect of exchange rate fluctuations on cash and cash equivalents 475 420
Cash and cash equivalents at the end of the year 15 673,409 13,730

The annexed notes 1 to 38 form an integral part of these financial statements.

Ansar Yahya
Anis Ahmad Khan Chief Executive & Zulfikar Mannoo
Director Managing Director Director

Annual Report
for the year ended December 31, 2009
 37

Statement of Changes in Equity

for the year ended 31 December 2009

Capital Reserves Revenue Reserves

Share Share Unappropriated Total
capital premium Other General profit

( Rupees in thousands)

Balance as at 31 December 2007 92,364 36,946 941 207 2,895,238 3,025,696

Total comprehensive income for the year - - - - 1,476,388 1,476,388

Final dividend 2007 @ Rs. 40 per share - - - - (369,457) (369,457)
Ist interim dividend @ Rs. 35 per share - - - - (323,275) (323,275)
2nd interim dividend @ Rs. 25 per share - - - - (230,911) (230,911)

- - - - 552,745 552,745

Balance as at 31 December 2008 92,364 36,946 941 207 3,447,983 3,578,441

Total comprehensive income for the year - - - - 1,260,567 1,260,567

Final dividend 2008 @ Rs. 40 per share - - - - (369,457) (369,457)
Ist interim dividend @ Rs. 25 per share - - - - (230,911) (230,911)
2nd interim dividend @ Rs. 25 per share - - - - (230,910) (230,910)
- - - - 429,289 429,289

Balance as at 31 December 2009 92,364 36,946 941 207 3,877,272 4,007,730

The annexed notes 1 to 38 form an integral part of these financial statements.

Ansar Yahya
Anis Ahmad Khan Chief Executive & Zulfikar Mannoo
Director Managing Director Director
38 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

1 The Company and its operation

Rafhan Maize Products Company Limited (“the Company”) is incorporated in Pakistan and is listed on the Karachi and Lahore Stock
Exchanges. Corn Products International Inc. Chicago, U.S.A, holds majority shares of the Company. The registered office of the
Company is located at Finlay House, I.I. Chundrigar Road, Karachi.

The Company uses maize as the basic raw material to manufacture and sell a number of industrial products, principal ones being
industrial starches, liquid glucose, dextrose, dextrin and gluten meals.

2 Basis of preparation
2.1 Statement of compliance
These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan
and the requirements of Companies Ordinance, 1984. Approved accounting standards comprise of such International
Financial Reporting Standards (IFRSs) issued by the International Standard Board and Islamic Financial Reporting Standards
(IFAs) issued by the Institute of Chartered Accountants of Pakistan as are notified under the provisions of the Companies
Ordinance, 1984. Wherever, the requirements of the Companies Ordinance, 1984 or directives issued by the Securities
and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of Companies
Ordinance, 1984 or the requirements of the said directives shall prevail.

2.2 Changes in accounting policies

Starting 01 January 2009, the Company has changed its accounting policies in the following areas:

The Company has applied revised IAS 1 “Presentation of Financial Statements (2007)” which became effective from 01
January 2009. This standard required the Company to present in the statement of changes in equity all owner changes in
equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income.

The Company has also applied IFRS 7 “Financial Instruments: Disclosures” from 01 January 2009. As a result, additional
disclosures have been made relating to financial instruments.

2.3 Standards and amendments to published approved International Financial Reporting Standards not yet effective
A number of new standards and amendments to standards are not yet effective for the year ended 31 December 2009, and
have not been applied in preparing these financial statements.

Amendment to IFRS 2 – Share-based Payment – Group Cash-settled Share-based Payment Transactions (effective for annual
periods beginning on or after 1 January 2010). Currently effective IFRSs require attribution of group share-based payment
transactions only if they are equity-settled. The amendments resolve diversity in practice regarding attribution of cash-
settled share-based payment transactions and require an entity receiving goods or services in either an equity-settled or a
cash-settled payment transaction to account for the transaction in its separate or individual financial statements.

Revised IFRS 3 Business Combinations (applicable for annual periods beginning on or after 1 July 2009) broadens among
other things the definition of business resulting in more acquisitions being treated as business combinations, contingent
consideration to be measured at fair value, transaction costs other than share and debt issue costs to be expensed, any pre-
existing interest in an acquiree to be measured at fair value, with the related gain or loss recognized in profit or loss and any
non-controlling (minority) interest to be measured at either fair value, or at its proportionate interest in the identifiable assets
and liabilities of an acquiree, on a transaction-by-transaction basis. The application of this standard is not likely to have an
effect on the Company’s financial statements.

Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations – (effective for annual periods
beginning on or after 1 July 2009). The amendments specify that if an entity is committed to a plan to sell a subsidiary, then it
would classify all of that subsidiary’s assets and liabilities as held for sale if criteria in IFRS 5 are met. This applies regardless of
the entity retaining an interest (other than control) in the subsidiary; and disclosures for discontinued operations are required
by the parent when a subsidiary meets the definition of a discontinued operation. This amendment is not likely to have any
impact on Company’s financial statements.

IAS 24 Related Party Disclosures (revised 2009) – effective for annual periods beginning on or after 1 January 2011. The
revision amends the definition of a related party and modifies certain related party disclosure requirements for government-

Annual Report
for the year ended December 31, 2009
 39

Notes to the Financial Statements

for the year ended 31 December 2009

related entities. The amendment would result in certain changes in disclosures.

Amended IAS 27 Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July
2009) requires accounting for changes in ownership interest by the group in a subsidiary, while maintaining control, to be
recognized as an equity transaction. When the group loses control of subsidiary, any interest retained in the former subsidiary
will be measured at fair value with the gain or loss recognized in the profit or loss. The application of the standard is not likely
to have an effect on the Company’s financial statements.

Amendment to IAS 32 Financial Instruments: Presentation – Classification of Rights Issues (effective for annual periods
beginning on or after 1 February 2010). The IASB amended IAS 32 to allow rights, options or warrants to acquire a fixed
number of the entity’s own equity instruments for a fixed amount of any currency to be classified as equity instruments
provided the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-
derivative equity instruments. This interpretation has no impact on the Company’s financial statements.

Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items (effective for annual
periods beginning on or after 1 July 2009) clarifies the application of existing principles that determine whether specific risks
or portions of cash flows are eligible for designation in a hedging relationship. The amendment is not likely to have an effect
on the Company’s financial statements.

Amendments to IFRIC 14 IAS 19 – The Limit on a Defined Benefit Assets, Minimum Funding Requirements and their Interaction
(effective for annual periods beginning on or after 1 January 2011). These amendments remove unintended consequences
arising from the treatment of prepayments where there is a minimum funding requirement. These amendments result in
prepayments of contributions in certain circumstances being recognized as an asset rather than an expense. This amendment
is not likely to have any impact on Company’s financial statements.

IFRIC 15- Agreement for the Construction of Real Estate (effective for annual periods beginning on or after 1 October 2009)
clarifies the recognition of revenue by real estate developers for sale of units, such as apartments or houses, ‘off-plan’, that is,
before construction is complete. The amendment is not relevant to the Company’s operations.

IFRIC – 17 Distributions of Non-cash Assets to Owners (effective for annual periods beginning on or after 1 July 2009) states
that when a company distributes non cash assets to its shareholders as dividend, the liability for the dividend is measured at
fair value. If there are subsequent changes in the fair value before the liability is discharged, this is recognized in equity. When
the non cash asset is distributed, the difference between the carrying amount and fair value is recognized in the income
statement. As the Company does not distribute non-cash assets to its shareholders, this interpretation has no impact on the
Company’s financial statements.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective for annual periods beginning on or after 1 July
2010). This interpretation provides guidance on the accounting for debt for equity swaps. This interpretation has no impact
on the Company’s financial statements.

3. Basis of measurement
These financial statements have been prepared under the historical cost convention, except for recognition of certain employees
retirement benefits at present value.

4. Summary of significant accounting policies

4.1 Trade debts
Trade debts are carried at original invoice amount less an estimate made for doubtful debts based on a review of all
outstanding amounts at the year end. Bad debts are written off when identified.

4.2 Revenue recognition

Sale of goods
Revenue represents the fair value of the consideration received or receivable for goods sold, net of discounts and sales tax.
Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company
and the amount of revenue, and the associated cost incurred, or to be incurred, can be measured reliably.
40 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

Revenue from sales is recognized upon transfer of significant risks and rewards of ownership of the goods to buyers i.e.
dispatch of goods to customers.

Interest
Income from bank deposits and loans is recognized on accrual basis.

4.3 Taxation
Income tax expense comprises current and deferred tax. Income tax is recognized in profit and loss except to the extent that
it relates to items recognized directly in equity, in which case it is recognized in equity.

Current
Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for
taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the
profit for the year if enacted after taking into account tax credits, rebates and exemptions, if any. The charge for current tax
also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments
framed during the year for such years.

Deferred
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from
differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against
which the deductible temporary differences, unused tax losses and tax credits can be utilised.

Deferred tax assets and liabilities are calculated at the rates that are expected to apply to the period when the asset is realized
or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance
sheet date. Deferred tax is charged or credited in the income statement, except in the case of items credited or charged to
equity in which case it is included in equity.

4.4 Tangible fixed assets

Property, plant and equipment except freehold land are stated at cost less accumulated depreciation and any identified
impairment loss. Freehold land is stated at cost less any identified impairment loss. Cost in relation to certain property, plant
and equipment signifies historical cost and borrowing costs as referred to in note 4.13.
Depreciation on property, plant and equipment is provided on a straight-line-basis. Rates of depreciation, which are disclosed
in note 5, are designed to write off the cost over the estimated useful lives of the assets. Depreciation methods, residual
values and useful lifes of the assets are reviewed atleast at each financial year end and adjusted if impact on depreciation is
significant.

Depreciation on additions to property, plant and equipment is charged from the month in which the asset is acquired or
capitalised, while no depreciation is charged for the month in which the asset is disposed off.

The Company assesses at each balance sheet date whether there is any indication that property, plant and equipment may
be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded
in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written
down to their recoverable amounts and the resulting impairment loss is recognised in income currently. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. Where an impairment loss is recognised, the
depreciation charge is adjusted in the future periods to allocate the asset’s revised carrying amount over its estimated useful
life.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can
be measured reliably. All other repair and maintenance costs are charged to income during the period in which they are
incurred.

The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the
carrying amount of the asset is recognised as an income or expense.

Annual Report
for the year ended December 31, 2009
 41

Notes to the Financial Statements

for the year ended 31 December 2009

4.5 Capital work-in-progress

Capital work in progress and stores held for capital expenditure are stated at cost less any identified impairment loss and
represents expenditure incurred on property, plant and equipment during the construction and installation. Cost also
includes applicable borrowing costs. Transfers are made to relevant property, plant and equipment category as and when
assets are available for use.

4.6 Retirement and termination benefits

Defined contributions scheme
The Company operates a defined contribution approved provident fund for all its eligible employees, in which the Company
and the employees make equal monthly contributions at the rate of 14% of basic salary including dearness allowance of
employees.

Defined benefits schemes

The Company also maintains an approved gratuity fund for all its employees and an approved pension fund for officers and
above-grade employees, having a service period of minimum 10 years.

The contributions are made to pension and gratuity funds in accordance with the actuary’s recommendations based on the
actuarial valuation of these funds as at 31 December 2009.

The future contribution rates of these funds include allowances for deficit and surplus. Projected unit credit method is used
for valuation of these funds based on the following significant assumptions:

Gratuity Fund Pension Fund

2009 2008 2009 2008

Discount rate 12.75% 15% 12.75% 15%

Expected return on plan assets 13% 15% 13% 15%
Contribution rates (% of basic salaries) 6% 7% 11% 9%
Annual increase in pension rate - - 5% 5%
Expected rate of growth per annum in
future salaries 12.75% 15% 12.75% 15%

The actuarial gains and losses are recognized in the period in which they occur directly in shareholders’ equity and presented
in the statement of comprehensive income.

4.7 Compensated absences

The Company accounts for compensated absences on the basis of unavailed earned leave balance of each employee at the
end of the year.

4.8 Stores and spares

These are valued at lower of cost, which is calculated according to moving average method, and net realizable value. Stores
in transit are valued at invoice value including other charges, if any, incurred thereon.

4.9 Stocks in trade

Stocks in trade have been valued at the lower of cost and net realizable value. Net realizable value signifies the estimated
selling price in the ordinary course of the business less estimated costs to complete and to make the sale.

Cost has been determined as follows:

Raw materials Moving average cost

Work in process Standard cost, which approximates actual cost
Finished goods Standard cost, which approximates actual cost

The variance between standard and actual cost on work in process and finished goods is charged to cost of sales.
42 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

4.10 Research and development cost

Research and development costs are charged to profit and loss account in the year in which these are incurred.

4.11 Foreign currencies

All monetary assets and liabilities in foreign currencies are translated into rupees at exchange rates prevailing at the balance
sheet date. Transactions in foreign currencies are translated into rupees at exchange rates prevailing at the date of transaction.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated into
rupees at exchange rates prevailing at the date of transaction. Non-monetary assets and liabilities denominated in foreign
currency that are stated at fair value are translated into rupees at exchange rates prevailing at the date when fair values are
determined. Exchange gains and losses are included in the income currently.

4.12 Cash and cash equivalents

For the purpose of cash flow statement, cash and cash equivalents comprise of cheques in hand, cash and bank
balances.

4.13 Borrowing costs

Borrowing costs incurred on related property, plant and equipment are capitalized till the date of commissioning. All other
borrowing costs are included in the profit and loss of the period on an accrual basis.

4.14 Provisions
Provisions are recognized when the Company has a legal or constructive obligation as a result of past events and it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of
the amount can be made. However, provisions are reviewed at each balance sheet date and adjusted to reflect current best
estimate.

4.15 Financial assets and liabilities

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the
instrument. All financial assets and liabilities are initially measured at cost, which is the fair value of the consideration given
and received respectively. These financial assets and liabilities are subsequently measured at fair value, amortised cost or
cost, as the case may be. The particular measurement methods adopted are disclosed in the individual policy statements
associated with each item.

4.16 Off-setting of financial assets and financial liabilities

A financial asset and a financial liability is offset and the net amount is reported in the balance sheet if the Company has a
legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset
and settle the liability simultaneously.

4.17 Trade and other payables

Financial liabilities are initially recognized at fair value plus directly attributable cost, if any, and subsequently at amortized
cost using effective interest rate method.

Other amounts payable are carried at cost which is the fair value of the consideration to be paid in future for goods and
services.

4.18 Impairment losses

Financial assets
A financial asset is considered to be impaired if objective evidence indicate that one or more events had a negative effect on
the estimated future cash flow of that asset.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as a difference between its
carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. An
impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.

Annual Report
for the year ended December 31, 2009
 43

Notes to the Financial Statements

for the year ended 31 December 2009

Individually significant financial assets are tested for impairment on a individual basis. The remaining financial assets are
assessed collectively in groups that share similar credit risk characteristics.

Non financial assets

The carrying amounts of the Company’s non-financial assets, other than biological assets, investment property, inventories
and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have
indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent
from other assets and groups.

Impairment losses are recognized in profit and loss. Impairment losses recognized in respect of cash-generating units are
allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount
of the other assets of the unit on a pro-rata basis.

4.19 Derivative financial instruments

These are initially recorded at fair value on the date a derivative contract is entered into and are re-measured to fair value
at subsequent reporting dates. The method of recognizing the resulting gain or loss depends on whether the derivative
is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain
derivatives as cash flow hedges.

The Company documents at the inception of the transaction the relationship between the hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in cash flow of hedged items. Derivatives are carried as assets
when fair value is positive and liabilities when the fair value is negative.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the profit and loss
account.

Amounts accumulated in equity are recognized in profit and loss account in the periods when the hedging items will effect
profit or loss. However, when the forecast hedged transaction results in the recognition of a non-financial asset or a liability,
the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the
cost of the asset or liability.

Any gain or loss from change in fair vaue of derivatives that do not qualify for hedge accounting are taken directly to profit
and loss account.

4.20 Related party transactions

Transactions with related parties are priced at comparable uncontrolled market price except for the assets sold to employees
under the employees’ car scheme as approved by the board of directors.

Parties are said to be related if they are able to influence the operating and financial decisions of the Company and vice
versa.

4.21 Dividends
Dividend distribution to the shareholders is recognized as a liability in the period in which it is approved by the
shareholders.
44 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

5 Property, plant and equipment

COST DEPRECIATION Book value
As at As at As at As at as at
01 January 31 December 01 January On Charge for 31 December 31 December
2009 Additions Disposals 2009 2009 disposals the year 2009 2009 Rate
(Rupees in thousands) %

Free-hold land 265,322 - - 265,322 - - - - 265,322

Factory building on free-hold land 603,546 108,218 (207) 711,557 342,951 (207) 51,161 393,905 317,652 10
Plant, machinery and equipment 2,100,324 227,585 (14,127) 2,313,782 1,139,482 (14,127) 82,615 1,207,970 1,105,812 10
Other machinery and equipment 51,353 4,643 (4,119) 51,877 27,754 (4,118) 1,711 25,347 26,530 10-12
Furniture, fixture and office
equipment 46,020 8,099 (4,178) 49,941 35,850 (4,175) 3,959 35,634 14,307 20-25
Automobiles 77,276 14,670 (8,973) 82,973 44,648 (8,882) 11,465 47,231 35,742 20

2009 3,143,841 363,215 (31,604) 3,475,452 1,590,685 (31,509) 150,911 1,710,087 1,765,365

COST DEPRECIATION Book value

As at As at As at As at as at
01 January 31 December 01 January On Charge for 31 December 31 December
2008 Additions Disposals 2008 2008 disposals the year 2008 2008 Rate
(Rupees in thousands) %

Free-hold land 138,078 127,244 - 265,322 - - - - 265,322

Factory building on free-hold land 593,932 9,614 - 603,546 295,010 - 47,941 342,951 260,595 10
Plant, machinery and equipment 2,068,341 32,153 (170) 2,100,324 1,061,819 (170) 77,833 1,139,482 960,842 10
Other machinery and equipment 46,412 4,949 (8) 51,353 26,249 (8) 1,513 27,754 23,599 10-12
Furniture, fixture and office
equipment 43,603 2,481 (64) 46,020 32,053 (64) 3,861 35,850 10,170 20-25
Automobiles 63,247 15,217 (1,188) 77,276 36,745 (1,030) 8,933 44,648 32,628 20
2008 2,953,613 191,658 (1,430) 3,143,841 1,451,876 (1,272) 140,081 1,590,685 1,553,156

5.1 The cost of fully depreciated assets which are still in use is Rs. (thousands) 701,077 (2008: Rs. (thousands) 721,550).

Note 2009 2008

( Rupees in thousands)

5.2 Depreciation charge for the year has been allocated as follows:

Cost of sales 23 140,628 132,325

Distribution cost 24 4,503 3,016
Administrative expenses 25 5,780 4,740
150,911 140,081

5.3 Disposal of property, plant and equipment

Book Sale
Description Sold to Cost value Proceeds Profit Mode of sale
( Rupees in thousands)

Automobile Mr. Manzoor ul Haq

Civil Quarters Block B 749 81 502 421 Tender
GM Abbad Faisalabad

Automobile Mr. Rashid Ali 4,877 - 975 975 Company policy

Vice Chairman
Chief Executive and Managing Director
6, Chandni Street, Al-Najaf Colony
Faisalabad
Assets with individual
book values of less than
Rs.50,000 Various 25,978 14 3,345 3,331 Tender
31,604 95 4,822 4,727

5.4 Automobile (two nos.) were sold to Mr. Rashid Ali, Vice Chairman, Chief Executive and Managing Director under Company’s
car scheme approved by the Board of Directors in their meeting dated November 07, 1992 and subsequently approved by the
shareholders in Annual General Meeting held on December 24, 1992.

Annual Report
for the year ended December 31, 2009
 45

Notes to the Financial Statements

for the year ended 31 December 2009

6. Capital work in progress

Cornwala/ Plant
Mehran expansion
projects projects Others 2009 2008
( Rupees in thousands)

Civil works and buildings 235,409 293 - 235,702 145,382

Plant and machinery 470,954 1,975 - 472,929 253,314
Project stores 272,406 - - 272,406 98,049
Advance for land - note 6.2 - - 6,814 6,814 6,814
2009 978,769 2,268 6,814 987,851 503,559
2008 495,661 1,084 6,814

6.1 Cornwala / Mehran projects includes markup amounting to Rs. (thousands) 35,458 (2008: Rs. (thousands) 9,963)
capitalized during the year at the rate ranging from 11.64% to 16.75% per annum (2008: 10:40% to 16:70%).

6.2 This represents full payment of Rs. (thousands) 1,814 (2008 : Rs. (thousands) 1,814) and legal cost incurred
Rs. (thousands) 5,000 (2008:Rs. (thousands) 5,000) for the Company’s factory land in Faisalabad which was acquired from
the government in 1953 but registration of title is still pending in the name of Company.

2009 2008
( Rupees in thousands)

7. Employees retirement benefits

Gratuity 83,988 89,746

Pension (68,204) (17,789)
15,784 71,957

7.1 Movements in the net assets/(liabilities) recognized in the balance sheet are as follows:

Gratuity Pension
2009 2008 2009 2008
( Rupees in thousands)

Net assets/(liabilities) at the

beginning of the year 89,746 90,263 (17,789) 6,274
Expenses recognized (8,090) (9,259) (9,999) (7,886)
Contribution paid 8,090 9,259 9,999 7,886
Actuarial loss recognized (5,758) (517) (50,415) (24,063)
Net assets/(liabilities) at the end of the year 83,988 89,746 (68,204) (17,789)

7.2 The amounts recognized in the profit and

loss account are as follows:

Current service cost 20,613 17,856 7,517 8,483

Interest cost 60,633 35,160 38,679 20,645
Expected return on plan assets (73,156) (43,757) (36,197) (21,242)
8,090 9,259 9,999 7,886
46 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

Gratuity Pension
( Rupees in thousands)

2009 2008 2009 2008

7.3 The amounts recognized in the balance
sheet are as follows:
Present value of the obligation (380,565) (492,403) (339,240) (260,636)
Fair value of plan assets 464,533 582,149 271,036 242,847
Net asset/(liability) 83,968 89,746 (68,204) (17,789)

7.4 Movement in present value of defined

benefit obligation
Present value of defined benefit obligation
as at the beginning of the year 492,403 416,871 260,636 205,827

Current service cost 20,613 17,856 7,517 8,483

Interest cost 60,633 35,160 38,679 20,645
Actual benefits paid during the period (195,573) (14,639) (11,471) (7,392)
Actuarial (gain)/loss on obligation. 2,489 37,155 43,879 33,073
Present value of defined benefit
obligation as at the end of the year 380,565 492,403 339,240 260,636

7.5 Movement in fair value of plan assets

Fair value of plan asset as at the
beginning of the year 582,149 507,134 242,847 212,101
Expected return on assets 73,156 43,757 36,197 21,242
Actual contribution by the employer 8,090 9,259 9,999 7,886
Actual paid during the year (195,573) (14,639) (11,471) (7,392)
Actuarial (gain)/loss on plan asset (3,269) 36,638 (6,536) 9,010
Fair value of plan asset as at the
end of the year 464,553 582,149 271,036 242,847

7.6 Actual return on plan assets

Expected return on plan assets 73,156 43,757 36,197 21,242
Actuarial (loss)/gain on plan assets (3,269) 36,638 (6,536) 9,010
69,887 80,395 29,661 30,252

(Percentage) (Percentage)
2009 2008 2009 2008
7.7 Plan assets consist of the following
Debt instruments 86% 45% 84% 70%
Cash and other deposits 14% 55% 16% 30%

2009 2008 2007 2006 2005

( Rupees in thousands)

7.8 Historical information-gratuity

Present value of defined
benefit obligation (380,565) (492,403) (416,871) (393,382) (320,395)
Fair value of plan assets 464,553 582,149 507,134 445,285 391,652
Surplus in the plan 83,988 89,746 90,263 51,903 71,257
Experience adjustment arising
on plan liabilities 2,489 37,155 (408) 60,504 (1,896)
Experience adjustment arising
on plan assets (3,269) 36,638 37,952 41,150 36,497

Annual Report
for the year ended December 31, 2009
 47

Notes to the Financial Statements

for the year ended 31 December 2009

2009 2008 2007 2006 2005

( Rupees in thousands)

7.9 Historical information-pension

Present value of defined
benefit obligation (339,240) (260,636) (205,827) (201,449) (189,549)
Fair value of plan assets 271,036 242,847 212,101 182,781 153,466
Surplus/(deficit) in the plan (68,204) (17,789) 6,274 (18,668) (36,083)
Experience adjustment arising
on plan liabilities 43,879 33,073 (13,183) (5,572) 2,345
Experience adjustment arising
on plan assets (6,536) 9,010 11,759 11,183 8,403

Note 2009 2008

( Rupees in thousands)

8 Long term loans - secured considered good

Staff loans outstanding for periods less than three years to:
Executives 8.4 3,073 885
Other employees 2,208 689
5,281 1,574
Less: Current maturity 12 1,717 783
3,564 791

8.1 Loans to other employees represent house building loans provided to employees in accordance with Company’s policy
and are repayable over a period of five years. These loans are secured against the employees provident fund. Loans to
employees carry interest at the rate of approximately 8% per annum (2008: 8 % per annum).

8.2 Maximum aggregate balance during the year, at the end of any month, of loans to executives was Rs. (thousands) 3,073
(2008: Rs. (thousands) 1,730).

8.3 No loans were granted to the directors and chief executive of the Company.

Note 2009 2008

( Rupees in thousands)

8.4 Loans to executives

Opening balance 885 1,820
Disbursement during the year 2,830 -
Recoveries during the year (642) (935)
Closing balance 3,073 885

9 Stores and spares

Stores 186,744 158,514
Spares 109,406 97,889
296,150 256,403
Less: Provision for slow moving and obsolete items 9.1 (34,598) (31,019)
261,552 225,384
Stores in transit 16,420 54,384
277,972 279,768

9.1 Provision for slow moving and obsolete items

Opening balance 31,019 25,297
Provision for the year 3,579 5,722
Closing balance 34,598 31,019
48 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

Note 2009 2008

( Rupees in thousands)

10 Stock in trade
Raw materials
Corn and cobs 643,791 1,887,117
Corn seeds 12,673 5,096
Other raw material 63 -
656,527 1,892,213
Work in process 34,715 28,785
Finished goods 474,876 485,064
1,166,118 2,406,062
11 Trade debts
Secured - against security deposits and bank guarantees 216,381 233,869
Unsecured - considered good
Related parties 34,874 38,528
Others 64,110 71,207
98,984 109,735
Considered doubtful 11,428 10,651
110,412 120,386
Less: Provision for doubtful balances 11.1 (11,428) (10,651)
98,984 109,735
315,365 343,604
11.1 Provision for doubtful balances
Opening balance 10,651 7,442
Provision for the year 780 3,209
Bad debts written off (3) -
Closing balance 11,428 10,651

12 Loans and advances

Loans and advances - considered good
Suppliers of goods and services 6,477 21,165
Employees 12.1 3,646 2,545
Current maturity of long term loans 8 1,717 783
11,840 24,493

12.1 No advances were given to executives, directors and chief executive of the Company during the year.

13 Trade deposits and short term prepayments

Security deposits 8,870 8,794
L/C margin 546 5,154
Prepayments 12,811 12,308
22,227 26,256

Annual Report
for the year ended December 31, 2009
 49

Notes to the Financial Statements

for the year ended 31 December 2009

Note 2009 2008

( Rupees in thousands)

14 Other receivables
Other receivables - Farmers balances
Considered good 1,566 1,569
Considered doubtful 1,675 1,675
3,241 3,244
Less: Provision for doubtful balances (1,675) (1,675)
1,566 1,569
Due from related parties 1,119 1,455
Workers’ profit participation fund 14.1 428 1,177
Income tax refundable 14.2 58,613 58,613
Others 3,303 1,181
65,029 63,995
14.1 Workers’ profit participation fund
Opening balance 1,177 627
Provision for the year 28 (108,072) (123,498)
Payment to the fund 107,323 124,048
Closing balance 428 1,177

14.2 The Income Tax Department has charged tax of Rs. (thousands) 81,078 for the assessment year 2001-2002 (financial
year ended 30 September 2000) under section 12(9A) of the Income Tax Ordinance, 1979 (Repealed) on the allegation
that the dividend distribution by the Company was less than 40% of its after tax profits. Against this levy, the Company
filed an appeal with the Commissioner of Income Tax (Appeals), which was rejected. The Company preferred an appeal
with the Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals). The ITAT vide order dated 21 April
2006 decided the case in favour of the Company and confirmed that levy of tax under section 12(9A) was against the
provisions of the law and directed the assessing officer for decision in accordance with the provisions of amended
clause 59 of Part IV, Second Schedule to the repealed Income Tax Ordinance, 1979.

The Income Tax Department has moved to Lahore High Court on 17 October 2006, against the orders of ITAT. The
case has not been fixed for hearing so far.No provision has been made in these financial statements as according to the
management of the Company, it is probable that this case will be decided in favour of the Company. The legal advisors
of the Company have concurred with the management’s view.
Note 2009 2008
( Rupees in thousands)

15 Cash and bank balances

Cash at banks
on current accounts 45,547 351
on PLS accounts 15.1 606,870 28
652,417 379

Cash in hand 2,358 1,958

Cheques in hand 18,634 11,393
20,992 13,351
673,409 13,730

15.1 These carry profit at rates ranging from 5% to 12% per annum (2008: 1% to 10.50% per annum).
50 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

Note 2009 2008

( Rupees in thousands)

16 Trade and other payables

Creditors 138,187 203,504
Advances from customers 78,320 80,938
Security deposits from dealers and contractors 16.1 174,219 167,170
Other deposits 16.2 857 1,677
Accrued liabilities 277,131 240,646
Workers’ welfare fund 28 41,067 47,398
Employees provident fund 1,071 3,026
Sales tax payable 16,777 16,485
Special excise duty payable 2,915 1,958
Unclaimed dividend 3,658 3,122
734,202 765,924

16.1 As per the terms of agreement between dealers and contractors, the Company can utilize these deposits in the normal
course of business.

16.2 These represent deposits held against tenders for the sale of scrap.

17 Short term running finance - secured

The aggregate financing facility available from commercial banks is Rs. (thousands) 3,000,000 (2008: Rs. (thousands) 2,300,000).

The rate of markup ranges from 11.64 % to 16.75 % per annum (2008 : 10.40 % to 16.70 % per annum). These facilities are secured
by joint pari passu hypothecation charge on current assets of the Company and are subject to repricing on monthly/ quar ter ly
basis.

The unutilized facility for letters of credit as on 31 December 2009 amounts to Rs. (thousands) 592,901 (2008: Rs. (thousands)
284,087 ).

Note 2009 2008

( Rupees in thousands)

18 Deferred taxation
The liability for deferred taxation comprises timing
differences relating to:

Accelerated tax depreciation 271,959 225,971

Employees retirement benefits 5,525 25,185
Others (17,163) (15,883)
260,321 235,273

Annual Report
for the year ended December 31, 2009
 51

Notes to the Financial Statements

for the year ended 31 December 2009

2009 2008 2009 2008

(Number of shares) (Rupees in thousands)

19 Authorized, issued, subscribed and

paid up capital

Authorized share capital

Ordinary shares of Rs.10 each 20,000,000 20,000,000 200,000 200,000

19.1 Issued, subscribed and

paid up capital

Ordinary shares of Rs. 10 each

fully paid up for cash 1,858,991 1,858,991 18,590 18,590
Issued other than cash - plant
and machinery 36,294 36,294 363 363
Issued as fully paid bonus shares 7,341,143 7,341,143 73,411 73,411
9,236,428 9,236,428 92,364 92,364

19.2 Corn Products International Inc., USA holds 6,494,243 (2008: 6,494,243) ordinary shares of Rs. 10 each as at
31 December 2009.
Note 2009 2008
( Rupees in thousands)

20 Reserves
Capital
Share premium 20.1 36,946 36,946
Other 20.2 941 941
37,887 37,887
Revenue

General reserve 207 207

Unappropriated Profit 3,877,272 3,447,983
3,877,479 3,448,190
3,915,366 3,486,077

20.1 This reserve can be utilized in accordance with the provision of section 83(2) of the Companies Ordinance, 1984.

20.2 This reserve was created under section 15BB of the Income Tax Act, 1922 to avail the tax exemption in prior years.

21 Contingencies and commitments

a) Certain labour cases are pending before the labour courts and their financial effect cannot be reasonably determined
due to their nature and uncertainty surrounding them. The possibility of any outflow for settlement of these claims is
considered remote.

b) Land registration fee as per Note 6.2.

c) Commitments in respect of capital expenditure contracted but not provided amounts to Rs. (thousands) 474,254 (2008:
Rs. (thousands) 650,715).

d) Commitments in respect of purchase of corn amounts to Rs. (thousands) 4,028,200 (2008: Rs. (thousands)
2,720,089).

e) Commitments in respect of counter guarantees given to banks in consideration of their guarantees in the normal
course of business amount to Rs. (thousands) 105,972 (2008: Rs. (thousands) 80,922).
52 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

2009 2008
Note ( Rupees in thousands)

22 Sales - net
Domestic 11,684,655 10,816,972
Export 304,567 433,825
11,989,222 11,250,797
Less: Sales tax 516,762 461,401
Special excise duty 33,182 27,941
Trade discount and commission 11,174 14,629
561,118 503,971
11,428,104 10,746,826

23 Cost of sales
Raw material consumed:
Corn 6,486,348 5,793,989
Others 4,626 113,675
Stores 254,649 224,513
Packing material 224,387 247,571
6,970,010 6,379,748
Factory expenses:
Salaries, wages and amenities 23.1 420,824 383,099
Spares consumed 102,523 105,418
Fuel and power 1,163,108 1,006,596
Rent, rates and taxes 25,525 3,564
Repairs and maintenance 13,519 14,468
Depreciation 5.2 140,628 132,325
Insurance 10,231 8,493
Factory general expenses 142,116 127,933
2,018,474 1,781,896
8,988,484 8,161,644
Add: Opening work in process stock 28,785 26,699
9,017,269 8,188,343
Less: Closing work in process stock (34,715) (28,785)
Cost of production 8,982,554 8,159,558
Add: Opening finished goods stock 485,064 331,086
9,467,618 8,490,644
Less: Closing finished goods stock (474,876) (485,064)
8,992,742 8,005,580

23.1 Salaries, wages and amenities include Rs. (thousands) 8,248 (2008: Rs. (thousands) 8,055) in respect of contribution
to pension and gratuity fund and Rs. (thousands) 10,264 (2008: Rs. (thousands) 8,977) in respect of contributions to
provident fund.

Annual Report
for the year ended December 31, 2009
 53

Notes to the Financial Statements

for the year ended 31 December 2009

Note 2009 2008

( Rupees in thousands)

24 Distribution cost
Salaries and amenities 24.1 47,306 44,782
Traveling and automobile expenses 8,559 7,341
Freight and distribution 48,044 96,131
Insurance 2,485 2,226
Rent, rates and taxes 1,007 758
Repair and maintenance 345 134
Electricity charges 93 66
Printing and stationery 486 423
Telephone and postage 1,475 1,481
Advertising and sales promotion 625 630
Depreciation 5.2 4,503 3,016
Market research and development 58 44
Provision for doubtful debts 780 3,209
Miscellaneous expenses 1,118 322
116,884 160,563

24.1 Salaries and amenities include Rs. (thousands) 2,380 (2008: Rs. (thousands) 2,169) in respect of contribution to pension
and gratuity fund and Rs. (thousands) 1,951 (2008: Rs. (thousands) 1,909) in respect of contributions to provident fund.

Note 2009 2008

( Rupees in thousands)

25 Administrative expenses
Salaries and amenities 25.1 140,608 131,321
Traveling and automobile expenses 10,852 10,248
Insurance 881 929
Rent, rates and taxes 1,361 1,019
Repair and maintenance 10,518 6,050
Electricity charges 1,489 1,190
Printing and stationery 936 967
Telephone and postage 3,132 3,329
Legal and professional charges 5,524 2,657
Depreciation 5.2 5,780 4,740
Auditors’ remuneration 25.2 1,704 1,511
Miscellaneous expenses 3,250 1,549
Donation and Charity 1,500 -
187,535 165,510

25.1 Salaries and amenities include Rs. (thousands) 7,461 (2008: Rs. (thousands) 6,921) in respect of contribution to pension
and gratuity fund and Rs. (thousands) 6,637 (2008: Rs. (thousands) 6,309) in respect of contributions to provident fund.
54 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

Note 2009 2008

( Rupees in thousands)

25.2 Auditors’ remuneration

Statutory audit fee 670 600
Review of half yearly accounts 230 200
Services in connection with review and reporting of
accounts to CPI Inc. 635 560
Audit of gratuity and pension funds 84 76
Out of pocket expenses reimbursed 85 75
1,704 1,511
26 Other operating income
Mark up on staff loans and profit on bank deposits 4,303 25,420
Profit on sale of scrap 61,895 33,393
Profit on sale of property, plant and equipment 4,727 549
Profit on sale of pesticides and seeds 2,992 5,737
Commission received 1,210 1,249
Foreign exchange gain 1,200 23,584
Miscellaneous income 2,932 979
79,259 90,911

27 Finance cost
Mark up on short term running finances 42,401 29,192
Bank charges and commission 6,365 6,931
48,766 36,123
28 Other operating expenses
Workers’ profit participation fund 14.1 108,072 123,498
Workers’ welfare fund 41,500 47,398
149,572 170,896

29 Taxation
Current 670,076 815,161
Deferred 44,708 (8,461)
714,784 806,700

2009 2008
% %
29.1 Numerical reconciliation between average effective
tax rate and applicable tax rate:
Applicable tax rate 35.00 35.00
Tax effect of inadmissible expenses 0.32 0.40
Tax effect of admissible expenses (0.33) (0.08)
Effect of presumptive tax regime and others 0.54 (0.23)
Average effective tax rate (tax expense
divided by profit before tax) 35.53 35.09

Annual Report
for the year ended December 31, 2009
 55

Notes to the Financial Statements

for the year ended 31 December 2009

2009 2008
( Rupees in thousands)

30 Earnings per share - basic and diluted

30.1 Earning per share - Basic
Profit attributable to ordinary shareholders (Rupees in thousands) 1,297,080 1,492,365
Weighted average number of ordinary shares (Numbers) 9,236,428 9,236,428
Earnings per share - basic (Rupees) 140.43 161.57

30.2 Earning per share - Diluted

There is no dilution effect on basic earnings per share as the Company has no such commitments.

31 Financial instruments
The Company’s financial liabilities mainly comprise trade and other payables and short term running finances. The main purpose
of financial liabilities is to raise finance for the Company’s financial assets which comprise long term loan, trade debts, Loans and
advances, trade deposits and short term prepayments, other receivables and Cash and bank balances.

The company has exposure to the following risks from its use of financial instruments:
- Credit risk
- Liquidity risk
- Market risk

The Board of Directors has overall responsibility for the establishment and oversight of Company’s risk management framework.
The Board is also responsible for developing and monitoring the Company’s risk management policies.

31.1 Credit risk

Credit risk represents the accounting loss that would be recognised at the reporting date if counter parties fail
completely to perform as contracted and arise principally from long term loans, trade debts, loans and advances, trade
deposits and short term prepay ment and other receivables and cash and bank balances. Out of the total financial assets
of Rs. 1,085,249 thousand (2008: Rs. 451,721 thousand) financial assets which are subject to credit risk amount to Rs.
1,011,175 thousand (2008: Rs. 378,825 thousand).

To manage exposure to credit risk in respect of trade receivables, management performs credit reviews taking into
account the customer’s financial position, past experience and other factors. Where considered necessary, advance
payments are obtained from certain parties. Sales made to major customers are secured through security deposits,
bank guarantees and letters of credit. To manage exposure to credit risk, the company applies credit limits to its
customer and obtains advances from certain customers.

All investing transactions are settled / paid for upon delivery. The Company’s policy is to enter into financial instrument
contract by following internal guidelines such as approving counterparties and approving credits.

Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have
similar economic features that would cause their abilities to meet contractual obligation to be similarly effected by the
changes in economic, political or other conditions. The Company believes that it is not exposed to major concentration
of credit risk.

The carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The
maximum exposure to credit risk at the reporting date is:
56 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

2009 2008
( Rupees in thousands)

Long term loans 5,281 1,574

Trade debts 315,365 343,604
Loans and advances 3,646 2,545
Trade deposits and short term prepayments 9,416 13,948
Other receivables 6,416 5,382
Cash and bank balances 671,051 11,772
1,011,175 378,825

Secured 221,662 235,443

Unsecured 789,513 143,382
1,011,175 378,825

The company has placed its funds with banks which are rated A+ by PACRA/JCR VIS

The maximum exposure to credit risk for trade debts as at 31 December 2009
by geographic regions was:

Domestic 287,809 291,223

Foreign 38,984 63,032
326,793 354,255
The aging of trade receivables at the reporting date is:
Past due 0 - 30 days 319,300 326,086
Past due 31 - 60 days 5,214 4,720
Past due 61 - 90 days 1,383 14,855
Past due 366 & above 896 8,594
326,793 354,255

The aging of impairment loss against trade receivable:

Past due 0 - 30 days 3,935 -
Past due 31 - 60 days 5,214 -
Past due 61 - 90 days 1,383 2,056
Past due 366 & above 896 8,594
11,428 10,650

The movement in provision for impairment of receivables is as follows:

Opening balance 10,651 7,442
Provision for the year 780 3,209
Bad debts written off (3) -
Closing balance 11,428 10,651

31.2 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s
approach to managing liquidity is to ensure as far as possible to always have sufficient liquidity to meet its liabilities
when due. The Company is not materially exposed to liquidity risk as substantially all obligations / commitments of
the Company are short term in nature and are restricted to the extent of available liquidity. In addition, the Company
has obtained overdraft facilities from various commercial banks to meet any deficit, if required to meet the short term
liquidity commitments.

Annual Report
for the year ended December 31, 2009
 57

Notes to the Financial Statements

for the year ended 31 December 2009

The table below summarizes the maturity profile of the Company’s financial liabilities as at reporting date:

31 December 2009
Carrying Less than More than
amount 12 month 1 year
( Rupees in thousands)

Financial Liabilities
Trade and other payables 655,882 655,882 -
Mark up accrued on short term running finances 8,601 8,601 -
Short term running finances - secured - - -
664,483 664,483 -

31 December 2008
Carrying Less than More than
amount 12 month 1 year
( Rupees in thousands)

Financial Liabilities
Trade and other payables 684,986 684,986 -
Mark up accrued on short term running finances 8,522 8,522 -
Short term running finances - secured 493,709 493,709 -
1,187,217 1,187,217 -
31.3 Market risk
Market risk is the risk that changes in market price, such as foreign exchange rates, interest rates and equity prices will
effect the Company’s income or the value of its holdings of financial instruments.

31.4 Currency risk

The Company is exposed to currency risk on import of project related and stores and spares items and export of
goods mainly denominated in US dollars and EURO and on foreign currency bank accounts. The Company’s exposure
to foreign currency risk for US Dollars and EURO are as follows:

2009 2009 2008 2008

USD EURO USD EURO

Foreign debtors 462,520 - 804,434 -

Foreign currency bank accounts 100 - 100 -
Gross financial assets exposure 462,620 - 804,534 -
Trade and other payables (228,226) - (168,434) (509,791)
Net exposure 234,394 - 636,100 (509,791)

The following significant exchange rates have been applied:

2009 2008 2009 2008
Average rate for the year Reporting date rate

USD to PKR 81.66 70.12 84.25 79.10

EURO to PKR 113.52 102.80 121.10 111.11
58 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

Sensitivity analysis:
At reporting date, if the PKR had strengthened by 10% against the foreign currencies with all other variables held constant,
before tax profit for the year would have been lower by the amount shown below, mainly as a result of net foreign
exchange gain on translation of foreign debtors, foreign currency bank account and trade and other payables.

2009 2008
( Rupees in thousands)

Effect on profit and loss

US Dollar 1,975 5,032
Euro - (5,664)
1,975 (632)

The weakening of the PKR against foreign currencies would have had an equal but opposite impact on the post tax loss.

The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and assets / liabilities of the Company.

31.5 Interest rate risk

At the reporting date the interest rate profile of the Company’s significant interest bearing financial instruments was as follows:

2009 2008 2009 2008

Effective rate Carrying amount
(in Percentage) (Rupees in thousands)

Financial Assets
Variable rate instruments:
Cash and bank balances - saving 5 to 12 1 to 10.50 606,870 28

Financial liabilities
Variable rate instruments:
Short term borrowings 11.64 to 16.75 10.40 to 16.70 - 493,709

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit and loss.
Therefore a change in interest rates at the reporting date would not affect profit and loss account.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have decreased / (increased) pofit for the year
by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant. The analysis is performed on the same basis for 2008.
Profit and loss 100 bps
Increase Decrease
Rupees

As at 31 December 2009 424,010 (424,010)

As at 31 December 2008 291,920 (291,920)

The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and assets / liabilities of the Company.
31.6 Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices (other than those arising from interest rate risk or currency risk). The company is not exposed
to any price risk as there are no financial instruments at the reporting date that are sensitive to price fluctuations

31.7 Fair value of financial instruments

The carrying values of the financial assets and financial liabilities approximate their fair values. Fair value is the amount for which
an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction

31.8 Capital risk management

The Board’s policy is to maintain an efficient capital base so as to maintain investor, creditor and market confidence
and to sustain the future development of its business. The Board of Directors monitors the return on capital employed,
which the Company defines as operating income divided by capital employed. The Board of Directors also monitors the
level of dividends to ordinary shareholders
Annual Report
for the year ended December 31, 2009
 59

Notes to the Financial Statements

for the year ended 31 December 2009

The Company’s objectives when managing capital are:

(i) to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders, and

(ii) to provide an adequate return to shareholders

The Company manages the capital structure in the context of economic conditions and risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the Company may, for example, adjust the amount
of dividends paid to shareholders and issue new shares

For working capital requirement and capital expenditure, the Company primarily relies substantially on short term borrowings

32 Remuneration of Chief Executive, paid Directors and Executives

Chief Executive Directors Executives

2009 2008 2009 2008 2009 2008
(incoming) (outgoing) Total (outgoing)
( Rupees in thousands)

Managerial remuneration 2,324 13,405 15,729 16,010 6,408 6,671 32,026 27,407
Rent, bonus and other allowances 426 12,874 13,300 9,258 9,300 8,881 39,701 33,241

2,750 26,279 29,029 25,268 15,708 15,552 71,727 60,648

Retirement benefits 388 2,237 2,625 2,582 587 1,076 5,345 4,420
Club subscription 18 67 85 59 27 24 36 27
Leave encashment 1,077 9,217 10,294 2,380 804 1,758 5,197 3,068

4,233 37,800 42,033 30,289 17,126 18,410 82,305 68,163

Number 1 1 1 1 2 2 37 31

Meeting fees aggregating to Rs. (thousands) 3 (2008: Rs (thousands) 10) were paid to 4 (2008: 5) non-executive directors for
at tending board meetings. In addition, the Vice Chairman, Chief Executive & Managing Director and two full time working
directors and some executives are also provided with Company maintained car.

33 Transactions with related parties and associates

The realted parties comprise parent company, related group companies, local associated company, directors of the company, key
management personnel and staff retirement funds. Details of transactions with related parties, other than those disclosed else
where in these financial statements are as follows:

2009 2008
Name of parties Nature of relationship Nature and description of Total Total
related party transaction value of Closing value of Closing
transaction balance transaction balance
(Rupees in thousands) (Rupees in thousands)

Unilever Pakistan Food Limited Associate Sales 703,067 242,222 742,822 19,770
Services rendered 63 - 8 -
Corn Products International Holding company Services received - 1,455 - 1,455
Corn Products Kenya Ltd. Associate Export sales 32,850 18,758 100,105 18,758
Corn Products Ammardas, Thailand Associate Imports - - 84,925 -
Corn Products Malaysia Associate Export sales 7,504 3,478 - -
Employees benefits Other related parties Contribution to funds 36,940 14,713 34,340 68,931

The transactions were carried out at an arm’s length basis, in accordance with the accounting policy as stated in
Note 4.20.

No buying and selling commission has been paid to any associated undertaking.
60 Rafhan Maize Products Co. Ltd.

Notes to the Financial Statements

for the year ended 31 December 2009

2009 2008
( Metric Tons)

34 Plant capacity and production

Average grind capacity per day 1,303 1,250

Grind capacity for 350 working days 456,050 437,500
Actual days worked 309 334
Actual grind 399,723 419,572

The reduction in grind days/ grind was attributable to lower sales demand and acute energy crisis in the country.

35 Dividends

The Board of Directors have proposed a final dividend for the year ended 31 December 2009 of Rs. 40 per share, amounting to
Rs. (thousands) 369,457 at their meeting held on 15 February 2010, for approval of the members at the Annual General Meeting
to be held on 29 March 2010 (2008: Rs. 40 per share amounting to Rs. (thousands) 369,457).

36 Date of authorization of issue

These financial statements were authorized for issue on 15 February 2010 by the Board of Directors of the Company.

37 Use of estimates and judgments

The preparation of financial statements in conformity with approved accounting standards requires management to make
judgments, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions and judgments are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making the
judgment about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized in
the period in which the estimate is revised if the revision effects only that period, or in the period of revision and future periods if
revision affects both current and future periods. The areas where various assumptions and estimates are significant to Company’s
financial statements or where judgments were exercised in application of accounting policies are as follows:

- Taxation- (note 4.3 & 29)

- Useful life of depreciable assets- (note 4.4 & 5)
- Employees retirement benefits- (note 4.6 & 7)
- Provision and contingencies- (note 4.14 & 21)

38 General
- Figures in these financial statements have been rounded off to the nearest thousands of rupees.
- Comparative figures have been reclassified and re arranged where necessary in order to facilitate comparison.

Ansar Yahya
Anis Ahmad Khan Chief Executive & Zulfikar Mannoo
Director Managing Director Director

Annual Report
for the year ended December 31, 2009
 61

Pattern of Shareholding
As at 31 December 2009

Number of Total
Shareholders Shareholding Shares Held

679 1 - 100 37,250

151 101 - 500 35,712
48 501 - 1000 36,996
44 1001 - 5000 107,083
2 5001 - 10000 15,995
1 15001 - 20000 20,000
1 40001 - 45000 43,140
2 50001 - 55000 108,217
1 55001 - 60000 58,252
1 60001 - 65000 63,822
3 65001 - 70000 200,262
1 85001 - 90000 89,819
1 90001 - 95000 93,817
1 100001 - 105000 100,131
2 110001 - 115000 226,265
2 140001 - 145000 283,066
1 150001 - 155000 152,139
2 165001 - 170000 332,964
1 200001 - 205000 200,085
1 235001 - 240000 236,578
1 300001 - 305000 300,595
1 6490001 - 6495000 6,494,240

947 9,236,428

Sr. Categories of Number of Shares

No. Shareholders Shareholders Held Percentage

1 Individuals 921 2,526,277 27.35

2 Investment Companies 1 60 0.00
3 Insurance Companies 3 113,322 1.23
4 Joint Stock Companies 7 912 0.01
5 Modaraba Companies 2 3,378 0.04
6 Foreign Investors 5 6,494,288 70.31
7 Mutual Fund 5 96,495 1.04
8 Others 3 1,696 0.02

Total: 947 9,236,428 100.00

The above two statements include 269 shareholders holding 386,203 shares through Central Depository Company of Pakistan Limited.
62 Rafhan Maize Products Co. Ltd.

Pattern of Shareholding
As at 31 December 2009 as per format perscribed in Code of Corporate Governance

No. of
Shares
Associated Companies, undertakings and related parties
Corn Products International Inc. - Sponsor and Related Party 6,494,240
NIT 0
ICP 60
Directors
Mr. John F. Saucier 1
Mr. Rashid Ali 600
Ms. Cheryl K. Bebee 1
Ms. Mary A. Hynes 1
Mr. Zulfikar Mannoo 238,163
Mian M. Adil Mannoo 154,459
Mr. Wisal A. Mannoo 174,143
Mr. Anis Ahmad Khan 1,264
Sh. Gulzar Hussain 4,650

Directors’ Spouses
Mrs. Sarwat Zulfikar W/o Mr. Zulfikar Mannoo 9,370

CEO
Mr. Ansar Yahya 82

Executives 1,711

Public sector companies and corporations 0

Banks, DFIs, Non-Banking FI, Insurance, Modaraba, Mutual Fund 213,231

Shareholders holding ten percent or more voting interest

Corn Products International Inc. 6,494,240

Annual Report
for the year ended December 31, 2009
Proxy Form
117th General Meeting (Annual Ordinary)

The Company Secretary,

Rafhan Maize Products Co. Ltd.,
Rakh Canal East Road, P. O. Box 62,
Faisalabad.

I / We
of
being shareholder(s) of R afhan M aize Produc ts Company Limited hereby appoint

of
or failing him
as my / our proxy to vote for me / us and on my / our behalf at the 117th General Meeting
(Annual Ordinary) of the Company to be held at Karachi on Monday, March 29, 2010
at 10:00 a.m. and / or at any adjournment thereof.

Dated this day of 2010.

Affix Revenue
(Signature of Proxy) Stamp of
Rs. 5/-

Witness Signature of Shareholder

Place Folio No. / CDC No.

No. of Shares held

Notes:
a) This Form of Proxy, duly completed and signed across a revenue stamp, must be deposited at the Company’s
Registered Office not less than 48 hours before the time of holding the meeting.

b) A proxy need not be a member of the Company.

 AFFIX
CORRECT
POSTAGE

The Company Secretary,

Rafhan Maize Products Co. Ltd;
Rakh Canal East Road, P. O. Box 62,
Faisalabad.
 Syed Yousuf Raza Gilani, Prime Minister of Pakistan presenting FPCCI Export Award to Mr. Ansar Yahya,
Chief Executive and Managing Director

Mr. Saleem Raza, Governor State Bank of Pakistan presenting 26th Corporate Excellence Award -
Certificate of Excellence to Mr. Rashid Ali, Vice Chairman

Mian Shahbaz Sharif, Chief Minister of Punjab presenting Occupational Health, Safety and Environment
(OHSE) Award to Mr. Ansar Yahya, Chief Executive and Managing Director