IN THIS REPORT

At Kohinoor Textile Mills Limited (KTML), we bring color

and creativity in our monotonous and melancholic
lifestyle. The fabric knitted to perfection with multitudes
of colors paving their way through creating stupendous
designs are meant to bring color and joy to the
stakeholders of KTML. We are striving to snowball this
venture to ultimate growth contributing to the economy
of Pakistan and playing role it needs in order to make
Country climb to the zenith!

ANNUAL REPORT 2021 01

02 KOHINOOR TEXTILE MILLS LIMITED
ANNUAL REPORT 2021 03
04 KOHINOOR TEXTILE MILLS LIMITED
ABOUT THE
REPORT
KOHINOOR TEXTILE MILLS LIMITED
(KTML) corporate Annual Report 2021
covers the period from 1st July 2020 to
30th June 2021. All the activities and
performance related data is related to KTML
and its subsidiaries Maple Leaf Cement
Factory Limited, Maple Leaf Capital Limited
& Maple Leaf Power Limited and does not
include any information or data related to
its associated companies unless where
required by legal and corporate regulations.

Annual Report 2021 gives an introduction &

overview about the principal activities of the
Company. A very brief and comprehensive
information has been provided about
business review, future outlook of the
Company along with Governance structure,
risk management framework, Performance
and future strategies of the Company.
Economic, environmental and corporate
social responsibility data is also presented
for the better understandability of users of
financial statements about the operations
of the Company.

Financial statements that are an integral part

of Annual Report 2021 have been prepared
in compliance of provisions and directives
of Companies Act, 2017 and Code of
Corporate Governance Regulations, 2019.
Independent auditor’s report is also part
of Annual report 2021. There has been no
change in the reporting period, boundary
and scope of the Report.

This Annual Report is also available at

[Link]

ANNUAL REPORT 2021 05

06 KOHINOOR TEXTILE MILLS LIMITED
CUSTOMER SERVICE PLAN

ORGANISATIONAL
OVERVIEW AND EXTERNAL
ENVIRONMENT

Company Profile & Principal Business Activities 08

Our Products 10
Company Information 13
Our Vision & Mission 14
Our Values 17
Group Structure 18
Organization Chart 19
Geographical Presence 20
Value Chain Analysis 22

ANNUAL REPORT 2021 07

 COMPANY PROFILE &
PRINCIPAL
BUSINESS ACTIVITIES
Kohinoor Textile Mills Limited (“The Company”) commenced Textile Operations in 1953 as a Private Limited
Company and became a Public Limited Company in 1968.

The Company’s spinning production facilities now comprise 158,544 ring spindles capable of spinning a wide
range of counts using cotton and Man-made fibers. 2,712 open end rotors at Rawalpindi for spinning and 288
looms at Raiwind capable of weaving a wide range of greige fabrics. The processing facilities at the Rawalpindi
unit are capable of dyeing and printing fabrics for the home textile market. The stitching facilities produce
a diversified range of home textiles for the export market. Both the dyeing and stitching facilities are being
augmented to take advantage of greater market access. Fully equipped laboratory facilities for quality control
and process optimization have been setup at all three sites.

LEADING EDGE PRODUCTION CAPABILITIES

The Company has been investing heavily in Information Technology, training of its human resources and
preparing its management to meet the challenges of market integration. The Company continues to ensure
that its current competitive position is maintained as well as supporting the ongoing improvement process
in an endeavour to maintain world’s best manufacturing practice. Operations of the Company are subject to
different environmental and labour laws. The Company is fully complying with all applicable environmental,
labour, corporate and other relevant legal laws.

08 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 09
 OUR PRODUCTS
Product Portfolio – To cater to varying needs of the market, the Company produces the following products:

i) Yarn
ii) Greige Fabric
iii) Dyed and Printed Fabric
iv) Home Textile Products (Bed Linen, Quilting, Embroidery, Curtains, etc)

The Company sell its products to local as well as international markets. Finished products of home textile
business are exported to mainly Europe, America, Canada, Australia, Asia and Africa.

YARN

GREIGE FABRIC

10 KOHINOOR TEXTILE MILLS LIMITED

HOME TEXTILES

ANNUAL REPORT 2021 11

12 KOHINOOR TEXTILE MILLS LIMITED
COMPANY
INFORMATION
Board of Directors Legal Adviser
Mr. Tariq Sayeed Saigol Chairman Mr. Abdul Rehman Qureshi
Mr. Taufique Sayeed Saigol Chief Executive Advocate High Court
Mr. Sayeed Tariq Saigol
Mr. Waleed Tariq Saigol Registered Office
Mr. Danial Taufique Saigol 42-Lawrence Road, Lahore.
Ms. Jahanara Saigol Tel: (0092-42) 36302261-62
Mr. Shafiq Ahmed Khan Fax: (0092-42) 36368721
Mr. Zulfikar Monnoo
Syed Mohsin Raza Naqvi Share Registrar
Vision Consulting Limited
Audit Committee 1st Floor, 3-C, LDA Flats,
Mr. Shafiq Ahmed Khan Chairman Lawrence Road, Lahore
Mr. Zulfikar Monnoo Member Tel: (0092-42) 36283096-97
Mr. Sayeed Tariq Saigol Member Fax: (0092-42) 36312550
Mr. Waleed Tariq Saigol Member E-Mail: shares@[Link]

Human Resource & Bankers of the Company

Remuneration Committee Al Baraka Bank (Pakistan) Limited
Mr. Shafiq Ahmed Khan Chairman Allied Bank Limited
Mr. Zulfikar Monnoo Member Askari Bank Limited
Mr. Sayeed Tariq Saigol Member Bank Alfalah Limited
Mr. Danial Taufique Saigol Member Bank Al-Habib Limited
Faysal Bank Limited
Chief Financial Officer Habib Bank Limited
JS Bank Limited
Syed Mohsin Raza Naqvi MCB Bank Limited
Meezan Bank Limited
Company Secretary National Bank of Pakistan
Mr. Muhammad Ashraf PAIR Investment Company Limited
Samba Bank Limited
Chief Internal Auditor The Bank of Punjab
The Bank of Khyber
Mr. Zeeshan Malik Bhutta
United Bank Limited
Auditors
M/s. Riaz Ahmad & Company
Chartered Accountants

Mills
Peshawar Road, Rawalpindi 8 K.M., Manga Raiwind Road, District Kasur Gulyana Road, Gujar Khan,
Tel: (0092-51) 5495328-32 Tel: (0092-42) 32560683-85, District Rawalpindi
Fax: (0092-51) 5495304 Fax: (0092-42) 32560686-87 Tel: (0092-51) 3564472-74

Website:
[Link]

Note: KTML’s Financial Statements are Video presentation of CEO detailing financial performance
also available at the above website of the Company is also available on the above website.

ANNUAL REPORT 2021 13

 The Kohinoor Textile Mills Limited
stated vision is to achieve and then
remain as the most progressive and
profitable Company in Pakistan in
terms of industry standards and
stakeholders’ interest.

14 KOHINOOR TEXTILE MILLS LIMITED

The Company shall achieve its
mission through a continuous process
of having sourced, developed,
implemented and managed the best
leading-edge technology, industry
best practice, human resource and
innovative products and services and
sold these to its customers, suppliers
and stakeholders.
ANNUAL REPORT 2021 15
16 KOHINOOR TEXTILE MILLS LIMITED
20 KOHINOOR TEXTILE MILLS LIMITED
ANNUAL REPORT 2021 21
 VALUE CHAIN Threat from substitute products
ANALYSIS
To say that, textiles has decorated the world today
KTML’s principal business activity is to produce won’t be an overstatement. The beauty and colours
and sell yarn, grey cloth and home textile products. which we find around us is just because of innovative
Manufacturing in textile involves blending of cotton, and attractive textile products. From a commercial
yarn, cloth, dyes & chemicals and various types of perspective there are no direct substitutes to textile,
stitching accessories through various processes to so threat from substitute products is not present at
achieve the desired output. To maintain machines the moment.
operative at plant throughout the year, electricity is a
vital component. KTML has its own captive power Bargaining power of customers
generation unit to supply electricity without any
disruption. Power generation in KTML has diversified Bargaining power of customers is high as there is an
portfolio ranging from National grid, Gas/HFO based intense threat of competition. Further technology and
generations as well as solar based power generation. ever changing fashion trends has made operations
On the upstream part of value chain, raw material for of the textile more complex. In such rapid changing
manufacturing includes local and imported cotton and circumstances, only that venture may succeed who
man-made fibre etc, which are mainly arranged from react proactively. In order to tap this risk factor, KTML
best cotton producing areas in the country and from has established an in house product development
international markets as well. Being a leading textile department who have the expertise to offer new
based group in Pakistan, KTML enjoys very strong designs and various types of product formations to
relationships with suppliers in both markets. address the changing customers’ requirements in an
efficient way.
KTML has invested heavily in maintaining a smooth
flow of operations. The company has implemented a Bargaining power of suppliers
proactive approach to mitigate its risk of disruptions
in the production process. Project Management It is common practice for large manufacturing
Committee (PMC) is specialized in using various concerns to enjoy a wide supplier base who are eager
maintenance techniques such as predictive, to do business with it, KTML being no exception. The
preventive and proactive maintenance to keep in pace company has been doing business with a huge list
all the machinery and equipment for their adequate of approved vendors, having a history of professional
functionality and to increase cost effectiveness, business ethics, to maintain a healthy competition.
machine uptime, and a greater understanding of Thus the Company enjoys the healthy bargaining
the level of risk that the organization is presently powers keeping the business norms intact. The
managing. At KTML, the production and quality Company has an extensive vendor selection process
inspection processes are strictly monitored by highly in place which is supervised by the Audit Department
qualified specialists, to ensure that the best possible to ensure transparency and fairness. It is against
products are manufactured for our valued customer. policy to accept goods or services from unapproved
Facilitating downstream along the value chain, KTML vendors.
has an efficient marketing team which has close ties
Raw material is obtained from local as well as from
with our valued customers. Customers are always
international markets. Extensive LC lines are opened
our first priority. We obtain regular feedback from
to facilitate ease of business with foreign parties,
them regarding our products and for complaints/
whereas fuel and other input costs are undertaken
suggestions if any, and these addressed by top
after extensive market research and negotiations to
management directly.
protect Company’s interests.
CUSTOMER LANDSCAPING AND Intensity of Competitive Rivalry
MARKET POSITIONING
Competitive forces are fairly strong in the textile
Threat of new competition sector which consists of rival companies aggressively
competing with one another on price and market
Threat of new competition is high as Pakistan is a share. The textile companies are geographically
country which has its major dependency in textile. situated all over in Pakistan that results in intensification
Furthermore, threats from international markets is also of competition as far as market share and price are
high. In order to remain competitive, it is compulsory concerned. KTML has been working a lot to maintain
for the organization to remain update in respect of its brand loyalty, market expansion, efficient supply
newer technologies and customers’ requirements to chain and being the first preference of customers
produce high quality products at minimum cost. regarding its superior quality products.

22 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 23
 KTML has always been the first
priority of renowned international
brands due to its superior quality.
This distinction is giving an edge
to the Company in such an
intense competitive environment.

EFFECT OF SEA-
SONALITY ON BUSI-
NESS IN TERMS OF
PRODUCTION AND
SALES
Home Textile products are
exported mostly in Western
world. Sales of the Company
show significant increase in first
half of the year due to spiritual
Christmas occasion. Thereafter
demand little bit slows for some
time. As far as spinning segment
is concerned KTML strength is to
produce fine count of yarn that is
used for summer suiting. Sales
significantly increase in winter
because cotton / lawn dresses
are being prepared across the
market in winter season to meet
requirements.

SIGNIFICANT
CHANGES FROM
PRIOR YEARS
There is no change in group
structure since prior year. External
environment is constantly
changing and rise in raw material
prices globally followed by
devaluation of Pak. Rupee in
comparison to US Dollar have
affected the profitability of the
Company.

24 KOHINOOR TEXTILE MILLS LIMITED

SERVICE MIND

STRATEGY AND RESOURCE

ALLOCATION

Strategic Objectives 2021-2022 26

Strategies and Management Objectives 27
Key Performance Indicators (KPIs) 28
Effect of seaonality on business in terms of production and sales 29
Risk Management Framework 30
Risks and opportunities analysis 31

ANNUAL REPORT 2021 25

 STRATEGIC
OBJECTIVES
2021-2022
Following are the main areas that constitute the strategic
objectives of Kohinoor Textile Mills Limited: -

Short Term Objectives

1. Effective use of available resources; and

2. Improved capacity utilization of the Company’s

production facilities;

Medium Term Objectives

3. Effective marketing and innovative concepts;

4. Modernization of production facilities to ensure the

most effective production;

5. Further improvements in implementation of Code

of Corporate Governance through optimization of
management processes;

6. Strengthening independence in terms of secure

supply of low-cost services and resources,
including energy supply, transportation and
logistics services;

Long Term Objectives

7. Explore alternative energy resources;

8. Implementation of effective technical and human

resource solutions. Personnel development,
creating proper environment for professional
growth of highly skilled professionals, ensuring safe
labour environment, competitive staff remuneration
and social benefits in accordance with scope and
quality of their work;

9. Compliance with local and international

environmental and quality management standards,
implementation of technologies allowing to comply
with the limitations imposed on pollutant emissions;
and

10. Implementation of projects in the social and

economic development of communities.

26 KOHINOOR TEXTILE MILLS LIMITED

STRATEGIES AND MANAGEMENT
OBJECTIVES
Management has the objective to transform the many changes in the textile industry. By improving
culture of the Company into highly customer driven, the labor productivity and reducing overall
empowered and cross functional focused company manufacturing costs, KTML is perceiving the needs
in order to maximize the return for stakeholders. of wide spread customer base across the globe.
Management has the belief that Quality may Continuous BMR in KTML is another measure to
not be achieved without implementation of Key ascertain that management is committed to deliver
Performance Indicators (KPI’s) in all the critical, the most up to date products to its customers as per
contemporary areas of performance. Total Quality their requirements.
Management team has been formed to monitor the
KPI’s in all the key areas on continuous basis and PROCESSES USED TO MAKE STRATEGIC
make corrective actions instantly where required. DECISIONS AND TO ESTABLISH & MONITOR
We strive to achieve our objectives with collective THE CULTURE OF THE ORGANIZATION.
wisdom and empathy. We believe that training was
and will remain the source of all process driven KTML’s strategic decision making process involves
thinking. Accordingly, trainings for management the identification of outcome, consideration for
team have been regularly arranged during the year nature of problem, research for the problem,
2020-21 and will continue in the year 2021-22. We development of alternative solutions, consideration
have framed well defined different teams to address for pros & cons of each solution, selection of best
the key areas like Team energy, Team strategy, Team solution and then execution of the best solution.
Culture Development etc. In order to monitor the culture of the Company,
Management at KTML use a range of tools, i.e.,
We have reduced variable cost due to efficient energy internal staff engagement surveys, “Pulse” surveys
management and other cost reduction measures. on specific topics, focus groups and interviews, exit
The to-date result, financial and non-financial, are interviews in addition to utilizing quantitative sources
the reflection of achievement of management’s of data such as whistleblowing reports etc.
objective which are strategically placed to increase
the wealth of stakeholder. The said results are
properly evaluated against the respective strategic
objectives to confirm the achievement.

SIGNIFICANT CHANGES FROM PRIOR YEARS

There is no material change in Company’s objective

and strategies from the previous year.

ENTITY’S SIGNIFICANT RESOURCES

Our resources mainly consist of human resource,

financial resource, and technological resource. The
Company assorted and hired team of professionals
with enormous expertise in latest technologies
who proficiently design the ways for improving and
upgrading our production process, networking and
control systems. We have developed a dedicated
team to analyse the human resource right from
selection till retirement. We believe in adding value
to our human resource by extensive trainings and
development program.

EFFECT OF TECHNOLOGICAL CHANGE ON

THE COMPANY STRATEGY AND RESOURCE
ALLOCATION.

Technological advancements in manufacturing

management and information systems facilitate

ANNUAL REPORT 2021 27

 KEY PERFORMANCE
INDICATORS (KPIs)
Following are some of the critical performance measures and indicators against stated objectives of the
Company.

Sr. No. Objectives Measures

1 Effective use of available resources Efficient production planning and control

and improved capacity utilization of the (PPC) department with responsibility to plan
Company’s production facilities orders on timely basis in order to minimize
the idle time.

Modernization of production facilities in order Efficient and state of the art production and
2 to ensure the most effective production management information system

3 Effective marketing and innovative concepts Increase in contribution margin and sales
volume

4 Strengthening independence in terms Decrease in variable cost

of secure supply of low-cost services
and resources, including energy supply,
transportation and logistics services

5 Explore alternative energy resources Reduced dependence on national grid by

way of generation through furnace, Gas and
solar

6 Further improvements in code of corporate Number of notices received from government

governance through restructuring of assets
and optimization of management processes

7 Implementation of effective technical and Well organized Human Resource

human resource solutions. Personnel Department. Number of non -conformities
development, creating proper environment raised
for professional growth of highly skilled
professionals, ensuring safe labour
environment, competitive staff remuneration
and social benefits in accordance with scope
and quality of their work

8 Compliance with local and international Compliance with ISO requirements

environmental and quality management and specific requirements from various
standards, implementation of technologies international customers
allowing to comply with the limitations
imposed on pollutant emissions

9 Implementation of projects in social and Allocation of funds for CSR

economic development of communities.

Management believes that current key performance measures continue to be relevant in future as well.

28 KOHINOOR TEXTILE MILLS LIMITED

EFFECT OF SEASONALITY ON BUSINESS IN
TERMS OF PRODUCTION AND SALES
 
Our liquidity condition has improved over the period with reduced payment
cycle. The management has a balanced team of suitably qualified professionals
who have breadth of experience and knowledge of best practices in liquidity
management pertaining to policies, processes, regulatory constraints, tax
considerations and liquidity management system.

The Company continues its efforts to maintain debts at a reasonable level which
supports the long term objectives of the company and improve its liquidity
position. Keeping in line with plant modernization strategy, The Company
continued its strategy to utilize maximum cash profits for the payment of debts.

Management believes that there is no inadequacy in capital structure in status

quo.

SIGNIFICANT PLANS AND DECISIONS

The Company continues its investments in sustainability and renewable
energy, with the commencement of a large-scale rain water harvesting project
at its main manufacturing site in Rawalpindi. The first phase of solar energy
project has been completed at the Rawalpindi and Gujar Khan site. Further
management is continuing with its policy of renewal of plant, machinery and
equipment, with emphasis on improving quality and increasing output in its
Spinning divisions. Greater emphasis is being placed on increasing our value-
added production in the Home Textiles division so increase in exports can be
achieved in the coming years.

ANNUAL REPORT 2021 29

30 KOHINOOR TEXTILE MILLS LIMITED
RISKS AND OPPORTUNITIES
ANALYSIS
OBJECTIVES:

The Board of Directors is committed to minimize the risks and take advantage of potential opportunities to
systematically and sustainably improve the value of the Company for all stakeholders. Management has
adopted a risk management approach and internal control framework, based on its business philosophy and
corporate objectives, which is explained below:

A. STRATEGY FORMULATION

Management reviews the Statement of Strategic Objectives annually that represent the Stakeholder’
expectations and are the lead indicators for determining the success level of the Company. To materialize the
objectives, Management adopts certain strategies. These strategies are approved by the Board of Directors
and are subject to adjustment, depending upon any changes in the external business environment or internal
organizational factors.

B. KEY RISKS AND OPPORTUNITIES OF CAPITALS

FORM OF CAPITAL KEY RISK KEY OPPORTUNITIES

Financial Capital Increased raw material Resumption in business activities after

and power cost prolonged covid-19 lockdown and future
reduction in interest rates.

Human Capital Loss of qualified and Bagging unparalleled and

competent staff ideal workforce from the market.

Manufacturing Capital Obsolescence of technology Investing in the latest technologies

and state of the art equipment.

Social and Relationship Bad reputation and publicity Building relationships along the value
Capital chain and developing the Company portfolio.

Natural Capital Water shortages Power generation through Solar based power
plants. Large scale rain water harvesting
project to minimize water shortage.

C. RISK ASSESSMENT

Risk assessment is an on-going process that highlights numerous uncertainties that poses potential threats
which may hinder the accomplishment of objectives of the Company. If these risks are not being addressed
in timely manner, may culminate in loss. Such risks and uncertainties can arise both from external as well as
internal factors within the Company. Broad categories of risks which may hinder operations of the Company
are as follows:

ANNUAL REPORT 2021 31

 RISKS TYPE IMPLICATION

Strategic Risks Strategic risks can be defined as the uncertainties and untapped opportunities
embedded in strategic intent. These risks are key matters for the Board of Directors,
and impinge on the whole business, rather than just an isolated unit.

Commercial Risks Commercial risks refer to potential losses arising from the trading partners or the
market in which the Company operates.

Operational Risks Operational risks refer to risks resulting from breakdowns in internal procedures,
people and system.

Financial Risks Financial risk is an umbrella term for multiple types of risk associated with financing,
profitability, liquidity and credit.

D. MATERIALITY APPROACH

Management believes materiality as a key component of an effective communication with stakeholders. The
management has adopted materiality approach which is based on a combination of stakeholder engagement,
under-standing of environmental limits and strategic alignment. It has made the process, assumptions and
evidence base for identifying material issues for more transparent, credible and amenable disclosures to have
more transparency on risk and opportunities.

Not being conclusive, management considers that following are the major risks which may affect the
operations of the Company and mitigating strategies for these risks.

32 KOHINOOR TEXTILE MILLS LIMITED

[Link] OBJECTIVES, RISKS AND MITIGATION STRATEGIES

Corporate Objective Risk Assessment Mitigation Strategies

Industry Competition: Strategic Risk: Likelihood: Company operates as

To maintain Company’s There is increasing Medium a vertically integrated
prominent position among competition among existing Magnitude: unit. Management takes
leading export oriented market players. Further, High proactive decisions and
Textile Companies. threat from new entrants are selects the product mix
foreseen in the operating in spinning and weaving
segment. segments which may
Source: External positively counter the
Likelihood: adverse uncontrollable
Commercial Risk: Medium affects in the sales of home
Increasing prices of raw Magnitude: textile segment.
material & overheads may High
affect the buying potential
of customers and profit
margins.
Source: External

Legislative and Legal Strategic Risk: Likelihood: Management exercises

Environment: More stringent legal High due care for procurement
To operate in a stable market requirements within the Magnitude: of raw materials. To meet
being compliant with all Country and in exportable Medium the Health and Safety
relevant laws of the country markets. standards Company
and international regulations. Changes and Reforms in is actively following
existing laws & regulations requirements of various
and legal uncertainties. Likelihood: certifications.
Source: External Low
Magnitude:
Commercial Risk: High
Demand from international
customers for being
compliant for labor, health
& safety and raw material
quality standards.
Source: External

Technology: Strategic Risk: Likelihood: Management continuously

To produce the best and Technological shift may Low investing considerable
highest quality product render production process Magnitude: amounts for upgradation of
that meets the demands obsolete and cost inefficient. High technological infrastructure in
of Customers and quality Source: External order to remain competitive
standards. and cost efficient.

Operations: Operational Risk: Likelihood: Management believes in

To ensure continuity of Company relies on various Low the capacity building of
operations without any third parties for sourcing of Magnitude: internal and external trading
disruptions in supply of quality goods and services. High partners / vendors in order
resource, continuous Business constraints faced to increase their potential for
production and minimize idle by associated ventures may timely sourcing of required
time. adversely affect the customer goods & services to the
servicing of the Company. Company.
Source: External/Internal

ANNUAL REPORT 2021 33

 Corporate Objective Risk Assessment Mitigation Strategies

Human Capital: Operational Risk: Likelihood: Management is

To recruit and retain the Loss of the qualified and Low continuously investing in
best people and provide competent staff. Magnitude: the capacity building of
adequate training to ensure Source: Internal Low its employees. A rigorous
high quality skilled force. succession plan is also in
place aimed to prepare the
future leaders.

Health and Safety: Operational Risk: Likelihood: Suitably qualified and

To ensure health and safety Accidents can take place Low well equipped health
of employees in workplaces. which can cause serious Magnitude: and safety department
injuries to employees. Medium is operational which
Source: Internal continuously monitors
the HSE conditions in the
Unforeseen calamities and Company and takes the
natural disasters may result remedial actions as and
in human loss. when required.
Source: External

Environment: Operational Risk: Likelihood: Management has installed

To ensure environment Hazardous emissions and Low the waste water treatment
friendly products and discharges into air and water Magnitude: plant in order to meet the
processes. beyond the prescribed limits. requirements of various
Medium
regulatory authorities.
Apart from that various
Waste from operations
initiatives are in process
may be disposed of in an to reduce to the maximum
inappropriate manner. possible minimum level the
Source: Internal discharge of hazardous
chemicals in water and air.

Finance: Financial Risk: Likelihood: Management has

To maintain strong financial Increase in the cost of Low addressed the risk of
position and produce borrowing may limit the Magnitude: shortage of working
financial performance which avenues for availability of capital by availing sufficient
Medium
is reflective of the Company’s sufficient working capital. lines from the diversified
financial institutions in
scale of business and Source: External
order to meet the short
Shareholders’ expectations Likelihood: term finance requirements
Payment defaults by counter Low of the company. Moreover
parties may leave the Magnitude: average credit period
Company with inadequate Medium of the Company is also
resources for discharging its being improved along with
own liabilities. improved operation cycle.
Source: External
Likelihood: Credit risk from counter
Devaluation of Pak. Rupee parties is being addressed
Low
may further adversely affect by frequent reviews of
Magnitude: outstanding balances
the raw materials cost of Medium of major parties, and
spinning segment. reconciliations after short
Source: External time intervals to avoid
the chance of disputed
amounts / transactions.

34 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 35
 F. Opportunity Analysis

Unlocking and exploiting operational opportunities is an important aspect of Kohinoor entrepreneurial

activities. We are committed to use existing products and new solutions to systematically enhance our growth
and strengthen our position in global markets. Investing in new projects and increasing the productivity of
existing ones are key elements for future organic growth. In the year under review, we strengthened the
basis for further growth in the coming years by making selective investments in our existing businesses and
developing innovations that support in achievement of company’s stated vision.

In connection with risk and opportunities pertaining to the Company, Board’s efforts for determining level of
risk, Board’s statement regarding robust assessment of risks, information about default in payment of any
debt and inadequacy in capital structure have been covered in the Director’s Report.

Key opportunity Impact area Strategy to materialize

Growing demand in local Social and relationship The company has increased its capacity of
market capital and fabric printing by adding a latest machine
Financial Capital of digital printing technology.

Source: External

Cost reduction by using Manufactured capital The company, realizing the importance
innovative production of reducing electric costs, has an active
waste heat recovery plant at site which
technology.
converts heat from power engine into
steam, which was previously lost, into
Source: Internal energy. Furthermore, the recent completed
2-MW solar power plant in addition to
existing 5-MW solar plant further provides
free electricity to the Company.

Development of human Human capital Development of human resource is

relations/resource. engraved in the company’s mission
statement & long-term objectives. Through
Source: Internal extensive trainings and development
programs, human resource capital is
adding value to the Company with their
professional ability, caliber and integrity.

Improvements in the Financial capital The company can capture healthy profits
business process. through its ability to operate at maximum
capacity, efficient cash management
Source: Internal system, by making sound liquid investments
and effective control over stock levels.

36 KOHINOOR TEXTILE MILLS LIMITED

PROACTIVE SERVICE
FOR EXCELLENCE

CORPORATE GOVERNANCE
AND COMPLIANCE
Notice of Annual General Meeting 38
Chairman’s Review 56
Directors’ Report 58
Statement of Compliance with the Listed
Companies (Code of Corporate Governance)
Regulations, 2019 68
Independent Auditor’s Review Report to the
Members on the Statement of Compliance 73
Report of the Audit Committee 74
Brief Profile of Directors 76
Terms of Reference of Board Committees 82
Management Committees & Terms of Reference 85
Other Corporate Matters 88
Integrated Reporting Framework (IR) 98
Compliance with International
Financial Reporting Standards (IFRS) 99
Stakeholders Relationship and Engagement 100

ANNUAL REPORT 2021 37

 NOTICE OF ANNUAL
GENERAL MEETING
Notice is hereby given that the 53rd Annual General borrowing cost of the Company, whichever is
Meeting of the members of Kohinoor Textile Mills higher. Vide special resolution passed in general
Limited (the “Company”) will be held on Tuesday, meeting held on October 27, 2020 by the
September 28, 2021 at 12:00 Noon at its Registered shareholders, the Company was authorized to
Office, 42-Lawrence Road, Lahore, to transact the extend a facility of similar nature to the extent of
following business: - Rs. 1,500 million which is valid till October 31,
2021.
Ordinary Business:
Resolved further that the Chief Executive Officer
1) To receive, consider and adopt the audited and the Company Secretary of the Company be
accounts of the Company including consolidated and are hereby authorized singly to take all steps
financial statements for the year ended June necessary, ancillary and incidental, corporate
30, 2021 together with the Chairman’s Review, and legal formalities for the completion of
Directors’ and Auditors’ Reports thereon. transactions in relation to the loans / advances
to the subsidiary company but not limited to filing
2) To approve final cash dividend for the year ended of all the requisite statutory forms and all other
June 30, 2021 at Re. 1/- per share i.e. 10%, as documents with the Securities and Exchange
recommended by the Board of Directors. This is Commission of Pakistan, executing documents
in addition to the interim cash dividend already all such notices, reports, letters and any other
paid to the shareholders at Re. 1/- per share document or instrument to give effect to the
i.e. 10%, thus making a total cash dividend at above resolution.”
Rs. 2/- per share i.e. 20% for the year.
5) To consider and, if deemed fit, pass the following
3) To appoint Auditors for the year ending on resolution as a special resolution under Section
June 30, 2022 and fix their remuneration. The 199 of the Companies Act, 2017, with or without
Board has recommended, as suggested by the modification, as recommended by the Directors:-
Audit Committee, the appointment of M/s. Riaz
Ahmad & Company, Chartered Accountants, the “Resolved by way of special resolution that
retiring auditors who being eligible have offered consent and approval of Kohinoor Textile Mills
themselves for re-appointment. Limited (the “Company”) be and is hereby
accorded under Section 199 of the Companies
Special Business: Act, 2017 (the “Act”) for investment in the
form of loans / advances from time to time to
4) To consider and, if deemed fit, pass the following Maple Leaf Capital Limited, a subsidiary of the
resolution as a special resolution under Section Company, upto an aggregate sum of Rs. 1,000
199 of the Companies Act, 2017, with or without million (Rupees one thousand million only) for a
modification, as recommended by the Directors:- period of one year commencing November 01,
2021 to October 31, 2022 (both days inclusive)
“Resolved by way of special resolution that at the mark-up rate of one percent above three
consent and approval of Kohinoor Textile Mills months KIBOR or one percent above the average
Limited (the “Company”) be and is hereby borrowing cost of the Company, whichever is
accorded under Section 199 of the Companies higher. Vide special resolution passed in general
Act, 2017 (the “Act”) for investment in the form meeting held on October 27, 2020 by the
of loans / advances from time to time to Maple shareholders, the Company was authorized to
Leaf Cement Factory Limited, a subsidiary of the extend a facility of similar nature to the extent
Company, upto an aggregate sum of Rs. 1,000 of Rs. 500 million which is valid till October 31,
million (Rupees one thousand million only) for a 2021.
period of one year commencing November 01,
2021 to October 31, 2022 (both days inclusive) Resolved further that the Chief Executive Officer
at the mark-up rate of one percent above three and the Company Secretary of the Company
months KIBOR or one percent above the average be and are hereby authorized singly to take all

38 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 39
 steps necessary, ancillary and incidental, corporate and legal formalities for the completion of transactions
in relation to the loans / advances to the subsidiary company but not limited to filing of all the requisite
statutory forms and all other documents with the Securities and Exchange Commission of Pakistan,
executing documents all such notices, reports, letters and any other document or instrument to give effect
to the above resolution.”

6) To ratify and approve transactions conducted with the Related Parties for the year ended June 30, 2021
by passing the following special resolution with or without modification:-

“Resolved that the transactions conducted with the Related Parties as disclosed in the note 38 of the
unconsolidated financial statements for the year ended June 30, 2021 and specified in the Statement of
Material Information under Section 134(3), be and are hereby ratified, approved and confirmed.”

7) To authorize the Board of Directors of the Company to approve transactions with the related parties for
the financial year ending on June 30, 2022 by passing the following special resolution with or without
modification: -

“Resolved that the Board of Directors of the Company be and is hereby authorized to approve the
transactions to be conducted with the Related Parties on case to case basis for the financial year ending
on June 30, 2022.

Resolved further that these transactions by the Board shall be deemed to have been approved by the
shareholders and shall be placed before the shareholders in the next Annual General Meeting for their
formal ratification/approval.”

BY ORDER OF THE BOARD

Lahore: (Muhammad Ashraf)

September 07, 2021 Company Secretary

NOTES: Holders must bring with them their Computerized

National Identity Cards (CNIC)/Passports in
1. The Share Transfer Books of the Company original to prove his/her identity. In case of Proxy,
will remain closed from September 22, 2021 CDC beneficial owners and Proxy Holders must
to September 28, 2021 (both days inclusive). enclose an attested copy of their CNIC/Passport
Physical transfers / CDS Transaction IDs with Proxy Form. Proxies in order to be effective
received at the Company’s Share Registrar, M/s. must be received at the Company’s Registered
Vision Consulting Ltd, 3-C, LDA Flats, First Floor, Office not later than 48 hours before the time for
Lawrence Road, Lahore, at the close of business holding the meeting and must be duly stamped,
on September 21, 2021 will be considered in signed and witnessed. A member shall not be
time for the purpose of above entitlement and entitled to appoint more than one proxy.
to determine voting rights of the shareholders for
attending the meeting. 3. In case of corporate entity, the Board of
Directors’ resolution / power of attorney with
2. A member eligible to attend, speak and vote at specimen signature of the nominee (unless it has
this meeting may appoint another member as been provided earlier) should be attached with
his/her proxy to attend, speak and vote instead the proxy form or may be provided at the time of
of him/her. CDC beneficial owners and Proxy meeting.

40 KOHINOOR TEXTILE MILLS LIMITED

4. In light of the threat by the evolving coronavirus their unclaimed physical dividends / physical
(COVID-19) situation, the Securities and shares, if any;
Exchange Commission of Pakistan vide Circular
No. 5 dated March 17, 2020 has advised the 7. As per Section 72 of the Companies Act, 2017,
Company to modify their usual planning for every existing listed company shall be required
Annual General Meeting in order to protect the to replace its physical shares with book-entry
well-being of the shareholders. form in a manner as may be specified and from
the date notified by the Commission, within
The shareholders who are interested to attend a period not exceeding four years from the
the AGM through Video Conferencing, are commencement of this Act, i.e. May 30, 2017.
hereby requested to get themselves registered
with the Company Secretary office by providing The shareholders having physical shareholding
the following detail at the earliest but not later are encouraged to open CDC sub-account with
than 72 hours before the time of AGM (i.e. before any of the brokers or Investor Account directly
12:00 Noon on September 25, 2021) through with CDC to place their physical shares into scrip
following means: less form, this will facilitate them in many ways,
including safe custody and sale of shares, any
a) Mobile/WhatsApp: 0321-7775170 time they want, as the trading of physical shares
b) E-mail: [Link]@[Link] is not permitted as per existing regulations of the
Pakistan Stock Exchange Ltd.
Shareholders are advised to mention Name,
CNIC Number, Folio/CDC Account Number, cell 8. Shareholders are requested to notify / update
number and e-mail ID for identification. the following information & documents with
their respective CDS participants and in case
Upon receipt of the above information from the of physical shares to our Share Registrar, if not
interested shareholders, the Company will send earlier notified / updated: -
the login credentials at their e-mail address. On
the date of AGM, shareholders will be able to a. Change in their addresses;
login and participate in the AGM proceedings
through their smartphone/ computer devices. b. Pursuant to requirement of Section 242 of the
Companies Act, 2017, any dividend payable in
In view of the above, the shareholders can also cash declared by a listed company shall only
provide their comments/suggestion for the be paid through electronic mode directly into
proposed agenda items of the AGM by using the the bank account designated by the entitled
aforesaid means. shareholder. Accordingly, shareholders who have
not yet provided / updated their International
5. The Members, who desire for receiving the Bank Account Number (IBAN) details, are
annual audited financial statements and AGM requested to furnish the information as provided
Notice through e-mail, are requested to send on website of the Company on priority basis. In
their written consent on a Standard Request case of non-submission of IBAN of 24 digits, the
Form available on website [Link] in Company will withhold the payment of dividends
order to avail this facility. The audited financial under the Companies (Distribution of Dividends)
statements for the year ended June 30, 2021 are Regulations, 2017;
available on website of the Company. Further,
the Company has sent its Annual Report 2021 c. Individual Members who have not yet submitted
through CD/DVD/USB to the shareholders at a copy of their valid Computerized Identity
their available Registered Addresses instead of Card (CNIC) to the Company are once again
hard copy. However, hard copy of Annual Report requested to send a copy of their valid CNIC at
will be provided free of cost on written request of the earliest directly to the office of Share Registrar
the shareholder. of the Company, Vision Consulting Limited, 3-C,
LDA Flats, Lawrence Road, Lahore. Corporate
6. Shareholders may contact at the Registered Members are requested to provide their National
Office of the Company to collect / enquire about Tax Number (NTN) and folio number thereon

ANNUAL REPORT 2021 41

 while sending the copies to the Share Registrar on their cash dividend will be deducted @30%
of the Company. In case of non-receipt of the instead of 15%;
copy of a valid CNIC or NTN (as the case may
be), the Company would be unable to comply e. As per clarification of FBR, each joint holder is
with the requirements of the Companies Act, to be treated individually as either a ‘Filer’ or
2017 and SROs issued thereunder; ‘Non-Filer’ and tax will be deducted on the basis
of shareholding notified by each joint holder.
d. Filer & Non-Filer shareholders will pay tax on Accordingly, such shareholder(s) may notify in
dividend income @15% and 30% respectively. writing within 07 days from entitlement date i.e.
Therefore, please ensure that their name(s) have September 21, 2021 as per following format to
been entered into Active Taxpayers List (ATL) our Share Registrar. If no notification is received
provided on website [Link] of the to our Share Registrar, then it will be assumed
Federal Board of Revenue (FBR), despite the fact that the shares are held in equal proportion by
that the shareholder is a filer, before entitlement the principal shareholder and the joint holder(s): -
date i.e. September 21, 2021, otherwise tax

Folio / CDC Total Principal Shareholder Joint Shareholder(s) Signature(s)

ccount No.
A Shares

Name & Shareholding Name & Shareholding

CNIC No. Proportion CNIC No. Proportion
(No. of Shares) (No. of Shares)

f. Withholding tax exemption from dividend AGENDA ITEM NUMBER 4 OF THE NOTICE –
income shall only be allowed if copy of valid tax INVESTMENT IN MAPLE LEAF CEMENT FACTORY
exemption certificate is made available to our LIMITED IN THE FORM OF LOANS/ADVANCES:
Share Registrar, Vision Consulting Limited, 3-C,
Maple Leaf Cement Factory Limited, having its
LDA Flats, Lawrence Road, Lahore;
Registered Office at 42-Lawrence Road, Lahore
(the “MLCFL”), is a subsidiary of the Company
g. Members are requested to submit their
and the Company being a holding company, holds
Notarized Declarations (CZ-50) as per Zakat
606,497,944 ordinary shares constituting 55.22%
& Ushr Ordinance, 1980 if they want to claim
of the aggregate paid-up capital in MLCFL, a
exemption towards non-deduction of zakat on
public listed company engaged in the business of
cash dividend;
manufacturing and sale of cement and the factory is
located at Iskanderabad, District Mianwali.
h. For any query / information, the shareholders
may contact with the Company Secretary at The Board of Directors of the Company in their
the above Registered Office and / or Mr. Abdul meeting held on August 13, 2021 has approved
Ghaffar Ghaffari of Share Registrar, Vision Rs. 1,000 million as loans / advances, being a
Consulting Ltd, 3-C, LDA Flats, Lawrence Road, reciprocal facility, to MLCFL on the basis of profit/
Lahore, Ph. Nos. (042) 36283096-97. financial statements of MLCFL subject to approval of
the members. The Company shall extend the facility
STATEMENT UNDER SECTION of loans / advances from time to time for working
capital requirements to MLCFL in accordance with
134(3) OF THE COMPANIES ACT,
an agreement in writing including all relevant terms
2017: and conditions as prescribed in the Regulations.

This statement sets out the material facts pertaining

Directors of the Company have also provided their
to the special business to be transacted at the
duly signed undertaking / due diligence report
Annual General Meeting of the Company to be held
on September 28, 2021. with recommendations that they have carried

42 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 43
 out necessary due diligence for the proposed of the members along with audited financial
investment in MLCFL and it has been kept at the statements of MLCFL as required under the
Registered Office of the Company for inspection Regulations.

Information under Regulation 3(1) of the Companies (Investment in

Associated Companies or Associated Undertakings) Regulations, 2017 (the
“Regulations”).

3(1)(a) Disclosure for all types of investments

(A) Regarding associated company or associated undertaking: -

Ref. REQUIREMENT INFORMATION

No.

(i) Name of associated company or Maple Leaf Cement Factory Limited

associated undertaking; (the “MLCFL”)

(ii) Basis of relationship; MLCFL is a subsidiary of Kohinoor Textile Mills

Limited (the “KTML”) and the KTML holds
55.22% of the aggregate paid-up capital in
MLCFL.

(iii) Earnings per share for the last three years; (Rupees)
Year Basic Diluted
30.06.2019 2.13 Restated 2.13 Restated
30.06.2020 (5.30) (5.30)
30.06.2021 5.69 5.69

(iv) Break-up value per share, based on latest As on June 30, 2021
audited financial statements; With revaluation surplus Rs. 34.18
Without revaluation surplus Rs. 31.37

(v) Financial position, including main items of Based on the audited financial statements
statement of financial position and profit for the financial year ended 30 June 2021 the
and loss account on the basis of its latest financial position of MLCFL is as under: -
financial statements;
Particulars Amount
Rupees (000)
Paid up capital 10,983,462
Capital reserves 6,588,813
Accumulated profits 16,880,291
Surplus on revaluation of
fixed assets–net of tax 3,089,975
Current liabilities 11,449,448
Current assets 16,923,416
Sales - Net 35,640,181
Gross profit 7,504,762
Operating profit 8,783,531
Net profit 6,254,109
Earnings per share (Rs.) 5.69

44 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 45
 (B) General Disclosures:

Ref. REQUIREMENT INFORMATION

No.

(i) Maximum amount of investment to be Rs. 1,000 million (Rupees one thousand million
made; only).

(ii) Purpose, benefits likely to accrue to the Purpose: To earn income on the loans and/or
investing company and its members advances to be provided to MLCFL from time to
from such investment and period of time for working capital requirements of MLCFL.
investment;
Benefits: The KTML will receive mark up at the
rate of one percent above three months KIBOR
or one percent above its average borrowing
cost, whichever is higher. This shall benefit
KTML’s cash flow by earning profit on idle funds.

Period: For a period of one year from November

01, 2021 to October 31, 2022.

(iii) Source of funds to be utilized for Loan and/or advance will be given out of own
investment and funds of KTML.

where the investment is intended to be

made using borrowed funds, -
(I) Justification for investment through N/A
borrowings;
(II) Detail of collateral, guarantees
provided and assets pledged for
obtaining such funds; and
(III) Cost benefit analysis;

(iv) Salient features of agreement(s), if any, Nature Loan / advance

with associated company or associated Purpose To earn mark-up / profit
undertaking with regards to the proposed on loan / advance being
investment; provided to MLCFL which will
augment KTML’s cash flow.
Period One Year
Rate of Mark-up One percent above three
months KIBOR or one
percent above the average
borrowing cost of KTML,
whichever is higher.
Repayment Principal plus mark-up/ profit
upto October 31, 2022

Penalty charges @3-months KIBOR plus one
percent in addition to the
outstanding amount(s).

46 KOHINOOR TEXTILE MILLS LIMITED

Ref. REQUIREMENT INFORMATION
No.

(v) Direct or indirect interest of directors, Investing Company i.e. KTML is a holding company
of MLCFL and Nine Directors are common in both the
sponsors, majority shareholders and
companies may be deemed to be interested to the
their relatives, if any, in the associated extent of their shareholding.
company or associated undertaking or
the transaction under consideration; None of the Directors or their relatives or associates
are interested in any of the above resolution in any way
except as members of KTML.

(vi) In case any investment in associated

A similar nature of loan/advance facility of
company or associated undertaking has
Rs. 1,500 million from time to time for working
already been made, the performance
capital requirements has been granted by the valued
review of such investment including
shareholders of KTML vide special resolution passed
complete information/justification for any
in the Annual General Meeting held on October 27,
impairment or write offs; and
2020 which is valid till October 31, 2021. There is no
impairment and/or write off against the above facility.

(vii) Any other important details necessary

for the members to understand the
N/A
transaction;

3(1)(c) Investments in the form of loans, advances:

Ref. REQUIREMENT INFORMATION

No.

(i) Category-wise amount of investment; Short term loan for working capital requirements
for a period of one year as dilated in preamble.

Average borrowing cost of the investing Average borrowing cost of KTML is 3.17% for
(ii)
company, the Karachi Inter Bank Offered the year ended June 30, 2021.
Rate (KIBOR) for the relevant period, rate of
return for Shariah Compliant products and
rate of return for unfunded facilities, as the
case may be, for the relevant period;
Mark-up will be charged from MLCFL at one
(iii) Rate of interest, mark up, profit, fees or
percent above three months KIBOR or one
commission etc. to be charged by investing
percent above the average borrowing cost of
company;
KTML, whichever is higher.
Particulars of collateral or security to
(iv) No collateral is considered necessary since
be obtained in relation to the proposed
MLCFL is a subsidiary company of KTML.
investment;

(v) If the investment carries conversion feature

i.e. it is convertible into securities, this fact
along with terms and conditions including
N/A
conversion formula, circumstances in which
the conversion may take place the time
when the conversion may be exercisable;
and
The loan / advance would be for a period of
(vi) Repayment schedule and terms and
one year from November 01, 2021 to October
conditions of loans or advances to be given
31, 2022 (both days inclusive). MLCFL will pay
to the associated company or associated
interest/mark-up on quarterly basis whereas
undertaking.
repayment of principal amount shall be on or
before October 31, 2022.
ANNUAL REPORT 2021 47
 Eight Directors and Sponsors of associated company i.e. MLCFL are also the members of KTML and are
interested to the extent of their shareholding as under: -

Name %age of shareholding %age of shareholding

in MLCFL in KTML

Mr. Tariq Sayeed Saigol 0.0030 4.2260

Mrs. Shehla Tariq Saigol (Spouse of Mr. Tariq Sayeed Saigol) 0.0164 10.1495
Mr. Taufique Sayeed Saigol 0.0015 14.5090
Mr. Sayeed Tariq Saigol 0.0010 0.1286
Mr. Waleed Tariq Saigol 0.0010 0.0112
Mr. Danial Taufique Saigol 0.0005 0.0010
Ms. Jahanara Saigol 0.0002 0.0008
Mr. Shafiq Ahmed Khan 0.0014 0.0010
Mr. Zulfikar Monnoo 0.0003 0.0010

AGENDA ITEM NUMBER 5 OF THE NOTICE – capital in any sort of financial instruments including
INVESTMENT IN MAPLE LEAF CAPITAL LIMITED but not limited to secure debt instruments and in
IN THE FORM OF LOANS/ADVANCES: shares of leading listed and unlisted companies but
not to act as an investment / brokerage company.
Maple Leaf Capital Limited (MLCL) was incorporated
on 25 April 2014 as a public limited company. The Board of Directors of the Company in their
The authorized share capital of MLCL is meeting held on August 13, 2021 has approved
R s . 5,000,000,000 and issued, subscribed and Rs. 1,000 million as loans / advances to MLCL
paid-up share capital of MLCL is Rs. 3,015,000,000. on the basis of financial results of MLCL subject
Kohinoor Textile Mills Limited is the holding company to approval of the members. The Company shall
of MLCL and owns 250,000,000 shares (82.919%) extend the facility of loans / advances from time to
of MLCL. time for working capital requirements to MLCL in
accordance with an agreement in writing including
MLCL is set up with the principal object of buying, all relevant terms and conditions as prescribed in the
selling, holding or otherwise acquiring or investing its Regulations.

48 KOHINOOR TEXTILE MILLS LIMITED

The Directors have carried out their due diligence relating to the proposed investment and duly signed
recommendation of due diligence report shall be available for inspection of members in the general meeting
along with the latest audited accounts of the subsidiary company.

3(1)(a) Disclosure for all types of investments

(A) Regarding associated company or associated undertaking: -

Ref. REQUIREMENT INFORMATION

No.

(i) Name of associated company or Maple Leaf Capital Limited

associated undertaking; (the “MLCL”)

(ii) Basis of relationship; MLCL is a subsidiary of Kohinoor Textile Mills

Limited (the “KTML”) and the KTML holds
82.92% of the aggregate paid-up capital in
MLCL.

(iii) Earnings per share for the last three years; (Rupees)
Basic Diluted
30.06.2019 0.88 Restated 0.88 Restated
30.06.2020 (2.04) (2.04)
30.06.2021 13.66 13.66

(iv) Break-up value per share, based on latest

As on June 30, 2021 is Rs. 28.36
audited financial statements;

(v) Based on the audited financial statements for

Financial position, including main items of
the financial year ended 30 June 2021, the
statement of financial position and profit
financial position of MLCL is as under: -
and loss account on the basis of its latest
financial statements;
Particulars Amount
Rupees (000)

Paid up capital 3,015,000

Unappropriated profit 5,534,932
Total equity 8,549,932
Current liabilities 1,863,499
Current assets 10,681,436
Revenue 5,013,141
Profit from operations 4,845,867
Profit after taxation 4,119,033
Earnings Per Share Rs. 13.66

ANNUAL REPORT 2021 49

 (B) General Disclosures:-

Ref. REQUIREMENT INFORMATION

No.

(i) Maximum amount of investment to be Rs. 1,000 million (Rupees one thousand million
made; only).

(ii) Purpose, benefits likely to accrue to the Purpose: To earn income on the loans and/or
investing company and its members advances to be provided to MLCL from time to
from such investment and period of time for working capital requirements of MLCL.
investment;
Benefits: The KTML will receive mark up at the
rate of one percent above three months KIBOR
or one percent above its average borrowing
cost, whichever is higher. This shall benefit the
KTML’s cash flow by earning profit on idle funds.

Period: For a period of one year from November

01, 2021 to October 31, 2022.

(iii) Source of funds to be utilized for Loan and/or advance will be given out of own
investment and funds of KTML.

where the investment is intended to be

made using borrowed funds, -
(i) Justification for investment through
borrowings; N/A
(ii) Detail of collateral, guarantees
provided and assets pledged for
obtaining such funds; and
(iii) Cost benefit analysis;

(iv) Salient features of agreement(s), if any, Nature Loan / advance

with associated company or associated Purpose To earn mark-up / profit on loan /
undertaking with regards to the proposed advance being provided to MLCL
investment; which will augment the KTML’s
cash flow.
Period One Year
Rate of
Mark-up One percent above the three
months KIBOR or one percent
above the average borrowing cost
of KTML, whichever is higher.

Repayment Principal plus mark-up/ profit

upto October 31, 2022
Penalty
charges @3-months KIBOR plus one
percent in addition to the
outstanding amount(s).

50 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 51
 Ref. REQUIREMENT INFORMATION
No.

(v) Direct or indirect interest of directors, Investing Company i.e. the KTML is a holding
sponsors, majority shareholders and company of MLCL and Six Directors are common
their relatives, if any, in the associated in both the companies may be deemed to be
company or associated undertaking or interested to the extent of their shareholding.
the transaction under consideration;
None of the Directors or their relatives or
associates are interested in any of the above
resolution in any way except as members of
KTML.

(vi) In case any investment in associated A similar nature of loan/advance facility of Rs.500
company or associated undertaking has million from time to time for working capital
already been made, the performance requirements has been granted by the valued
review of such investment including shareholders of KTML vide special resolution
complete information/justification for any passed in the Annual General Meeting held on
impairment or write offs; and October 27, 2020 which is valid till October 31,
2021. There is no impairment and/or write off
against the above facility.

(vii) Any other important details necessary

for the members to understand the N/A
transaction;

3(1)(c) Investments in the form of loans

Ref. REQUIREMENT INFORMATION
No.

(i) Category-wise amount of investment; Short term loan for working capital requirements
for a period of one year as dilated in preamble.

(ii) Average borrowing cost of the investing Average borrowing cost of KTML is 3.17% for
company, the Karachi Inter Bank Offered the year ended June 30, 2021.
Rate (KIBOR) for the relevant period, rate
of return for Shariah Compliant products
and rate of return for unfunded facilities,
as the case may be, for the relevant
period;

(iii) Rate of interest, mark up, profit, fees Mark-up will be charged from MLCL at one
or commission etc. to be charged by percent above three months KIBOR or one
investing company; percent above the average borrowing cost of
KTML, whichever is higher.

(iv) Particulars of collateral or security to No collateral is considered necessary since

be obtained in relation to the proposed MLCL is a subsidiary company of KTML.
investment;

52 KOHINOOR TEXTILE MILLS LIMITED

 Ref. REQUIREMENT INFORMATION
No.

(v) If the investment carries conversion feature

i.e. it is convertible into securities, this fact
along with terms and conditions including
conversion formula, circumstances in N/A
which the conversion may take place
the time when the conversion may be
exercisable; and

(vi) Repayment schedule and terms and The loan / advance would be for a period of
conditions of loans or advances to be one year from November 01, 2021 to October
given to the associated company or 31, 2022 (both days inclusive). MLCL will pay
associated undertaking. interest / mark-up on quarterly basis whereas
repayment of principal amount shall be on or
before October 31, 2022.

Five Directors and Sponsors of associated company i.e. MLCL are also the members of KTML and are
interested to the extent of their shareholding as under: -

Name %age of shareholding %age of shareholding

in MLCL in KTML

Mr. Taufique Sayeed Saigol 8.3748 14.5090

Mrs. Shehla Tariq Saigol
(Spouse of Mr. Tariq Sayeed Saigol) 3.3167 10.1495
Mr. Sayeed Tariq Saigol - 0.1286
Mr. Waleed Tariq Saigol 0.3648 0.0112
Mr. Danial Taufique Saigol - 0.0010
Ms. Jahanara Saigol - 0.0008

AGENDA ITEM NUMBER 6 OF THE NOTICE – to approve transactions with the related parties
RATIFICATION AND APPROVAL OF THE RELATED from time-to-time on case to case basis for the
PARTY TRANSACTIONS year ended June 30, 2021 and such transactions
were deemed to be approved by the shareholders.
Transactions conducted with the related parties Such transactions were to be placed before the
have to be approved by the Board of Directors duly shareholders in the next annual general meeting
recommended by the Audit Committee on quarterly for their formal approval/ratification. Accordingly,
basis pursuant to clause 15 of Listed Companies these transactions are being placed before the
(Code of Corporate Governance) Regulations, shareholders in this meeting for their formal approval/
2019. However, during the year since majority of ratification.
the Company’s Directors were interested due to
their common directorships and therefore these All transactions with related parties to be ratified have
transactions are being placed for the approval by been disclosed in the note 38 to the unconsolidated
shareholders in the Annual General Meeting. In last financial statements for the year ended June 30,
Annual General Meeting of the Company, in order 2021. Party-wise details of such related party
to promote transparent business practices, the transactions are given below: -
shareholders had authorized the Board of Directors

ANNUAL REPORT 2021 53

 Name of Relationship Description of Transactions 2021 2020
Related Party
Rupees in thousand
Maple Leaf Subsidiary
Purchase of goods and services 144,968 114,281
Cement Company
Factory Investment made - 3,343,934
Limited
Sale of property, plant and equipment 3,533 -
Dividend income - 163,918
Expenses paid by MLCFL on behalf of the 5,265 -
Company
Common expenses 14,050 22,152
Loan given - 870,000
Receipts against loan - 870,000
Mark up charged on loans - 21,297
Maple Leaf Subsidiary Loan obtained - 1,250,000
Capital Limited Company
Loan repaid 445,216 804,784
Mark-up on loans 2,004 80,308
Purchase of property, plant and equipment 3,533 -
Sale of property, plant and equipment 1,594 -
Provident fund Post-employ- Contribution to provident fund 65,616 57,896
ment benefit
plan

The Saim Family Trust, British Virgin Islands (BVI) AGENDA ITEM NUMBER 7 OF THE NOTICE –
through Mercury Management Inc., BVI and Hutton AUTHORIZATION FOR THE BOARD OF DIRECTORS
Properties Limited, BVI (related parties) holds TO APPROVE THE RELATED PARTY TRANSACTIONS
73,390,896 [24.52%] (2020: 73,390,896) and DURING THE YEAR ENDING ON JUNE 30, 2022.
49,639,992 [16.59%] (2020: 49,639,992) ordinary
shares respectively of the Company on which The Company shall be conducting transactions
dividend amounting to Rupees 146,781,792 (2020: with its related parties during the year ending on
Rupees 128,434,068) and Rupees 99,279,984 June 30, 2022 as per the approved policy with
(2020: Rupees 86,869,986) respectively was paid respect to ‘transactions with related parties’ in the
during the year. normal course of business. The majority of Directors
are interested due to their common directorships
The Company carries out transactions as per the in the subsidiary/associated companies. In order
approved policy with respect to ‘transactions with to promote transparent business practices, the
related parties’ in the normal course of business. All shareholders are required to authorize the Board
transactions entered into with related parties require of Directors to approve transactions with the
the approval of the Audit Committee of the Company, related parties from time-to-time and on case
which is chaired by an Independent Director of the to case basis for the year ending on June 30,
Company. Upon the recommendation of the Audit 2022, which transactions shall be deemed to
Committee, such transactions were placed before be approved by the Shareholders. The nature
the Board of Directors for approval. and scope of such related party transactions is
explained above. These transactions shall be
The nature of relationship with these related parties placed before the shareholders in the next AGM
has been indicated above. The Directors are for their formal approval/ratification.
interested in the resolution only to the extent of their
shareholding and having their common directorships The Directors are interested in the resolution only
in such related parties. to the extent of their shareholding and/or only their
common directorships in such related parties.

54 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 55
 CHAIRMAN’S REVIEW
I am pleased to present the annual report and audited which the annual business plan is derived, as well
financial statements of the Company for the year as, projected plans for the next five years have been
ended 30 June, 2021 to our valued shareholders. set by the Management, covering all functional and
Significant aspects of performance of your Company operational areas by utilization of available resources,
have been shared with you during the course of modernization and expansion of production facilities
the financial year 2020-21. The Management of the to ensure continued growth in the bottom line which
Company is encouraged by the future prospects should hopefully result in improved results.
and expects to continue to demonstrate satisfactory
performance through its efforts and strategic DILIGENCE:
directions provided by the Board.
The Board reviews the quality and appropriateness of
Pursuant to requirement of the Listed Companies financial statements of the Company, reporting and
(Code of Corporate Governance) Regulations, transparency of disclosures, Company’s accounting
2019, mechanism has been put in place for annual policies, corporate objective plans, budgets and
evaluation of the performance of the Board of Directors other reports. The meetings of the Board are held at
(the “Board”) of Kohinoor Textile Mills Limited (the required frequencies and agenda alongwith working
“Company”). The main objective of this exercise is to papers are circulated in sufficient time prior to Board
internally evaluate the performance of the Board and and Committee meetings.
its Committees in order to facilitate the Management
and to play an effective role as a coordinated team ADEQUATE GOVERNANCE:
for the success of the Company. Strategic goals
for the Management have been earmarked for The Board has framed the Code of Conduct which
the coming year and the Board’s effectiveness is defines requisite behavior and has been disseminated
measured in the context of achievement of such throughout the Company, alongwith supporting
objectives. Accordingly, the Board has completed policies and procedures. Adequate controls and
its annual self-evaluation for the year 2021 and I robust systems are in place to ensure effective
am pleased to report that the overall performance control environment so compliance of best policies
benchmarked on the basis of criteria set for the year of Corporate Governance are achieved. The Board
2021, remained satisfactory. Such assessment was sets high standards of honesty and integrity which
based on standards set by the Board in line with best we consider are vital for success of the business.
corporate governance practices.
PRESENTATIONS:
COMPOSITION OF THE BOARD:
During the course of discussion and approvals of
The composition of the Board depicts reasonable financial statements, comprehensive presentations
balance of executive and non-executive Directors are placed before the Board based on incisive,
including independent Directors and as a Group, critical and strategic analysis of all functional
possess the requisite skills, core competencies and areas relating to core business of the Company.
industry knowledge to lead the Company. All Board Benchmarking compared with the industry’s peer
members have exercised their individual business group are carried out. This practice provides ample
judgment and are involved in important Board opportunity for objective analysis of the Company’s
decisions. goals and evaluation of its own financial performance
with the peer group. The Board provides appropriate
VISION & MISSION STATEMENTS: directions and oversight emanated on the basis of
thorough and detailed discussions.
The Board members are aware of the high level of
ethical and professional standards laid down in our
Vision & Mission Statements which are adopted by
the Company and fully support the same in attaining
the objectives dilated therein.

STRATEGIC DECISION MAKING: Lahore Tariq Sayeed Saigol

13 August 2021 Chairman
Overall corporate strategy and objectives have been
set in line with the strategic vision of the Board from

56 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 57
 DIRECTORS’ REPORT
TO THE SHAREHOLDERS
In compliance with Section 227 of the Companies
Act, 2017, the Directors are pleased to present 53rd
Annual Report along with audited financial statements
and Auditors’ Report thereon for the year ended 30
June 2021.

58 KOHINOOR TEXTILE MILLS LIMITED

PRINCIPAL ACTIVITIES fold increase in freight rates, high yarn prices which
retailers internationally were unable to absorb, as well
Kohinoor Textile Mills Limited is a public limited
as, unexpected movements in the exchange rate.
company incorporated in Pakistan under the
Demand from the Company’s institutional customers
Companies Act, 1913 (now the Companies Act,
suffered due to hotel closures and travel bans which
2017) and listed on Pakistan Stock Exchange Limited.
significantly impacted the tourism industry and had
The Registered Office of the Company is situated at
a negative effect on the bottom-line. However, with
42-Lawrence Road, Lahore. The principal activity of
ever-increasing rates of vaccination globally, the
the Company is manufacturing of yarn and cloth,
Company is optimistic that the division will see a return
processing and stitching the cloth and trade of textile
to its earlier performance during the current year.
products.
The Company continues to focus on balancing and
modernization to increase quality and productivity.
REVIEW OF OPERATIONS
During the year under review, profitability of the To keep up with its Sustainability focus, the
Company recorded an impressive increase over Company continues to make large investments in
the previous year, despite ill effects of the ongoing green technologies. An additional large-scale Solar
Coronavirus pandemic, much increased global freight energy project is underway and by December 2021
rates, and fluctuations in foreign exchange rates. This should bring the Company’s total Solar capacity to
improved performance can be attributed to timely above 11 Megawatts, with further projects to follow.
purchases of raw materials and the Company’s Additionally, the Company is continuing efforts to
continuing upgradation of plant and machinery which minimize its usage of water and increase water
resulted in improved quality and productivity. storage and recycling capabilities.

The results of the Company’s Spinning divisions We remain hopeful that the Government continues
have been the main driver of improved profitability its energy policy for supply of electricity and natural
due to increased selling rates as a result of high gas to the textile sector which will go a long way in
local and international demand and our raw material supporting the Country’s exporting industries. The
procurement policy. The Company continues to invest Government’s ongoing efforts to vaccinate the general
in increasing capacity, improving quality, and adding public is appreciated, and the Company has adopted
new spinning technologies to further diversify its yarn strict policies to get its employees and their families
offerings. These continue to come online and should vaccinated as soon as possible. We commend the
lead to improved financial results going forward. Government’s efforts to provide its people with free
vaccines.
Cotton prices are on the rise internationally. The
Company is carrying ahead with its cautious raw It is hoped that the financial results of the Company
material procurement policy as it continues its will continue to improve in the coming year, as the
purchasing for the current year. Moving forward, Company’s investments in its people, plant, and
the Company will continue to focus on international machinery continue to bear fruit and as the global
sourcing of cotton as local supplies are costly and economy recovers from the effects of the pandemic.
output is expected to be lower than the needs of
the local industry. Additionally, the Company is FINANCIAL REVIEW
focusing on greater use of synthetic fibres to reduce
dependence on cotton. During the year under review, Company’s sales
increased by 37% to Rs. 29,956 million (2020:
The results of the Weaving division improved over Rs. 21,845 million), while cost of sales increased
the previous year in spite of high yarn prices and by 33% to Rs. 23,823 million (2020: Rs. 17,855
tight supply situation of yarn imports. As demand is million). This resulted in gross profit of Rs. 6,133
expected to increase out of Pakistan in the coming million (2020: Rs. 3,990 million). Operating profit for
years, the Company is currently in the planning stages the year under review stood at Rs. 4,061 million
of a capacity increase at its Raiwind site. (2020: Rs. 2,681 million). The Company recorded
after tax profit of Rs. 2,756 million (2020: Rs. 1,528
The Home Textiles division did not perform as well as million). Earnings per share for the year ended 30
the previous year. This is due in large part to a many June 2021 stood at Rs. 9.21 against Rs. 5.11 for
the last year.

ANNUAL REPORT 2021 59

60 KOHINOOR TEXTILE MILLS LIMITED
GROUP FINANCIAL REVIEW

During the year under review, Company’s consolidated revenue increased to Rs. 65,451 million (2020:
Rs. 50,848 million), while cost of sales increased to Rs. 49,998 million (2020: Rs. 45,977 million). This resulted
in gross profit of Rs. 15,453 million (2020: Rs. 4,871 million). Earnings /(Loss) per share for the year ended 30
June 2021 were Rs. 28.26 against Rs. (3.32) for the last year.

DIVIDEND & APPROPRIATIONS

Keeping in view the results, the Board of Directors has announced final cash dividend for the year ended June
30, 2021 at Re. 1/- per share (10%). This is in addition to interim cash dividend already paid at Re. 1/- per share
(10%), thus making a total cash dividend at Rs. 2/- per share (20%) for the year. Future prospects of dividend
are dependent on future economic conditions.

The Directors recommend as under:

Description Rs. “000”

Profit before taxation 3,397,709

Provision for taxation (641,380)
Profit after taxation 2,756,329
Final dividend declared for the year ended 30 June 2020 (299,296)
Interim dividend declared during the year ended 30 June 2021 (299,296)
Accumulated profit brought forward 8,698,514

Accumulated profit carried forward 10,856,251

SUBSEQUENT EVENTS review. Furthermore, no payment on account of

taxes, duties and levies is overdue or outstanding at
There are no subsequent event that materially
financial year end.
affect the performance, objectives or strategy of the
Company. Moreover, there is no material change and
PRINCIPAL RISKS AND UNCERTAINTIES
commitment affecting the financial position of the
Company which have occurred between the end The major risks and challenges faced by the Company
of the financial year of the Company to which the are as follows: -
financial statement relates and the date of the report.
i- Declining export sales due to increased
competition at global as well as regional levels.
BUSINESS RATIONALE OF CAPITAL
ii. Rupee devaluation causing escalation in prices of
EXPENDITURE / ONGOING EXPANSIONS OF
imported raw cotton, packaging and dyes, which
THE COMPANY
truncating profit margins.
Company has planned an additional large-scale Solar iii. Increased energy cost due to rising fuel and
energy project that will be live by December 2021 power prices.
and will bring the Company’s total Solar capacity to iv. Overall inflationary increase in operating
above 11 Megawatts. In addition to that as demand expenses.
is expected to increase out of Pakistan in the coming v. Head on competition amongst textile
years for textile products, the Company is currently manufacturers on price as well as on sales.
in the planning stages of a capacity increase at its
The Organization is effectively equipped to face
weaving division.
challenges and uncertainties that are likely to arise.
Through combined experience, skill and effective
DEFAULT OF REPAYMENTS, DEBT/LOAN ETC.
business reporting, Management is always aware of
Adhering to the best business practices, the internal and external developments. The Company
Company recognizes its responsibility of timely has formulated unique specialised cross functional
repayments of due amount. No default on payment teams that routinely discuss key issues and risks to
of loan/debts was recorded during the year under come up with the most forward approach. In response

ANNUAL REPORT 2021 61

62 KOHINOOR TEXTILE MILLS LIMITED
to stiff competition and low margins in export markets, technological platform, therefore, the Company is
marketing team under the guidance of Management continuously investing in the information technology
launched an effective market penetration strategy to to remain up to date to deliver the excellent service to
increase presence in previously untapped markets. its stakeholders.
To cater to overall inflation, an efficient procurement
plan is in place. Natural Capital:
Management is committed for perseverance of
CHANGE IN NATURE OF BUSINESS
natural capital for a prosperous future of coming
No change has occurred during the financial year generations. Management is increasing its investment
concerning the nature of the business of the Company in SOLAR base power projects in order to deliver a
or of its subsidiaries, or any other company in which clean environment. Water is also being used wisely to
the Company has interest. limit the wastage of this scarce resource. Waste water
treatment plant has been installed by the Company
GOVERNMENT OF PAKISTAN’S POLICIES several years ago to achieve the stated objective.
RELATED TO COMPANY’S BUSINESS & THEIR
IMPACT ON PERFORMANCE CORPORATE SOCIAL RESPONSIBILITY
Government of Pakistan’s policy to provide cheap The Company acknowledges its responsibility
source of Short term/Long term financing for export towards society and performs its duty by providing
oriented textile based Companies has significant financial assistance to projects for society
impact on financials of the Company. In addition development by various charitable institutions on
to these Duty Drawback on local Taxes & Levies consistent basis. The Company has been recognized
(DLTL) scheme is also an excellent opportunity from by the Pakistan Centre for Philanthropy as a leader in
Government that support the exporters in efficient social and charitable contributions and strives to be
financial management. a constructive member of the communities in which
it has a presence. The Company has contributed in
NON-FINANCIAL PERFORMANCE medical social sciences project and in this regard,
the Company’s Board of Directors decided to
Company’s non-financial performance in relation to
donate towards construction of Admin Block at Al-
important constituents are as follows.
Aleem Medical College in Gulab Devi Chest Hospital
(GDCH), Lahore. The Company has also contributed
Human Capital:
in the past for medical social service projects and in
Human capital is a significant element in the success this regard the Company donated a state-of-the-art
of an organization. KTML believes that Organization’s Cardiac facility to GDCH in Lahore by building Sayeed
long term success is dependent in the advancement Saigol Cardiac Complex at GDCH.
of its employees. Considering same organization is
continuously investing in the grooming of employees Kohinoor Maple Leaf Group has received “13th
by way of various in house / out sourced training Corporate Social Responsibility National Excellence
sessions. Award” on account of its performance of various
social obligations.
Relationship Capital:
KTML enjoys a very healthy & beneficial relationship IMPACT OF COMPANY’S BUSINESS ON THE
with its stakeholders, customers, shareholders & ENVIRONMENT
suppliers. The Company is currently producing Management understands the harmful effects of
and supplying high-quality products which ensure
contaminated water on the surrounding areas after
maximum satisfaction to its customers. The Company
emission from the mills premises. In order to prevent
is maintaining a highly satisfactory relationship with all
the potentially harmful effects of any chemicals used
its stakeholders.
in processing on the surrounding water table, a
Intellectual Capital: waste water treatment plant has been constructed
minimizing or negating any contamination in water
Intellectual capital comprises various information discharged from the factory. Further, the Company
systems available in an organization. Management in
continues to investigate and implement pilot projects
KTML believes that in order to maintain the competitive
into alternative, sustainable energy sources.
advantage it is utmost important to update the

ANNUAL REPORT 2021 63

 ADEQUACY OF INTERNAL CONTROL independent auditor’s report on financial statements
The Board of Directors is aware of its responsibility of the Company for the year have expressed an
with respect to internal controls environment and unqualified opinion on the state of affairs of the
accordingly has established an efficient system of Company.
internal financial controls for ensuring effective and
efficient conduct of operations, safeguarding of The Board has recommended, as suggested by
Company assets, compliance with applicable laws
the Audit Committee, the appointment of M/s. Riaz
and regulations and reliable financial reporting. The
independent Internal Audit function of the Company Ahmad & Co., Chartered Accountants, the retiring
regularly appraises and monitors the implementation auditors who being eligible, have offered themselves
of financial controls, whereas the Audit Committee for re-appointment for the ensuing year, subject to
reviews the effectiveness of the internal control approval of the members in the forthcoming Annual
framework and financial statements on quarterly General Meeting.
basis.
LEADERSHIP STRUCTURE
MANAGEMENT’S RESPONSIBILITY TOWARDS
PREPARATION AND PRESENTATION OF COMPOSITION OF THE BOARD OF DIRECTORS
FINANCIAL STATEMENTS & COMMITTEES:
The Management is aware of its responsibility for
the preparation and fair presentation of its financial Total Number of Directors:
statements in accordance with the accounting and
reporting standards as applicable in Pakistan and a) Male 8
the requirements of the Companies Act, 2017 and b) Female 1
for such internal control as management determines
is necessary to enable the preparation of financial Composition:
statements that are free from material misstatement,
whether due to fraud or error. Independent Directors 02

AUDITORS Non-Executive Directors 03

The existing auditors of the Company M/s. Riaz Executive Directors (including CEO) 03
Ahmad & Co., Chartered Accountants, in their Female Director (Non-Executive) 01

LIST OF DIRECTORS AND BOARD MEETINGS

During the year under review, four meetings of the Board of Directors were held in Pakistan and no Board
meeting was held outside Pakistan. The attendance of each Director was as under: -

CATEGORY NAMES MEETINGS

ATTENDED

Independent Directors Mr. Shafiq Ahmed Khan 4
Mr. Zulfikar Monnoo 4

Other Non-Executive Directors Mr. Tariq Sayeed Saigol - Chairman 4

Mr. Sayeed Tariq Saigol 3
Mr. Waleed Tariq Saigol 4

Executive Directors Mr. Taufique Sayeed Saigol 4

Chief Executive Officer
Mr. Danial Taufique Saigol 4
Syed Mohsin Raza Naqvi 4

Female Director
Non-Executive Director Ms. Jahanara Saigol 4

Leave of absence was granted to the Director who could not attend the Board Meeting.

64 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 65
 AUDIT COMMITTEE

Four meetings of the Audit Committee were held during the financial year and attendance of each Member was
as under: -

NAMES DESIGNATION MEETINGS ATTENDED

Mr. Shafiq Ahmed Khan Chairman (Independent Director) 4
Mr. Zulfikar Monnoo Member (Independent Director) 4
Mr. Sayeed Tariq Saigol Member (Non-Executive Director) 3
Mr. Waleed Tariq Saigol Member (Non-Executive Director) 1

Leave of absence was granted to the Members who could not attend the Audit Committee Meetings.

Mr. Shafiq Ahmed Khan, the Chairman Audit Committee was present in the last AGM held on October 27, 2020.

Board Annually Evaluates the performance of Board Committees including Audit Committee.

HUMAN RESOURCE AND REMUNERATION COMMITTEE

NAMES DESIGNATION

Mr. Shafiq Ahmed Khan Chairman (Independent Director)
Mr. Zulfikar Monnoo Member (Independent Director)
Mr. Sayeed Tariq Saigol Member (Non-Executive Director)
Mr. Danial Taufique Saigol Member (Executive Director)

One meeting was held on December 23, 2020 and all Members attended the meeting other than Mr. Sayeed Tariq Saigol.

REMUNERATION TO NON-EXECUTIVE / for attending meetings and for other business

INDEPENDENT DIRECTORS conducted for and on behalf of the Company.

The Board of Directors has approved a ‘Directors’ The details of the remuneration paid to the Chief
Remuneration Policy’, the salient features of which Executive and Directors of the Company are disclosed
are: in Note 37 of the Standalone Financial Statements.

• No Director shall determine his/her own PATTERN OF SHAREHOLDING

remuneration.
Pattern of shareholding of the Company in accordance
• Meeting fee of a Director other than regular with the Companies Act, 2017 as at June 30, 2021
paid Chief Executive, Sponsors and / or family is annexed.
Directors and full time working Director(s), shall
be net of tax amounting to Rs.10, 000/- (Rupees FUTURE OUTLOOK
ten thousand only) per meeting or as time to
time determined by the Board for attending the It is hoped that the financial results of the Company
Board and its Committee meetings. will continue to improve in the coming year, as the
Company’s investments in its people, plant, and
• Any tax obligation against such payment machinery continue to bear fruit and as the global
applicable for the time being and/or amended economy recovers from the effects of the pandemic.
hereinafter shall be borne by the Company. We remain hopeful that the Government continues
its energy policy for supply of electricity and natural
• The Directors shall be entitled to be paid all gas to the textile sector which will go a long way
reasonable expenses, including travelling, hotel in supporting the Country’s exporting industries.
charges and other expenses incurred by them The Government’s ongoing efforts to vaccinate the

66 KOHINOOR TEXTILE MILLS LIMITED

general public is appreciated, and the Company has adopted strict policies to get its employees
and their families vaccinated as soon as possible. We commend the Government’s efforts to
provide its people with free vaccines.

ACKNOWLEDGEMENT

The Directors are grateful to the Company’s members, financial institutions and customers
for their co-operation and support. They also appreciate hard work and dedication of all the
employees working at the various divisions.

For and on behalf of the Board

Lahore (Syed Mohsin Raza Naqvi) (Taufique Sayeed Saigol)

13 August 2021 Director Chief Executive

ANNUAL REPORT 2021 67

 STATEMENT OF COMPLIANCE
WITH LISTED COMPANIES (CODE OF CORPORATE GOVERNANCE)
REGULATIONS, 2019 (THE “REGULATIONS”)

Name of Company: Kohinoor Textile Mills Limited

Year Ended: June 30, 2021

This Company has complied with the requirements of the Regulations in the following manner:-

1. The total number of Directors are Nine (9) as per the following composition:

Male: 8
Female: 1

2. The Composition of the Board is as follows: -

i. Independent Directors 02
ii. Non-Executive Directors 03
iii. Executive Directors (including CEO) 03
iv. Female Director (Non-Executive) 01

Determination of number of independent particulars of the significant policies along

Directors comes to 2.66 (rounded to 2) with their date of approval or updating is
which is based on Eight Elected Directors, maintained by the Company. Although
excluding CEO who is considered as these are well circulated among the relevant
deemed director. The fraction contrived in employees and directors, the Board shall if
one-third number is not rounded up as the mandatorily required consider posting such
two elected independent directors have policies and synopsis of terms of reference
requisite competencies, skills, knowledge of the Board’s Committees on its website in
and experience to discharge and execute near future;
their duties competently, as per applicable
laws and regulations. As they fulfill the 6. All the powers of the Board have been duly
necessary requirements as per applicable exercised and decisions on relevant matters
laws and regulations, hence, appointment of have been taken by the Board / Shareholders
a third independent director is not warranted. as empowered by the relevant provisions of
Further, at the time of election of directors, the Companies Act, 2017 (the “Act”) and
no one as per procedure intended to contest these Regulations;
election as director representing minority
shareholders; 7. The meetings of the Board were presided
over by the Chairman. The Board has
3. The Directors have confirmed that none complied with the requirements of the
of them is serving as a Director on more Act and the Regulations with respect to
than seven listed companies, including this frequency, recording and circulating minutes
Company; of meetings of the Board;

4. The Company has prepared a Code of 8. The Board has a formal policy and
Conduct and has ensured that appropriate transparent procedures for remuneration of
steps have been taken to disseminate it Directors in accordance with the Act and
throughout the Company along with its these Regulations;
supporting policies and procedures;
9. Three Directors have obtained certificate
5. The Board has developed a vision/mission for Directors’ Training Program and Five
statement, overall corporate strategy and Directors are exempt from this due to 14 years
significant policies of the Company. The of education and 15 years of experience on
Board has ensured that complete record of the Boards of listed companies as under: -;

68 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 69

Sr. NAME OF DIRECTORS YEARS OF EXPERIENCE
No.
1. Mr. Tariq Sayeed Saigol Exempted from Directors’ Training Program
2. Mr. Sayeed Tariq Saigol Director of the Company since 1998
3. Mr. Taufique Sayeed Saigol Exempted from Directors’ Training Program
4. Mr. Waleed Tariq Saigol Director in Maple Leaf Cement Factory Limited (MLCFL) since
2004
5. Mr. Danial Taufique Saigol Certificate obtained for Directors’ Training Program
6. Ms. Jahanara Saigol Appointed on the Board of the Company on April 23, 2020 and
Director in MLCFL since December 31, 2019. Directors’ Training
Program within a period of one year from the date of appointment
as a director is non-mandatory and compliance will be made in due
course.
7. Mr. Shafiq Ahmed Khan Director in Trust Investment Bank Limited from 1997 to 2009 and
Director of the Company since 2014
8. Mr. Zulfikar Monnoo Director in Rafhan Maize Product Co. Limited since 1990 and cer-
tificate obtained for Directors’ Training Program
9. Syed Mohsin Raza Naqvi Certificate obtained for Directors’ Training Program
The Company has planned to arrange Directors’ Training Program certification for female executives
over the next few years.
10. The Board has approved appointment of Chief Financial Officer, Company Secretary and Head of
Internal Audit, including their remuneration and terms and conditions of employment and complied
with relevant requirements of the Regulations;
11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before
approval of the Board;
12. The Board has formed committees comprising of members given below:

a) Audit Committee

NAME DESIGNATION

Mr. Shafiq Ahmed Khan Chairman (Independent Director)
Mr. Zulfikar Monnoo Member (Independent Director)
Mr. Sayeed Tariq Saigol Member (Non-Executive Director)
Mr. Waleed Tariq Saigol Member (Non-Executive Director)

b) Human Resource & Remuneration Committee

NAME DESIGNATION

Mr. Shafiq Ahmed Khan Chairman (Independent Director)
Mr. Zulfikar Monnoo Member (Independent Director)
Mr. Sayeed Tariq Saigol Member (Non-Executive Director)
Mr. Danial Taufique Saigol Member (Executive Director)

70 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 71
 c) Nomination Committee: Currently, the Board has not constituted a separate nomination committee
and the functions are being performed by the human resource and remuneration committee. The
Board shall consider to constitute nomination committee after next election of directors;

d) Risk Management Committee: Currently, the Board has not constituted a risk management
committee and senior officers of the Company perform the requisite functions and apprise the
Board accordingly. The Board shall consider to constitute risk management committee after next
election of directors;

13. The terms of reference of the aforesaid committees have been formed, documented and advised to
the committees for compliance;

14. The frequency of meetings of the committees were as per following:

MEETINGS FREQUENCY

Audit Committee Four meetings were held during the financial
year ended June 30, 2021.
Human Resource and One meeting was held during the financial year ended
Remuneration Committee June 30, 2021.

15. The Board has set up an effective internal audit function which is considered to be suitably qualified and
experienced for the purpose and are conversant with the policies and procedures of the Company;

16. 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 (ICAP)
and registered with Audit Oversight Board of Pakistan, that they and all their partners are in compliance
with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP
and that they and the partners of the firm involved in the audit are not a close relative (spouse, parent,
dependent and non-dependent children) of the Chief Executive Officer, Chief Financial Officer, Head of
Internal Audit, Company Secretary or Director of the Company;

17. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the Act, these Regulations or any other regulatory requirement and
the auditors have confirmed that they have observed IFAC guidelines in this regard; and

18. We confirm that all requirements of the regulations 3,6,7,8,27,32,33 and 36 of the Regulations have
been complied with.

(TARIQ SAYEED SAIGOL)

Lahore: 13 August, 2021 CHAIRMAN

72 KOHINOOR TEXTILE MILLS LIMITED
 2-A, ATS Centre, 30-West,
Fazal-ul-Haq Road,Blue Area,
Islamabad, Pakistan
T: +92 (51) 227 4121 - 2
F: +92 (51) 227 8859
racoisd@[Link]
[Link]

INDEPENDENT AUDITOR’S
REVIEW REPORT
TO THE MEMBERS OF KOHINOOR TEXTILE MILLS LIMITED
REVIEW REPORT ON THE STATEMENT OF COMPLIANCE CONTAINED IN LISTED
COMPANIES (CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Kohinoor Textile Mills
Limited (the Company) for the year ended 30 June 2021 in accordance with the requirements of regulation
36 of the Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Company.
Our responsibility is to review whether the Statement of Compliance reflects the status of the Company’s
compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance
with the requirements of the Regulations. A review is limited primarily to inquiries of the Company’s personnel
and review of various documents prepared by the Company to comply with the Regulations.

As a part of our audit of the 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 are not
required to consider whether the Board of Directors’ statement on internal control covers all risks and controls
or to form an opinion on the effectiveness of such internal controls, the Company’s corporate governance
procedures and risks.

The Regulations require the Company to place before the Audit Committee, and upon recommendation
of the Audit Committee, place before the Board of Directors for their review and approval, its related party
transactions. We are only required and have ensured compliance of this requirement to the extent of the
approval of the related party transactions by the Board of Directors upon recommendation of the Audit
Committee.

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
requirements contained in the Regulations as applicable to the Company for the year ended 30 June 2021.

RIAZ AHMAD & COMPANY

Chartered Accountants

Islamabad
Date: 13 August, 2021

ANNUAL REPORT 2021 73

 REPORT OF THE AUDIT COMMITTEE

The Audit Committee comprises of two Independent and prudent judgment. Proper and adequate
Directors and two Non-Executive Directors. The accounting records have been maintained by the
Chief Financial Officer, the Chief Internal Auditor and Company in accordance with the Companies
the external auditors attend the Audit Committee Act, 2017, and the external reporting is
meetings as provided in Listed Companies (Code consistent with management processes and
of Corporate Governance) Regulations, 2019. Four adequate for shareholder needs.
meetings of the Audit Committee were held during the
year 2020-2021. Based on reviews and discussions 4) The Audit Committee reviewed and approved all
in these meetings, the Audit Committee reports that: related party transactions.

1) The Audit Committee reviewed and approved 5) No cases of material complaints regarding
the quarterly, half yearly and annual financial accounting, internal accounting controls or
statements of the Company including audit matters, or Whistle Blowing were received
consolidated financial statements and by the Committee.
recommended them for approval of the Board
of Directors. 6) The Company’s system of internal control is
sound in design and is continually evaluated for
2) Appropriate accounting policies have been effectiveness and adequacy.
consistently applied. All core and other
applicable International Accounting Standards 7) The Board has established internal audit
were followed in preparation of financial function being an independent appraisal
statements of the Company and consolidated function for the review of the internal control
financial statements on a going concern basis, system in all areas of the business activity
which present fairly the state of affairs, results of and provides management with objective
operations, cash flows and changes in equity of evaluations, appraisals and recommendations
the Company. on the adequacy, effectiveness and compliance
with each system reviewed.
3) Accounting estimates are based on reasonable

74 KOHINOOR TEXTILE MILLS LIMITED

8) Company’s internal audit function is headed services company having satisfactory QCR
by a Chartered Accountant with a team of rating. They carry out objective examination
professionals who are suitably qualified and and evaluation of the financial statements to
experienced and well aware of the Company’s make sure that the records are fair and accurate
policies and procedures. representation of the transactions. They confirm
every year that the firm and all Partners in the
9) Internal audit function operates under the firm are compliant with the IFAC guidelines on
charter approved by the Audit Committee and Code of Ethics as adopted by the Institute of
head of the internal audit function has direct Chartered Accountants of Pakistan.
access to the Audit Committee.
17) The external auditors, M/s. Riaz Ahmad &
10) Company’s internal audit function prepares Company, Chartered Accountants, were
annual plan for the financial year and a strategic allowed direct access to the Audit Committee
audit plan for following two years during which and necessary coordination with internal
all major systems and areas of activity will be auditors was also ensured. Major findings
audited. Annual and strategic audit plan is arising from audits and any matters that the
approved by the Audit Committee. external auditors wished to highlight were freely
discussed with them.
11) Internal audit reports include findings,
conclusions, recommendations and action 18) The Audit Committee reviewed the Management
plans agreed with management. These are Letter issued by the external auditors and the
reported promptly to the appropriate level of management response thereto. Observations
management. Follow up in implementation is were discussed with the auditors and required
ensured. actions recorded.

12) The Audit Committee, on the basis of the 19) Appointment of external auditors and fixing
internal audit reports, reviewed the adequacy of of their audit fee was reviewed and the Audit
controls and compliance shortcomings in areas Committee following this review recommended
audited and discussed corrective actions in to the Board of Directors re-appointment
the light of management’s responses. This has of M/s. Riaz Ahmad & Company, Chartered
ensured the continual evaluation of controls and Accountants, as external auditors for the year
improved compliance. 2021-2022.

13) The Audit Committee has reviewed the Annual

Report for the last financial year and found it
fair, balance and understandable to users of
financial statements. Annual Report provides
the necessary information to all the stakeholders On behalf of the Audit Committee
about the Company’s financial performance,
financial position and future prospects.

14) Performance of the Audit Committee is annually

reviewed by the Board of Directors. However, (Shafiq Ahmed Khan)
the Committee is devising a checklist for self- Chairman, Audit Committee
evaluation of its performance. 13 August 2021

15) The Audit Committee ensured that statutory

and regulatory obligations and requirements of
best practices of governance have been met.

16) Present Auditors, M/s. Riaz Ahmad & Company,

Chartered Accountants, were appointed as on
December 30, 2004. They are professional

ANNUAL REPORT 2021 75

 BRIEF PROFILE OF DIRECTORS

Mr. Tariq Sayeed Saigol is the Chairman of Kohinoor Maple

Leaf Group (KMLG). He is a member of the reputed Saigol
MR. TARIQ SAYEED SAIGOL Family who pioneered in textile manufacturing after partition
(CHAIRMAN / DIRECTOR) and later ventured into the financial sector, chemicals,
synthetic fibres, sugar, edible oil refining, civil engineering,
OTHER ENGAGEMENTS construction, cement and energy.
CHAIRMAN / DIRECTOR
Mr. Saigol was schooled at Aitchison College, Lahore and
Maple Leaf Cement Factory Limited
graduated from Government College University, Lahore,
Maple Leaf Power Limited
following which he studied Law at University Law College,
Lahore.

He started his career in 1968 at Kohinoor’s Chemical

Complex at Kala Shah Kaku. Upon trifurcation of the Group
in 1976, he became Chief Executive of Kohinoor Textile Mills
Limited, Rawalpindi. Since 1984, he has been Chairman of
Kohinoor Maple Leaf Group which has interests in textiles,
cement manufacturing and energy.

He remained Chairman of All Pakistan Textile Mills Association

from 1992 to 94, President of Lahore Chamber of Commerce
and Industry for 1995-97 and Chairman of All Pakistan
Cement Manufacturers Association from 2003-2006.

Mr. Saigol was a member of the Federal Export Promotion

Board and Central Board of State Bank of Pakistan. He
has also served on several Government Commissions and
Committees on a number of subjects, including Export
Promotion, reorganization of WAPDA and EPB, Right Sizing
of State owned Corporations and Resource Mobilization. He
is the author of “Textile Vision 2005” which was adopted by
the Government in 2000 and also its critique prepared in
2006. He also served as a member of the Central Board of
State Bank of Pakistan for a second term in 2007 and was a
member of the Prime Minister’s Economic Advisory Council
established in 2008.

He takes keen interest in the development of education and

health care in Pakistan. He has been a member of the Board
of Governors of Lahore University of Management Sciences,
Founding Chairman of the Board of Governors of Chandbagh
School, Founder Trustee of Textile University of Pakistan,
member of the Syndicate of University of Health Sciences
and Member of Board of Governors of Aitchison College,
Lahore. He presently serves on the Managing Committee,
Gulab Devi Chest Hospital, Lahore.

In recognition of his contribution, he was conferred with the

civilian award, Sitara-e-Isaar by the President of Pakistan in
2006.

He is a keen golfer and has represented Pakistan at Golf in

Sri Lanka and Pakistan in 1967.

76 KOHINOOR TEXTILE MILLS LIMITED

MR. TAUFIQUE SAYEED SAIGOL Mr. Taufique Sayeed Saigol is the Chief Executive
(CHIEF EXECUTIVE / DIRECTOR) of Kohinoor Textile Mills Limited and Director in all
OTHER ENGAGEMENTS KMLG companies. He is a leading and experienced
industrialist of Pakistan. He graduated as an Industrial
DIRECTOR Engineer from Cornell University, USA in 1974. He
Maple Leaf Cement Factory Limited has widely travelled and his special forte is in the
Maple Leaf Power Limited
export business. He is a business man of impeccable
CHAIRMAN / DIRECTOR credibility and vision and has substantial experience of
Maple Leaf Capital Limited working in different environments.

MR. SAYEED TARIQ SAIGOL Mr. Sayeed Tariq Saigol is the Chief Executive of
(DIRECTOR) Maple Leaf Cement and Maple Leaf Power Ltd. He
graduated from McGill University with a degree in
OTHER ENGAGEMENTS management. Mr. Sayeed Saigol also has several
CHIEF EXECUTIVE / DIRECTOR years of work experience in the textile industry. Prior to
Maple Leaf Cement Factory Limited joining Maple Leaf Cement, he was involved in setting
Maple Leaf Power Limited up and managing an apparel dyeing company. He is
DIRECTOR a member of the Board of Governors of the Lahore
Maple Leaf Capital Limited University of Management Sciences.

MR. WALEED TARIQ SAIGOL Mr. Waleed Tariq Saigol is the Director in all KMLG
(DIRECTOR) companies and the Chief Executive Officer in Maple
OTHER ENGAGEMENTS Leaf Capital Limited. He holds a bachelor’s degree in
Political Science from the London School of Economics
DIRECTOR
Maple Leaf Cement Factory Limited & Political Science. Apart from his responsibilities in
Maple Leaf Power Limited textiles, he is also involved in identifying and developing
new areas of business for KMLG. He is a keen golfer
CHIEF EXECUTIVE / DIRECTOR
Maple Leaf Capital Limited and has won several tournaments in Pakistan.

MR. DANIAL TAUFIQUE SAIGOL Mr. Danial Taufique Saigol is the younger son of
(DIRECTOR) Mr. Taufique Sayeed Saigol, CEO of KTML. Danial
OTHER ENGAGEMENTS began his career with KMLG in January 2012 as
DIRECTOR Executive Director. He holds a bachelor’s degree in
Maple Leaf Cement Factory Limited Finance from McGill University, Montreal, Canada.
Maple Leaf Power Limited He is currently posted at Kohinoor Textile Mills
Maple Leaf Capital Limited Limited, Rawalpindi.

MS. JAHANARA SAIGOL Ms. Jahanara Saigol is daughter of renowned

(DIRECTOR) industrialist, Mr. Tariq Sayeed Saigol who is the
Chairman of Kohinoor Maple Leaf Group. She
OTHER ENGAGEMENTS
is currently completing PhD in Islamic Art and
DIRECTOR Architecture at SOAS, University of London. She has
Maple Leaf Cement Factory Limited also completed degrees in MA, SOAS, University of
Maple Leaf Capital Limited London and M. St, University of Oxford.

ANNUAL REPORT 2021 77

 Mr. Shafiq Ahmed Khan got his bachelor degree from Punjab
MR. SHAFIQ AHMED KHAN University and joined Habib Bank Limited at entry level in 1968
(DIRECTOR) and spent over a period of 24 years in order to become Executive
Vice President while performing in different areas of services. He
OTHER ENGAGEMENTS
spent a period of five years in Fidelity Investment Bank Limited,
DIRECTOR Lahore, as first President & CEO of a major investment bank in the
Maple Leaf Cement Factory Limited country and guided with sound business and risk management.

Since 1996 to 2005, he has been associated with Pakistan’s

largest private sector commercial bank as Senior Executive Vice
President / Group Head and taken responsibilities for devising
and implementing business strategies for MCB Bank Limited.
He also served on the Board of Trust Investment Bank Limited
from 1997 to 2009. Over the course of 36 years in a career, he
used up in domestic and international market with all necessary
skills for developing & implementing successful strategies
for institutions’ businesses across geographical segments
particularly in banking relationships and enjoy sound relationships
with regulatory authorities in various countries. Currently, being
an Independent Director, he is the Chairman of Audit Committee
as well as Human Resource and Remuneration Committee of
Kohinoor Maple Leaf Group’s listed companies.

Mr. Zulfikar Monnoo joined the Board of Unilever Pakistan Foods

MR. ZULFIKAR MONNOO Limited when the company was formed. He is past Chairman and
(DIRECTOR) now a member of both the Audit and the HR& R Committees.

OTHER ENGAGEMENTS He is also Director of Rafhan Maize Products Co. Limited

since 1990 and a member of both the Audit and the HR& R
DIRECTOR
Committees.
Maple Leaf Cement Factory Limited
Unilever Pakistan Foods Limited,
He is the Chief Executive of Pakwest Industries (Pvt.) Ltd.,
Rafhan Maize Products Co. Limited
Lahore. He is an alumni of The Wharton School, University of
DIRECTOR / CHIEF EXECUTIVE Pennsylvania and Aitchison College, Lahore.
Pakwest Industries (Pvt.) Limited
He is a businessman with experience of 30 years as a director
having degree of bachelor in science and economics with a
major in finance. He obtained Directors’ training certification from
Pakistan Institute of Corporate Governance in 2012. His special
expertise/ specialized skills are Finance & Accounting, Human
Resource, sales and has industrial experience in food & textile
ingredient manufacturing as well as artificial leather (coated
fabrics).
Mr. Mohsin Naqvi is Fellow Member of the Institute of Chartered
SYED MOHSIN RAZA NAQVI Accountants of Pakistan with over 32 years of Financial
(DIRECTOR / GROUP DIRECTOR Management experience. His areas of expertise include: financial
FINANCE / CHIEF FINANCIAL OFFICER) projections, forecasting-short term and long-term cash flows,
business strategy development, acquisitions and evaluations
OTHER ENGAGEMENTS of business units, establishing company’s reporting structure,
DIRECTOR / CHIEF FINANCIAL OFFICER implementing budgetary control procedures, implementing
Maple Leaf Cement Factory Limited financial software, organizing finance and treasury functions of
the Company.
DIRECTOR
Maple Leaf Power Limited He is former board member of Kohinoor Mills Limited and Al-
Maple Leaf Capital Limited Wazan Group, Kuwait. He has experience of working in several
countries which include Saudi Arabia, Kuwait, Philippines,
Morocco, Jordan and Pakistan.

78 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 79
 QUALIFICATION OF CFO AND HEAD OF INTERNAL AUDIT
The Chief Financial Officer and the Head of Internal Audit possess the requisite qualifications and experience
as prescribed in Listed Companies (Code of Corporate Governance) Regulations, 2019.

ROLE OF CHAIRMAN AND THE CEO

The Company’s Chairman Reports to the Board and the CEO reports to the Chairman (acting on behalf of
the Board) and to the Board directly. Their respective roles are being described hereunder:

ROLE OF THE CHAIRMAN ROLE OF THE CEO

Principal responsibility is the effective running of the Principal responsibility is running the Company’s
Board. business.

Responsible for ensuring that the Board as a whole Responsible for proposing and developing the
plays a full and constructive part in the development Company’s strategy and overall commercial
and determination of the Company’s strategy and objectives, which he does in close consultation
overall commercial objectives. with the Chairman and the Board.

Guardian of the Board’s decision-making process. Responsible with the executive team for
implementing the decisions of the Board and its
Committees.

Responsible for promoting the highest standards Responsible for promoting, and conducting the
of integrity, probity and corporate governance affairs of the Company with the highest standards
throughout the Company and particularly at Board of integrity, probity and corporate governance.
level.

CHAIRMAN’S SIGNIFICANT COMMITMENTS by the Board. As sanctioned by the Companies Act

2017 and authorised by Articles of Association of
List of companies in which the chairman holds the Company, following decisions are taken by the
directorship has been separately disclosed in the Board namely: -
Director Profile section of the Annual Report.
• Issue of shares;
FORMAL ORIENTATION TRAINING PROGRAM
FOR DIRECTORS • Approval of financial statements;

All the Directors are suitably qualified and experienced • Approval of bonus to employees;
and most of them are exempt from Directors’ training
program due to 14 years of education and 15 years • Incurring capital expenditure and disposal of
of experience on the Boards of listed companies. fixed assets;

Further, the Directors have also provided declarations • Declaration of interim dividend;
that they are aware of their duties, powers and
responsibilities under the Companies Act, 2017 and • Writing off bad debts, advances and receivables;
the Listing Regulations of Pakistan Stock Exchange.
• Writing off inventories and other assets of the
MATTERS DECIDED BY THE BOARD OF company;
DIRECTORS
• Make borrowings in the form of loans,
The Board of Directors approves overall corporate debentures, leasing contracts or redeemable
strategy which is in line with Company’s Vision. All capital
the Strategic Decisions of the Company are taken

80 KOHINOOR TEXTILE MILLS LIMITED

• Investment of funds of the company; Moreover, none of our Executive Director is working
as Non-Executive Director in companies which are
• To determine the terms of and the circumstances not associated companies.
in which a law suit may be compromised and
a claim or right in favor of a company may be SECURITY CLEARANCE OF FOREIGN
released, extinguished or relinquished DIRECTOR
No foreign director was on Board of Directors of the
• Other matters of strategic nature e.g. taking
Company during the year.
over a company or acquiring a controlling or
substantial stake in another company;
IMPLEMENTATION OF GOVERNANCE
PRACTICES EXCEEDING LEGAL
MATTERS DELEGATED TO THE MANAGEMENT
REQUIREMENT
Management of the Company is entrusted with the
responsibility to conduct operations of the Company The management of Kohinoor Textile Mills Limited
adhering to corporate strategy approved by Board believes to follow best governance practices
of Directors. Tactical and operational matters are that can be implemented in the Company’s
delegated to the Management of the Company environment. To implement these practices the
which mainly include: minimum benchmark is to comply with all the
legal requirements. However, the management
• Cash flow Management; goes ahead to implement best governance rules
and practices that are followed globally and are in
• Selling and Marketing; favour of the Company’s shareholders, employees,
environment and community.
• Compliance with legal requirements;
Following additional governance practices
• Production Management; implemented by the management include:

• Procurement Management and • Disbursement of additional corporate and

financial information to shareholders and legal
• Other support functions like Human Resource authorities, although not required by any law, to
Management. make the Company’s affairs more transparent
and to give better insight of the Company’s
COMPENSATION POLICY OF EXECUTIVE affairs, policies and strategies.
DIRECTORS WHO ALSO SERVE OTHER
COMPANIES BOARD OF DIRECTORS • Implementation of 5S policy to create a healthy
and work friendly environment together with
Executive Director of the Company shall be
efficiency and effectiveness.
appropriately compensated for their service
in the Company and for representation on the
• Implementation of Health, Safety and
Company’s Board. This compensation shall take
Environment Policy for better and safe work
into consideration the amount of time required to be
place environment for employees, workers and
devoted to Board activities, the fiduciary responsibility
surrounding community.
of such positions and the competitiveness of the
compensation levels. Compensation is subject to
The Company understands and fulfils its corporate
change at the discretion of the Board. Board may
social responsibility and has implemented various
approve revision in Director’s Compensation Policy
social projects for welfare of the community.
from time to time.

No fee is paid to Executive Directors of the Company

by way of their appointment in other associated in
the capacity of Non-Executive Director.

ANNUAL REPORT 2021 81

 TERMS OF
REFERENCE
OF BOARD
COMMITTEES
AUDIT COMMITTEE

The Main Terms of Reference of the Audit

Committee are as under: -
(i) Determination of appropriate measures to
safeguard the Company’s assets;
(ii) Review of annual and interim financial
statements of the Company, prior to their
approval by the Board of Directors, focusing
on:
(a) major judgmental areas;
(b) significant adjustments resulting from
the audit;
(c) going concern assumption;
(d) any changes in accounting policies and
practices;
(e) compliance with applicable accounting
standards;

82 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 83
 (f) compliance with these regulations and other confidence, concerns, if any, about actual or
statutory and regulatory requirements; and potential improprieties in financial and other
matters and recommend instituting remedial
(g) all related party transactions.
and mitigating measures;
(iii) Review of preliminary announcements of results
prior to external communication and publication; (xv) Recommend to the Board of Directors
the appointment of external auditors, their
(iv) Facilitating the external audit and discussion
removal, audit fees, the provision of any service
with external auditors of major observations
permissible to be rendered to the Company by
arising from interim and final audits and any
the external auditors in addition to audit of its
matter that the auditors may wish to highlight (in
financial statements, measures for redressal
the absence of management, where necessary);
and rectification of non-compliances with the
(v) Review of management letter issued by external Regulations. The Board of Directors shall give
auditors and management’s response thereto; due consideration to the recommendations
of the Audit Committee and where it acts
(vi) Ensuring coordination between the internal and
otherwise it shall record the reasons thereof.
external auditors of the Company;
(vii) Review of the scope and extent of internal audit, (xvi) Consideration of any other issue or matter as
audit plan, reporting framework and procedures may be assigned by the Board of Directors.
and ensuring that the internal audit function has
adequate resources and is appropriately placed HUMAN RESOURCE & REMUNERATION
within the Company; COMMITTEE (THE ‘HR & R COMMITTEE’)
(viii) Consideration of major findings of internal
investigations of activities characterized by The Main Terms of Reference of the HR&R Committee
fraud, corruption and abuse of power and are as under: -
management’s response thereto;
i. Recommending human resource management
(ix) Ascertaining that the internal control systems policies to the Board;
including financial and operational controls,
accounting systems for timely and appropriate ii. Recommending to the Board the selection,
recording of purchases and sales, receipts
evaluation, development, compensation
and payments, assets and liabilities and the
reporting structure are adequate and effective; (including retirement benefits) of Chief
Operating Officer, Chief Financial Officer,
(x) Review of the Company’s statement on internal Company Secretary and Head of Internal
control systems prior to endorsement by the Audit;
Board of Directors and internal audit reports;
iii. Consideration and approval on
(xi) Instituting special projects, value for money recommendations of Chief Executive Officer
studies or other investigations on any matter
on such matters for key management positions
specified by the Board of Directors, in
consultation with the Chief Executive Officer who report directly to Chief Executive Officer or
and to consider remittance of any matter to the Chief Operating Officer; and
external auditors or to any other external body;
iv. Where human resource and remuneration
(xii) Determination of compliance with relevant consultants are appointed, their credentials
statutory requirements; shall be known by the committee and a
statement shall be made by them as to
(xiii) Monitoring compliance with these regulations
whether they have any other connection with
and identification of significant violations thereof;
the Company.
(xiv) Review of arrangement for staff and
management to report to Audit Committee in

84 KOHINOOR TEXTILE MILLS LIMITED

MANAGEMENT COMMITTEES & TERMS
OF REFERENCE
Management Committees are constituted to monitor management is rigorously investing considerable
and control the progress of various operational and resources to determine and then opt what feasible
strategic goals and ensure their effective contribution technological options are available that best meets
towards achieving Company’s strategic objective. the goals of the organization in order to remain cost
competitive and provide the maximum return to
Following is a brief description of each committee, stakeholders.
its cross-functional composition and its terms of
reference:- MEMBERS
Director
PROJECT MANAGEMENT COMMITTEE Head of Department – Marketing
Head of Department – Production
Project management committee (PMC), serves as Head of Department – Engineering
a driving forum to monitor the progress of agreed Head of Department – Finance
goals & objectives of the company on consistent Head of Department – Information Technology
basis, and steer the organization in right direction in Head of Department – Human Resource
order to achieve the stated vision and mission of the
organization. Terms of reference

MEMBERS • Our BPR team implies specific business

Director objectives such as cost reduction, time
Head of Department – Marketing reduction, output quality improvement.
Head of Department – Production • We focus on the most important processes that
Head of Department – Engineering reflect our business vision.
Head of Department – Finance • Understand and measure the existing process
Head of Department – Information Technology to avoid repeating of old mistakes and to provide
Head of Department – Human Resource a baseline for future improvements.
Head of Department – Commercial • Design and build the prototype of new
processes and ensure quick delivery of results
Terms of reference and involvement and satisfaction of customers.

• Possible review each of the project areas – NO. OF MEETINGS HELD: 10

activities or sub projects
• Developing a framework for integrating planning. ENERGY MANAGEMENT COMMITTEE
• Tools for achieving sustainable coastal
economies and environments Management has strong commitment towards
• Handling financial issues, budget monitoring securing the future of company, to remain competitive
and modifications and provide the maximum return to stakeholders.
• Develop standards & follow-up project progress Efficient use of energy cannot be compromised
therefore; Energy Management Committee (EMC) has
NO. OF MEETINGS HELD: 24 been formed to suggest the cost cutting opportunities
for the sake of improvement in performance through
BUSINESS PROCESS REENGINEERING wise energy use in all the departments of the
COMMITTEE company.

Business Process Re-engineering (BPR) team has MEMBERS

been formed to achieve dramatic improvements in Director
critical, contemporary measures of performance, Head of Department –Engineering
such as cost, quality, service and speed on consistent Head of Department –Finance
basis. Information technology and information Head of Department –Production
systems are the main areas of interest where Head of Department –Marketing

ANNUAL REPORT 2021 85

 Terms of reference • Introduction of Performance Measurement
System by developing Key Performance
• Our team is committed for annual energy cost Indicators and continuous compilation of their
reductions from continuous improvements. associated data, analysis and reporting to
• To minimize environmental impacts, it concerned stakeholders, so that performance
incorporates energy efficiency, water of every key function and process is monitored,
conservation, waste minimization, pollution controlled, and improved.
prevention, resource efficient materials and • Reduction and elimination of wastages from
indoor air quality in all phases of a building’s life. different processes.
• EMC design plans that help us meet our climate • Improvement in organization wide abilities,
protection commitments. procedures and plans.
• The appointment of a full time energy • Training of employees on basic, medium and
management coordinator ensures the plan advanced problem solving and statistical tools
proceeds. in order to improve their analytical abilities.
• Responsible for energy procurement, monitoring • Creation of various forums within an organization
and targeting energy savings, maintaining where Quality improvement initiatives are formally
program of energy saving measures, raising institutionalized, e.g. Kaizen, Quality Circles, and
energy awareness and corporate wide energy functional / Cross Functional Teams.
monitoring and reporting.
NO. OF MEETINGS HELD: 12
NO. OF MEETINGS HELD: 15
STANDARD OPERATING PROCEDURES REVIEW
TOTAL QUALITY MANAGEMENT COMMITTEE COMMITTEE

Total Quality Management (TQM) committee is formed Standard operating procedures review committee
to improve quality at every level in the organization. has been formed to review and update SOP’s for
TQM is an organization wide program aimed to all the activities / procedures being performed in the
ensure standardization and continual improvement in Company & develop new SOP’s if required.
all its products, services, processes & procedures.
This program lays down the Quality Management MEMBERS
standards for all the processes & procedures in the Director
organization and is equipping the existing human Head of Department – Internal Audit
resources to improve their innate abilities in order Head of Department – Marketing
to achieve the desired level of performance through Head of Department – Production
synergistic activities. Head of Department – Finance

MEMBERS Terms of reference

Director
Head of Department – Quality Assurance • Documentation of all the important activities and
Head of Department – Marketing procedures.
Head of Department – Production • Standardization of documents as prescribed by
Head of Department – Engineering Quality Management standards.
Head of Department – Finance • Incorporation of industry best practices in the
Head of Department – Information Technology procedures to make the system efficient and
Head of Department – Human Resource effective.
Head of Department – Commercial • Elimination of duplication of records in different
procedures.
Terms of reference

• Standardization of processes and operations NO. OF MEETINGS HELD: 12

within every function of the company.

86 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 87
 OTHER CORPORATE
MATTERS
ANNUAL EVALUATION OF BOARD
PERFORMANCE 6. Board focuses on goals and results;
7. Availability of Board’s guideline to management;
The Board has set a criterion based on emerging and
leading practices to assist in the self-assessment of an 8. Regular follow up to measure the impact of
individual director and the full Board’s performance. It Board’s decisions;
is not intended to be all-inclusive. When completing
9. Assessment to ensure compliance with code of
the performance evaluation, Board considers the
ethics and corporate governance.
following main performance evaluation process or
behaviour: -
During the year under review, the performance
review of Board was not carried out by any external
i) Adequate Board composition.
consultant.
ii) Satisfactory Processes and Procedures for
Board meetings. PERFORMANCE REVIEW OF BOARD
COMMITTEES
iii) The Board sets objectives and formulates an
overall corporate strategy. Performance of Board Committees is regularly
evaluated by the Board of Directors based on the
iv) The Board has set up adequate number of its terms of reference as defined and approved by the
Committees. Board.

v) Each Director has adequate knowledge of CEO’S PERFORMANCE REVIEW

economic and business environment in which
the Company operates The performance of the CEO is regularly evaluated by
. the Board of Directors and this evaluation is based
vi) Each Board member contributes towards on the criteria defined by the Board of Directors
effective and robust oversight. which includes various financial and nonfinancial key
performance indicators (KPIs). At the start of the year,
vii) The Board has established a sound internal CEO presents his KPI for the upcoming year to the
control system and regularly reviews it. Board of Directors. The Board periodically evaluates
the actual performance against those KPIs during
viii) The Board reviews the Company’s significant the year and discusses the future course of action
accounting policies according to the adequate to attain the Company’s stated goals. The CEO also
financial reporting regulatory framework. appraises to the Board regarding an assessment of
senior management and their potential to achieve the
ix) The Board considers the quality and objectives of the Company.
appropriateness of financial accounting and
reporting and the transparency of disclosures. BOARD’S REVIEW OF BUSINESS
CONTINUITY AND DISASTER
EVALUATION CRITERIA OF BOARD RECOVERY PLAN
PERFORMANCE
The Board of Directors periodically review the
Following is the main criteria: Company’s Business Continuity & Disaster Recovery
(BC/DR) plan to ensure that critical business functions
1. Financial policies reviewed and updated; will be available to customers, suppliers, regulators,
and other entities that have access to those functions
2. Capital and operating budgets approved even under extraordinary circumstances. BC/ DR
annually; plan mainly includes daily tasks such as customer/
3. Board receives regular financial reports; suppliers correspondence, production data, trading
activities, project management, system backups and
4. Procedure for annual audit; help desk operations.
5. Board approves annual business plan;

88 KOHINOOR TEXTILE MILLS LIMITED

The primary activities of the Board for the execution 1. Identify areas of risk.
of the plan include:
2. Develop strategies and responses for risky
areas.
1) To develop and maintain a formal plan that is
responsive to the Company’s current business 3. Educate all employees about the conflict of
needs and operating environment. interest policy.
2) To ensure that a Business Continuity Recovery 4. Communicate with stakeholders to provide the
Team includes representatives from all business platform for proper disclosure.
units.
5. Enforce the policy.
3) To provide ongoing business continuity training to
all employees, including executive management Further, the Directors are annually reminded of the
and the Board. insider trading circular issued by the Securities and
Exchange Commission of Pakistan to avoid dealing
4) Ensure that thorough current business impact in shares while they are in possession of the insider
analysis and risk assessments are maintained. information. Every director is required to provide to
5) Ensure a centralized executive view of the the Board complete details regarding any material
business continuity plan and programs. transaction which may bring conflict of interest with
the Company for prior approval of the Board. The
interested director do not participate in the discussion
CONFLICT OF INTEREST MANAGEMENT neither they vote on such matters. The transactions
POLICY with all the related parties are made on arms-length
The Company has the policy for actual and perceived basis and complete details are provided to the Board
conflicts of interest and measures are adopted to for their approval. Further all the transactions with
avoid any conflict of interest, identify the existence of the related parties are fully disclosed in the financial
any conflict of interest, and to disclose the existence of statements of the Company.
conflict of Interest. The Company annually circulates
and obtains a signed copy of Code of Conduct INVESTORS’ GRIEVANCES POLICY
applicable to all its employees and Directors, which
also relates to matters relating to conflict of interest. The Company believes that Investor services is a vital
element for sustained business growth and we want
Further, it seeks to set out the process, procedures to ensure that our Investors receive exemplary service
and internal controls to facilitate compliance with the across different touch points of the Company. Prompt
Policy as well as to highlight the consequences of and efficient service is essential to retain existing
non-compliance with the Policy by all its employees relationships and therefore, Investor satisfaction
and Directors. The Company Policy provides a guide becomes critical to the Company. Investor queries
as to what constitutes a conflict of interest, the and complaints constitute an important voice of
processes and procedures that are in place in order to Investor, and this policy details grievance handling
facilitate compliance and, the consequences of non- through a structured grievance framework.
compliance. The Policy is intended to assist directors
and employees in making the right decisions when Grievance policy is supported by a review mechanism,
confronted with potential conflict of interest issues. to minimize the recurrence of similar issues in future.
Investors has the facility to call toll free call centre
MANAGEMENT OF CONFLICT OF 24/7 to register their grievances. The Company’s
INTEREST Grievance policy follows the following principles:

The primary goal of Kohinoor policy is to manage • Investors are treated fairly at all times.
conflicts of interest to ensure that decisions are • Complaints raised by Investors are dealt with
made and are seen to be made on proper grounds, courtesy and in a timely manner.
for legitimate reasons and without bias. To do this • Investors are informed of avenues to raise their
Kohinoor has set the following procedures to manage queries and complaints within the organization
and monitor the conflict of Interest: and their rights if they are not satisfied with the
resolution of their complaints.

ANNUAL REPORT 2021 89

 • Queries and complaints are treated efficiently • Development and up gradation of different
and fairly. modules to provide reliable, efficient and timely
• The Company’s employees work in good faith information.
and without prejudice, towards the interests of • To create a culture of paper less environment
the Investors. within the Company.

SAFETY OF RECORDS HUMAN RESOURCE MANAGEMENT

The Company is effectively implementing the policy to The Company is committed to build a strong
ensure the safety of the records. All records must be organizational culture that is shaped by empowered
retained for as long as they are required to meet legal, employees who demonstrate a deep belief in
administrative, operational, and other requirements Company’s vision and values. Therefore, Human
of the Company. The main purposes of the Company Resource Management (HRM) is an integral part
Policy are: of our business strategy. The Company fosters
leadership, individual accountability and teamwork.
• To ensure that the Company’s Records are The main objectives of the Company’s HRM policy
created, managed, retained, and disposed of in are:
an effective and efficient manner;
• To facilitate the efficient management of the • Selecting the right person, with the right
Company’s Records through the development experience, at the right time, offering the right
of a coordinated records Management program; compensation.
• To ensure preservation of the Company’s • Developing management philosophies and
Records of permanent value to support both practices to promote and encourage motivation
protection of privacy and freedom of information and retention of the best employees.
services throughout the Company to promote • Recognizing and rewarding employees’
collegiality and knowledge sharing; contribution to the business.
• Information will be held only as long as required, • Fostering the concept of team work and
and disposed of in accordance with the record synergetic efforts
retention policy and retention schedules and • Encouraging and supporting team concepts
• Records and information are owned by the and team building techniques.
Company, not by the individual or team. • Nurturing a climate of open communications
between management and employees.
IT GOVERNANCE POLICY • Making all reasonable efforts to achieve a high
quality of work-life balance.
Kohinoor has properly documented and
implemented IT governance Policy to ensure an Further to note no.42 of standalone Financials of
integrated framework for evolving and maintaining the Company for year ended 30 June 2021, factory
existing information technology and acquiring new employees are as follows.
technology to achieve the Company’s strategic
focus. The purpose of this policy is to define the IT 2021 2020
governance scope, and its roles and responsibilities.
IT Governance policy consist of the following: 5,285
5,392

• To provide a structured decision making process INITIATIVES TAKEN BY MANAGEMENT

around IT investment decisions. IN PROMOTING & ENABLING
• Promotes accountability, due diligence, efficient INNOVATION
and economic delivery of the Company’s IT
services. Innovation initiates when a Company understands
• Lay down solid foundation for management the requirements of its customers. At KTML we do
decision making and oversight. believe that Customer always come first. Management
• Safeguard of Company’s financial data. at KTML is maniacal about understanding the
customers, their sensitivities, preferences and

90 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 91
 desires. Monitoring of customer interaction, sales and 1. Emotional Intelligence
retention is regular feature of management practice
at KTML that help us to remain innovative in meeting 2. Effective Communication Skills
ever changing customer requirements. During the
year Company has achieve Top Exporter recognition 3. Project Management
award 2020.
4. Supply chain management
SUCCESSION PLANNING
5. Simatic Program Logic Controllers
The Company believes in proactive approach towards
succession planning. We recruit employees, develop 6. Situational Leadership II
their knowledge, skills, abilities, and prepare them for
advancement or promotion into ever more challenging 7. Building Impactful Brands
roles. Rigorous succession planning is also in place
throughout the organization. Succession planning 8. Benchmarking Session
ensures that employees are constantly groomed-up
to fill each needed role. 9. Management Development Program

10. HSE Emergency Response Training

TRAINING AND DEVELOPMENT OF
EMPLOYEES 11. Developing Future Leaders
No Company, small or large, can win over the long
run, without energized employees, who believe in
the Mission of the Company and understands how SOCIAL AND ENVIRONMENTAL
to achieve it. In KOHINOOR, we look for people RESPONSIBILITY POLICY
who exemplify continuous improvement when we
are spotting future successors. In this relation, the The Company’s Social and Environmental
Company also expends a lot in terms of finances and Responsibility Policy reflects the Company’s
time for the training of its resources as is evident from recognition that there is a strong, positive correlation
the below trainings held during the year: between financial performance and corporate, social

92 KOHINOOR TEXTILE MILLS LIMITED

and environmental responsibility. The Company beliefs, gender, race, ethnicity, disability, education,
believes that the observance of sound environmental colour, language, age, socioeconomic background,
and social strategies is essential for building strong and geographic location and region. The culture of
brand and safeguarding reputation, which in turn is the Company values differences and recognises
vital for long term success. that stakeholders from different backgrounds and
experiences can bring valuable insights to enable a
SOCIAL RESPONSIBILITY POLICY: collaborative work environment by introduction of
varied ideas and perspectives within the Company.
• Implementation of Employee Code of Conduct
that fits with local customs and regulations. We Aim to pro-actively tackle discrimination and to
• Culture of ethics and behaviour which improve ensure that no individual or group is directly or indirectly
values like integrity and transparency. discriminated against for any reason regarding
• Focusing on social involvement by developing employment and the Company bears no tolerance for
multicultural teams with different competencies. harassment/bullying and persecution. The company
• Promoting the culture of work facilitation and has a whistle blowing policy in place, and employees
knowledge transfer. are encouraged to report all such matters and related
• Carrying out corporate philanthropy actions that grievances to the Human Resources department.
focus in particular on preserving life and the
environment. The Board ensures application of diversity policy
• Maintaining collaborative relations with the through Human Resource department by ensuring
society through a good harmony and effective that all talent hunting seminars, job fairs and
communication. advertisements specifically mention that we are
an equal opportunity employer in all areas and we
ENVIRONMENTAL RESPONSIBILITY nourish an organizational culture where individual
differences are appreciated rather than criticized for
POLICY novel ideas and improvements. Furthermore, Internal
Audit department ensures and reports compliance of
• Ensure our products, operations and services
diversity policy on periodic basis.
comply with relevant environmental legislation
and regulations.
• Maintain and continually improve our WHISTLE BLOWING POLICY
environmental management systems to
conform to the ISO Standards or more stringent In line with the Company’s commitment to open
requirements as dictated by specific markets or communication, the whistle blowing policy through
local regulations. non-conformance reporting was designed to provide
• Operate in a manner that is committed to an avenue for employees to raise concerns, and
continuous improvement in environmental reassurance that they will be protected. As an aware
sustainability through recycling, conservation and attentive organization, Kohinoor believes in the
of resources, prevention of pollution, product conduct of the affairs of its business in a fair and
development and promotion of environmental see-through approach by adopting the uppermost
responsibility amongst our employees. principles of professionalism, truthfulness, reliability
• Responsibly managing the use of hazardous and principled manners. The said policy has the
materials in our operations, products and following main procedures:
services and promote recycling or reuse of our
products. 1. All Protected Disclosures should be addressed to
• Inform suppliers, including contractors, of our the nominated Ombudsperson of the Company.
environmental expectations and require them
to adopt environmental management practices 2. Protected Disclosures should preferably be
aligned with these expectations. reported in writing so as to ensure a clear
understanding of the issues raised and should
either be typed or written in a legible in English,
POLICY ON DIVERSITY Urdu or in the regional language.
At Kohinoor Textile Mills Limited, we aim to be an
3. The Protected Disclosure should be forwarded
inclusive organisation, where diversity is valued,
under a covering letter which shall bear the
respected and built upon. We recruit and retain a
identity of the Whistle Blower.
diverse workforce irrespective of religious and political

ANNUAL REPORT 2021 93

94 KOHINOOR TEXTILE MILLS LIMITED
4. Protected Disclosures should be factual and • Implementation of Health, Safety and
not speculative or in the nature of a conclusion, Environment Policy for better and safe work
and should contain as much specific information place environment for employees, workers and
as possible to allow for proper assessment of surrounding community.
the nature and extent of the concern and the
The Company understands and fulfils its corporate
urgency of a preliminary investigative procedure.
social responsibility and has implemented various
social projects for welfare of the community.
5. Anonymous disclosures will not be entertained
by the Ombudsperson as it would not be
possible for it to interview the Whistle Blowers. RELATED PARTY TRANSACTIONS

The Company has made detailed disclosures about

6. If initial enquiries by the Ombudsperson indicate
related party transactions in its financial statements
that the concern / complaint has no basis, or it
annexed with this annual report. Such disclosure is in
is not a matter to be investigation pursued under
line with the requirements of the 4th Schedule to the
this Policy, it may be dismissed at this stage.
Companies Act, 2017 and applicable International
Financial Reporting Standards.
7. Where initial enquiries indicate that further
investigation is necessary, this will be carried
through in a fair manner, as a neutral fact-finding Moreover, the Company has also decided to place its
process and without presumption of guilt. A related party transactions before the Annual General
written report of the findings would be made. Meeting for obtaining shareholders’ approval for
the same. Details of party-wise disclosure of such
In Kohinoor, no whistle blowing related incidence transactions is also given in the statement u/s 134
was highlighted and reported under the above said annexed with the Notice of AGM.
procedures during the year.  
TRANSACTION / TRADE OF COMPANY’S
GOVERNANCE PRACTICES EXCEEDING SHARES
LEGAL REQUIREMENT
The Board has reviewed the threshold for disclosure
of interest by executives holding of Company’s
The management of Kohinoor Textile Mills Limited
shares which includes Chief Executive Officer,
believes to follow best governance practices that can
Chief Financial Officer, General Manager (Finance),
be implemented in the Company’s environment. To
Sr. Manager (Finance), Head of Internal Audit and
implement these practices the minimum benchmark
Company Secretary. None of the Directors, CEO,
is to comply with all the legal requirements. However,
CFO, GM (Finance), Sr. Manager (Finance), Head of
the management goes ahead to implement best
Internal Audit and Company Secretary (including their
governance rules and practices that are followed
spouses and minor children) traded in the shares of
globally and are in favour of the Company’s
the Company.
shareholders, employees, environment and
community.

Following additional governance practices

implemented by the management include:

• Disbursement of additional corporate and

financial information to shareholders and legal
authorities, although not required by any law, to
make the Company’s affairs more transparent
and to give better insight of the Company’s
affairs, policies and strategies.

• Implementation of 5S policy to create a healthy

and work friendly environment together with
efficiency and effectiveness.

ANNUAL REPORT 2021 95

 INTEGRATED REPORTING
FRAMEWORK (IR)
Kohinoor Textile Mills Limited is engaged in the production and sale of yarn, cloth
and textile products. Management of the Company following the spirit of adhering
to the best corporate governance practices and its reporting thereof is committed
to generate greater value for the organization and its stakeholders. Keeping in
view the globalized business scenario and the ever-increasing expectations of all
the stakeholders being users of published annual report, integration of corporate
governance briefings, social and environmental information with financial
information is vital to organizational position and performance reporting.

The Company has adopted the International Integrated Reporting (IR) Framework
to give an overview of the Company’s business affairs by presenting all the
financial and non-financial information considering the variable interests of a wide
range of stakeholders. The management is committed to achieve excellence
in transparent reporting in all aspects. The Company annually reviews the IR
Framework to continuously improve the quality of information produced, and
communicates its operations, brand, and financial structure to the stakeholders.
Furthermore, the Company is prepared to manage any risk that may affect the
long-term sustainability of the business and has progressed ahead in this Report
to incorporate all 8 core Content Elements of IR Framework: -

• Organizational overview and external environment

• Governance
• Business model
• Risks and opportunities
• Strategy and resource allocation
• Performance
• Outlook
• Basis of preparation and presentation

Management acknowledges its responsibility of the integrity of this Report and

have applied their collective mind and effort in its preparation and presentation.
Full efforts have been made to disclose all material information to its stakeholders
unless Management is of the view that its disclosure would cause significant
competitive harm, however, it stands to note that there is a certain degree of
challenge to objectively quantify certain qualitative factors that add value in the
wake of disruption caused by the global COVID – 19 pandemic.

Even so, we are moving ahead with the tradition of providing information to its
stakeholders that goes beyond the traditional requirements of financial reporting
framework and other legal requirements, by doing so we believe the stakeholders
gain a better understanding of the Company, its business, strategies, opportunities
and risks, business model, governance and performance which itself is a form of
value creation for its stakeholders.

96 KOHINOOR TEXTILE MILLS LIMITED

COMPLIANCE WITH
INTERNATIONAL
FINANCIAL REPORTING
STANDARDS (IFRS)
The management of the Company strongly
believes in adherence to unreserved compliance
with all the applicable International Accounting
Standards (IAS)/IFRS vital to true and fair
preparation and presentation of financial
information. Compliance to IFRS encourages
sufficient disclosures of the financial statements
that are beneficial for informed decisions of
stakeholders.

The Report has been prepared in compliance

of :-

• The International Financial Reporting

Standards (IFRS) issued by the International
Accounting Standards Board (IASB).
• Islamic Financial Accounting standards
(IFAS) issued by the Institute of Chartered
Accountants of Pakistan (ICAP)
• Provisions and directives of Companies Act,
2017
• Code of Corporate Governance Regulations,
2019
• Best Corporate Report (BCR) guidelines
issued by ICAP & ICMAP
• Core guidelines of the Integrated Reporting
Framework issued by the IIRC

ANNUAL REPORT 2021 97

 STAKEHOLDERS RELATIONSHIP
AND ENGAGEMENT
POLICY FOR STAKEHOLDERS’ shareholders and to add synergy factor to achieve
ENGAGEMENT better results in the Company’s prospects.

Kohinoor Textile Mills Limited maintains sound PROCEDURES FOR STAKEHOLDERS

collaborative relationships with its stakeholders. ENGAGEMENT:
The Company understands the importance of
continuous collaboration with shareholders of the Procedures for stakeholders engagement includes
Company regarding all significant decisions to be effective communication, good harmony, compliance
made, the performance of the Company in varying with laws & regulations and customer focused
circumstances, challenges it faced and the necessary approach which are the key success for establishment
steps taken to mitigate those challenges. of collaborative relationship with stakeholder.

BOARD’S INTERACTION WITH MAJOR ENGAGEMENT FREQUENCY

SHAREHOLDERS
The Company maintains its good relationships with all
The Board has devised a mechanism to arrange stakeholders based on mutual interest, integrity and
interactive sessions between management of confidence. We maintain collaborative relations with
the Company and its shareholders to solicit and our stakeholders through harmonious and effective
understand views of shareholders. It includes communication and through our customer focused
management briefings to its shareholders about approach. Moreover, the Company maintains good
the performance of the Company, macro and micro relationship with its Bankers and arranges Investors’
economic factors affecting the Company, prospects conferences periodically to discuss business
of the Company and the steps taken by the prospects and financial management plans with the
Company to improve its performance in challenging Lenders which also enhances their confidence in the
circumstances. These communications help the Company.
Board to understand and resolve the concerns of the

98 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 99
 ISSUES RAISED IN THE LAST ANNUAL GENERAL • MENA & Frontier Conference at Dubai
MEETING • EFG Hermes London Conference
• South Asia Conference, Dubai
No issue was raised by the valued shareholders in • 14th Annual One on One Conference EFG
the last Annual General Meeting held on October Hermes, Dubai
27, 2020 at the Registered Office of the Company. • Karachi PSX Brokers Meeting Organized by
However, queries raised were explained to the AKD
satisfaction of the Members.
INVESTORS’ RELATIONS SECTION ON
SIGNIFICANT CORPORATE BRIEFING CORPORATE WEBSITE
SESSIONS
The Company disseminates information to its
The interactive sessions include the annual general investors and shareholders through a mix of
meeting, extra ordinary general meetings, corporate information exchange platforms, including its
briefings/road shows, responding to investor queries corporate website. The website is updated regularly
either raised on email, website or on telephone. to provide detailed and latest company information
During the year, following major international and including financial highlights, investor information
local road shows/corporate briefings sessions were and other requisite information besides the link to
held with investors: SECP’s investor education portal; the ‘Jamapunji’.

100 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 101
102 KOHINOOR TEXTILE MILLS LIMITED
WE ARE COMMITTED TO
SUSTAINABILITY

CORPORATE
SUSTAINABILITY
Culture & Corporate Strategy 106
Business Model 108
Position in Value Chain 110
Code of Business Conduct and Ethical Principles 112
Industrial Relations 114
Management System and Product
Compliance Certifications 125
Corporate Events 128
Notable Events 129

ANNUAL REPORT 2021 103

ANNUAL REPORT 2021 105
106 KOHINOOR TEXTILE MILLS LIMITED
ANNUAL REPORT 2021 107
ANNUAL REPORT 2021 109
 CODE OF BUSINESS CONDUCT AND
ETHICAL PRINCIPLES
The following principles constitute the code of 5. All employees share a responsibility for the
conduct which all Directors and employees of Company’s good public relations particularly
Kohinoor Textile Mills Limited are required to apply at the community level. Their readiness to
in their daily work and observe in the conduct of help with religious, charitable, educational
Company’s business. and civic activities is accordingly encouraged
provided it does not create an obligation
While the Company will ensure that all employees are that interferes with their commitment to the
fully aware of these principles, it is the responsibility Company’s best interests.
of each employee to implement the Company’s
policies. Contravention is viewed as misconduct. 6. The Company has strong commitment to
the health and safety of its employees and
The code emphasizes the need for a high standard preservation of the environment and the
of honesty and integrity which are vital for the Company will persevere towards achieving
success of any business. continuous improvement of its Health,
Safety and Environment (HSE) performance
ETHICAL PRINCIPLES by reducing potential hazards, preventing
pollution and improving awareness.
1. Directors and employees are expected not Employees are required to operate the
to engage in any activity which can cause Company’s facilities and processes keeping
conflict between their personal interest and this commitment in view.
the interest of the Company such as interest
in an organization supplying goods/ services 7. Commitment and team work are key
to the Company or purchasing its products. In elements to ensure that the Company’s
case a relationship with such an organization work is carried out effectively and efficiently.
exists, the same must be disclosed to the Also all employees will be equally respected
Management. and actions such as sexual harassment
and disparaging remarks based on gender,
2. Dealings with third parties which include religion, race or ethnicity will be avoided.
Government officials, suppliers, buyers,
agents and consultants must always ensure
that the integrity and reputation of the
Company are not in any way compromised.

3. Directors and employees are not allowed to

accept any favours or kickbacks from any
organization dealing with the Company.

4. Directors and employees are not permitted to

divulge any confidential information relating
to the Company to any unauthorized person.
Nor should they, while communicating
publicly on matters that involve Company
business, presume to speak for the Company
unless they are certain that the views that
they express are those of the Company and
it is the Company’s desire that such views be
publicly disseminated.

110 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 111
 INDUSTRIAL RELATIONS
The company has established an Industrial Relations
(IR) department for determination of adequate terms
and conditions of employment. Further, the IR
department is responsible for avoidance and settlement
of disputes and differences between the Company,
it’s employees, and their representatives through
negotiation. The company has operates a Provident
fund and a Worker’s Profit Participation Fund for its
employees, as well as paying bonuses to employees
on the basis of the company’s profitability and individual
performance. The company is committed to providing
equal opportunities to all existing and prospective
employees without discrimination on the basis of race,
religion, gender, or age.

ENERGY SAVING MEASURES

Given the current energy crisis in Pakistan, Kohinoor’s
management recognises the importance of the
efficient usage of energy in the corporate sector,
and has therefore has formed an energy committee
with the aim of finding more efficient and sustainable
methods for generating and managing energy. The QUALITY MANAGEMENT
Company’s processing department has already SYSTEMS
reaped large benefits through its collaboration with
several major multinational chemical suppliers;
The Company maintains its reputation as a high
together they have substantially reduced the usage
quality supplier and owes its current business, in
of water, chemicals, and energy while maintaining
or improving quality and environmental standards. large part, to this reputation. Quality control checks
The Company hopes that future progress in these occur at all points in the production chain, starting at
projects will yield further reductions in the costs of the delivery of raw material to the factories, through to
energy and usage of other resources such as water, the Quality Assurance team acting as the customer’s
etc. Further, in anticipation of increased scarcity representative when conducting audits of finished
and load shedding of natural gas and electricity, goods before handing them over to the customer’s
the Company is taking steps to further diversify its audit teams for the final inspection. It is worth noting
energy production capabilities, expanding into steam that the Company’s Quality Management Systems
generation via wood, coal and waste heat recovery, are so highly regarded that several customers no
and initiating a pilot project in solar heating of longer require the presence of external auditors
water. The Company remains committed to explore
before shipping of finished goods. The Company is
sustainable alternative energy sources which is
ISO-9001:2008 certified and firmly believes in the
evident from installation of 3MW Solar based power
project in Rawalpindi Division. necessity of Quality Management Systems.

CONSUMER PROTECTION INFORMATION TECHNOLOGY

MEASURES
Management has a strong commitment to strengthen
We are committed to ensuring that our products the platform for information technology and
are shipped in a manner complying with the highest information systems in order to remain competitive
safety standards and meeting or exceeding all legal and cater the requirements of coming era. The
requirements. The Company takes care and applies company continues to upgrade and improve our
appropriate procedures to manufacture its products information systems and processes, an effort led by a
so as to ensure that no harmful substances are team of IT professionals with wide ranged experience
present in any of its products. in latest information technologies.

112 KOHINOOR TEXTILE MILLS LIMITED

OCCUPATIONAL HEALTH, SAFETY disciplined and constructive control environment
AND ENVIRONMENTAL (HSE) in which all employees understand their roles and
PROTECTION MEASURES obligations. Employees are encouraged to report any
deals that may be supported by kickbacks, and no
The Company continues to meet and exceed the employees are allowed to run parallel businesses.
health and safety standards required for SA 8000 The Company maintains a system by which any
certification. Frequent audits are conducted by employee can report the non-conformance (NC) to
customers, regulatory agencies, and the Company’s the top management. All NCs reported are addressed
own audit teams in order to ensure compliance with by the top management on timely basis and a regular
these standards and those set by the Company’s follow up activity is being carried out in order to
customers. The Company strives to provide a ensure that all issues highlighted are permanently
safe and healthy workplace for its employees and resolved. Further, the Company’s Internal Audit
to act responsibly towards the communities and department is empowered to perform regular and
environment, in which it operates. It realizes this ad-hoc checks and audits of any and all functions
through the commitment of its leadership, the and operations of the company and reports directly
dedication of its staff, and application of the highest to the Audit Committee. Moreover, the Company has
professional standards of work. Recently we have also formulated whistle blowing policy.
done a complete re-examination and improvement of
our fire safety protocols to further ensure the safety ANTI-CORRUPTION MEASURES
of our employees. Management takes all possible
measures to prevent unsafe activities by its hiring Any evidence or suspicion of any unethical or unlawful
practices and through the implementation of effective activity, damage to environment, any offence or
management, human resources and operational injustice, non-compliance with applicable regulatory
policies. requirements or company policies can be reported
in complete confidentiality. To win the battle against
BUSINESS ETHICS & ANTI- corruption and any unethical /unlawful activity the
CORRUPTION MEASURES management adapts both top-down and a bottom-
The Company, through its training, management up communication approach. The Company expects
standards and procedures, aims to develop a all its employees to perform services with integrity

ANNUAL REPORT 2021 113

114 KOHINOOR TEXTILE MILLS LIMITED
ANNUAL REPORT 2021 115
 and professionalism. The Company is fully committed continues to investigate and implement pilot projects
to promoting the highest standards of ethical behavior into alternative, sustainable energy sources.
throughout its business. The management condemns
corrupt and fraudulent practices and ensures NATIONAL CAUSE DONATIONS
transparency, integrity and honesty in all aspects of
work. Fundamental to this is the adoption of a ‘zero During the year, Company has contributed Rs. 10.623
tolerance’ approach to all forms of corruption and Million to Gulab Devi Educational Complex, Lahore
misrepresentation. The entity has strong internal audit towards construction of Al-Aleem Medical College
functions in place to review the operations in order to in Gulab Devi Chest Hospital (GDCH), Lahore. The
detect any potential occurrence of corruption. Company has also contributed in the past for medical
social service projects and in this regard had donated
a state of the art Cardiac facility to the Gulab Devi
WASTE WATER TREATMENT Chest Hospital (GDCH) in Lahore by building Sayeed
PLANT Saigol Cardiac Complex at GDCH.
Management understands the harmful effects of
contaminated water on the surrounding areas after
SECURITY
emission from the mills premises. In order to prevent
The Company maintains its dedication to security,
the potentially harmful effects of any chemicals used
and is fully compliant with the Customs Trade Pact
in processing on the surrounding water table, a
against Terrorism (CTPAT), performing frequent and
waste water treatment plant has been constructed
regular audits to ensure it remains so. All areas of
minimizing or negating any contamination in water
the Company premises are monitored using video
discharged from the factory. Further, the company

2021 2020
(Rupees in thousand)

Donations 10,623,000 16,046,000
STATEMENT OF Health 18,099,363 14,277,088
Trainings 4,702,884 6,378,022
CHARITY Other Welfare 2,368,488 7,342,235

35,793,735 44,043,345

116 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 117
 surveillance, as per CTPAT requirements. We are also and incorporated into the annual budgets. And at the
compliant with the standards set by our international end of the year, all the actual costs incurred on these
customers, many of which exceed those of CTPAT. initiatives are compared with the budgeted figures
and next year’s budgeting is further carried out on
CONTRIBUTION TO NATIONAL the basis of comparative analysis.
EXCHEQUER
EMPLOYEES’ SATISFACTION:
During the year the Company has contributed
amounted to Rs. 3,857.43 million (2020: 3,090.90 It is essential for a Company to make sure its
Million) in respect of taxes, levies and duties. employees are satisfied with their employers.
Moreover, we have also contributed (USD) 74.750 Similarly, for a company to gain competitive
million (2020: 58.250 Million) to the national treasury advantage and to benefit from its diverse workforce,
by way of export sales. it needs to cater to employee satisfaction. To achieve
employees’ satisfaction, the Company engages in
EMPLOYMENT OF SPECIAL various activities including annual gatherings, formal
PERSONS and informal meetings, surveys, HR engagement
and appraisal activates designed to bridge the
The Company has employed disabled persons in communication gap between top management and
compliance with the rules set out by the Government employee. It also results in identification of areas that
of Pakistan which is 3% quota of the total workforce need improvement, recognize and reward exemplary
necessitated to be allocated to disabled persons. performance via salary raises and promotions and
help employees gain a better understanding about
HUMAN RESOURCE their roles and responsibilities. The ultimate goal is to
ACCOUNTING enhance employee’s productivity as well as impart a
sense of belonging by making them feel valued and
Kohinoor believes that having an eye on cost acknowledged.
factor of the organization is important as it gives
us a true picture of the Impact and overall success At KTML employee management, labor management
of the initiatives taken by the Company. In light of and human rights are implemented in accordance
this philosophy, the major cost incurred on Human with the legal requirements. The company has no
Resource Management are monitored and measured child labor or forced labor as part of the workforce.
through HR Budgeting which mainly includes the cost The employees are informed beforehand in case
of recruitment, training, development and rewarding of any operational changes, however, there were
staff. no operational changes during the year. Integrity is
a part of our core values at KTML, we have a strict
At the start of the financial year, estimated costs of policy against corruption and bribery. To emphasize
hiring along with the advertisement and headhunting its importance and to make sure the policies are
expenses are calculated and added in the budget. communicated to all employees, a code of conduct
Similarly, the training & development plans, major is designed in a way that leaves no room for non-
employee rewards & benefits including Staff compliance. In addition to this, all employees are
increments, health & life insurance, leave encashment, offered market competitive salaries along with other
staff vehicles costs (as a part of perks) are forecasted benefits. The Company is committed to provide equal

118 KOHINOOR TEXTILE MILLS LIMITED

opportunity to all existing and prospective employees 1. EHS department of the Company remained fully
without any discrimination on the basis of religion, active since the start of coronavirus pandemic
gender, race, age etc. and there has been no incident for ensuring the health and wellbeing of all
of discrimination so far. The Company has employed employees.
disabled persons in compliance with the rules set out
2. Temperature screening is a major
by the Government of Pakistan which is 3% quota of
recommendation of the WHO for preventing
the total workforce necessitated to be allocated to
COVID-19 spread. Thermal scanners have been
disabled persons.
installed at office entrances for accurate data
availability & redundancy.
PANDEMIC RECOVERY PLAN BY
THE MANAGEMENT AND POLICY 3. Hand sanitizers were available in all departments
STATEMENT and a dedicated resource was appointed to refill
the hand sanitizer dispensers on daily basis.
As the world grapples with the extraordinary 4. Awareness Posters displayed in all hand washing
ramifications of the COVID-19 coronavirus pandemic, facilities throughout the factory and trainings are
we are confronting a human emergency dissimilar to also being provided to the staff on proper hand
any we have ever encountered and our social fabric washing method.
is under extreme pressure. The pandemic has posed
a serious challenge around the globe, affecting 5. Social Distancing is encouraged and ensured
humanity without distinction. Therefore, in these in all offices, production floors, canteen and
extremely trying and uncertain times, the positive mosque etc. Social distancing marks have also
impact created by KTML, is most critical. been made on all floors and walkways to remind
employees to maintain safe distance.
Further, as Covid-19 pandemic spread throughout
the world, it was important to ensure smooth 6. Face Masks have been provided to all the
business operations without any compromise on the employees and have been made mandatory to
health and wellbeing of all our employees. Protection wear within the factory premises.
of lives and livelihood remained our topmost goal and
all the employees geared up to work as a team in 7. All meetings are being carried out through video
these challenging times. / teleconferencing. Regular disinfections are
also carried out as per WHO guidelines.
Following are some of the precautionary measures
undertaken by the Company in this pursuit: 8. Manning levels at Offices have been reduced

ANNUAL REPORT 2021 119

 to a minimum while, Company’s IT department PROCUREMENT PRACTICES
provided support to employees to facilitate ‘work
from home’. Kohinoor Textile Mills management plays a vital role
and devise policies to procure locally so that growth
9. COVID-19 Vaccination Camp has been arranged in local economy can be fueled and stimulated. We
for employees inside factory premises in believe in strategic relationships and have developed
collaboration with Government authorities and strong connections with vendors in the industry.
all employees were encouraged to vaccinate Our Purchase team stays in continuous contact
themselves. with suppliers and vendors through meetings to
10. Sports Hall, Gym and Day Care facilities have resolve issues for on time deliveries, any concerns
been closed about terms & conditions and timely payments. Our
sustainable growth is also attributable to engage
Amid 4th wave of Pandemic, in compliance with SOP’s reputed and dependable suppliers & vendors as
formulated by World Health Organization & National business partners for supply of raw material, industrial
Command Operation Centre Pakistan, Company has inputs, equipment, and machinery.
adopted strict policies to get its employees and their
families vaccinated as soon as possible. MARKET PRESENCE
CORPORATE SOCIAL RESPONSIBILITY In the Company, all employment is strictly done on
merit and no preference whatsoever is granted.
(HEALTH & EDUCATION)
Kohinoor Textile Mills aggressively contributes in the
As part of organization’s commitment towards wellbeing of economy and provide job opportunities
community development, it actively participates in to local community. Value creation and growth of
various CSR programs directed towards health, the entity is directly linked with these aspects and
education and socio-economic development of management has devised stringent polices to never
society at large. We have undertaken several initiatives let this aspect unaddressed. Moreover, this aspect
such as donating personal protective products (PPEs) can also increase the economic benefit to the local
to medical institutions and underserved sections of the community, and improve an organization’s ability to
society, upgrading health care facilities in Ghulab Devi understand local needs.
Chest hospital by providing equipment and creating
awareness campaigns. The Company is committed COMMUNITY INVESTMENT AND
to work in the best interest of all the stakeholders,
in particular the community in which we operate.
WELFARE SCHEMES
In order to bring a positive & lasting change in the The Company has a long tradition of maintaining
community by educating the new generation. The good community relations, and many of its employees
schools are located in the Kohinoor Colony premises are actively involved in welfare schemes. We believe
and managed by female staff, these schools provide that investing in our communities is an integral part
quality education to both boys and girls. of our social responsibility, and is vital to ensure the
sustained success of the Company. We aim to ensure
DIVERSITY AND EQUAL that our businesses and factories have the resources
OPPORTUNITY and support to identify those projects, initiatives, and
Kohinoor Textile Mills Limited is committed to ensure partnerships that can make a real difference in their
equal treatment and fair working conditions for communities, and those that will mean something to
employees. This belief is driven by our core values. As our employees and their families.
part of our HR policy, we strive to be an equal opportunity
employer. The Company believe that empowerment of RURAL DEVELOPMENT PROGRAM
women can have replicating effects over the society
and it is a part of its approach to see women as pillars The Company’s Mills are located in rural area therefore
of community by empowering them at the workplace. various corporate social responsibility activities are
We are committed to encourage greater diversity and effectively implemented in those [Link] Company
ensuring equal opportunities for individuals based on has been working hard to initiate and sustain rural
merit. We also provide an inclusive environment where development programs for the enhancement of health
everyone feels valued and respected, irrespective of of the rural population. Therefore a “Dengue Fever
age, gender, race, marital status, disability, religion or Awareness Program” was carried out to demonstrate
belief, color, and nationality. the prevention techniques and share knowledge with

120 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 121
122 KOHINOOR TEXTILE MILLS LIMITED
ANNUAL REPORT 2021 123
124 KOHINOOR TEXTILE MILLS LIMITED
ANNUAL REPORT 2021 125
 WE FOCUS ON
DESIGN

OUTLOOK
Forward Looking statement 133
Factors Effecting External Environment 134
SWOT Analysis 136
Sources of Information and Assumptions 137

130 KOHINOOR TEXTILE MILLS LIMITED

FORWARD LOOKING
STATEMENT
The Company is continuously monitoring all of its Non-financial measures are the many intangible
cost factors to keep them at the lowest possible variables that impact performance of the Company.
levels. The production costs have increased due to These are difficult to quantify compared to financial
non-controllable factors like rising energy cost, Pak
measures but equally important. These indicators are
Rupee devaluation and inflation, but the Company
stands committed under the guidance of its Board more likely to be closer to the long-term organizational
of Directors, Key management personals and valued strategies. Following are the non-financial measures
input from all stakeholder groups to its constant in place by the Company:
drive to be a progressive and profitable Company
as per its Vision and Core values. We expect that • Stakeholders’ engagement – different
Government will also make necessary amendments
committees and forums are in place and meetings
in relevant laws & regulations for a smooth system
through which textile sector may timely obtain its long are held periodically to keep the stakeholders
hold sales tax refunds. We are quite optimistic that involved in every aspect of the business.
coming year should see a strong profitability across
all divisions. • Customer satisfaction – Company places strong
emphasizes on customers’ satisfaction and
We are confident that the Company will be able to
ensure to produce & deliver the goods as per
meet the challenges presented by local as well as
international markets. Future financial forecasts based specific demands of customers.
on management’s best estimates are as follows:
• Employees’ development - the Company has
FINANCIAL FORECAST conducted various training courses for the
development of existing human capital.
The projections are very encouraging with continued
growth expected locally and internationally as new • Innovation in manufacturing methods – ongoing
potential businesses are being explored and various R & D is in place to improve the production
measures adopted by the Company to reduce the
process and efficiencies.
cost.

Financial Forecast FY 2021-22 RESPONSE TOWARDS CHALLENGES &

Rs. in Million UNCERTAINTIES
Revenue 37,653
Gross Profit 7,110 The Organization is effectively equipped to face
challenges and uncertainties that are likely to arise.
Profit from operations 4,688
Through combined experience, skill and effective
business reporting, management is always aware of
Financial & Non-financial considerations internal and external developments. The Company
has formulated unique specialized cross functional
Financial considerations are used to make the teams that routinely discuss key issues and risks
projections of the Company which are as follows: to come up with the most forward approach. In
response to stiff competition and low margins in
• Increase in sales volume for all types of products. export markets, marketing team under has launched
• Reduced cost of production through: an effective market penetration strategy to increase
presence in previously untapped markets. To cater
to overall inflation an efficient procurement plan is in
a. optimizing power generation mix place.
b. lower weighted average cost of capital

ANNUAL REPORT 2021 131

 FACTORS EFFECTING EXTERNAL
ENVIRONMENT
FACTOR IMPACT KTML RESPONSE

P
Changes in applicable rules Management proactively plans to manage the
& regulations operations of Company in a way so that full
compliance may be made with all applicable rules
& regulations. Impact on financials for each new
POLITICAL amendment is monitored by projection / analysis
on continuous basis so that operational decisions
may be made efficiently. Exploring new export
markets is an ongoing exercise to efficiently utilize
production capacities. Regular market analysis by
senior management and the Board. Conducting
corporate briefings and roadshows, both at
national and international level, to mitigate the
impact of Government policies and actions on the
market capitalization of the company.

FACTOR IMPACT KTML RESPONSE

E
Exchange rate fluctuation, The Company met price hikes in input costs
Price hikes in major input by efficient procurement of local & imported
materials cotton with better negotiation. Effective inventory
management by meticulously reviewing inventory
ECONOMIC holding periods. Deployed various cost reduction
initiatives to control production and non -production
related fixed costs.

FACTOR IMPACT KTML RESPONSE

S
Stakeholders’ inclination Ensuring compliance with all requirements of
towards CSR compliant Corporate Social responsibility. The Company
organizations Better supports provision of educational facilities for
etention in organizations public at large and the Board has approved the
SOCIAL offering ffordable health and construction of Al-Aleem medical college in Ghulab
educational facilities Attitude Devi Educational Complex.
change towards welfare of
public at large

FACTOR IMPACT KTML RESPONSE

T
Technical obsolescence of Company has the latest technology to avoid
production facilities any risk of technical obsolescence and keep on
Continuous development investing on BMR. Company continuously invests
of information technology in the robust hardware and software for system
TECHNO- up-gradation and MIS. Recently Company has
infrastructures and
LOGY managed ERP modules for meeting latest reporting
Management Information
Systems (MIS) software needs.

132 KOHINOOR TEXTILE MILLS LIMITED

 FACTOR IMPACT KTML RESPONSE

L
Enforcement of new Company has engaged an efficient team of
Companies Act, 2017 professionals to ensure compliance with all
Continuous amendment in enacted and or substantially enacted statutes,
the provisions of income tax acts and ordinances. It further equips the company
LEGAL with an up to date knowledge of all prevailing legal
ordinance 2001 and sales
tax act 1990 resulting from requirements.
finance bill on annual basis
Amendments in the Company ensures that all taxes and duties
requirements of code of payments, whether income tax or sales tax,
corporate governance, are made timely by having an effective cash
Pakistan stock exchange management system in place.
rules and the requirements
of SECP Act. The company has equipped itself with a competent
Severe FBR actions to legal team to make itself updated on employment
deter non- compliance and and industrial laws. It further helps the management
late payments in complying with requisite updates on timely basis.

Amendments in
employment laws and
industrial relations
regulations

FACTOR IMPACT KTML RESPONSE

E
Attitude towards and support Company is successfully operating waste water
for renewable energy treatment plant. Solar based power generation
Air pollution & deforestation has also augmented the operational efficiencies of
Lowering of underground the Company. Planting trees to limit the emission
ENVIRONM- of harmful gases in the atmosphere and to ensure
water belt
ENTAL maintenance and lifting up the underground
Growing attention towards
“green” attitudes water level by reducing the evaporation process.
The company has been approved the standards
of ISO 14001 and ISO 18001 for complying with
an effective Environmental Management System
(EMS) and Occupational Health and Safety
Assessment Series (OHSAS) requirements.

Note: In connection with risk and opportunities pertaining to the Company, Board’s efforts for determining level
of risk, Board’s statement regarding robust assessment of risks, information about default in payment of any
debt and inadequacy in capital structure have been covered in the Directors’ Report.

ANNUAL REPORT 2021 133

ANNUAL REPORT 2021 135
 WE LIVE OUR VALUES
EVERY DAY

PERFORMANCE AND
POSITION
Financial Review 139
Statement of Cash Flows - (Direct Method) 144
Results Reported in Interim Financial
Statements and Final Accounts 146
Value Addition and Distribution 148
Horizontal Analysis of Financial Statements 150
Vertical Analysis of Financial Statements 152
Key Operating and Financial Data 155
DuPont Analysis 164
Definition and Glossary of Terms 166
Jama Punji 167

136 KOHINOOR TEXTILE MILLS LIMITED

FINANCIAL REVIEW
FINANCIAL RESULTS: FINANCIAL RESULTS:
Financial highlights of key operating results for the ACTUAL VS BUDGET
year 2020-21 are as follows:
Sales and profitability of the company for the year ended
30 June 2021 compared with the projections / budget
Particulars 2021 2020
(Rs. In Million) is as under.
Particulars Actual Budget
Equity 20,157 17,971
2021 2021
Capital Employed 24,041 21,383 (Rs. In Million)
Revenue 29,955 21,845 Revenue 29,955 26,858
Gross Profit 6,133 3,990 Gross Profit 6,133 4,936
Profit from operations 4,061 3,130
Profit from operations 4,061 2,681
Net Profit before Tax 3,398 1,878 Actual position remained ahead budgetary targets
Operating Cash Flows 2,898 (390) due to extra ordinary efforts in all critical contemporary
areas of performance.
Investing Cash Flows (1,617) (4,481)
Financing Cash Flows (1,218) 4,841 SEGMENTAL REVIEW OF
BUSINESS PERFORMANCE
Comments of favorable/(unfavorable) variances in
Segment wise profits before taxation and unallocated
financial results:
income and expenses for the year ended 30 June
2021 are as under:
• Equity increased by 12% from Rs. 17,971 million
(2020) to Rs. 20,157 (2020) due to increased Particulars Actual
profits during the year.
2021 2020
• Sales increased as compared with previous year (Rs. In Million)
due to rigorous efforts made by marketing teams Spinning 3,296 1,644
by soliciting new customers and unlocking new Weaving 519 292
avenues to grab extra revenue despite tough Processing and
business conditions. Home Textile 456 631

• Gross profits increased due to better profit margins Operating profits of Spinning & Weaving Divisions
and efficient controls over critical contemporary improved during the year due to increased sales
areas of performance. volume and better selling margins as compared with
preceding year. However, Home Textile division faced
• Operating Cash flows improved due to factors stiff conditions due to global pandemic & adverse
mentioned above. exchange rate movements.  

ANNUAL REPORT 2021 137

138 KOHINOOR TEXTILE MILLS LIMITED
ANNUAL REPORT 2021 139
 COMPOSITION OF LOCAL VERSUS IMPORTED
COMPONENTS AND SENSITIVITY ANALYSIS

2021 2020
Rs. ‘000 % Rs. ‘000 %
Local Materials:

Raw materials 9,478,609 46% 8,355,897 44%
Stores and spares 2,676,570 13% 2,461,347 13%
Fuel and power 2,796,886 14% 2,400,944 13%

14,952,065 73% 13,218,188 70%

Imported materials
Raw materials 4,476,248 22% 3,984,798 21%
Stores and spares 1,030,842 5% 1,674,517 9%

5,507,090 27% 5,659,315 30%

20,459,155 100% 18,877,503 100%
SENSITIVITY ANALYSIS
For each percent change in value of foreign currency, cost of imported materials will change by Rs 55.071
million (2020: 56.593 million).


2021 2020
Rs. ‘000 Rs. ‘000

Appreciation of PKR (55,071) (56,596)
Depreciation of PKR 55,071 56,596
Percentage of COS 0.23% 0.32%

The management of the Company constantly monitors the international prices of imported materials and
exchange rates fluctuations. Management takes necessary measures to mitigate such impacts as per
Company’s risk management policies.

FREE CASH FLOWS

Net cash generated from operating activities 4,454,979 628,069
Capital expenditures (1,696,204) (1,396,465)

Free Cash Flows 2,758,775 (768,396)

Free Cash Flow (FCF) is the Cash a Company produces through its operations, less the cost of expenditures
on assets. Ample availability of Cash depicts financial health of a Company to discharge its financial and
operational commitments hence having lesser dependency on external sources of finance providers. During
the year, performance of the Company remain excellent hence ample case flows generated through operations
to meet financial obligations amicably.

ECONOMIC VALUE ADDED

Net Profit after Tax 2,756,329 1,528,043
Less: Cost of capital (653,393) (578,803)

Economic Value Added 2,102,936 949,240

Economic value added (EVAD) is a measure of a Company’s operating profit after tax generated in excess
of cost of funds deployed. Ample EVAD exhibits that operations of the Company are driven with level of
accuracy to full fill the requirements of finance providers.

140 KOHINOOR TEXTILE MILLS LIMITED

RECONCILIATION OF WEIGHTED AVERAGE NUMBER OF
SHARES FOR EPS
Description 2021 2020
Number of shares

Weighted average number of shares outstanding at beginning of the year 299,296,456 299,296,456

Weighted average number of shares outstanding at the end of the year 299,296,456 299,296,456

FAIR VALUE OF PROPERTY, b. Demand Factor

PLANT AND EQUIPMENT Increase in demand of yarn / fabric & Home
Textile products may result in increase in market
Market value of the Company’s property, plant and price which will contribute towards better
equipment is around Rs. 17.38 billion. The Company’s profitability and Earnings per share (EPS) which
property, plant and equipment except freehold land will ultimately increase the share price.
and capital work in progress are stated at cost
less accumulated depreciation and accumulated c. Increase in Cost of Production
impairment loss in its financial statements. Freehold
land is stated at revalued amount at the date of Any increase in variable cost (Raw materials,
revaluation less any identified impairment loss and power & utilities cost) may badly affect the gross
capital work-in-progress is stated at cost. margins and will resultantly fall in the profitability
and fall in EPS. This may badly affect the market
SIGNIFICANT / MATERIAL ASSETS price of the share downward.
OR IMMOVABLE PROPERTY
d. Political Unrest (Strikes, protests)
The Company’s material assets comprise of land,
building, ring spinning machinery, open-end spinning Volatile political situation often creates disruption
machinery, wider width weaving looms, high definition in the business processes. Strikes, protests
digital printing machine, printing rotaries, dyeing and creates hindrance in production operations
finishing machines, Jenbacher, Wartsila and Nigatta which may adversely affect the Company to meet
engines, and solar power plant installation. deadlines of National / International customers.
This factor although not very much material at
SHARE PRICE SENSITIVITY the moment, but may affect share price of the
Company adversely.
ANALYSIS
e. Change in Government Policies
Company’s share price is directly linked with the
operational and financial performance of Company. Any change in Government policies related to
In the current situation, Management considers the textile sector may affect the share price of the
following factors to which the performance and share Company. If policy change is positive then share
price of the Company may be sensitive. price will increase, otherwise vice versa.
a. Agriculture Sensitivity Analysis of Change in Market Capitalization
Performance in textile sector is mainly dependent Share Price as of 30 June 2021 Rs.75.2
on better results of agriculture sector for supply Market Capitalization
of quality cotton on cheaper rates. Good as of 30.06.2021 Rs. 22,507,093,491
environmental conditions for cotton crop, having
required rain falls, results in optimal quality of Change in Share Change in Market
cotton with reasonable prices. Availability of Price by Capitalization
quality cotton on cheaper rates supports to +10% Rs. 24,757,802,840
generate higher profit margins for producing -10% Rs. (24,757,802,840)
various types of yarn which in turns affect
positively the share price of Company.

ANNUAL REPORT 2021 141

 STATEMENT OF CASH FLOWS
(DIRECT METHOD)
FOR THE YEAR ENDED 30 JUNE 2021
2021 2020
(Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash received from customers 29,029,895 20,915,588
Cash paid to suppliers and employees (24,574,916) (20,287,519)

Cash generated from operations 4,454,979 628,069

Finance cost paid (795,382) (680,070)
Income tax paid (761,121) (337,845)
Net increase in long term deposits (3) (369)

Net cash generated from / (used in) operating activities 2,898,473 (390,215)

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure on property, plant and equipment (1,696,204) (1,396,465)
Proceeds from disposal of property, plant and equipment 109,825 46,230
Long term investments made - (3,343,934)
Proceeds from disposal of long term investments - 24,800
Short term investments made (153,569) (193,544)
Proceeds from disposal of Short term investments 102,500 162,188
Interest received 20,586 55,683
Dividend received - 163,918

Net cash used in investing activities (1,616,862) (4,481,124)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing 1,611,794 1,414,291
Repayment of long term financing (419,316) (392,726)
Grant received during the year 107,544 -
Short term borrowings - net (1,920,591) 4,337,604
Dividend paid (597,769) (517,583)

Net cash (used in) / from financing activities (1,218,338) 4,841,586

Net increase / (decrease) in cash and cash equivalents 63,273 (29,753)

Cash and cash equivalents at the beginning of the year 186,613 216,366

Cash and cash equivalents at the end of the year 249,886 186,613

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

142 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 143
 RESULTS REPORTED IN INTERIM
FINANCIAL STATEMENTS AND
FINAL ACCOUNTS
Interim Reports Results Annual
Particulars 3 Months Period 6 Months Period 9 Months Period Full Year Ended
Ended 30-09-2020 Ended 31-12-2020 Ended 31-03-2021 30-06-2021

Rupees ‘000 % Rupees ‘000 % Rupees ‘000 % Rupees ‘000 %
Revenue 7,075,482 13,990,000 21,671,110 29,955,525
Gross Profit 1,204,606 17.03% 2,558,845 18.29% 4,274,915 19.73% 6,132,628 20.47%
Operating Profit 782,350 11.06% 1,594,343 11.40% 2,676,660 12.35% 4,061,498 13.56%
Profit before tax 622,576 8.80% 1,253,351 8.96% 2,168,777 10.01% 3,397,709 11.34%
Profit after tax 512,918 7.25% 1,009,044 7.21% 1,690,428 7.80% 2,756,329 9.20%
Equity 18,484,008 18,680,838 19,062,926 20,157,557
Current ratio (in time) 0.96 0.95 0.98 1.04

GRAPHICAL PRESENTATION

144 KOHINOOR TEXTILE MILLS LIMITED

ANALYSIS OF VARIATION IN RESULTS REPORTED IN INTERIM
FINANCIAL STATEMENTS WITH THE FINAL ACCOUNTS
Quarter Gross Profit Operating Net Profit Shareholders’ Current Ratio
Profit Equity
Quarter 1 Gross Profit was Operating profit Net profit after Shareholders’ equity Current ratio was
With Annual 17.03% as com- was 11.06% tax was Rs. was Rupees. 18,484 0.96 times.
30 June pared with annual as compared 512,598 Million million as compared
2021 GP of 20.47% due with annual as compared with annual equity
to slightly squeezed operating profit with annual net of Rupees. 20,157
profit margins in 1st of 13.56% be- profit of Rs. million.
quarter. cause business 2,756Million.
conditions were
not encourag-
ing due to busi-
ness lock down
amid pandemic
corona.
Quarter 2 Gross Profit was Operating profit Net profit after Shareholders’ equity Current ratio was
With Annual 18.29% as com- for the first tax was Rs. was Rupees. 18,680 0.95 times as
30 June pared with annual half year was 1,009 Million as million as compared compared with
2021 GP of 20.47%. 11.40% as compared with with annual equity of annual ratio of 1.04.
Although mar- compared with annual net profit Rupees. 20,157 mil- Ratio declined due to
gins improved as annual oper- of Rs. 2,756Mil- lion due to dividend increase in borrow-
compared with 1st ating profit of lion. from subsidiary ings to meet working
quarter of the year, 13.56% mainly Company. capital requirements.
but these were due to factors
squeezed than an- aforemen-
nual GP % because tioned.
business was in its
full pace at end of
the year in June 21.
Quarter 3 Gross profit was Operating profit Net profit after Shareholders’ equity Current ratio was
With Annual 19.73% as com- for the first 9 tax was Rs. was Rupees. 19,062 0.98 times as com-
30 June pared with annual months was 1,690 Million as million as compared pared with annual
2021 GP of 20.47% 12.35% as compared with with annual equity current ratio of 1.04.
due to better compared with annual net profit of Rupees. 20,157 Ratio declined as
utilizations, selling annual oper- of Rs. 2,756Mil- million. compared with an-
margins across ating profit of lion. nual ratio due to bor-
all divisions of the 13.56%. rowings for working
company. capital requirements.

ANNUAL REPORT 2021 145

 VALUE ADDITION AND
DISTRIBUTION
2021 2020 2019 2018 2017 2016
Rs “000” % age Rs “000” % age Rs “000” % age Rs “000” % age Rs “000” % age Rs “000” % age

Wealth Generated

Revenue 29,955,525 99.41% 21,844,810 98.67% 21,220,135 97.21% 17,833,540 93.78% 17,404,708 90.98% 16,088,302 93.78%
Other operating income 178,692 0.59% 293,511 1.33% 608,755 2.79% 1,183,527 6.22% 1,725,445 9.02% 1,067,529 6.22%

30,134,217 100.00% 22,138,321 100.00% 21,828,890 100.00% 19,017,067 100.00% 19,130,153 1

00.00% 17,155,831 100.00%


Distribution of wealth
Cost of Sales (excluding
employees’ remuneration) 21,659,914 71.88% 15,935,032 71.98% 16,107,686 73.79% 13,874,754 72.96% 13,365,225 69.86% 11,716,169 68.29%
Distribution, administration &
Other expenses 1,774,700 5.89% 1,188,042 5.37% 1,103,538 5.06% 798,627 4.20% 821,843 4.30% 869,714 5.07%
Employees Remuneration 1,687,861 5.60% 2,334,177 10.54% 1,925,620 8.82% 1,827,395 9.61% 1,772,981 9.27% 1,604,413 9.35%
Financial charges 663,789 2.20% 802,869 3.63% 411,111 1.88% 362,200 1.90% 267,593 1.40% 337,357 1.97%
Government taxes
(includes income tax) 641,380 2.13% 350,158 1.58% 530,291 2.43% 489,769 2.58% 550,732 2.88% 495,963 2.89%
Dividend to shareholders 598,592 1.99% 523,768 2.37% 598,592 2.74% 797,654 4.19% 1,411,775 7.38% 1,350,393 7.87%
Retained within the business 3,107,981 10.31% 1,004,275 4.54% 1,152,052 5.28% 866,668 4.56% 940,004 4.91% 781,822 4.56%

30,134,217 100.00% 22,138,321 100.00% 21,828,890 100.00% 19,017,067 100.00% 19,130,153 1

00.00% 17,155,831 100.00%

GRAPHICAL
PRESENTATION

146 KOHINOOR TEXTILE MILLS LIMITED

ANNUAL REPORT 2021 147
148
HORIZONTAL ANALYSIS OF
FINANCIAL STATEMENT
2021 Change 2020 Change 2019 Change 2018 Change 2017 Change 2016

KOHINOOR TEXTILE MILLS LIMITED

w.r.t 2020 w.r.t 2019 w.r.t 2018 w.r.t 2017 w.r.t 2016
Rs “000” % Rs “000” % Rs “000” % Rs “000” % Rs “000” % Rs “000”
BALANCE SHEET
Total Equity 20,157,557 12.17 17,971,090 5.92 16,966,815 7.24 15,820,626 13.63 13,922,796 7.43 12,959,673
Total non-current liabilities 3,883,657 13.84 3,411,551 60.24 2,129,031 15.04 1,850,676 4.20 1,776,007 47.37 1,205,135
Total current liabilities 10,093,041 (10.85) 11,321,125 75.50 6,450,732 (10.41) 7,200,654 42.70 5,046,039 1.10 4,990,909

Total equity and liabilities 34,134,255 4.37 32,703,766 28.02 25,546,578 2.71 24,871,956 19.89 20,744,842 8.30 19,155,717

Total non-current assets 23,662,335 4.59 22,623,930 22.21 18,512,532 1.96 18,155,891 17.53 15,447,434 17.40 13,158,134
Total current assets 10,471,920 3.89 10,079,836 43.30 7,034,046 4.73 6,716,065 26.78 5,297,408 (11.67) 5,997,583

Total assets 34,134,255 4.37 32,703,766 28.02 25,546,578 2.71 24,871,956 19.89 20,744,842 8.30 19,155,717

HORIZONTAL ANALYSIS OF FINANCIAL PERFORMANCE

Revenue 29,955,525 37.13 21,844,810 2.94 21,220,135 18.99 17,833,540 2.46 17,404,708 8.18 16,088,302
Cost of sales 23,822,897 33.43 17,854,630 1.11 17,659,063 15.00 15,355,788 3.59 14,823,393 13.60 13,048,866

Gross profit 6,132,628 53.69 3,990,180 12.05 3,561,072 43.72 2,477,752 (4.01) 2,581,315 (15.07) 3,039,436
Distribution cost 1,218,390 48.29 821,609 46.41 561,181 13.19 495,766 (7.90) 538,294 (6.26) 574,226
Administrative expenses 643,123 6.75 602,467 9.10 552,220 11.67 494,532 7.35 460,681 14.85 401,099
Other expenses 388,309 117.49 178,545 (51.00) 364,380 135.55 154,690 12.35 137,681 (17.11) 166,105
Other income 178,692 (39.12) 293,511 (51.79) 608,755 (48.56) 1,183,527 (31.41) 1,725,445 61.63 1,067,529

Profit from operations 4,061,498 51.49 2,681,070 (0.41) 2,692,046 6.98 2,516,291 (20.62) 3,170,104 6.90 2,965,535
Finance cost 663,789 (17.32) 802,869 95.29 411,111 13.50 362,200 35.35 267,593 (20.68) 337,357

Profit before taxation 3,397,709 80.90 1,878,201 (17.66) 2,280,935 5.89 2,154,091 (25.79) 2,902,511 10.44 2,628,178
Taxation 641,380 83.17 350,158 (33.97) 530,291 8.27 489,769 (11.07) 550,732 11.04 495,963

Profit after taxation 2,756,329 80.38 1,528,043 (12.72) 1,750,644 5.19 1,664,322 (29.23) 2,351,779 10.30 2,132,215
GRAPHICAL PRESENTATION AND COMMENTS ON
HORIZONTAL ANALYSIS OF FINANCIAL STATEMENT
Balance Sheet
Continuous increase in shareholder’s equity is primarily because of profitable operations of the Company.
Increase in non-current liabilities is due to financing obtained for the expansion and modernization of production
facilities and Solar based power generation.
Increase in non-current assets is due to modernization of production facilities.
Increase in current assets is in line with normal business growth.

Profit and Loss Account

Company’s overall sales are being increased by 37%. Export & local sales improved by 30% & 41% respectively
despite tough business conditions globally as well as locally due to prevalent global pandemic.
Gross profit has been increased by 54% due to selection of high yield orders and stringent controls over critical
contemporary areas of performance.
Other expenses increased due to increase in workers’ profit participation fund provision & exchange loss due
to adverse movement PKR as compared with other currencies.
Finance cost decreased due to lower interest rates as compared to previous year & efficient fund management
despite significant increase in working capital requirements.

ANNUAL REPORT 2021 149

150
VERTICAL ANALYSIS OF
FINANCIAL STATEMENT

KOHINOOR TEXTILE MILLS LIMITED

2021 % 2020 % 2019 % 2018 % 2017 % 2016 %

....................... ......................................................... Rupees in thousand....................... .........................................................

BALANCE SHEET
Total Equity 20,157,557 59.05 17,971,090 54.95 16,966,815 66.42 15,820,626 63.61 13,922,796 67.11 12,959,673 67.65
Total non-current liabilities 3,883,657 11.38 3,411,551 10.43 2,129,031 8.33 1,850,676 7.44 1,776,007 8.56 1,205,135 6.29
Total current liabilities 10,093,041 29.57 11,321,125 34.62 6,450,732 25.25 7,200,654 28.95 5,046,039 24.32 4,990,909 26.05

Total equity and liabilities 34,134,255 100.00 32,703,766 100.00 25,546,578 100.00 24,871,956 100.00 20,744,842 100.00 19,155,717 100.00

Total non-current assets 23,662,335 69.32 22,623,930 69.18 18,512,532 72.47 18,155,891 73.00 15,447,434 74.46 13,158,134 68.69
Total current assets 10,471,920 30.68 10,079,836 30.82 7,034,046 27.53 6,716,065 27.00 5,297,408 25.54 5,997,583 31.31

Total assets 34,134,255 100.00 32,703,766 100.00 25,546,578 100.00 24,871,956 100.00 20,744,842 100.00 19,155,717 100.00

VERTICAL ANALYSIS OF FINANCIAL PERFORMANCE

Revenue 29,955,525 100.00 21,844,810 100.00 21,220,135 100.00 17,833,540 100.00 17,404,708 100.00 16,088,302 100.00
Cost of sales 23,822,897 79.53 17,854,630 81.73 17,659,063 83.22 15,355,788 86.11 14,823,393 85.17 13,048,866 81.11

Gross profit 6,132,628 20.47 3,990,180 18.27 3,561,072 16.78 2,477,752 13.89 2,581,315 14.83 3,039,436 18.89
Distribution cost 1,218,390 4.07 821,609 3.76 561,181 2.64 495,766 2.78 538,294 3.09 574,226 3.57
Administrative expenses 643,123 2.15 602,467 2.76 552,220 2.60 494,532 2.77 460,681 2.65 401,099 2.49
Other expenses 388,309 1.30 178,545 0.82 364,380 1.72 154,690 0.87 137,681 0.79 166,105 1.03
Other income 178,692 0.60 293,511 1.34 608,755 2.87 1,183,527 6.64 1,725,445 9.91 1,067,529 6.64

Profit from operations 4,061,498 13.56 2,681,070 12.27 2,692,046 12.69 2,516,291 14.11 3,170,104 18.21 2,965,535 18.43
Finance cost 663,789 2.22 802,869 3.68 411,111 1.94 362,200 2.03 267,593 1.54 337,357 2.10

Profit before taxation 3,397,709 11.34 1,878,201 8.60 2,280,935 10.75 2,154,091 12.08 2,902,511 16.68 2,628,178 16.34
Taxation 641,380 2.14 350,158 1.60 530,291 2.50 489,769 2.75 550,732 3.16 495,963 3.08

Profit after taxation 2,756,329 9.20 1,528,043 6.99 1,750,644 8.25 1,664,322 9.33 2,351,779 13.51 2,132,215 13.25
GRAPHICAL PRESENTATION
OF VERTICAL ANALYSIS

ANNUAL REPORT 2021 151

 COMMENTS ON VERTICAL ANALYSIS
OF FINANCIAL STATEMENT
Balance Sheet Profit & Loss Account

Equity component is 59% of the balance sheet Cost of sales is 79.53% in (2021) as compared to
footing. A major factor for such tremendous increase 81.73% in (2020), despite increase in sales. Such
is constant profitability of the Company. decrease is mainly due to efficient buying of Raw
Materials & having excellent controls to minimize in-
During current year, non- current liabilities are efficiencies through-out the production process.
11.38% of the balance sheet footing as compared
to 10.43% for the preceding year, this increase is Finance cost decreased due to lower interest rates
primarily because of expansion and modernization as compared to previous year & efficient fund
of production facilities. management despite significant increase in working
capital requirements.
Non-current assets has been increased from Rs.
22,623 Million in 2020 to Rs. 23,662 Million in 2021. Other expenses increased due to increase in workers’
Increase is due to capital expenditure for production profit participation fund provision & exchange loss
facilities across all divisions of the Company. due to adverse movement PKR as compared with
other currencies.

152 KOHINOOR TEXTILE MILLS LIMITED

KEY OPERATING AND FINANCIAL DATA
SIX YEARS SUMMARY
Financial Highlights 2021 2020 2019 2018 2017 2016
PKR ‘000’
Financial Position (Rs.’000)
Tangible fixed assets-net 10,706,281 9,699,484 8,907,570 8,578,713 8,222,022 7,437,640
Intangible assets - - - - 11,974 9,305
Investment & Other assets 12,956,054 12,924,446 9,604,962 9,577,178 7,213,438 5,711,189
23,662,335 22,623,930 18,512,532 18,155,891 15,447,434 13,158,134

Current assets 10,471,920 10,079,836 7,034,046 6,716,065 5,297,408 5,997,583
Current liabilities 10,093,041 11,321,125 6,450,732 7,200,654 5,046,039 4,990,909

Net working capital 378,879 (1,241,289) 583,314 (484,589) 251,369 1,006,674

Capital employed 24,041,214 21,382,641 19,095,846 17,671,302 15,698,803 14,164,808
Less: Long term loan & other liabilities 3,883,657 3,411,551 2,129,031 1,850,676 1,776,007 1,205,135

20,157,557 17,971,090 16,966,815 15,820,626 13,922,796 12,959,673

Share holders Equity
Represented By:
Share capital 2,992,964 2,992,964 2,992,964 2,992,964 2,823,551 2,823,551
Reserves & unappropriated profit 17,164,593 14,978,126 13,973,851 12,827,662 11,099,245 10,136,122

20,157,557 17,971,090 16,966,815 15,820,626 13,922,796 12,959,673

ANNUAL REPORT 2021 153

 Financial Highlights 2021 2020 2019 2018 2017 2016
PKR ‘000’

Revenue (Rs. ‘000) 29,955,525 21,844,810 21,220,135 17,833,540 17,404,708 16,088,302
Profitability (Rs.’000)
Gross Profit 6,132,628 3,990,180 3,561,072 2,477,752 2,581,315 3,039,436
Operating profit 4,061,498 2,681,070 2,692,046 2,516,291 3,170,104 2,965,535
Profit before tax 3,397,709 1,878,201 2,280,935 2,154,091 2,902,511 2,628,178
Taxation 641,380 350,158 530,291 489,769 550,732 495,963
Profit after tax 2,756,329 1,528,043 1,750,644 1,664,322 2,351,779 2,132,215

154 KOHINOOR TEXTILE MILLS LIMITED

Financial Highlights 2021 2020 2019 2018 2017 2016



Profitability Ratios:

Gross Profit to sales (%age) 20.47 18.27 16.78 13.89 14.83 18.89
Net Profit to sales (%age) 9.20 6.99 8.25 9.33 13.51 13.25
EBITDA (%age) 15.70 14.86 15.19 16.92 20.76 20.70
Operating leverage ratio 1.39 (0.14) 0.37 (10.50) 0.88 1.00
Return on equity (%age) 13.67 8.50 10.32 10.52 16.89 16.45
Return on capital employed (%age) 11.47 7.15 9.17 9.42 14.98 15.05
Profit before tax ratio (%age) 11.34 8.60 10.75 12.08 16.68 16.34
Effective tax rate (%age) 18.88 18.64 23.25 22.74 18.97 18.87
Cost / Revenue ratio (%age) 79.53 81.73 83.22 86.11 85.17 81.11
Return on Fixed Assets 25.74% 15.75% 19.76% 31.79% 28.67% 28.60%
Return on Total Assets 11.65% 6.75% 7.26% 11.85% 11.13% 11.34%

ANNUAL REPORT 2021 155

 Financial Highlights 2021 2020 2019 2018 2017 2016

Liquidity Ratios:
Current ratio 1.04 0.89 1.09 0.93 1.05 1.20
Acid test ratio 0.56 0.35 0.41 0.50 0.54 0.66
Cash to current liabilities 0.02 0.02 0.03 0.02 0.03 0.05
Cash flow from operations to sales % 9.68 (1.79) 11.75 2.21 6.73 6.23

Financial Highlights 2021 2020 2019 2018 2017 2016

Activity / Turnover Ratios:
No. of days in Inventory 72 94 66 54 52 59
No. of days in receivables 34 32 27 31 25 25
No. of days in creditors 40 50 41 39 35 39
Operating cycle 67 76 52 46 41 45
Inventory turn over 5 4 6 7 7 6
Debtors turn over ratio 11 11 13 12 15 15
Creditors turnover ratio 9 7 9 9 10 9
Total assets turn over / return on
investment ratio 0.90 0.75 0.84 0.78 0.87 0.88
Fixed assets turn over ratio 2.49 1.97 2.01 1.75 1.81 1.83

156 KOHINOOR TEXTILE MILLS LIMITED

Financial Highlights 2021 2020 2019 2018 2017 2016

Investment / Market Ratios:
Earning per share - Basic - (Rupees) 9.21 5.11 5.85 5.64 8.25 7.48
Earning per share - Diluted - (Rupees) 9.21 5.11 5.85 5.64 8.25 7.48
Price earning ratio 8.17 6.96 4.28 9.75 12.75 10.70
Price to book ratio 75.2:67.35 35.51:60.04 25.05:56.69 54.99:52.86 105.13:49.31 80.03:45.90
Dividend yield ratio 20% 20% 18% 28% 50% 40%
Dividend payout ratio (%age) 21.72 39.17 29.92 48.76 60.63 53.50
Dividend cover ratio - (Times) 4.60 2.55 3.34 2.05 1.65 1.87
Cash dividend per share - (Rupees) 2 2 1.75 2.75 5 4
Stock dividend per share - - - - - 15%
Breakup value per share - (Rupees):
- without revaluation surplus 67.35 47.20 43.85 40.02 35.77 32.44
- with revaluation surplus 67.35 60.04 56.69 52.86 49.31 45.90
- with revaluation surplus and
investments at fair value 96.89 89.59 72.26 95.83 158.50 145.35
Market value per share at
the end of the year - (Rupees) 75.2 35.51 25.05 54.99 105.13 80.03
Share Price - High during the
year - (Rupees) 80 45 57.25 106.00 128.50 82.34
Share Price - Low during the
year - (Rupees) 35.51 19.28 25.05 54.99 78.95 60.94
Earning assets to total assets
ratio (%age) 69.17 69.02 72.26 72.8 74.19 68.38

ANNUAL REPORT 2021 157

 Financial Highlights 2021 2020 2019 2018 2017 2016

Capital Structure Ratios:
Financial leverage ratio 0.48 0.58 0.30 0.40 0.49 0.48
Weighted average cost of debt (%age) 3.17 5.90 5.40 4.94 4.16 5.35
Debt to equity ratio (as per book) 17 : 83 14 : 86 10 : 90 10 : 90 10 : 90 7 : 93
Debt to equity ratio (as per market value) 16 : 84 22 : 78 21 : 79 9 : 91 5 : 95 4 : 96
Interest cover ratio 6.12 3.34 6.55 6.95 11.85 8.79
Average operating working
capital to sales ratio 0.21 0.23 0.19 0.22 0.20 0.20
Net borrowing to EBITDA ratio 2.02 3.16 1.51 2.05 1.28 1.25

Financial Highlights 2021 2020 2019 2018 2017 2016

Employee Productivity Ratio’s:
Production per employee
Spinning - Kg’s 000 45.8 42.18 43.22 42.37 38.63 38.76
Processing - Meters ‘ 000 6.35 7 7.24 7.11 8.39 9.41
Weaving - Sq. Meter ‘000 114.28 98.09 119.55 117.72 110.57 105.66
Revenue per employee (Rupees ‘000) 5,812 4,147 4,477 3,730 3,490 3,397
Staff Turnover Ratio-% 1% 0.9% 0.85% 1.1% 1.25% 1.3%

158 KOHINOOR TEXTILE MILLS LIMITED

Financial Highlights 2021 2020 2019 2018 2017 2016

Non-Financial Ratio’s:
Plant Availability
Spinning 90.30% 80.50% 89.90% 89.80% 91.20% 90.30%
Processing 83.30% 87.80% 70.10% 69.40% 85.50% 91.10%
Weaving 93.70% 81.40% 91.80% 91.20% 89.40% 92.10%
Customer Satisfaction index 95.10% 93.25% 94.49% 91.10% 90.65% 90.10%

Others:
Spares inventory as % of asset cost 0.58% 0.43% 0.48% 2.11% 2.46% 2.37%
Maintenance cost as % operating expenses 7.50% 8.10% 7.40% 8.10% 8.80% 9%

ANNUAL REPORT 2021 159

 Financial Highlights 2021 2020 2019 2018 2017 2016
PKR ‘000’
Summary of Cash flows

Net cash flow from operating activities 2,898,473 (390,215) 2,493,699 394,884 1,171,639 1,002,347
Net cash used in investing activities (1,616,862) (4,481,124) (572,930) (2,202,943) (196,570) (247,653)
Net cash (used in) / from
financing activities (1,218,338) 4,841,586 (1,866,308) 1,815,029 (1,049,146) (640,497)

Net change in cash and cash equivalents 63,273 (29,753) 54,461 6,970 (74,077) 114,197

Financial Highlights 2021 2020 2019 2018 2017 2016

Quantitative Data

Yarn (Kgs “000”) :
Production (cont. into 20s)
KTM Division 46,536 39,810 41,751 41,331 39,574 38,473
KGM Division 37,773 34,382 36,994 36,603 34,816 33,299

84,309 74,192 78,745 77,934 74,390 71,772

Sales / [Link] wvg.(actual count)
KTM Division 19,329 16,118 16,699 16,483 12,356 11,017
KGM Division 6,573 6,071 5,858 5,724 5,284 5,106

25,902 22,189 22,557 22,207 17,640 16,123

Cloth (Linear meters “000”) :
Processing (Rawalpindi Division)
Production 17,525 18,468 14,757 14,613 17,986 19,168
Sales 18,101 15,067 12,967 13,809 17,641 18,355
Weaving (Raiwind Division)
Production 31,705 27,919 32,447 29,857 27,533 26,204
Sales 32,998 26,654 32,299 29,817 27,021 26,614

160 KOHINOOR TEXTILE MILLS LIMITED

Production in spinning / weaving divisions is continuously increasing due to inclusion of latest machinery with
better efficiencies. Production of processing / home textile division is dependent on various factor such as run /
cut size, print density etc. therefore it is showing slight adverse trend over the period.

ANNUAL REPORT 2021 161

 RETURN ON EQUITY (ROE)
DuPont Analysis (RS. ‘000)

Comments:

1. DuPont equation indicates increase in ROE over the period. Key driving factors in increased ROE are
profit margin and total asset turnover.

2. Profit margin increased because of better selling margins and volumes as compared with previous
year.

3. Increased equity multiplier coupled with improved asset turnover & profit margins helped achieve
increased return on equity as compared with preceding year.

162 KOHINOOR TEXTILE MILLS LIMITED

HOW THE INDICATORS AND PERFORMANCE MEASURES HAVE
CHANGED OVER THE PERIOD
Kohinoor Textile Mills Limited has an established mechanism of performance appraisal. Key Performance
Indictors (KPIs), for both financial and non-financial economic activities, are set for each objective or project
and then its progress is monitored and evaluated by the management against those KPIs.

Financial Review section of this report enlists and elaborates major KPIs that management of the Company
prefers to review on regular basis to access the ‘Operational’ and ‘Financial’ performance of the Company’s
economic affairs. Key variances indicated by the KPIs are also explained briefly to help understand the
performance of business activities.

Since, there isn’t any change in the Company’s principal business activities and related industry from previous
year, except some expansion in fabric digital print and solar power installation, the management believes the
set KPIs sufficiently indicates the project performance and didn’t required any change.

METHODS AND ASSUMPTIONS USED IN COMPILING INDICATORS

A performance indicator represents parameters and factors that may caste an impact of decisive nature on a
company’s financial position, financial performance or liquidity position. Following are the key assumptions in
compiling these indicators:

Financial Position

• Appropriateness of capital mix in the company

• Proportion of financial leverage in debt equity mix
• Change in current ratio

Financial performance

• Maintaining high local sales retention

• Monitoring key components of variable cost to be amongst top cost effective players
• Initiating and maintaining techniques for optimal fixed cost absorption and appropriate mix of operational
leverage

Liquidity Position

• Keeping an eye on funds used in / generated from operating, investing and financial cash flow activities
• Reviewing funds used in working capital management
• Effectively segregating cash and noncash items

All the indicators are devised in the light of these basic assumptions and are periodically reviewed and
monitored. Furthermore, Company performance variance analysis from corresponding figures of comparative
periods and from budgeted figures as comparability over time provides good basis of Corporate Reporting.
These indicators are finally used to report financial information to all users of the financial statements in the form
of annual financial statements.

ANNUAL REPORT 2021 163

 DEFINITIONS AND GLOSSARY OF Return on Equity (ROE):
TERMS
A percentage that indicates how efficiently common
Gross Profit ratio: stockholders’ invested money is being used. The
percentage is the result of dividing net earnings by
The relationship of the gross profit made for a common stockholders’ equity. The ROE is used for
specified period and the sales or turnover achieved measuring growth and profitability. You can compare
during that period. a Company’s ROE to the ROE of its industry to
determine how a company is doing compared to its
Net Profit Ratio: competition.

Net profit ratio is the ratio of net profit (after taxes) to Return on Investment (ROI):
net sales.
Also Known as return on invested capital (ROIC). ROI
Operating Profit Ratio: is a measure of how well management has used the
Company’s resources. ROI is calculated by dividing
The Operating profit ratio indicates the ratio of earnings by total assets. It is a broader measure
company’s profit before interest and taxes to net than return on equity (ROE) because assets include
sales. debt as well as equity. It is a useful to compare a
company’s ROI with others in the same industry.
Current Ratio:
Du Pont Analysis:
A Company’s current assets divided by its current
liabilities. This ratio gives you a sense of a Company’s A type of analysis that examines a Company’s
ability to meet short-term liabilities, and is a measure Return on Equity (ROE) by splitting it into three main
of financial strength in the short term. A ratio of 1 components; profit margin, total asset turnover and
implies adequate current assets to cover current equity multiplier. This analysis highlight the main
liabilities: the higher above 1, the better. driving factor of ROE and the factor which needs to
be addressed to improve the ROE.
Debt-Equity Ratio:
Free Cash Flow:
The ratio of a Company’s liabilities to its equity. The
higher the level of debt, the more important it is for a Free Cash Flow (FCF) is the Cash a Company
company to have positive earnings and steady cash produces through its operations, less the cost of
flow. For comparative purposes, debt-equity is most expenditures on assets & net borrowings. Ample
useful for companies within the same industry. availability of Cash depicts financial health of a
Company to discharge its financial and operational
Earnings Per Share (EPS): commitments hence having lesser dependency on
external sources of finance providers.
The portion of a Company’s profit allocated to each
outstanding share of common stock. Earnings Economic Value Added:
per share serve as an indicator of a Company’s
profitability. Economic value added (EVAD) is a measure of a
Company’s operating profit after tax generated
Profit Margin: in excess of cost of funds deployed. Ample EVAD
exhibits that operations of the Company are driven
Determined by dividing net income by net sales during with level of accuracy to full fill the requirements of
a time period and is expressed as a percentage. finance providers.
Net profit margin is a measure of efficiency and the
higher the margin, the better. Trends in margin can
be attributed to rising/falling production costs or
rising / falling price of the goods sold.

164 KOHINOOR TEXTILE MILLS LIMITED

This disclosure is being added as per requirements of Securities and
Exchange Commission of Pakistan vide SRO 924(1) / 2015, dated 09
September 2015.

ANNUAL REPORT 2021 165

 WE ARE EXPANDING OUR
DEPTH AND BREADTH

Financial Statements
for the Year Ended June 30, 2021

Independent Auditors’ Report 167

Statement of Financial Position 172
Statement of Profit or Loss 174
Statement of Comprehensive Income 175
Statement of Changes in Equity 176
Statement of Cash Flows 177
Notes to the Financial Statements 178
Pattern of Shareholding 231

166 KOHINOOR TEXTILE MILLS LIMITED

 2-A, ATS Centre, 30-West,
Fazal-ul-Haq Road,Blue Area,
Islamabad, Pakistan
T: +92 (51) 227 4121 - 2
F: +92 (51) 227 8859
racoisd@[Link]
[Link]

INDEPENDENT AUDITOR’S REPORT

To the members of Kohinoor Textile Mills Limited

Opinion

We have audited the annexed financial statements of Kohinoor Textile Mills Limited (the Company), which
comprise the statement of financial position as at 30 June 2021, and the statement of profit or loss, the
statement of comprehensive income, the statement of changes in equity, the statement of cash flows for
the year then ended, and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information, 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 the audit.

In our opinion and to the best of our information and according to the explanations given to us, the
statement of financial position, the statement of profit or loss, the statement of comprehensive income,
the statement of changes in equity and the statement of cash flows together with the notes forming
part thereof conform with the accounting and reporting standards as applicable in Pakistan and give the
information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively
give a true and fair view of the state of the Company’s affairs as at 30 June 2021 and of the profit, other
comprehensive income, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in
Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the Company in
accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have
fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.

ANNUAL REPORT 2021 167

 Sr. Key audit matters How the matters were addressed in our audit
No.
1 Inventory existence and valuation:

Inventory as at 30 June 2021 amounted Our procedures over existence and valuation of
to Rupees 4,784.331 million, break up of inventory included, but were not limited to:
which is as follows:
• To test the quantity of inventories at all locations,
- Stores, spare parts and loose tools we assessed the corresponding inventory
Rupees 811.473 million observation instructions and participated in
inventory counts on sites. Based on samples,
- Stock-in-trade Rupees 3,972.858 we performed test counts and compared the
million quantities counted by us with the results of the
counts of the management;

Inventory is measured at the lower of cost • For a sample of inventory items, re-performed
and net realizable value. the weighted average cost calculation and
compared the weighted average cost appearing
We identified existence and valuation of on valuation sheets;
inventory as a key audit matter due to its
size, representing 14.02% of the total • We tested that the ageing report used by
assets of the Company as at 30 June 2021, management correctly aged inventory items by
and the judgment involved in valuation. agreeing a sample of aged inventory items to the
last recorded invoice;
For further information on inventory, refer to
the following: • On a sample basis, we tested the net realizable
value of inventory items to recent selling prices
- Summary of significant accounting and re-performed the calculation of the inventory
policies, Inventories note 2.16 to the write down, if any;
financial statements.
• We assessed the percentage write down applied
- Stores, spare parts and loose tools to older inventory with reference to historic
note 20 and Stock-in-trade note 21 inventory write downs and recoveries on slow
to the financial statements. moving inventory;

• In the context of our testing of the calculation, we

analysed individual cost components and traced
them back to the corresponding underlying
documents. We furthermore challenged changes
in unit costs; and

• We also made enquiries of management,

including those outside of the finance function,
and considered the results of our testing above
to determine whether any specific write downs
were required.

168 KOHINOOR TEXTILE MILLS LIMITED

Sr. Key audit matters How the matters were addressed in our audit
No.
2 Capital expenditures

The Company is investing significant Our procedures included, but were not limited to:
amounts in its operations and there are
a number of areas where management • We tested operating effectiveness of controls
judgment impacts the carrying value of in place over the property, plant and equipment
property, plant and equipment and its cycle including the controls over whether costs
respective depreciation profile. These incurred on activities is capital or operating in
include among other the decision to nature;
capitalize or expense costs; and review of
useful lives of the assets including the impact • We evaluated the appropriateness of
of changes in the Company’s strategy. capitalization policies and depreciation rates;

We focused on this area since the amounts • We performed tests of details on costs
have a significant impact on the financial capitalized; and
position of the Company and there is
significant management judgment required • We verified the accuracy of management’s
that has significant impact on the reporting calculation used for the impairment testing.
of the financial position for the Company.
Therefore, considered as one of the key
audit matters.

For further information, refer to the following:

- Summary of significant accounting

policies, Property, plant, equipment
and depreciation note 2.7 to the
financial statements.
- Property, plant and equipment note
16 to the financial statements.
3 Revenue recognition

The Company recognized net revenue of Our procedures included, but were not limited to:
Rupees 29,955.525 million for the year
ended 30 June 2021. • We obtained an understanding of the process
relating to recognition of revenue and testing
We identified recognition of revenue as a key the design, implementation and operating
audit matter because revenue is one of the effectiveness of key internal controls over
key performance indicators of the Company recording of revenue;
and gives rise to an inherent risk that • We compared a sample of revenue transactions
revenue could be subject to misstatement recorded during the year with sales orders, sales
to meet expectations or targets. invoices, delivery documents and other relevant
underlying documents;
For further information, refer to the following: • We compared a sample of revenue transactions
recorded around the year-end with the sales
- Summary of significant accounting orders, sales invoices, delivery documents and
policies, Revenue from contracts with other relevant underlying documentation to
customers note 2.23 to the financial assess if the related revenue was recorded in the
statements. appropriate accounting period;
• We assessed whether the accounting policies
- Revenue note 27 to the financial for revenue recognition complies with the
statements. requirements of IFRS 15 ‘Revenue from
Contracts with Customers’;
• We also considered the appropriateness of
disclosures in the financial statements.

ANNUAL REPORT 2021 169

 Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the information
included in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in
accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of
Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.

Board of directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report

170 KOHINOOR TEXTILE MILLS LIMITED

 to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going
concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.

We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.

We also provide the board of directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Company as required by the Companies Act, 2017
(XIX of 2017);

b) the statement of financial position, the statement of profit or loss, the statement of comprehensive
income, the statement of changes in equity and the statement of cash flows together with the notes
thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in
agreement with the books of account and returns;

c) investments made, expenditure incurred and guarantees extended during the year were for the
purpose of the Company’s business; and

d) 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.

The engagement partner on the audit resulting in this independent auditor’s report is Raheel Arshad.

RIAZ AHMAD & COMPANY

Chartered Accountants

Islamabad

DATE: 13 August 2021

ANNUAL REPORT 2021 171

 STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
2021 2020
Note (Rupees in thousand)

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorised share capital
370,000,000 (2020: 370,000,000)
ordinary shares of Rupees 10 each 3,700,000 3,700,000
30,000,000 (2020: 30,000,000) preference
shares of Rupees 10 each 300,000 300,000

4,000,000 4,000,000

Issued, subscribed and paid-up share capital 3 2,992,964 2,992,964

Reserves 4

Capital reserves
Share premium 986,077 986,077
Surplus on revaluation of freehold land and investment properties 3,871,774 3,843,044

4,857,851 4,829,121
Revenue reserves
General reserve 1,450,491 1,450,491
Unappropriated profit 10,856,251 8,698,514

12,306,742 10,149,005

Total reserves 17,164,593 14,978,126

Total equity 20,157,557 17,971,090

LIABILITIES

NON-CURRENT LIABILITIES

Long term financing 5 3,173,974 2,860,987
Deferred government grants 6 24,287 -
Gas Infrastructure Development Cess (GIDC) payable 7 14,294 -
Deferred income tax liability 8 671,102 550,564

3,883,657 3,411,551
CURRENT LIABILITIES

Trade and other payables 9 2,657,455 2,535,813
Accrued mark-up 10 65,021 196,614
Short term borrowings 11 5,558,536 7,479,127
Current portion of non-current liabilities 12 1,299,221 357,307
Unclaimed dividend 13 30,592 29,769
Taxation - net 14 482,216 722,495

10,093,041 11,321,125

13,976,698 14,732,676
TOTAL LIABILITIES

CONTINGENCIES AND COMMITMENTS 15

TOTAL EQUITY AND LIABILITIES 34,134,255 32,703,766

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

172 KOHINOOR TEXTILE MILLS LIMITED
 2021 2020
Note (Rupees in thousand)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 16 10,706,281 9,699,484
Investment properties 17 1,824,360 1,792,755
Long term investments 18 11,078,733 11,078,733
Long term deposits 19 52,961 52,958

23,662,335 22,623,930







CURRENT ASSETS

Stores, spare parts and loose tools 20 811,473 705,750
Stock-in-trade 21 3,972,858 5,362,714
Trade debts 22 3,266,729 2,360,050
Advances 23 612,203 306,325
Short term prepayments 14,599 10,803
Other receivables 24 1,410,306 1,064,784
Short term investments 25 133,866 82,797
Cash and bank balances 26 249,886 186,613

10,471,920 10,079,836

TOTAL ASSETS 34,134,255 32,703,766

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2021 173

 STATEMENT OF PROFIT OR LOSS
For the year ended 30 June 2021
2021 2020
Note (Rupees in thousand)

REVENUE 27 29,955,525 21,844,810
COST OF SALES 28 (23,822,897) (17,854,630)

GROSS PROFIT 6,132,628 3,990,180

DISTRIBUTION COST 29 (1,218,390) (821,609)
ADMINISTRATIVE EXPENSES 30 (643,123) (602,467)
OTHER EXPENSES 31 (388,309) (178,545)

(2,249,822) (1,602,621)

3,882,806 2,387,559
OTHER INCOME 32 178,692 293,511

PROFIT FROM OPERATIONS 4,061,498 2,681,070

FINANCE COST 33 (663,789) (802,869)

PROFIT BEFORE TAXATION 3,397,709 1,878,201

TAXATION 34 (641,380) (350,158)

PROFIT AFTER TAXATION 2,756,329 1,528,043


2021 2020
--------------Rupees--------------

EARNINGS PER SHARE - BASIC AND DILUTED 35 9.21 5.11

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

174 KOHINOOR TEXTILE MILLS LIMITED

STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2021
2021 2020
(Rupees in thousand)

PROFIT AFTER TAXATION 2,756,329 1,528,043

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to profit or loss

- Surplus on revaluation of freehold land 28,730 -

Items that may be reclassified subsequently to profit or loss - -

Other comprehensive income for the year 28,730 -

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,785,059 1,528,043

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2021 175

176
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Reserves
Capital reserves Revenue reserves

Share Surplus on Total Total
Unappropriated
capital Share revaluation of General Sub - Total reserves equity

KOHINOOR TEXTILE MILLS LIMITED

Sub - Total
premium freehold land reserve profit
and investment
properties
….………………...…..…… ( Rupees in thousand ) ….………………...…..……

Balance as at 01 July 2019 2,992,964 986,077 3,843,044 4,829,121 1,450,491 7,694,239 9,144,730 13,973,851 16,966,815
Transactions with owners:
- final dividend for the year ended 30 June 2019
@ Rupee 0.75 per share - - - - - (224,472) (224,472) (224,472) (224,472)
- interim dividend for the year ended 30 June 2020
@ Rupee 1.00 per share - - - - - (299,296) (299,296) (299,296) (299,296)
- - - - - (523,768) (523,768) (523,768) (523,768)

Profit for the year - - - - - 1,528,043 1,528,043 1,528,043 1,528,043
Other comprehensive income for the year - - - - - - - - -
Total comprehensive income for the year - - - - - 1,528,043 1,528,043 1,528,043 1,528,043

Balance as at 30 June 2020 2,992,964 986,077 3,843,044 4,829,121 1,450,491 8,698,514 10,149,005 14,978,126 17,971,090

Transactions with owners:
- final dividend for the year ended 30 June 2020
@ Rupee 1.00 per share - - - - - (299,296) (299,296) (299,296) (299,296)
- interim dividend for the year ended 30 June
2021 @ Rupee 1.00 per share - - - - - (299,296) (299,296) (299,296) (299,296)
- - - - - (598,592) (598,592) (598,592) (598,592)
Profit for the year - - - - - 2,756,329 2,756,329 2,756,329 2,756,329
Other comprehensive income for the year - - 28,730 28,730 - - - 28,730 28,730
Total comprehensive income for the year - - 28,730 28,730 - 2,756,329 2,756,329 2,785,059 2,785,059

Balance as at 30 June 2021 2,992,964 986,077 3,871,774 4,857,851 1,450,491 10,856,251 12,306,742 17,164,593 20,157,557

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
2021 2020
Note (Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 36 4,454,979 628,069
Finance cost paid (795,382) (680,070)
Income tax paid (761,121) (337,845)
Net increase in long term deposits (3) (369)

Net cash generated from / (used in) operating activities 2,898,473 (390,215)

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure on property, plant and equipment (1,696,204) (1,396,465)
Proceeds from disposal of property, plant and equipment 109,825 46,230
Long term investments made - (3,343,934)
Proceeds from disposal of long term investments - 24,800
Short term investments made (153,569) (193,544)
Proceeds from disposal of short term investments 102,500 162,188
Interest received 20,586 55,683
Dividend received - 163,918

Net cash used in investing activities (1,616,862) (4,481,124)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing 1,611,794 1,414,291
Repayment of long term financing (419,316) (392,726)
Grant received during the year 107,544 -
Short term borrowings - net (1,920,591) 4,337,604
Dividend paid (597,769) (517,583)

Net cash (used in) / from financing activities (1,218,338) 4,841,586

Net increase / (decrease) in cash and cash equivalents 63,273 (29,753)
Cash and cash equivalents at the beginning of the year 186,613 216,366

Cash and cash equivalents at the end of the year 249,886 186,613

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2021 177

 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1. THE COMPANY AND ITS OPERATIONS

1.1 Kohinoor Textile Mills Limited is a public limited company incorporated in Pakistan under the
Companies Act, 1913 (now the Companies Act, 2017) and listed on Pakistan Stock Exchange
Limited. The registered office of the Company is situated at 42-Lawrence Road, Lahore. The
principal activity of the Company is manufacturing of yarn and cloth, processing and stitching
the cloth and trade of textile products.

1.2 Geographical location and addresses of all business units are as follows:

Sr. No. Manufacturing units and office Address

Manufacturing units:

1 Spinning and Home textile units Peshawar Road, Rawalpindi.
2 Spinning unit Gulyana Road, Gujar Khan, District Rawalpindi.
3 Weaving unit 8 K.M. Manga Raiwind Road, District Kasur.

Head office 42-Lawrence Road, Lahore.

1.3 These financial statements are the separate financial statements of the Company. Consolidated
financial statements of the Company are prepared separately. Details of the Company’s
investment in subsidiaries are stated in note 18 to these financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all years presented, unless otherwise stated:

2.1   Basis of preparation

a)      Statement of compliance

These financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards applicable in
Pakistan comprise of:

- International Financial Reporting Standards (IFRSs) issued by the International Accounting
Standards Board (IASB) as notified under the Companies Act, 2017; and

- Provisions of and directives issued under the Companies Act, 2017.

Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRSs,
the provisions of and directives issued under the Companies Act, 2017 have been followed.

b) Accounting convention

These financial statements have been prepared under the historical cost convention except as
otherwise stated in the respective accounting policies.

c) Critical accounting estimates and judgments

The preparation of financial statements in conformity with the approved accounting standards
requires the use of certain critical accounting estimates. It also requires the management to
exercise its judgment in the process of applying the Company’s accounting policies. Estimates

178 KOHINOOR TEXTILE MILLS LIMITED

 and judgments are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances. The areas where various assumptions and estimates are significant to the
Company’s financial statements or where judgments were exercised in application of accounting
policies are as follows:

Useful lives, patterns of economic benefits and impairment

Estimates with respect to residual values, useful lives and pattern of flow of economic benefits
are based on the analysis of the management of the Company. Further, the Company reviews
the value of assets for possible impairment on an annual basis. Any change in the estimates in
the future might affect the carrying amount of respective item of property, plant and equipment,
with a corresponding effect on the depreciation charge and impairment.

Inventories

Inventory write-down is made based on the current market conditions, historical experience
and selling goods of similar nature. It could change significantly as a result of changes in market
conditions. A review is made on each reporting date on inventories for excess inventories,
obsolescence and declines in net realizable value and an allowance is recorded against the
inventory balances for any such declines.

Income tax

In making the estimates for income tax currently payable by the Company, the management
takes into account the current income tax law and the decisions of appellate authorities on
certain issues in the past.

Allowance for expected credit losses

The allowance for expected credit losses assessment requires a degree of estimation and
judgment. The Company has elected to measure loss allowance for trade debts using IFRS 9
‘Financial Instruments’ simplified approach based on the lifetime expected credit loss, grouped
based on days overdue, and makes assumptions to allocate an overall expected credit loss rate
for each group. These assumptions include recent sales experience and historical collection
rates.

Provisions

As the actual outflows can differ from estimates made for provisions due to changes in laws,
regulations, public expectations, technology, prices and conditions, and can take place many
years in the future, the carrying amounts of provisions are reviewed at each reporting date
and adjusted to take account of such changes. Any adjustments to the amount of previously
recognised provision is recognized in the statement of profit or loss unless the provision was
originally recognised as part of cost of an asset.

Contingencies

The Company reviews the status of all pending litigations and claims against the Company.
Based on the judgment and the advice of the legal advisors for the estimated financial outcome,
appropriate disclosure or provision is made. The actual outcome of these litigations and claims
can have an effect on the carrying amounts of the liabilities recognized at the statement of
financial position date.

Impairment of investment in subsidiary companies

In making an estimate of recoverable amount of the Company’s investment in subsidiary
companies, the management considers future cash flows.

ANNUAL REPORT 2021 179

 Revenue from contracts with customers involving sale of goods

When recognizing revenue in relation to the sale of goods to customers, the key performance
obligation of the Company is considered to be the point of delivery of the goods to the customer,
as this is deemed to be the time that the customer obtains control of the promised goods and
therefore, the benefits of unimpeded access.

Revaluation of land and investment properties (Note 45)

d) Amendments to published approved accounting standards that are effective in current year
and are relevant to the Company

Following amendments to published approved accounting standards are mandatory for the
Company’s accounting periods beginning on or after 01 July 2020:

· IAS 1 (Amendments) ‘Presentation of Financial Statements’ and IAS 8 (Amendments)
‘Accounting Policies, Changes in Accounting Estimates and Errors’;
·  International Accounting Standards Board’s revised Conceptual Framework – March 2018
·  IFRS 3 (Amendments) ‘Business Combination’;
·  IFRS 16 (Amendments) ‘Leases’;
· Interest Rate Benchmark Reform which amended IFRS 9 ‘Financial Instruments’, IAS 39
‘Financial Instruments: Recognition and Measurement’ and IFRS 7 ‘Financial Instruments:
Disclosures’.

The above-mentioned amendments to approved accounting standards did not have any impact
on the amounts recognised in prior period and are not expected to significantly affect the current
or future periods.

e) Amendments to published approved accounting standards that are effective in current year
but not relevant to the Company

There are amendments to published standards that are mandatory for accounting periods
beginning on or after 01 July 2020 but are considered not to be relevant or do not have any
significant impact on the Company’s financial statements and are therefore not detailed in these
financial statements.

f) Amendments to published approved accounting standards that are not yet effective but
relevant to the Company

Following amendments to existing standards have been published and are mandatory for the
Company’s accounting periods beginning on or after 01 July 2021 or later periods:

Classification of liabilities as current or non-current (Amendments to IAS 1 ‘Presentation of
Financial Statements’) effective for the annual period beginning on or after 01 January 2023.
These amendments in the standards have been added to further clarify when a liability is
classified as current. The standard also amends the aspect of classification of liability as non-
current by requiring the assessment of the entity’s right at the end of the reporting period to
defer the settlement of liability for at least twelve months after the reporting period. An entity
shall apply those amendments retrospectively in accordance with IAS 8 ‘Accounting Policies,
Changes in Accounting Estimates and Errors’.

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37 ‘Provisions, Contingent
Liabilities and Contingent Assets’) effective for the annual period beginning on or after 01 January
2022 amends IAS 1 ‘Presentation of Financial Statements’ by mainly adding paragraphs which
clarifies what comprise the cost of fulfilling a contract. Cost of fulfilling a contract is relevant when
determining whether a contract is onerous. An entity is required to apply the amendments to
contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting
period in which it first applies the amendments (the date of initial application). Restatement of

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 comparative information is not required, instead the amendments require an entity to recognize
the cumulative effect of initially applying the amendments as an adjustment to the opening
balance of retained earnings or other component of equity, as appropriate, at the date of initial
application.

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16
‘Property, Plant and Equipment’) effective for the annual period beginning on or after 1 January
2022. Clarifies that sales proceeds and cost of items produced while bringing an item of
property, plant and equipment to the location and condition necessary for it to be capable of
operating in the manner intended by management e.g. when testing etc., are recognized in
profit or loss in accordance with applicable Standards. The entity measures the cost of those
items applying the measurement requirements of IAS 2 ‘Inventories’. The standard also removes
the requirement of deducting the net sales proceeds from cost of testing. An entity shall apply
those amendments retrospectively, but only to items of property, plant and equipment that are
brought to the location and condition necessary for them to be capable of operating in the
manner intended by management on or after the beginning of the earliest period presented
in the financial statements in which the entity first applies the amendments. The entity shall
recognize the cumulative effect of initially applying the amendments as an adjustment to the
opening balance of retained earnings (or other component of equity, as appropriate) at the
beginning of that earliest period presented.

The following annual improvements to IFRS standards 2018-2020 are effective for annual
reporting periods beginning on or after 01 January 2022:

IFRS 9 ‘Financial Instruments’ – The amendment clarifies that an entity includes only fees paid
or received between the entity (the borrower) and the lender, including fees paid or received
by either the entity or the lender on the other’s behalf, when it applies the ‘10 per cent’ test in
paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability.

IFRS 16 ‘Leases’ – The amendment partially amends Illustrative Example 13 accompanying
IFRS 16 ‘Leases’ by excluding the illustration of reimbursement of leasehold improvements by
the lessor. The objective of the amendment is to resolve any potential confusion that might arise
in lease incentives.

IAS 41 ‘Agriculture’ – The amendment removes the requirement in paragraph 22 of IAS 41 for
entities to exclude taxation cash flows when measuring the fair value of a biological asset using
a present value technique.

Disclosure of Accounting Policies (Amendments to IAS 1 ‘Presentation of Financial Statements’
and IFRS Practice Statement 2 ‘Making Materiality Judgement’) effective for annual periods
beginning on or after 01 January 2023. These amendments are intended to help preparers in
deciding which accounting policies to disclose in their financial statements. Earlier, IAS 1 states
that an entity shall disclose its ‘significant accounting policies’ in their financial statements.
These amendments shall assist the entities to disclose their ‘material accounting policies’ in
their financial statements.

Covid-19-Related Rent Concessions (Amendment to IFRS 16 ‘Leases’) effective for annual
reporting periods beginning on or after 01 April 2021. These amendments permit a lessee to
apply the practical expedient regarding COVID-19-related rent concessions. The entity shall
recognize the cumulative effect of initially applying the amendments as an adjustment to the
opening balance of retained earnings (or other component of equity, as appropriate) at the
beginning of that earliest period presented.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to
IAS 12 ‘Income taxes’) effective for annual periods beginning on or after 01 January 2023. These
amendments clarify how companies account for deferred tax on transactions such as leases
and decommissioning obligations.

ANNUAL REPORT 2021 181

 Change in definition of Accounting Estimate (Amendments to IAS 8 ‘Accounting Policies,
Changes in Accounting Estimates and Errors) effective for annual periods beginning on or after 1
January 2023. This change replaced the definition of Accounting Estimate with a new definition,
intended to help entities to distinguish between accounting policies and accounting estimates.

The International Accounting Standards Board (IASB) has published ‘Reference to the Conceptual
Framework (Amendments to IFRS 3)’ with amendments to IFRS 3 ‘Business Combinations’
that update an outdated reference in IFRS 3 without significantly changing its requirements.
Effective for business combinations for which the acquisition date is on or after the beginning
of annual period beginning on or after 01 January 2022. The amendments also add to IFRS 3
an exception to its requirement for an entity to refer to the Conceptual Framework to determine
what constitutes an asset or a liability. The standard is effective for transactions in the future and
therefore would not have an impact on past financial statements.

Interest Rate Benchmark Reform – Phase 2 which amended IFRS 9 ‘Financial Instruments’, IAS
39 ‘Financial Instruments: Recognition and Measurement’, IFRS 4 ‘Insurance Contracts’ and
IFRS 7 ‘Financial Instruments: Disclosures’ is applicable for annual financial periods beginning
on or after 01 January 2021. The changes made relate to the modification of financial assets,
financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure
requirements applying IFRS 7 to accompany the amendments regarding modifications and
hedge accounting.

The above amendments and improvements are likely to have no significant impact on the
financial statements.

g) Standards and amendments to approved published standards that are not yet effective and
not considered relevant to the Company

There are other standards and amendments to published standards that are mandatory for
accounting periods beginning on or after 01 July 2021 but are considered not to be relevant or
do not have any significant impact on the Company’s financial statements and are therefore not
detailed in these financial statements.

2.2 Employee benefit

The Company operates an approved funded provident fund scheme covering all permanent
employees. Equal monthly contributions are made both by the Company and employees at the
rate of 8.33 percent of basic salary and cost of living allowance to the fund. The Company’s
contributions to the fund are charged to statement of profit or loss.

2.3 Taxation

Current

Provision for 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. 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 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 recognized for all taxable temporary differences and deferred
tax assets 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 utilized.

182 KOHINOOR TEXTILE MILLS LIMITED

 Deferred tax is calculated at the rates that are expected to apply to the period when the
differences reverse based on tax rates that have been enacted or substantively enacted by the
reporting date. Deferred tax is charged or credited in the statement of profit or loss, except to
the extent that it relates to items recognized in other comprehensive income or directly in equity.
In this case the tax is also recognized in other comprehensive income or directly in equity,
respectively.

2.4 Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of
the primary economic environment in which the Company operates (the functional currency).
The financial statements are presented in Pak Rupees, which is the Company’s functional and
presentation currency. Figures are rounded off to the nearest thousand of Pak Rupees.

2.5  Foreign currency transactions and translation

All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at exchange
rates prevailing at the reporting date. Transactions in foreign currencies are translated into Pak
Rupees at exchange rates prevailing at the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are charged
or credited to statement of profit or loss. Non-monetary assets and liabilities that are measured
in terms of historical cost in a foreign currency are translated into Pak 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 Pak Rupees at exchange rates prevailing
at the date when fair values are determined.

2.6 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 obligations and a reliable estimate of the amount can be made.

2.7 Property, plant, equipment and depreciation

Operating fixed assets

Operating fixed assets except freehold land are stated at cost less accumulated depreciation
and accumulated impairment losses (if any). Cost of operating fixed assets consists of historical
cost, borrowing cost pertaining to erection / construction period of qualifying assets and other
directly attributable cost of bringing the asset to working condition. Freehold land is stated at
revalued amount less any identified impairment loss.

Subsequent costs are included in the asset’s carrying amount or recognized 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 statement of profit or loss during the period in which they
are incurred.

Increases in the carrying amounts arising on revaluation of freehold land are recognized, in other
comprehensive income and accumulated in revaluation surplus in shareholders’ equity. To the
extent that increase reverses a decrease previously recognized in the statement of profit or loss,
the increase is first recognized in the statement of profit or loss. Decreases that reverse previous
increases of the same asset are first recognized in other comprehensive income to the extent of
the remaining surplus attributable to the asset; all other decreases are charged to the statement
of profit or loss.

ANNUAL REPORT 2021 183

 Depreciation

Depreciation on operating fixed assets is charged to the statement of profit or loss applying the
reducing balance method so as to write off the cost / depreciable amount of the asset over their
estimated useful lives at the rates given in note 16.1. Depreciation on additions is charged from
the month the assets are available for use while no depreciation is charged in the month in which
the assets are de-recognized. The residual values and useful lives of assets are reviewed by the
management, at each financial year end and adjusted if impact on depreciation is significant.

De-recognition

An item of operating fixed assets is de-recognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the
asset is included in the statement of profit or loss in the year the asset is de-recognized.

Capital work-in-progress

Capital work-in-progress is stated at cost less identified impairment losses, if any. All expenditure
connected with specific assets incurred during installation and construction period are carried
under capital work-in-progress. These are transferred to operating fixed assets as and when
these are available for use.

2.8  Investment properties

Land and buildings held for capital appreciation or to earn rental income are classified as
investment properties. Investment properties are carried at fair value which is based on active
market prices, adjusted, if necessary, for any difference in the nature, location or condition of the
specific asset. The valuation of the properties is carried out with sufficient regularity.

Gain or loss arising from a change in the fair value of investment properties is recognized in the
statement of profit or loss for the year in which it arises.

2.9 IFRS 16 “Leases”

Right-of-use assets

A right-of-use asset is recognized at the commencement date of a lease. The right-of-use asset
is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before the commencement date net of any lease
incentives received, any initial direct costs incurred, and, except where included in the cost
of inventories, an estimate of costs expected to be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the
lease or the estimated useful life of the asset, whichever is shorter. Where the Company expects
to obtain ownership of the leased asset at the end of the lease term, the depreciation is charged
over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any
re-measurement of lease liabilities.

The Company has elected not to recognize a right-of-use asset and corresponding lease liability
for short-term leases with terms of 12 months or less and leases of low-value assets. Lease
payments on these assets are charged to income as incurred.

Lease liabilities

A lease liability is recognized at the commencement date of a lease. The lease liability is initially
recognized at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Company’s incremental borrowing rate. Lease payments comprise of fixed payments less

184 KOHINOOR TEXTILE MILLS LIMITED

 any lease incentives receivable, variable lease payments that depend on an index or a rate,
amounts expected to be paid under residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably certain to occur, and any anticipated
termination penalties. The variable lease payments that do not depend on an index or a rate are
expensed in the period in which they are incurred.

Lease liabilities are measured at amortized cost using the effective interest method. The carrying
amounts are re-measured if there is a change in the following: future lease payments arising
from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase
option and termination penalties. When a lease liability is re-measured, an adjustment is made
to the corresponding right-of-use asset, or to statement of profit or loss if the carrying amount
of the right-of-use asset is fully written down.

2.10 Investments and other financial assets

a) Classification

The Company classifies its financial assets in the following measurement categories:

· those to be measured subsequently at fair value (either through other comprehensive
income, or through profit or loss), and

· those to be measured at amortized cost

The classification depends on the Company’s business model for managing the financial assets
and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business
model in which the investment is held. For investments in equity instruments, this will depend
on whether the Company has made an irrevocable election at the time of initial recognition
to account for the equity investment at fair value through other comprehensive income. The
Company reclassifies debt investments when and only when its business model for managing
those assets changes.

b) Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for
managing the asset and the cash flow characteristics of the asset. There are three measurement
categories into which the Company classifies its debt instruments:

Amortized cost

Financial assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortized cost. Interest
income from these financial assets is included in other income using the effective interest rate
method. Any gain or loss arising on derecognition is recognized directly in profit or loss and
presented in other income / (other expenses) together with foreign exchange gains and losses.
Impairment losses are presented as separate line item in the statement of profit or loss.

ANNUAL REPORT 2021 185

 Fair value through other comprehensive income (FVTOCI)

Financial assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVTOCI. Movements in the carrying amount are taken through other comprehensive
income, except for the recognition of impairment losses (and reversal of impairment losses),
interest income and foreign exchange gains and losses which are recognized in profit or loss.
When the financial asset is de-recognized, the cumulative gain or loss previously recognized in
other comprehensive income is reclassified from equity to profit or loss and recognized in other
income / (other expenses). Interest income from these financial assets is included in other income
using the effective interest rate method. Foreign exchange gains and losses are presented in
other income/ (other expenses) and impairment losses are presented as separate line item in the
statement of profit or loss.

Fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortized cost or FVTOCI are measured at FVTPL. A
gain or loss on a debt instrument that is subsequently measured at FVTPL is recognized in profit
or loss and presented net within other income / (other expenses) in the period in which it arises.

Equity instruments

The Company subsequently measures all equity investments at fair value for financial instruments
quoted in an active market, the fair value corresponds to a market price (level 1). For financial
instruments that are not quoted in an active market, the fair value is determined using valuation
techniques including reference to recent arm’s length market transactions or transactions
involving financial instruments which are substantially the same (level 2), or discounted cash
flow analysis including, to the greatest possible extent, assumptions consistent with observable
market data (level 3).

Fair value through other comprehensive income (FVTOCI)

Where the Company’s management has elected to present fair value gains and losses on equity
investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss. Impairment losses (and reversal of impairment losses) on equity
investments measured at FVTOCI are not reported separately from other changes in fair value.

Fair value through profit or loss

Changes in the fair value of equity investments at fair value through profit or loss are recognized
in other income / (other expenses) in the statement of profit or loss as applicable.

Dividends from such investments continue to be recognized in profit or loss as other income
when the Company’s right to receive payments is established.

2.11 Financial liabilities - classification and measurement

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated
as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognized in profit or loss. Other financial
liabilities are subsequently measured at amortized cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognized in statement of profit or
loss. Any gain or loss on de-recognition is also included in profit or loss.

2.12 Impairment of financial assets

The Company recognizes loss allowances for ECLs on:

- Financial assets measured at amortized cost;
- Debt investments measured at FVOCI; and
- Contract assets.

186 KOHINOOR TEXTILE MILLS LIMITED

 The Company measures loss allowances at an amount equal to lifetime ECLs, except for the
following, which are measured at 12-month ECLs:

- Debt securities that are determined to have low credit risk at the reporting date; and

- Other debt securities and bank balances for which credit risk (i.e. the risk of default occurring
over the expected life of the financial instrument) has not increased significantly since initial
recognition.

12-month ECLs are the portion of ECLs that result from default events that are possible within
the 12 months after the reporting date (or a shorter period if the expected life of the instrument
is less than 12 months).

When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECLs, the Company considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes
both quantitative and qualitative information and analysis, based on the Company’s historical
experience and informed credit assessment and including forward-looking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it
is more than past due for a reasonable period of time. Lifetime ECLs are the ECLs that result
from all possible default events over the expected life of a financial instrument. 12-month ECLs
are the portion of ECLs that result from default events that are possible within the 12 months
after the reporting date (or a shorter period if the expected life of the instrument is less than 12
months). The maximum period considered when estimating ECLs is the maximum contractual
period over which the Company is exposed to credit risk.

The Company has elected to measure loss allowances for trade debts using IFRS 9 simplified
approach and has calculated ECLs based on lifetime ECLs. The Company has established a
matrix that is based on the Company’s historical credit loss experience, adjusted for forward-
looking factors specific to the debtors and the economic environment. When determining
whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Company considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Company’s historical experience and informed
credit assessment including forward-looking information.

Loss allowances for financial assets measured at amortized cost are deducted from the gross
carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable
expectations of recovering of a financial asset in its entirety or a portion thereof. The Company
individually makes an assessment with respect to the timing and amount of write-off based on
whether there is a reasonable expectation of recovery. The Company expects no significant
recovery from the amount written off. However, financial assets that are written off could still be
subject to enforcement activities in order to comply with the Company’s procedures for recovery
of amounts due.

At each reporting date, the Company assesses whether financial assets carried at amortised
cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when
one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of the debtor;
-  a breach of contract such as a default;
- the restructuring of a loan or advance by the Company on terms that the Company would
not consider otherwise;
- it is probable that the debtor will enter bankruptcy or other financial reorganization; or
-  the disappearance of an active market for a security because of financial difficulties.

ANNUAL REPORT 2021 187

 2.13 De-recognition of financial assets and financial liabilities

a) Financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards
of ownership and does not retain control over the transferred asset. Any interest in such de-
recognized financial assets that is created or retained by the Company is recognized as a
separate asset or liability.

b) Financial liabilities

The Company derecognizes a financial liability (or a part of financial liability) from its statement
of financial position when the obligation specified in the contract is discharged or cancelled
or expires.

2.14 Offsetting of financial instruments

Financial assets and financial liabilities are set off and the net amount is reported in the financial
statements when there is a legal enforceable right to set off and the Company intends either to
settle on a net basis or to realize the assets and to settle the liabilities simultaneously.

2.15 Investment in subsidiaries

Investments in subsidiaries are stated at cost less impairment loss, if any, in accordance with the
provisions of IAS 27 ‘Separate Financial Statements’.

2.16 Inventories

Inventories, except for stock in transit and waste stock / rags, are stated at lower of cost and
net realizable value. Cost is determined as follows:

Stores, spare parts and loose tools

Useable stores, spare parts and loose tools are valued principally at moving average cost, while
items considered obsolete are carried at nil value. Items in transit are valued at cost comprising
invoice value plus other charges paid thereon.

Stock-in-trade

Cost of raw materials, work-in-process and finished goods is determined as follows:

(i) For raw materials: Annual average basis.

(ii) For work-in-process and finished goods: Average manufacturing cost including a
portion of production overheads.

Materials in transit are valued at cost comprising invoice value plus other charges paid thereon.
Waste stock / rags are valued at net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make a sale.

2.17 Trade and other receivables

Trade debts are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any allowance for expected credit losses.

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 Other receivables are recognized at amortized cost, less any allowance for expected credit
losses.

2.18 Borrowings

Financing and borrowings are recognized initially at fair value and are subsequently stated at
amortized cost. Any difference between the proceeds and the redemption value is recognized
in the statement of profit or loss over the period of the borrowings using the effective interest
method.

2.19 Borrowing cost

Interest, mark-up and other charges on long-term finances are capitalized up to the date of
commissioning of respective qualifying assets acquired out of the proceeds of such long-term
finances. All other interest, mark-up and other charges are recognized in statement of profit or
loss.

2.20 Trade and other payables

Liabilities for trade and other amounts payable are initially recognized at fair value, which is
normally the transaction cost.

2.21 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit
accounts and other short term highly liquid instruments that are readily convertible into known
amounts of cash and which are subject to insignificant risk of changes in values.

2.22 Share capital

Ordinary shares are classified as share capital. Incremental costs directly attributable to the issue
of new shares are shown in equity as a deduction, net of tax.

2.23 Revenue from contracts with customers

i) Revenue recognition

Sale of goods

Revenue from the sale of goods is recognized at the point in time when the customer
obtains control of the goods, which is generally at the time of delivery.

Processing services

The Company provides processing services to local customers. These services are rendered
separately and the Company’s contract with the customer for services constitute a single
performance obligation.

Revenue from services is recognized at the point in time, generally at the time of dispatch.
There are no terms giving rise to variable consideration under the Company’s contracts with
its customers.

Interest

Interest income is recognized as interest accrues using the effective interest method. This
is a method of calculating the amortized cost of a financial asset and allocating the interest
income over the relevant period using the effective interest rate, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to
the net carrying amount of the financial asset.

ANNUAL REPORT 2021 189

 Dividend

Dividend on equity investments is recognized when right to receive the dividend is established.

Other revenue

Other revenue is recognized when it is received or when the right to receive payment is
established.

ii) Contract assets

Contract assets arise when the Company performs its performance obligations by transferring
goods to a customer before the customer pays its consideration or before payment is due.
Contract assets are treated as financial assets for impairment purposes.

iii) Customer acquisition costs

Customer acquisition costs are capitalized as an asset where such costs are incremental
to obtaining a contract with a customer and are expected to be recovered. Customer
acquisition costs are amortized on a straight-line basis over the term of the contract.

Costs to obtain a contract that would have been incurred regardless of whether the contract
was obtained or which are not otherwise recoverable from a customer are expensed as
incurred to profit or loss. Incremental costs of obtaining a contract where the contract term
is less than one year is immediately expensed to profit or loss.

iv) Customer fulfillment costs

Customer fulfillment costs are capitalized as an asset when all the following are met: (i)
the costs relate directly to the contract or specifically identifiable proposed contract; (ii)
the costs generate or enhance resources of the Company that will be used to satisfy
future performance obligations; and (iii) the costs are expected to be recovered. Customer
fulfillment costs are amortized on a straight-line basis over the term of the contract.

v) Right of return assets

Right of return assets represents the right to recover inventory sold to customers and is
based on an estimate of customers who may exercise their right to return the goods and
claim a refund. Such rights are measured at the value at which the inventory was previously
carried prior to sale, less expected recovery costs and any impairment.

vi) Contract liabilities

Contract liability is the obligation of the Company to transfer goods to a customer for
which the Company has received consideration from the customer. If a customer pays
consideration before the Company transfers goods, a contract liability is recognized when
the payment is made. Contract liabilities are recognized as revenue when the Company
performs its performance obligations under the contract.

vii) Refund liabilities

Refund liabilities are recognized where the Company receives consideration from a customer
and expects to refund some, or all, of that consideration to the customer. A refund liability
is measured at the amount of consideration received or receivable for which the Company
does not expect to be entitled and is updated at the end of each reporting period for changes
in circumstances. Historical data is used across product lines to estimate such returns at the
time of sale based on an expected value methodology.

190 KOHINOOR TEXTILE MILLS LIMITED

 2.24 Derivative financial instruments

Derivatives are initially recognized at fair value. Any directly attributable transaction costs are
recognized in the statement of profit or loss as incurred. They are subsequently remeasured
at fair value on regular basis and at each reporting date as a minimum, with all their gains and
losses, realized and unrealized, recognized in the statement of profit or loss.

2.25 Segment reporting

Segment reporting is based on the operating (business) segments of the Company. An operating
segment is a component of the Company that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to the
transactions with any of the Company’s other components. An operating segment’s operating
results are reviewed regularly by the chief executive officer to make decisions about resources
to be allocated to the segment and assess its performance, and for which discrete financial
information is available.

Segment results that are reported to the chief executive officer include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis. Those incomes,
expenses, assets, liabilities and other balances which cannot be allocated to a particular
segment on a reasonable basis are reported as unallocated.

The Company has three reportable business segments. Spinning (Producing different quality of
yarn using natural and artificial fibers), Weaving (Producing different quality of greige fabric using
yarn) and Processing and Home Textile (Processing greige fabric for production of printed and
dyed fabric and manufacturing of home textile articles).

Transaction among the business segments are recorded at arm’s length prices using admissible
valuation methods. Inter segment sales and purchases are eliminated from the total.

2.26  Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting
date to determine whether there is any indication of impairment. If such indication exists, the
recoverable amount of such asset is estimated. An impairment loss is recognized wherever the
carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognized
in statement of profit or loss except for impairment loss on revalued assets, which is adjusted
against the related revaluation surplus to the extent that the impairment loss does not exceed
the surplus on revaluation of that asset.

2.27 Government grants

The Company follows deferral method of accounting for government grant related to subsidized
long term loan. Government grant is initially recognized as deferred grant and measured as
the difference between the initial carrying value of the long term loan recorded at market rate
(i.e. fair value of the long term loan in this case) and the proceeds of subsidized long term loan
received. In subsequent years, the grant is recognized in statement of profit or loss, in line with
the recognition of interest expenses the grant is compensating and is presented as a reduction
of related interest expense.

2.28 Earnings per share

The Company presents earnings per share (EPS) data for its ordinary shares. EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the year.

ANNUAL REPORT 2021 191

 2.29 Contingent assets

Contingent assets are disclosed when the Company has a possible asset that arises from past
events and whose existence will only be confirmed by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the Company. Contingent assets
are not recognized until their realization becomes certain.

2.30 Contingent liabilities

Contingent liability is disclosed when the Company has a possible obligation as a result of past
events whose existence will only be confirmed by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the control of the Company. Contingent liabilities
are not recognized, only disclosed, unless the possibility of a future outflow of resources is
considered remote. In the event that the outflow of resources associated with a contingent
liability is assessed as probable, and if the size of the outflow can be reliably estimated, a
provision is recognized in the financial statements.

2.31 Dividend and other appropriations

Dividend distribution to the Company’s shareholders is recognized as a liability in the Company’s
financial statements in the period in which the dividends are declared and other appropriations
are recognized in the period in which these are approved by the Board of Directors.

3. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL

2021 2020 2021 2020
(Number of Shares) (Rupees in thousand)

1,596,672 1,596,672 Ordinary shares of Rupees 10 each allotted on

reorganization of Kohinoor Industries Limited 15,967 15,967

26,156,000 26,156,000 Ordinary shares allotted under scheme of
arrangement of merger of Part II of Maple
Leaf Electric Company Limited 261,560 261,560

26,858,897 26,858,897 Ordinary shares allotted under scheme of
arrangement of merger of K ohinoor Raiwind
Mills Limited and Kohinoor Gujar
Khan Mills Limited 268,589 268,589

75,502,560 75,502,560 Ordinary shares of Rupees 10 each issued
as fully paid bonus shares 755,025 755,025

169,182,327 169,182,327 Ordinary shares of Rupees 10 each issued
as fully paid in cash 1,691,823 1,691,823

299,296,456 299,296,456 2,992,964 2,992,964

192 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)
4. RESERVES

Composition of reserves is as follows:

Capital reserves

Share premium 4.1 986,077 986,077

Surplus on revaluation of freehold land and
investment properties:

- Freehold land

As at 01 July 2,579,452 2,579,452
Increase due to revaluation to fair value 16.1 28,730 -

As at 30 June 2,608,182 2,579,452

- Investment properties 1,263,592 1,263,592

3,871,774 3,843,044

4,857,851 4,829,121
Revenue reserves

General reserve 1,450,491 1,450,491
Unappropriated profit 10,856,251 8,698,514

12,306,742 10,149,005

17,164,593 14,978,126

4.1 This reserve can be utilized by the Company only for the purposes specified in section 81 of the
Companies Act, 2017.

2021 2020
Note (Rupees in thousand)

5. LONG TERM FINANCING

Long term loans:

From banking companies and other financial
institutions - secured 5.1 4,206,691 2,968,283
Less: Current portion shown under current liabilities 12 (1,032,717) (107,296)

3,173,974 2,860,987

ANNUAL REPORT 2021 193

 RATE OF
TOTAL NUMBER OF INTEREST
LENDER 2021 2020 INTEREST PER SECURITY
FACILITY ANNUM INSTALLMENTS PAYABLE

.....Rupees in thousand.....
5.1 Long term loans

The Bank of 128,087 129,004 600,000 SBP LTFF Sixteen equal quarterly Quarterly Joint pari passu charge
Punjab rate + installments commenced amounting to Rupees 2,000
2.50% from 09 September 2016 million (inclusive of 25% margin)
and ending on 07 November on all the fixed assets (excluding
2021. land and building) of the
Company.

384,684 387,775 400,000 SBP LTFF Thirty six equal quarterly Quarterly
rate + 1% installments commenced
from 31 January 2018 and
ending on 19 February 2030.

465,504 461,143 500,000 SBP LTFF Twenty four equal quarterly Quarterly
rate + 1% installments commenced
from 26 February 2019 and
ending on 02 July 2030.

978,275 977,922 1,500,000

The Bank of 129,600 - 400,000 3 Month Twenty four equal quarterly Quarterly Ranking charge amounting to
Punjab Kibor + 1% installments after grace Rupees 533 million (inclusive
period for every tranche from of 25% margin) on all the fixed
its date of disbursement. assets (excluding land and
building) of the Company.

MCB Bank 26,032 78,804 317,679 SBP LTFF Twenty eight equal quarterly Quarterly First pari passu charge over land
Limited rate + 2.5% installments commenced and building of Raiwind Division
from 25 November 2015 amounting to Rupees 467
and ending on 10 December million, and plant and machinery
2021. of the Company and personal
guarantees of the sponsor
directors.

MCB Bank 418,522 - 500,000 SBP TERF Twenty four equal quarterly Quarterly Ranking charge amounting to
Limited (Note rate + 1% installments commencing Rupees 667 million on all the
5.1.1) from 25 May 2023 and fixed assets (excluding land and
ending on 04 June 2031. building) of the Company.

National Bank 474,449 452,750 500,000 SBP LTFF Twelve equal half yearly Half yearly Joint pari passu charge
of Pakistan rate + installments commenced amounting to Rupees 1,624
1.25% from 30 June 2018 and million (inclusive of 25% margin)
ending on 10 February over plant and machinery of the
2025. Company.

202,710 217,530 218,000 SBP LTFF Twelve equal half yearly Half yearly
rate + installments commenced
1.25% from 27 June 2020 and
ending on 24 June 2026.

340,371 373,466 500,000 SBP LTFF Twelve equal half yearly Half yearly
rate + installments after expiry of 18
1.00% months from the date of first
disbursement.

1,017,530 1,043,746 1,218,000

National Bank 89,362 - 143,000 SBP LTFF Twelve equal half yearly Half yearly Ranking charge amounting to
of Pakistan rate + 1% installments commencing Rupees 190.667 million on all
from 18th month of first the fixed assets (excluding land
drawdown and subsequently and building) of the Company.
every 6 month or as per
SBP finalized repayment
schedule.

National Bank 18,107 - 500,000 SBP LTFF Twelve equal half yearly Half yearly Ranking charge amounting to
of Pakistan rate + 1% installments commencing Rupees 667 million on all the
from 18th month of fixed assets (excluding land and
first drawdown and building) of the Company.
subsequently every 6 month
or as per SBP finalized
repayment schedule.

PAIR 180,484 180,484 300,000 SBP LTFF Twenty four equal quarterly Quarterly Joint pari passu charge over
Investment rate + 1% installments commenced fixed assets (excluding land and
Company from 17 July 2018 and building) amounting to Rupees
Limited ending on 23 August 2025. 400 million of Rawalpindi
and Gujar Khan Division and
personal guarantees of the
sponsor directors.

54,033 - 119,500 SBP LTFF Twenty equal quarterly Quarterly

rate + 1.5% installments commencing
from 27th month of the date
of first disbursement.

234,517 180,484 419,500

194 KOHINOOR TEXTILE MILLS LIMITED

 RATE OF
TOTAL NUMBER OF INTEREST
LENDER 2021 2020 INTEREST PER SECURITY
FACILITY ANNUM INSTALLMENTS PAYABLE

.....Rupees in thousand.....

Askari Bank 172,558 211,781 350,000 SBP LTFF Thirty six equal quarterly Quarterly First pari passu charge over land
Limited rate + installments commenced and building of Raiwind Division
1.25% from 28 January 2018 and amounting to Rupees 467
ending on 31 October 2027. million, and plant and machinery
of the Company and personal
guarantees of the sponsor
directors.

Allied Bank 410,790 132,641 500,000 SBP LTFF Twenty four equal quarterly Quarterly Joint pari passu charge
Limited rate + installments commencing amounting to Rupees 2,000
1.00% from 21 July 2021 and million (inclusive of 25 % Margin)
ending on 23 June 2028. over plant and machinery of the
Company.

Allied Bank 711,398 342,905 1,000,000 SBP LTFF Eight equal quarterly Quarterly
Limited (Note rate for installments commenced
5.1.2) payment from 31 January 2021 and
of wages ending on 25 November
& salaries 2022.
+ 0.5% to
1.00%

1,122,188 475,546 1,500,000

4,206,691 2,968,283 6,848,179

5.1.1 This represents long-term loan obtained under “SBP Temporary Economic Refinance Facility”
for import of plant and machinery. The facility carries markup at the rate specified by State
Bank of Pakistan plus spread of 1% per annum. The loan has been measured at its fair value
in accordance with IFRS 9 (Financial Instruments) using market rates. The difference between
fair value of loan and loan proceeds has been recognised as deferred grant as per requirements
of IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance) and
as per selected opinion issued in November 2020 by the Institute of Chartered Accountants of
Pakistan. The reconciliation of the carrying amount is as follows:

2021 2020
(Rupees in thousand)

Balance at beginning of the year - -

Disbursements during the year 441,534 -
Repayments during the year - -

441,534 -
Discounting adjustments for recognition at fair
value - deferred government grant (23,575) -
Unwinding of discount on liability 563 -

Balance as at end of the year 418,522 -

5.1.2 These represent long-term loans obtained under SBP Refinance Scheme for payment of wages
and salaries to workers. The effective interest rate is calculated at 7.75% and the loans have
been recognised at the present value. These loans are repayable in 8 equal quarterly installments
commenced from 31 January 2021 discounted at the effective rate of interest. The difference
between fair value of loan and loan proceeds has been recognised as deferred grant as per
requirements of IAS 20 (Accounting for Government Grants and Disclosure of Government
Assistance) and as per Circular 11/2020 issued by the Institute of Chartered Accountants of
Pakistan. The reconciliation of the carrying amount is as follows:

ANNUAL REPORT 2021 195

 2021 2020
Note (Rupees in thousand)

Balance at beginning of the year 342,905 -

Disbursements during the year 657,095 342,905
Repayments during the year (250,000) -

750,000 342,905
Discounting adjustments for recognition at fair
value - deferred government grant (83,969) -
Unwinding of discount on liability 45,367 -

Balance as at end of the year 711,398 342,905

6. DEFERRED GOVERNMENT GRANTS

Government grant recognised during the year 6.1 107,544 -

Less: Amortisation of deferred government
grant during the year (45,930) -

61,614 -
Less: Current portion of deferred government grant 12 (37,327) -

24,287 -

6.1 This represents deferred government grants in respect of long term loan obtained under “SBP
Temporary Economic Refinance Facility” for import of plant and machinery and SBP Refinance
Scheme for payment of wages and salaries to workers as disclosed in note 5.1.1 & 5.1.2 to
the financial statements, respectively. There are no unfulfilled conditions or other contingencies
attached to these grants.

2021 2020
Note (Rupees in thousand)

7. GAS INFRASTRUCTURE DEVELOPMENT

CESS (GIDC) PAYABLE

Balance at the beginning of the year 250,011 250,011
Less: Gain on remeasurement of GIDC 32 (19,588) -
Add: Unwinding of discount on GIDC payable 33 13,048 -

243,471 250,011
Less: Current portion of GIDC payable 12 (229,177) (250,011)

7.1 14,294 -

7.1 This represents non-current portion of Gas Infrastructure Development Cess (GIDC) payable
to Sui Northern Gas Pipelines Limited (SNGPL). During previous years, the Company, along
with various other companies had challenged the legality and validity of levy and demand of
GIDC in Honorable Lahore High Court which was pending adjudication at the end of last year.
However, during the year Supreme Court of Pakistan vide judgement dated 13 August 2020,
while dismissing appeals filed by various industrial and commercial entities with respect to the
legality and validity of levy and demand of GIDC, has decided the case in favor of SNGPL.
Now the Company is to pay the balance amount of GIDC in 24 equal monthly installments.
This liability has been recognized at fair value using discount rate of 8.23% per annum and the
difference between the fair value and the total amount of liability is recognized in statement of
profit or loss as other income. Subsequent to initial recognition, the effect of unwinding of liability
is recognized in statement of profit or loss as finance cost.

196 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

8. DEFERRED INCOME TAX LIABILITY

This comprises of following:

Deferred tax liability on taxable temporary
differences in respect of:

Accelerated tax depreciation 694,466 568,432

Deferred tax asset on deductible temporary
differences in respect of:

Allowance for expected credit losses (21,138) (15,642)
Provision against obsolete stock in trade (1,132) (1,132)
Provision against slow moving stores, spare
parts and loose tools (1,094) (1,094)

(23,364) (17,868)

8.1 671,102 550,564

8.1 Movement in deferred tax balances is as follows:

At beginning of the year 550,564 593,732
Recognized in statement of profit or loss:
- accelerated tax depreciation on operating fixed assets 126,034 (35,384)
- allowance for expected credit losses (5,496) (7,044)
- Provision against slow moving stores, spare
parts and loose tools - (740)

34 120,538 (43,168)

671,102 550,564

Deductible temporary differences are considered to the extent that the realization of related tax
8.2
benefits is probable from reversals of existing taxable temporary differences and future taxable
profits.
2021 2020
Note (Rupees in thousand)

9. TRADE AND OTHER PAYABLES

Creditors 1,065,125 1,187,371
Accrued liabilities 508,531 467,701
Duties and taxes 451,191 396,360
Sindh infrastructure development cess 99,238 68,880
Contract liabilities - unsecured 151,146 148,422
Workers’ profits participation fund 9.1 172,343 193,553
Workers’ Welfare Fund 90,480 38,330
Payable to subsidiary company - Maple Leaf Cement
Factory Limited - net 96,779 -
Payable to subsidiary company - Maple Leaf Capital Limited 1,939 -
Withholding income tax payable 3,699 7,918
Payable to employees’ provident fund trust 4,909 10,725
Others 12,075 16,553

2,657,455 2,535,813

ANNUAL REPORT 2021 197

 This represents provision for infrastructure cess imposed by the Province of Sindh through Sindh
9.1
Finance Act, 1994 and its subsequent versions including the final version i.e. Sindh Development
and Maintenance of Infrastructure Cess Act, 2017. The Company filed writ petition in Honorable
Sindh High Court, Karachi whereby stay was granted and directions were given to provide
bank guarantees in favor of Director Excise and Taxation, Karachi. The Honorable Sindh High
Court, Karachi passed order dated 04 June 2021 against the Company and directed that bank
guarantees should be encashed. Being aggrieved by the order, the Company along with others
are in the process of filing petitions for leave to appeal before Honorable Supreme Court of
Pakistan against the Sindh High Court’s judgment in relation to Sindh infrastructure development
cess.

2021 2020
Note (Rupees in thousand)

9.2 Workers’ profits participation fund

Balance as on 01 July 193,553 197,365
Interest for the period 33 10,172 14,524
Provision for the year 31 163,719 92,622

367,444 304,511
Less: Payments during the year (195,101) (110,958)

172,343 193,553

9.2.1 The Company retains workers’ profits participation fund for its business operations till the date of
allocation to workers. Interest is paid at prescribed rate under the Companies Profits (Workers’
Participation) Act, 1968 on funds utilized by the Company till the date of allocation to workers.

2021 2020
Note (Rupees in thousand)

10. ACCRUED MARK-UP

Long term loans:

From banking companies 29,547 26,398

Short term borrowings:
From banking companies 35,474 146,985
From Maple Leaf Capital Limited - subsidiary company - 23,231

35,474 170,216

65,021 196,614

11. SHORT TERM BORROWINGS

From banking companies - secured
Short term running finances 11.1 & 11.2 46,593 1,501,348
Other short term finances 11.1 & 11.3 989,664 1,961,738
State Bank of Pakistan (SBP) refinances 11.1 & 11.4 4,519,777 3,538,802
Temporary overdraft 11.5 2,502 32,023

5,558,536 7,033,911
From subsidiary company - unsecured
Maple Leaf Capital Limited - 445,216

5,558,536 7,479,127

198 KOHINOOR TEXTILE MILLS LIMITED

 11.1 These finances are obtained from banking companies under mark up arrangements and
are secured by pledge of raw materials, charge on current assets of the Company including
hypothecation of work-in-process, stores and spares, letters of credit, firm contracts and book
debts. These form part of total credit facilities of Rupees 12,070 million (2020: Rupees 12,046
million).

11.2 The rates of mark-up range from 8.25% to 8.59% (2020: 3.46% to 20% ) per annum on balance
outstanding.

11.3 The rates of mark-up range from 2.97% to 9.21% (2020: 2.97 % to 15.41%) per annum on
balance outstanding.

11.4 The rate of mark-up is 3.0% (2020: 3.0%) per annum on balance outstanding.

11.5 This represents temporary overdraft due to cheques issued by the Company at the statement of
financial position date.

2021 2020
Note (Rupees in thousand)

12. CURRENT PORTION OF NON-CURRENT LIABILITIES

Long term financing 5 1,032,717 107,296

Deferred government grant 6 37,327 -
Current portion of GIDC payable 7 229,177 250,011

1,299,221 357,307

13. UNCLAIMED DIVIDEND

It is payable on demand.

14. TAXATION - NET

Balance as at 01 July 722,495 667,014
Add: Provision for the year 34 520,842 393,326
Less: Tax deducted at source / paid during the year (761,121) (337,845)

Balance as at 30 June 482,216 722,495

15. CONTINGENCIES AND COMMITMENTS

15.1 Contingencies

a) The Company filed an appeal before Appellate Tribunal Inland Revenue, Lahore for the tax year
2003 against order of Commissioner Inland Revenue (Appeals) (CIR(A)) dated 18 September 2008
passed under section 122 (5A) of the Income Tax Ordinance, 2001 wherein the order of the Assessing
Officer creating demand of Rupees 20.780 million was upheld. In addition to above, another appeal
for the tax year 2003 was filed by the tax department before Appellate Tribunal Inland Revenue
against the order of CIR (A) passed under section 221, through which order of the assessing officer
regarding disallowance of depreciation expense amounting to Rupees 62.666 million and penalty
levied amounting to Rupees 17.484 million had been annulled. An appeal before Appellate Tribunal
Inland Revenue is pending for hearing. No provision has been made in these financial statements as
the Company is hopeful of favorable outcome of these cases.

b) The Company filed income tax return for the tax year 2011 having tax loss amounting to Rupees
721.390 million and creating a refund of Rupees 107.808 million. Assessment under section 122 (5A)
dated 12 June 2017 of the Income Tax Ordinance, 2001 was finalized by restricting loss to Rupees

ANNUAL REPORT 2021 199

 435.435 million and reducing refund to Rupees Nil. The Company filed an appeal before CIR (A)
who granted partial relief to the Company vide order dated 08 March 2021. Another assessment
under section 122(5A) dated 14 February 2017 was finalized by creating a demand of Rupees 12.185
million. The Company filed an appeal before CIR (A) who upheld the order of assessing officer through
order dated 28 January 2021. The Company filed appeals before Honorable Appellate Tribunal Inland
Revenue against above orders which are still pending for hearing. No provision has been made in
these financial statements as the Company is hopeful of a favorable outcome.

c) The Company filed income tax return for tax year 2012 having tax loss of Rupees 766.104 million
and creating a refund of Rupees 56.126 million. An assessment under section 221 of the Income Tax
Ordinance, 2001 has been finalized on the issue that full & final tax on exports cannot be adjusted
against minimum tax @ 1% and creating demand of Rupees 49.807 million and the same has been
upheld by the CIR(A). The impugned demand has been adjusted against refund for tax year 2013.
An appeal has been filed by the Company in ATIR, which is still pending for hearing. Furthermore, an
assessment under section 122(5A) of the Income Tax Ordinance, 2001 dated 22 December 2017
has been finalized and taxable income has been assessed at Rupees 520.126 million by creating
demand of Rupees 91.535 million. The Company filed an appeal before Commissioner Inland Revenue
(Appeals) who, vide its order dated 08 March 2021, granted relief on major issues, while upheld the
order on various other issues. The Company filed appeal before the Honorable Appellate Tribunal Inland
Revenue where the case is still pending. No provision has been made in these financial statements as
the Company is hopeful of a favorable outcome.

d) The Company filed income tax return for tax year 2014 having tax loss of Rupees 178.170 million
and creating a refund of Rupees 11.051 million. An assessment under section 122(1) of the Income
Tax Ordinance, 2001 has been finalized and taxable income had been assessed at Rupees 234.312
million creating demand of Rupees 22.462 million. The Company filed an appeal before Commissioner
Inland Revenue (Appeals) who granted relief on major issues, while upheld the order on various other
issues. The Company filed appeal before the Honorable Appellate Tribunal Inland Revenue who, vide
its order dated 25 January 2021, decided the case in favour of the Company. The department has
filed appeal against this order in Lahore High Court which is pending adjudication. No provision has
been made in these financial statements as the Company is hopeful of a favorable outcome.

e) The Company has filed a petition against the National Highway Authority’s (NHA) demand for payment
of registration fee of Rupees 75 million in accordance with the National Highway Authority Act of 1991.
The argument is based on the fact that the Company is registered with relevant local bodies at the
time of its establishment and that registration with NHA is not required. Moreover, legislation cannot
be applied retrospectively to any company. A single bench of the Lahore High Court granted interim
relief in favour of the Company in its order dated 22 October 2020, and the issue is presently pending
adjudication. No provision has been made in these financial statements as the Company is hopeful of
favorable outcome.

f) The Company and tax authorities filed appeals before different appellate authorities regarding
sales tax and custom duty matters. Pending the outcome of appeals filed by the Company and tax
authorities, no provision has been made in these financial statements which on the basis adopted
by the authorities would amount to Rupees 175.619 million (2020: Rupees 87.996 million), since the
Company has strong grounds against the assessments framed by the relevant authorities.

g) The Company filed recovery suit in Lahore High Court, Rawalpindi Bench amounting to Rupees
14.683 million (2020: Rupees 14.683 million) against supplier for goods supplied by him. Pending the
outcome of the cases, no provision has been made in these financial statements since the Company
is confident about favorable outcome of the cases.

h) The Company filed suits before Civil Court, Rawalpindi and Lahore High Court, against demands
raised by Sui Northern Gas Pipelines Limited (SNGPL) amounting to Rupees 72.811 million. No
provision has been made in these financial statements, since the Company is confident about favorable
outcome.

200 KOHINOOR TEXTILE MILLS LIMITED

 i) The Company filed an appeal before Supreme Court of Pakistan against an order of Lahore High
Court, Rawalpindi Bench on an appeal filed by supplier for non-payment by the Company. The
Company has provided a guarantee of Rupees 4.254 million on the directions of Supreme Court of
Pakistan. Appeal is pending adjudication and the Company expects a favorable outcome.

j) Guarantees issued by various commercial banks, in respect of financial and operational
obligations of the Company, to various institutions and corporate bodies aggregate to Rupees
371.011 million (2020: Rupees 331.011 million).

15.2 Commitments in respect of:

a) Contracts for capital expenditures amounting to Rupees Nil (2020: Rupees 12.035 million).

b) Letters of credit for capital expenditure amounting to Rupees 927.920 million (2020: Rupees
116.522 million).

c) Letters of credit other than for capital expenditure amounting to Rupees 3,303.062 million (2020:
Rupees 424.041 million).

2021 2020
(Rupees in thousand)


16. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets (Note 16.1) 10,119,371 9,260,304
Capital work-in-progress (Note 16.2) 586,910 439,180

10,706,281 9,699,484

ANNUAL REPORT 2021 201

202
16.1 Operating fixed assets


Factory and Residential Services Computer Furniture
Freehold Office other and other Plant and and other and IT and Office
land buildings Vehicles Total
equipment
buildings buildings machinery equipment installations fixtures

-------------------------------------------------------------------- (Rupees in thousand) --------------------------------------------------------------------

At 30 June 2019

KOHINOOR TEXTILE MILLS LIMITED

Cost / revalued amount 2,739,557 37,800 1,525,290 126,352 9,949,963 49,358 115,630 80,751 53,647 245,827 14,924,175
Accumulated depreciation - (8,989) (796,523) (69,953) (4,877,293) (36,471) (93,635) (58,251) (31,753) (119,538) (6,092,406)

Net book value 2,739,557 28,811 728,767 56,399 5,072,670 12,887 21,995 22,500 21,894 126,289 8,831,769

Year ended 30 June 2020

Opening net book value 2,739,557 28,811 728,767 56,399 5,072,670 12,887 21,995 22,500 21,894 126,289 8,831,769
Additions / transfers - 1,288 122,539 11,119 833,437 400 19,260 4,791 6,899 33,353 1,033,086

Disposals:
Cost - - - - (138,073) - (291) - - (14,286) (152,650)
Accumulated depreciation - - - - 101,835 - 203 - - 10,712 112,750

- - - - (36,238) - (88) - - (3,574) (39,900)
Depreciation charge - (358) (61,917) (3,749) (462,008) (1,516) (7,499) (2,457) (2,406) (22,741) (564,651)

Closing net book value 2,739,557 29,741 789,389 63,769 5,407,861 11,771 33,668 24,834 26,387 133,327 9,260,304

At 30 June 2020

Cost / revalued amount 2,739,557 39,088 1,647,829 137,471 10,645,327 49,758 134,599 85,542 60,546 264,894 15,804,611
Accumulated depreciation - (9,347) (858,440) (73,702) (5,237,466) (37,987) (100,931) (60,708) (34,159) (131,567) (6,544,307)

Net book value 2,739,557 29,741 789,389 63,769 5,407,861 11,771 33,668 24,834 26,387 133,327 9,260,304

Year ended 30 June 2021

Opening net book value 2,739,557 29,741 789,389 63,769 5,407,861 11,771 33,668 24,834 26,387 133,327 9,260,304
Revaluation surplus (Note 4) 28,730 - - - - - - - - - 28,730
Additions / transfers - - 168,995 19,734 1,194,990 20,296 13,958 57,507 9,866 63,128 1,548,474

Disposals:
Cost - - - - (214,378) - (1,678) - - (18,540) (234,596)
Accumulated depreciation - - - - 147,666 - 795 - - 8,733 157,194

- - - - (66,712) - (883) - - (9,807) (77,402)
Depreciation charge - (369) (73,387) (4,678) (517,254) (2,373) (10,927) (5,020) (2,969) (23,758) (640,735)

Closing net book value 2,768,287 29,372 884,997 78,825 6,018,885 29,694 35,816 77,321 33,284 162,890 10,119,371

At 30 June 2021

Cost / revalued amount 2,768,287 39,088 1,816,824 157,205 11,625,939 70,054 146,879 143,049 70,412 309,482 17,147,219
Accumulated depreciation - (9,716) (931,827) (78,380) (5,607,054) (40,360) (111,063) (65,728) (37,128) (146,592) (7,027,848)

Net book value 2,768,287 29,372 884,997 78,825 6,018,885 29,694 35,816 77,321 33,284 162,890 10,119,371

Depreciation rate (%) - 5 5 - 10 5 - 10 10 10 30 10 10 20

16.1.1 Freehold land was revalued by an independent valuer Anderson Consulting (Private) Limited (Evaluators, Surveyors, Stock Inspectors, Architects & Engineers) as at 30 June 2021. Book
value of freehold land on cost basis is Rupees 160.105 million (2020: Rupees 160.105 million) as at 30 June 2021. Had there been no revaluation, the value of freehold land would have
been lower by Rupees 2,608.182 million (2020: Rupees 2,579.452 million). Forced sale value of freehold land is Rupees 2,353.044 million (2020: Rupees 2,328.623 million).
 16.1.2 Detail of operating fixed assets, exceeding the book value of Rupees 500,000 disposed of during the year is as follows:

Accumulated Net book Sale Gain/ Mode of

Description
Cost Particulars of purchasers
depreciation value proceeds (loss) disposal

---------------(Rupees
in thousand) ---------------
Plant and Machinery
Carding Crossrol MK-6 14,195 10,403 3,792 7,720 3,928 Negotiation Ideal Trading Company, Faisalabad
Schlafhorst Auto Winder RM-338 11,642 8,630 3,012 3,453 441 Negotiation Crescent Cotton Mill Limited, Faisalabad
Schlafhorst Auto Winder RM-338 22,855 17,019 5,836 4,566 (1,270) Negotiation Husnain Textile Mills (Private) Limited, Lahore
Comber Rieter E-60 Model-1995 2,203 764 1,439 1,752 313 Negotiation AN Textile Mills Limited, Faisalabad
Rieter Draw Frame RSB D-30 & SB-2 10,474 8,393 2,081 6,039 3,958 Negotiation Quetta Textile Mills Limited, Karachi
Rieter Draw Frame Rsb D-30 3,548 2,736 812 2,772 1,960 Negotiation Asher Imran Spinning Mills (Private) Limited, Lahore
Carding Crosrol MK-6 5,291 3,791 1,500 2,180 680 Negotiation Shakarganj Limited, Lahore
Mk-7 Cards Crosrol 30,555 11,483 19,072 19,110 38 Negotiation Paradise Spinning Mills (Private) Limited, Faisalabad
Auto Cone Winder Savio Orion-M 9,068 6,718 2,350 2,200 (150) Negotiation HIK Textiles (Private) Limited, Lahore
Juki - DDL-5550N - L/S 6,501 5,293 1,208 1,318 110 Negotiation Instant Print System (Private) Limited, Islamabad
Auto Cone Winder Savio Orion-L 15,039 8,782 6,257 5,200 (1,057) Negotiation HIK Textiles (Private) Limited, Lahore
Boiler-Complete 7,324 6,377 947 868 (79) Negotiation Sanadeed Trading Company, Faisalabad
Autowinder Schlafhorst RM-338 57,267 43,476 13,791 18,865 5,074 Negotiation Husnain Textile Mills (Private) Limited, Lahore
Delta Machine Single Needle Quilting 11,585 8,400 3,185 12,600 9,415 Negotiation Zubaida Industry, Karachi

207,547 142,265 65,282 88,643 23,361
Vehicles
Toyota GLI RI-15-899 1,890 1,167 723 1,870 1,147 Negotiation E.F.U. General Insurance Limited, Karachi
Toyota GLI RI-16-499 1,922 1,088 834 1,900 1,066 Negotiation E.F.U. General Insurance Limited, Karachi
Honda Vezel Hybrid AHJ-600 4,292 1,645 2,647 4,300 1,653 Negotiation Anjum Shahzad Malik, Rawalpindi
Honda City Prosmatic
LEC-18A-8700 1,986 671 1,315 1,315 - Transfer Maple Leaf Capital Limited, Lahore, Subsidiary Company
Honda Civic 1.5 TURBO-19-1919 4,656 1,358 3,298 3,298 - Transfer Maple Leaf Cement Factory Limited, Lahore, Subsidiary Company

14,746 5,929 8,817 12,683 3,866
Aggregate of other items of
operating fixed assets with
individual book values not
exceeding Rupees 500,000 12,303 9,000 3,303 8,499 5,196

234,596 157,194 77,402 109,825 32,423

ANNUAL REPORT 2021

203
 2021 2020
Note (Rupees in thousand)

16.1.3 Depreciation charged during the year has

been allocated as follows:

Cost of sales 28 594,743 524,447
Administrative expenses 30 45,992 40,204

640,735 564,651

16.1.4 Particulars of immovable properties (i.e. land and buildings) are as follows:

Location Usage of Immovable Total Area Covered Area
Property (Acres) (“000” Sqr meters)

Peshawar Road, Rawalpindi Manufacturing facilities 64.68 1,147.55
Residential and offices 56.58 832.57

8 KM, Manga Raiwind Road, Manufacturing facilities 13.22 280.26
District Kasur Residential and offices 8.11 122.58
Land 11.24 -

Gulyana Road, Gujar Khan, Manufacturing facilities 13.18 279.62
District Rawalpindi Residential and offices 23.96 177.69
Land 13.54 -

204.51 2,840.27

16.2 Capital work in progress

Civil Plant and Advances Total
works and machinery for capital
buildings expenditure

At 30 June 2019 75,150 651 - 75,801

Add: Additions during the year 201,900 727,471 - 929,371
Less: Transferred to operating fixed assets
during the year (134,946) (431,046) - (565,992)

At 30 June 2020 142,104 297,076 - 439,180

Add: Additions during the year 222,484 1,039,729 73,609 1,335,822
Less: Transferred to operating fixed assets
during the year (188,729) (927,909) (71,454) (1,188,092)

At 30 June 2021 175,859 408,896 2,155 586,910

2021 2020
Note (Rupees in thousand)

17. INVESTMENT PROPERTIES

Year ended 30 June

Opening net book value 1,792,755 1,792,755
Fair value gain 32 31,605 -

Closing net book value 1,824,360 1,792,755

17.1 The fair value of investment properties comprising land situated at Rawalpindi and Lahore have
been determined by an independent valuer, Anderson Consulting (Private) Limited (Evaluators,
Surveyors, Stock Inspectors, Architects & Engineers) as at 30 June 2021.

204 KOHINOOR TEXTILE MILLS LIMITED

 17.2 Forced sale value of these properties as at 30 June 2021 was Rupees 1,550.707 million (2020:
Rupees 1,523.843 million).

17.3 Particulars of investment properties are as follows:

Description Address Total Area Covered Area

(Acres) (Sqr feet)

Land Peshawar Road, Rawalpindi 43.95 -
Land & building 42-Lawrence Road, Lahore 4.70 26,059

48.65 26,059

2021 2020
Note (Rupees in thousand)

18. LONG TERM INVESTMENTS

Equity instruments - subsidiary companies:
Maple Leaf Cement Factory Limited - Quoted 18.1 8,578,733 8,578,733
Maple Leaf Capital Limited - Un-quoted 18.2 2,500,000 2,500,000

11,078,733 11,078,733

18.1.1 The Company holds 606,497,944 (2020: 606,497,944) ordinary shares of Rupees 10 each of
Maple Leaf Cement Factory Limited. Equity held 55.22% (2020: 55.22%).

18.2 The Company holds 250,000,000 (2020: 250,000,000) ordinary shares of Rupees 10 each of
Maple Leaf Capital Limited. Equity held 82.92% (2020: 82.92%).

19. LONG TERM DEPOSITS

Long term deposits include security deposits placed with utility companies.

2021 2020
Note (Rupees in thousand)

20. STORES, SPARE PARTS AND LOOSE TOOLS

Stores 20.1 753,418 667,422
Spare parts and loose tools 61,827 42,100

815,245 709,522
Less: Provision against slow moving stores, spare
parts and loose tools (3,772) (3,772)

811,473 705,750

20.1 This includes stores in transit of Rupees 20.999 million (2020: Rupees 26.045 million).

ANNUAL REPORT 2021 205

 2021 2020
Note (Rupees in thousand)

21. STOCK-IN-TRADE

Raw materials 21.1 & 21.3 2,202,633 2,676,123
Work-in-process 786,993 1,000,429
Finished goods 21.2 987,136 1,690,066

3,976,762 5,366,618
Less: Provision against obsolete stock in trade (3,904) (3,904)

3,972,858 5,362,714

21.1 Raw materials and finished goods include stock in transit of Rupees 17.094 million (2020:
Rupees 7.060 million) and Rupees 39.851 million (2020: Rupees 9.720 million) respectively.

21.2 Finished goods of Rupees 91.276 million (2020: Rupees 68.273 million) are being carried at
net realizable value and the aggregate amount of write-down of inventories to net realizable
value recognized as an expense during the year was Rupees 3.039 million (2020: Rupees 3.417
million).

21.3 Raw materials include stock amounting to Rupees 23.897 million (2020: Rupees 112.354
million) with external parties for processing.

2021 2020
Note (Rupees in thousand)

22. TRADE DEBTS

Considered good:

Secured (against letters of credit) 1,957,114 1,178,599
Unsecured 1,382,503 1,235,388

3,339,617 2,413,987
Less: Allowance for expected credit losses 22.2 (72,888) (53,937)

3,266,729 2,360,050

22.1 Revenue from the sale of goods is recognized at the time of delivery, while payment is generally
due with in 30 to 90 days from delivery in case of local sales, and 45 to 120 days in case of
export sales.

2021 2020
Note (Rupees in thousand)

22.2 Allowance for expected credit losses

Opening balance 53,937 29,646
Recognized during the year 31 18,951 24,291

Balance at end of year 72,888 53,937

206 KOHINOOR TEXTILE MILLS LIMITED

 22.3 As at 30 June 2021, trade debts of Rupees 676.415 million (2020: Rupees 859.924 million)
were past due but not impaired. These relate to a number of independent customers from
whom there is no recent history of default. The ageing analysis of these trade debts is as follows:

2021 2020
Note (Rupees in thousand)

Upto 1 month 433,662 249,682
1 to 6 months 233,716 598,507
More than 6 months 9,037 11,735

676,415 859,924

22.4 Default is triggered when more than 360 days have passed. As at the reporting date there were
no defaulting parties of outstanding trade debts from export sales.

22.5 The majority of export debts of the company are situated in Asia, Europe and America.

2021 2020
Note (Rupees in thousand)

23. ADVANCES

Considered good:
Employees - interest free 23.1
- Executives 328 629
- Other employees 1,584 3,141

1,912 3,770
Advances to suppliers 447,382 280,171
Letters of credit 162,909 22,384

612,203 306,325

23.1 These advances are not carried at amortized cost as the impact was considered immaterial.

2021 2020
Note (Rupees in thousand)

24. OTHER RECEIVABLES

Considered good:

Sales tax refundable 864,748 733,211
Custom duty receivable 15,993 15,993
Mark up rate support receivable from financial institutions 3,633 3,633
Export rebate 29,987 33,529
Accrued interest - 216
Duty draw back receivable 487,117 235,640
Due from subsidiary company - Maple Leaf Cement
Factory Limited - net - 35,528
Others 8,828 7,034

1,410,306 1,064,784

ANNUAL REPORT 2021 207

 25. SHORT TERM INVESTMENTS - amortized cost

These represent term deposit receipts of United Bank Limited having maturity period of one year
and carrying profit at effective rate of 6.50% (2020: 6.25%). It is under lien with the bank against
guarantees given on behalf of the Company.

2021 2020
Note (Rupees in thousand)

26. CASH AND BANK BALANCES

Cash in hand 2,854 3,447

Cash at bank:
- On current accounts 103,075 110,627
- On saving accounts 26.1 143,957 72,539

247,032 183,166

249,886 186,613

26.1 The balances in saving accounts carry rate of profit ranging from 2.34% to 5.50% (2020:
2.79% to 15.30%) per annum.

26.2 The balances in current and saving accounts include USD 64,311 (2020: USD 60,606).

26.3 The balances in saving accounts include an amount of Rupees 15.155 million (2020:
Rupees 15.155 million) held under lien against guarantees issued by the bank on behalf
of the Company.

2021 2020
Note (Rupees in thousand)

27. REVENUE

Revenue from contracts with customers:

- Export sales 11,949,562 9,182,133
- Local sales 27.1 17,639,406 12,491,415

29,588,968 21,673,548
Export rebate 88,353 54,503
Duty draw back 278,204 116,759

29,955,525 21,844,810

27.1 Local sales 20,657,745 14,626,088

Less: sales tax (3,018,339) (2,134,673)

17,639,406 12,491,415

208 KOHINOOR TEXTILE MILLS LIMITED

 27.2 Disaggregation of revenue

In the following table, revenue is disaggregated by primary geographical market, major products and service lines and timing of revenue recognition. The table also includes a
reconciliation of the disaggregated revenue with the Company’s reportable segments (Note 40).

Processing and
Spinning
Weaving Home Textile Company
2021 2020 2021 2020 2021 2020 2021 2020

------------------------------------- ( R u p e e s in t h o u s a n d ) -------------------------------------
Primary geographical markets

Europe - - 1,917,794 1,639,883 2,027,775 3,363,884 3,945,569 5,003,767
United States of America and Canada - - 162,987 - 4,887,395 3,158,376 5,050,382 3,158,376
Asia, Africa, Australia - - 260,652 10,765 2,692,959 1,009,225 2,953,611 1,019,990
Pakistan 14,463,555 10,279,559 2,998,046 2,074,595 177,805 137,261 17,639,406 12,491,415
Export rebate and duty draw back - - - - 366,557 171,262 366,557 171,262

14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 29,955,525 21,844,810

Major product / service lines
Yarn 14,393,124 10,156,699 - - - - 14,393,124 10,156,699
Greige fabric - - 5,339,479 3,725,243 - - 5,339,479 3,725,243
Made-ups - - - - 9,229,624 7,285,754 9,229,624 7,285,754
Finished fabric - - - - 492,058 341,443 492,058 341,443
Processing income - - - - 21,654 11,956 21,654 11,956
Waste 70,431 122,860 - - 42,598 29,593 113,029 152,453
Export rebate and duty draw back - - - - 366,557 171,262 366,557 171,262

14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 29,955,525 21,844,810

Revenue from contracts with customers 14,463,555 10,279,559 5,339,479 3,725,243 9,785,934 7,668,746 29,588,968 21,673,548
Export rebate and duty draw back - - - - 366,557 171,262 366,557 171,262

14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 29,955,525 21,844,810

Timing of revenue recognition

Products transferred at a point in time 14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 29,955,525 21,844,810
Products and services transferred over time - - - - - - - -

External revenue as reported 14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 29,955,525 21,844,810

Revenue is recognised at point in time as per the terms and conditions of underlying contracts with customers.

27.3 The amount of Rupees 119.780 million included in contract liabilities (Note 9) at 30 June 2020 has been recognised as revenue in 2021 (2020: Rupees 84.266 million).

ANNUAL REPORT 2021

209
 2021 2020
Note (Rupees in thousand)

28. COST OF SALES

Raw materials consumed 28.1 14,428,347 12,023,445
Salaries, wages and other benefits 28.2 2,162,983 1,919,598
Processing charges 44,409 61,487
Stores, spare parts and loose tools consumed 1,799,876 1,353,285
Packing materials consumed 817,914 576,704
Fuel and power 2,796,886 2,400,944
Repair and maintenance 153,154 172,136
Insurance 27,855 32,495
Other factory overheads 80,364 21,206
Depreciation 16.1.3 594,743 524,447

22,906,531 19,085,747
Work-in-process
Opening stock 1,000,429 800,016
Closing stock (786,993) (1,000,429)

213,436 (200,413)

Cost of goods manufactured 23,119,967 18,885,334

Finished goods
Opening stock 1,690,066 659,362
Closing stock (987,136) (1,690,066)

702,930 (1,030,704)

Cost of sales 23,822,897 17,854,630

28.1 Raw materials consumed

Opening stock 2,676,123 2,358,873
Add: Purchased during the year 13,954,857 12,340,695

16,630,980 14,699,568
Less: Closing stock (2,202,633) (2,676,123)

14,428,347 12,023,445

28.2 Salaries, wages and other benefits include provident fund contribution of Rupees 52.155 million
(2020: Rupees 45.967 million) by the Company.

210 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

29. DISTRIBUTION COST

Salaries and other benefits 29.1 103,725 87,822

Outward freight and handling 69,818 30,975
Clearing and forwarding 838,319 427,315
Commission to selling agents 157,918 209,315
Travelling and conveyance 999 9,116
Insurance 13,750 5,094
Vehicles’ running 3,959 3,187
Electricity, gas and water 3,090 2,458
Postage, telephone and fax 3,153 4,185
Sales promotion and advertisement 15,536 32,033
Miscellaneous 8,123 10,109

1,218,390 821,609

29.1 Salaries and other benefits include provident fund contribution of Rupees 4.175 million
(2020: Rupees 3.607 million) by the Company.

2021 2020
Note (Rupees in thousand)

30. ADMINISTRATIVE EXPENSES

Salaries and other benefits 30.1 371,397 326,757
Travelling and conveyance 9,399 21,141
Repair and maintenance 12,810 43,947
Rent, rates and taxes 17,369 5,738
Insurance 12,135 11,899
Vehicles’ running 20,300 17,182
Printing, stationery and periodicals 8,718 7,229
Electricity, gas and water 10,302 8,563
Postage, telephone and fax 9,760 8,930
Legal and professional 33,265 24,495
Security, gardening and sanitation 39,902 40,835
Depreciation 16.1.3 45,992 40,204
Miscellaneous 51,774 45,547

643,123 602,467

30.1 Salaries and other benefits include provident fund contribution of Rupees 9.286 million
(2020: Rupees 8.322 million) by the Company.

30.2 The Company has shared expenses aggregating to Rupees 14.050 million (2020: Rupees
22.152 million) on account of combined offices with the Maple Leaf Cement Factory Limited
- subsidiary company. These expenses have been recorded in respective accounts.

ANNUAL REPORT 2021 211

 2021 2020
Note (Rupees in thousand)

31. OTHER EXPENSES

Auditor’s remuneration 31.1 2,435 2,385
Donations 31.2 & 31.3 10,623 16,046
Allowance for expected credit losses 22.2 18,951 24,291
Impact of de-recognition of financial instrument
carried at amortized cost - 19
Workers’ profits participation fund 9.2 163,719 92,622
Workers’ welfare fund 69,340 38,330
Exchange loss - net 123,241 4,852

388,309 178,545

31.1 Auditors’ remuneration

Audit fee 2,100 1,900

Reimbursable expenses 335 335
Certifications - 150

2,435 2,385

31.2 It represents donation amounting to Rupees 10.473 million to Gulab Devi Chest Hospital, Lahore
and Rupees 0.15 million to Eduljee Dinshaw Road Project Trust (2020: Rupees 15.546 million to
Gulab Devi Chest Hospital and Rupees 0.5 million to Prime Minister’s Corona Relief Fund).

31.3 None of the directors and their spouses have any interest in the donee’s fund.

2021 2020
Note (Rupees in thousand)

32. OTHER INCOME

Income from financial assets:

Return on bank deposits 14,128 47,152
Return on term deposit receipts 6,242 6,832
Interest income on loans and advances to Maple Leaf
Cement Factory Limited - 21,297
Dividend income from Maple Leaf Cement Factory Limited - 163,918

20,370 239,199
Income from non-financial assets:

Scrap sales 74,706 47,168
Gain on disposal of operating fixed assets 16.1.2 32,423 6,330
Gain on sale of stores and spares - 814
Gain on remeasurement of investment properties 17 31,605 -
Gain on remeasurement of GIDC payable 7 19,588 -

158,322 54,312

178,692 293,511

212 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

33. FINANCE COST

Mark-up / finance charges / interest on:
Long term financing 117,362 97,358
Short term borrowings from banking companies 448,047 557,865
Short term borrowing from Maple Leaf Capital Limited 2,004 80,308
Unwinding of discount on GIDC payable 7 13,048 -
Workers’ profits participation fund 9.2 10,172 14,524

590,633 750,055
Bank charges and commission 73,156 52,814

663,789 802,869

34. TAXATION

Current tax:
- Current year 578,130 393,326
- Prior year (57,288) -

14 520,842 393,326
Deferred tax 8.1 120,538 (43,168)

34.1 641,380 350,158

34.1 Reconciliation of tax charge for the year

Profit before tax 3,397,709 1,878,201

Tax on profit @ 29% (2020: 29%) 985,336 544,678
Tax effect of lower rate on income from exports (332,560) (205,245)
Tax effect of prior year adjustment (57,288) -
Tax effect of permanent differences 44,166 -
Others 1,726 10,725

641,380 350,158


35. EARNINGS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic earnings per share which is based on:

2021 2020

Profit attributable to ordinary shares RUPEES IN THOUSAND 2,756,329 1,528,043

Weighted average number of ordinary shares NUMBERS 299,296,456 299,296,456

Earnings per share RUPEES 9.21 5.11

ANNUAL REPORT 2021 213

 2021 2020
Note (Rupees in thousand)

36. CASH GENERATED FROM OPERATIONS

Profit before taxation 3,397,709 1,878,201

Adjustment for non-cash charges and other items:
Depreciation 640,735 564,651
Finance cost 663,789 802,869
Gain on disposal of operating fixed assets (32,423) (6,330)
Return on term deposit receipts (6,242) (6,832)
Dividend income from Maple Leaf Cement Factory
Limited - subsidiary company - (163,918)
Return on bank deposits (14,128) (47,152)
Allowance for expected credit losses 18,951 24,291
Gain on remeasurement of investment properties (31,605) -
Impact of de-recognition of financial instrument
carried at amortized cost - 19
Working capital changes 36.1 (181,807) (2,417,730)

4,454,979 628,069
36.1 Working capital changes

(Increase) / decrease in current assets:
Stores, spare parts and loose tools (105,723) (140,313)
Stock-in-trade 1,389,856 (1,548,367)
Trade debts (925,630) (929,222)
Advances (305,878) 63,946
Short term prepayments (3,796) 13,275
Other receivables (345,738) (529,496)

(296,909) (3,070,177)

Increase in trade and other payables 115,102 652,447

(181,807) (2,417,730)

36.2 Reconciliation of movement of liabilities to cash flows arising from financing activities

2021
Liabilities from financing activities
Long term Short term Deferred Unclaimed
financing borrowings government dividend Total
grant

- -------------- (Rupees in thousand) ---------------

Balance as at 01 July 2020 2,968,283 7,479,127 - 29,769 10,477,179
Proceeds from long term financing 1,611,794 - - - 1,611,794
Repayment of long term financing (419,316) - - - (419,316)
Grant received during the year - - 107,544 - 107,544
Short term borrowings - net - (1,920,591) - - (1,920,591)
Dividend declared - - - 598,592 598,592
Amortisation of deferred government
grant during the year 45,930 - (45,930) - -
Dividend paid - - - (597,769) (597,769)

Balance as at 30 June 2021 4,206,691 5,558,536 61,614 30,592 9,857,433

214 KOHINOOR TEXTILE MILLS LIMITED

 2020
Liabilities from financing activities
Long term Short term Unclaimed
financing borrowings dividend Total

------------ (Rupees in thousand) ------------


Balance as at 01 July 2019 1,946,718 3,141,523 23,584 5,111,825
Proceeds from long term financing 1,414,291 - - 1,414,291
Repayment of long term financing (392,726) - - (392,726)
Short term borrowings - net - 4,337,604 - 4,337,604
Dividend declared - - 523,768 523,768
Dividend paid - - (517,583) (517,583)

Balance as at 30 June 2020 2,968,283 7,479,127 29,769 10,477,179

37. REMUNERATION OF CHIEF EXECUTIVE OFFICER, DIRECTORS AND EXECUTIVES

The aggregate amounts charged in these financial statements in respect of remuneration including
certain benefits to the Chief Executive Officer, Directors and Executives of the Company are given
below:

Chief Executive Officer Directors Executives
2021 2020 2021 2020 2021 2020

-----------------( Rupees in Thousand )----------------

Managerial remuneration 23,265 19,800 23,829 20,093 118,010 90,600

Allowances

House rent 3,941 3,960 1,644 1,980 25,961 19,415
Medical - - 1,220 1,019 11,568 8,887
Utilities 8,326 6,393 8,302 6,844 24,839 18,974
Special allowance 6,847 5,940 8,511 6,597 32,232 24,760
Contribution to provident fund 1,938 1,649 1,985 1,674 9,763 7,468

44,317 37,742 45,491 38,207 222,373 170,104

Number of persons 1 1 2 2 52 40

Chief Executive Officer and Directors are provided with the Company’s maintained vehicles, free medical
facilities and residential telephone facilities for both business and personal use. Chief Executive Officer
is also provided with free furnished accommodation along with utilities.

Executives are provided with the Company’s maintained vehicles in accordance with the Company’s
policy.

The aggregate amount charged in these financial statements in respect of directors’ meeting fee paid
to 2 (2020: 1) non-executive directors was Rupees 324,998 (2020: Rupees 111,110).

No remuneration was paid to non-executive directors of the Company.

ANNUAL REPORT 2021 215

 38. TRANSACTIONS WITH RELATED PARTIES

38.1 The related parties comprise of subsidiary companies, associated undertakings, directors of the
Company and their close relatives, key management personnel and staff retirement fund. Detail
of transactions with related parties, other than those which have been specifically disclosed
elsewhere in these financial statements are as follows:

2021 2020
(Rupees in thousand)

Subsidiary companies

Maple Leaf Cement Factory Limited
Purchase of goods and services 144,968 114,281
Investment made - 3,343,934
Sale of property, plant and equipment 3,533 -
Dividend income - 163,918
Expenses paid by Maple Leaf Cement Factory Limited
on behalf of the Company 5,265 -
Common expenses 14,050 22,152
Loan given - 870,000
Receipts against loan - 870,000
Mark up charged on loans - 21,297

Maple Leaf Capital Limited
Loan obtained - 1,250,000
Loan repaid 445,216 804,784
Mark-up on loans 2,004 80,308
Purchase of property, plant and equipment 3,533 -
Sale of property, plant and equipment 1,594 -

Post employment benefit plan
Contribution to provident fund 65,616 57,896

38.2 The related party status of outstanding balances as at 30 June 2021 are included in trade and
other payables (note 9) and long term investments (note 18). The receivables and payables are
primarily unsecured in nature.

38.3 Following are the related parties with whom the Company had entered into transactions or have
arrangements / agreements in place.

Transactions entered or
agreements and / or arrangements Aggregate
Basis of in place during the financial year
Company name % of
relationship ended shareholding
2021 2020

Maple Leaf Capital Limited Subsidiary Yes Yes 82.92%
Maple Leaf Cement Factory Limited Subsidiary Yes Yes 55.22%

38.4 The Saim Family Trust, British Virgin Islands (BVI) through Mercury Management Inc., BVI and
Hutton Properties Limited, BVI (related parties) holds 73,390,896 [24.52%] (2020: 73,390,896)
and 49,639,992 [16.59%] (2020: 49,639,992) ordinary shares respectively of the Company on
which dividend amounting to Rupees 146,781,792 (2020: Rupees 128,434,068) and Rupees
99,279,984 (2020: Rupees 86,869,986) respectively was paid during the year.

216 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
39. PLANT CAPACITY AND ACTUAL PRODUCTION

SPINNING:

- Rawalpindi Division (NUMBERS)

Spindles (average) installed / worked 85,680 85,680

(KILOGRAMS IN THOUSAND)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,098 shifts) 45,337 46,185
Actual production converted into 20s count based on
3 shifts per day for 1,094 shifts (2020: 1,056 shifts) 41,252 36,324

(NUMBERS)

Rotors (average) installed / worked 2,712 2,712

(KILOGRAMS IN THOUSAND)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,098 shifts) 6,037 4,514
Actual production converted into 20s count based on
3 shifts per day for 1,094 shifts (2020: 1,056 shifts) 5,284 3,486

- Gujar Khan Division (NUMBERS)

Spindles (average) installed / worked 72,864 72,864

(KILOGRAMS IN THOUSAND)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,098 shifts ) 41,944 41,449
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,050 shifts) 37,773 34,382

WEAVING:

- Raiwind Division (NUMBERS)

Looms installed / worked 288 288

(SQUARE METERS IN
THOUSAND)

100% plant capacity at 60 picks based on 3 shifts per
day for 1,095 shifts (2020: 1,098 shifts) 104,909 104,909
Actual production converted to 60 picks based on
3 shifts per day for 1,095 shifts (2020: 939 shifts) 98,283 85,439

ANNUAL REPORT 2021 217

 PROCESSING OF CLOTH :

- Rawalpindi Division (METERS IN THOUSAND)

Capacity at 3 shifts per day for 1,095 shifts (2020: 1,098 shifts) 42,090 42,090
Actual production at 3 shifts per day for 1,095 shifts
(2020: 1,098 shifts) 17,525 18,468

POWER PLANT:

- Rawalpindi Division (MEGA WATTS)

Annual rated capacity based on 365 days (2020: 366 days) 241,706 224,186
Actual generation
Furnace engines 31,862 35,476
Gas engines 21,257 18,355
Solar 7,129 2,995

- Raiwind Division

Annual rated capacity based on 365 days (2020: 366 days) 96,360 96,360
Actual generation 30,221 37,340

- Gujar Khan Division

Annual rated capacity based on 30 days (2020: Nil days) 1,584 -
Actual generation - solar 240 -

Stitching

The plant capacity of this division is indeterminable due to multi-product plant involving varying
processes of manufacturing and run length of order lots.

REASONS FOR LOW PRODUCTION

- Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality.

- Cloth processing units working capacity was limited to actual export / local orders in hand.

- The generation of power was limited to actual demand.

218 KOHINOOR TEXTILE MILLS LIMITED


40. SEGMENT INFORMATION Processing and Elimination of inter-
Spinning Weaving Home Textile segment transactions Company
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

----------------------------------------------- ( R u p e e s in t h o u s a n d ) -------------------------------------------------
REVENUE:
EXTERNAL 14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 - - 29,955,525 21,844,810
INTER-SEGMENT
806,245 1,668,855 1,531,164 1,617,139 7,764 2,656 (2,345,173) (3,288,650) - -
15,269,800 11,948,414 6,870,643 5,342,382 10,160,255 7,842,664 (2,345,173) (3,288,650) 29,955,525 21,844,810
COST OF SALES (11,661,101) (10,034,763) (6,070,009) (4,828,446) (8,436,960) (6,280,071) 2,345,173 3,288,650 (23,822,897) (17,854,630)

GROSS PROFIT 3,608,699 1,913,651 800,634 513,936 1,723,295 1,562,593 - - 6,132,628 3,990,180

DISTRIBUTION COST (44,737) (38,707) (133,372) (77,448) (1,040,281) (705,454) - - (1,218,390) (821,609)
ADMINISTRATIVE EXPENSES (267,920) (231,156) (148,429) (144,785) (226,774) (226,526) - - (643,123) (602,467)

(312,657) (269,863) (281,801) (222,233) (1,267,055) (931,980) - - (1,861,513) (1,424,076)
PROFIT BEFORE TAX AND UNALLOCATED
INCOME AND EXPENSES 3,296,042 1,643,788 518,833 291,703 456,240 630,613 - - 4,271,115 2,566,104

UNALLOCATED INCOME AND EXPENSES
OTHER EXPENSES (388,309) (178,545)
OTHER INCOME 178,692 293,511
FINANCE COST (663,789) (802,869)
TAXATION (641,380) (350,158)

(1,514,786) (1,038,061)

PROFIT AFTER TAXATION 2,756,329 1,528,043

40.1 Reconciliation of reportable segment assets and liabilities

Processing and
Spinning
Weaving Home Textile Company

2021 2020 2021 2020 2021 2020 2021 2020

--------------------------------- ( R u p e e s in t h o u s a n d ) ---------------------------------------

TOTAL ASSETS FOR REPORTABLE SEGMENT 6,987,209 6,997,298 3,619,156 3,176,202 5,555,619 4,967,109 16,161,984 15,140,609

UNALLOCATED ASSETS 17,972,271 17,563,157

TOTAL ASSETS AS PER STATEMENT OF FINANCIAL POSITION 34,134,255 32,703,766

All segment assets are allocated to reportable segments other than those directly relating to corporate and tax assets.

TOTAL LIABILITIES FOR REPORTABLE
SEGMENT 3,581,834 2,206,675 781,283 2,302,479 6,089,278 6,901,316 10,452,395 11,410,470

UNALLOCATED LIABILITIES 3,524,303 3,322,206

TOTAL LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION 13,976,698 14,732,676

All segment liabilities are allocated to reportable segments other than trade and other payables and deferred tax liabilities.

ANNUAL REPORT 2021

219
 40.2 Geographical Information

40.2.1 The Company’s revenue from external customers by geographical location is detailed in note
27.2 to the financial statements.

40.2.2 All non-current assets as at reporting date are located and operated in Pakistan.

40.3 Revenue from major customers

Revenue from major customers whose revenue accounts for more than 10% of the segment’s
revenue in Weaving segment was Rupees 1,462 million (2020: Rupees 1,109 million ) whereas
in the Processing and Home Textile segment was Rupees 4,301 million (2020: Rupees 2,696
million).

40.4 Based on the judgment made by the management printing, dyeing and home textile operating
segments of the Company have been aggregated into a single operating segment namely
‘Processing and Home Textile’ as these segments have similar economic characteristics in
respect of nature of the products, nature of production process, type of customers, method of
distribution and nature of regulatory environment.

41. PROVIDENT FUND

As at the reporting date, all investments out of provident fund have been made in accordance with
the section 218 of the Companies Act, 2017 and the regulations formulated for this purpose by the
Securities and Exchange Commission of Pakistan.

2021 2020
42. NUMBER OF EMPLOYEES

Number of employees as at 30 June 5,475 5,392

Average number of employees during the year 5,463 5,267

43. FINANCIAL RISK MANAGEMENT

43.1 Financial risk factors

The Company’s activities expose it to a variety of financial risks: market risk (including currency
risk, other price risk and interest rate risk), credit risk and liquidity risk. The Company’s overall
risk management programme focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the Company’s financial performance. The Company uses
derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by the Company’s finance department under policies approved
by the Board of Directors. The Company’s finance department evaluates and hedges financial
risks. The Board provides principles for overall risk management, as well as policies covering
specific areas such as currency risk, other price risk, interest rate risk, credit risk, liquidity risk,
use of derivative financial instruments and non-derivative financial instruments and investment
of excess liquidity.

220 KOHINOOR TEXTILE MILLS LIMITED

 (a) Market risk

(i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. Currency risk arises mainly from future
commercial transactions or receivables and payables that exist due to transactions in foreign
currencies.

The Company is exposed to currency risk arising from various currency exposures, primarily with
respect to the United States Dollar (USD) and Euro. Currently, the Company’s foreign exchange
risk exposure is restricted to bank balances and the amounts receivable / payable from / to the
foreign entities. The Company’s exposure to currency risk was as follows:

2021 2020

Cash at banks - USD 64,311 60,606
Trade debts - USD 9,314,959 3,998,000
Trade debts - EURO 421,175 -
Net exposure - USD 9,379,270 4,058,606
Net exposure - EURO 421,175 -

The following significant exchange rates were
applied during the year:

Rupees per US Dollar
Average rate 160.22 157.03
Reporting date rate 157.80 168.75

Rupees per Euro
Average rate 188.53 -
Reporting date rate 188.12 -

Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5% against the
USD and Euro with all other variables held constant, the impact on profit after taxation for the
year would have been Rupees 69.567 million and Rupees 3.724 million (2020: Rupees 32.195
million and Rupees Nil) respectively higher / lower, mainly as a result of exchange gains / losses
on translation of foreign exchange denominated financial instruments. Currency risk sensitivity
to foreign exchange movements has been calculated on a symmetric basis. In management’s
opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year end
exposure does not reflect the exposure during the year.

(ii) Other price risk

Other price risk represents the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market prices (other than those arising from interest rate risk
or currency risk), whether those changes are caused by factors specific to the individual financial
instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
As at 30 June 2021 the Company is not exposed to commodity price risk.

ANNUAL REPORT 2021 221

 (iii) Interest rate risk

This represents the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.

The Company’s interest rate risk arises from long term financing, short term borrowings and
bank balances in saving accounts. Financial instruments at variable rates expose the Company
to cash flow interest rate risk. Financial instruments at fixed rate expose the Company to fair
value interest rate risk.

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

2021 2020
(Rupees in thousand)

Fixed rate instruments

Financial assets

Term deposit receipts 133,866 82,797
Financial liabilities
Long term financing 4,077,091 2,625,378
Short term borrowings 4,519,777 3,538,802

Floating rate instruments

Financial assets

Bank balances - saving accounts 143,957 72,539

Financial liabilities

Long term financing 129,600 342,905
Short term borrowings 1,036,257 3,908,302

Fair value sensitivity analysis for fixed rate instruments

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

Cash flow sensitivity analysis for variable rate instruments

If interest rate at the year end date, fluctuates by 1% higher / lower with all other variables
held constant, profit after taxation for the year would have been Rupees 5.861 million (2020:
Rupees 31.195 million) lower / higher, mainly as a result of higher / lower interest on floating rate
financial instruments. This analysis is prepared assuming the amounts of financial instruments
outstanding at reporting date were outstanding for the whole year.

222 KOHINOOR TEXTILE MILLS LIMITED

 (b) Credit risk

Credit risk represents the risk that one party to a financial instrument will cause a financial loss
for the other party by failing to discharge an obligation. The carrying amount of financial assets
represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was as follows:
2021 2020
(Rupees in thousand)

Trade debts 3,266,729 2,360,050

Investments 133,866 82,797
Deposits 52,961 52,958
Advances 1,912 3,770
Other receivables 8,828 42,778
Bank balances 247,032 183,166

3,711,328 2,725,519

The credit quality of financial assets that are neither past due nor impaired can be assessed by
reference to external credit ratings (if available) or to historical information about counterparty
default rate:

Rating 2021 2020

Short term Long term Agency (Rupees in thousand)

Banks
Al-Baraka Bank (Pakistan) Limited A1 A PACRA 15,198 14,820
Allied Bank Limited A1+ AAA PACRA 4,724 675
Askari Bank Limited A1+ AA+ PACRA 6,862 5,251
Bank Alfalah Limited A1+ AA+ PACRA 13,501 8,592
Bank Al-Habib Limited A1+ AA+ PACRA 26,753 21,962
Bank Islami Pakistan Limited A1 A+ PACRA 31 30
Faysal Bank Limited A1+ AA PACRA 751 259
Habib Bank Limited A-1+ AAA JCR-VIS 9,028 11,275
MCB Bank Limited A1+ AAA PACRA 73,103 66,262
Meezan Bank Limited A-1+ AA+ JCR-VIS 41,505 11,313
National Bank of Pakistan A1+ AAA PACRA 7,759 10,391
MCB Islamic Bank Limited A1 A PACRA 27,854 25,595
Silkbank Limited A-2 A- JCR-VIS 48 -
The Bank of Punjab A1+ AA+ PACRA 9,309 2,031
Habib Metropolitan Bank Limited A1+ AA+ PACRA 2,097 2,196
Samba Bank Limited A-1 AA JCR-VIS 19 -
United Bank Limited A-1+ AAA JCR-VIS 8,490 2,514

247,032 183,166

Investments
United Bank Limited - term deposit receipts A-1+ AAA JCR-VIS 133,866 82,797

The Company applies the IFRS 9 simplified approach to measure expected credit losses which uses
a lifetime expected loss allowance for all trade debts.

To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics and the days past due. These trade receivables are netted off with the collateral
obtained from these customers to calculate the net exposure towards these customers. The Company
has concluded that the expected loss rates for trade debts against local sales are different from the
expected loss rates for trade debts against export sales.

The expected loss rates are based on the payment profiles of sales over a period of 36 months
before 30 June 2021 and the corresponding historical credit losses experienced within this period. The

ANNUAL REPORT 2021 223

 historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of the customers to settle the receivables. The Company has identified
the Gross Domestic Product, Unemployment, Interest, and the inflation Index of the country in which
it majorly sells its goods and services to be the most relevant factors, and accordingly adjusts the
historical loss rates based on expected changes in these factors.

On that basis, the loss allowance as at 30 June 2021 and 30 June 2020 was determined as follows:

At 30 June 2021
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (RUPEES IN % (RUPEES IN
THOUSAND) THOUSAND)

Not past due 0.00% 23,322 - 0.00% - -

Up to 30 days 9.19% 246,596 22,660 0.00% - -
31 to 60 days 12.25% 63,132 7,736 0.00% - -
61 to 90 days 24.34% 32,333 7,870 0.00% - -
91 to 180 days 37.98% 78,035 29,640 0.00% - -
181 to 360 days 54.73% 1,091 597 0.00% - -
Above 360 days 100.00% 4,385 4,385 0.00% - -

448,894 72,888 - -

Trade debts which are not
subject to risk of default 1,406,804 - 1,483,919 -

1,855,698 72,888 1,483,919 -

At 30 June 2020
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (RUPEES IN % (RUPEES IN
THOUSAND) THOUSAND)

Not past due 0.00% 5,816 - 0.00% - -

Up to 30 days 9.58% 121,189 11,604 0.00% - -
31 to 60 days 18.21% 60,596 11,032 0.00% - -
61 to 90 days 31.87% 27,529 8,774 0.00% - -
91 to 180 days 42.76% 30,821 13,178 0.00% - -
181 to 360 days 76.24% 5,285 4,030 0.00% - -
Above 360 days 100.00% 5,319 5,319 0.00% - -

256,555 53,937 - -

Trade debts which are not
subject to risk of default 1,369,366 - 788,066 -

1,625,921 53,937 788,066 -

Due to the Company’s long standing business relationships with these counter parties and after giving
due consideration to their strong financial standing, management does not expect non-performance
by these counter parties on their obligations to the Company. Accordingly, the credit risk is minimal.

224 KOHINOOR TEXTILE MILLS LIMITED

(c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities.

The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through
an adequate amount of committed credit facilities. At 30 June 2021, the Company had Rupees 9,091
million (2020: Rupees 6,912 million) available borrowing limits from financial institutions and Rupees
249.886 million (2020: Rupees 186.613 million) cash and bank balances. The management believes
the liquidity risk to be low. Following are the contractual maturities of financial liabilities, including
interest payments. The amount disclosed in the table are undiscounted cash flows:

Contractual maturities of financial liabilities as at 30 June 2021.

Carrying Contractual 6 month 6-12 1-2 More than

amount cash flows or less month Year 2 Years
------------------- (Rupees in thousand) --------------------
Non-derivative financial liabilities:

Long term financing 4,206,691 4,618,407 590,942 556,801 870,407 2,600,257
Trade and other payables 1,684,449 1,684,449 1,684,449 - - -
Accrued mark-up 65,021 65,021 65,021 - - -
Short term borrowings 5,558,536 5,611,468 5,611,468 - - -
Unclaimed dividend 30,592 30,592 30,592 - - -

11,545,289 12,009,937 7,982,472 556,801 870,407 2,600,257

Contractual maturities of financial liabilities as at 30 June 2020

Carrying Contractual 6 month 6-12 1-2 More than

amount cash flows or less month Year 2 Years

------------------- (Rupees in thousand) --------------------

Non-derivative financial liabilities:

Long term financing 2,968,283 3,235,415 42,652 142,875 731,403 2,318,485
Trade and other payables 1,671,625 1,671,625 1,671,625 - - -
Accrued mark-up 196,614 196,614 196,614 - - -
Short term borrowings 7,479,127 7,664,417 7,432,566 231,851 - -
Unclaimed dividend 29,769 29,769 29,769 - - -

12,345,418 12,797,840 9,373,226 374,726 731,403 2,318,485

The contractual cash flows relating to the above financial liabilities have been determined on the basis
of interest rates / mark-up rates effective as at 30 June 2021. The rates of interest / mark up have been
disclosed in note 5.1 and note 11 to these financial statements.

ANNUAL REPORT 2021 225

 43.2 Financial instruments by categories
Financial assets at
amortized cost
2021 2020
(Rupees in thousand)

Trade debts 3,266,729 2,360,050

Investments 133,866 82,797
Deposits 52,961 52,958
Advances 1,912 3,770
Other receivables 8,828 42,778
Cash and bank balances 249,886 186,613

3,714,182 2,728,966

Financial liabilities at
amortized cost
2021 2020
(Rupees in thousand)

Long term financing 4,206,691 2,968,283
Trade and other payables 1,684,449 1,671,625
Accrued mark-up 65,021 196,614
Short term borrowings 5,558,536 7,479,127
Unclaimed dividend 30,592 29,769

11,545,289 12,345,418

43.3 Reconciliation to the line items presented in the statement of financial position is as follows:

2021 2020
Financial Non- Total Financial Non- Total
assets financial as per assets financial as per
assets statement assets statement
of financial of financial
position position
----- RUPEES IN THOUSAND ----- ----- RUPEES IN THOUSAND -----
Assets as per statement of
financial position

Trade debts 3,266,729 - 3,266,729 2,360,050 - 2,360,050
Investments 133,866 - 133,866 82,797 - 82,797
Deposits 52,961 - 52,961 52,958 - 52,958
Advances 1,912 610,291 612,203 3,770 302,555 306,325
Other receivables 8,828 1,401,478 1,410,306 42,778 1,022,006 1,064,784
Cash and bank balances 249,886 - 249,886 186,613 - 186,613

3,714,182 2,011,769 5,725,951 2,728,966 1,324,561 4,053,527

226 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Financial Non- Total Financial Non- Total
assets financial as per assets financial as per
assets statement assets statement
of financial of financial
position position
----- RUPEES IN THOUSAND ----- ----- RUPEES IN THOUSAND -----
Liabilities as per statement of
financial position

Long term financing 4,206,691 - 4,206,691 2,968,283 - 2,968,283
Trade and other payables 1,684,449 973,006 2,657,455 1,671,625 864,188 2,535,813
Accrued mark-up 65,021 - 65,021 196,614 - 196,614
Short term borrowings 5,558,536 - 5,558,536 7,479,127 - 7,479,127
Unclaimed dividend 30,592 - 30,592 29,769 - 29,769

11,545,289 973,006 12,518,295 12,345,418 864,188 13,209,606

43.4 Offsetting financial assets and liabilities

As on reporting date, recognized financial instruments are not subject to offsetting as there are
no enforceable master netting arrangements and similar agreements.

43.5 Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order
to maintain or adjust the capital structure, the Company may adjust the amount of dividend
paid to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in
the industry and the requirements of the lenders, the Company monitors the capital structure
on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital
employed. Borrowings represent long term financing and short term borrowings obtained by
the Company as referred to in note 5 and note 11 respectively. Total capital employed includes
‘total equity’ as shown in the statement of financial position plus ‘borrowings’. The Company’s
strategy, remain unchanged from the last year.

2021 2020
(Rupees in thousand)

Borrowings 9,765,227 10,447,410

Total equity 20,157,557 17,971,090

Total capital employed 29,922,784 28,418,500

Gearing ratio 32.63% 36.76%

The decrease in the gearing ratio resulted primarily from decrease in borrowings of the Company.

44. RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS

Fair value hierarchy

Certain financial assets and financial liabilities are not measured at fair value if the carrying amounts
are a reasonable approximation of fair value. Due to short term nature, carrying amounts of certain
financial assets and financial liabilities are considered to be the same as their fair value. Judgements
and estimates are made in determining the fair values of the financial instruments that are recognised
and measured at fair value in these financial statements. To provide an indication about the reliability
of the inputs used in determining fair value, the Company classify its financial instruments into the

ANNUAL REPORT 2021 227

 following three levels. However, as at the reporting date, the Company has no such type of financial
instruments which are required to be grouped into these levels. These levels are explained as under:

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and equity securities) is based on quoted market prices at the end of the reporting period.
The quoted market price used for financial assets held by the Company is the current bid price. These
instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximise the use of
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument
is included in level 3. This is the case for unlisted equity securities.

45. RECOGNIZED FAIR VALUE MEASUREMENTS - NON-FINANCIAL ASSETS

(i) Fair value hierarchy

Judgments and estimates are made for non-financial assets not measured at fair value in these
financial statements but for which the fair value is described in these financial statements. To provide an
indication about the reliability of the inputs used in determining fair value, the Company has classified
its non-financial assets into the following three levels.

At 30 June 2021 Level 1 Level 2 Level 3 Total

------- ( Rupees in thousand ) ------

Investment properties - 1,824,360 - 1,824,360
Freehold land - 2,768,287 - 2,768,287

Total non-financial assets - 4,592,647 - 4,592,647

At 30 June 2020 Level 1 Level 2 Level 3 Total

------- ( Rupees in thousand ) ------

Investment properties - 1,792,755 - 1,792,755
Freehold land - 2,739,557 - 2,739,557

Total non-financial assets - 4,532,312 - 4,532,312

The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at
the end of the reporting period.

There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.
Further, there was no transfer in and out of level 3 measurements.

(ii) Valuation techniques used to determine level 2 fair values

The Company obtains independent valuations for its investment properties and freehold land
(classified as property, plant and equipment) at least annually. At the end of each reporting period,
the management updates the assessment of the fair value of each property, taking into account the
most recent independent valuations. The management determines a property’s value within a range
of reasonable fair value estimates. The best evidence of fair value of land is current prices in an active
market for similar lands. The best evidence of fair value of buildings is to calculate fair depreciated
market value by applying an appropriate annual rate of depreciation on the new construction /
replacement value of the same building.

228 KOHINOOR TEXTILE MILLS LIMITED

 Valuation processes

The Company engages external, independent and qualified valuers to determine the fair value of the
Company’s investment properties and freehold land at the end of every financial year. As at 30 June
2021, the fair values of the investment properties and freehold land have been determined by Anderson
Consulting (Private) Limited (an approved valuer).

Changes in fair values are analyzed at each reporting date during the annual valuation discussion
between the Chief Financial Officer and the valuers. As part of this discussion the team presents a
report that explains the reason for the fair value movements.

46. DISCLOSURES BY COMPANY LISTED ON ISLAMIC INDEX

2021 2020
Description Note (Rupees in thousand)

Loans / advances obtained as per Islamic mode:

Contract liabilities 9 151,146 148,422
Shariah compliant bank deposits / bank balances:
Bank balances 26 84,588 51,758

Profit earned from shariah compliant bank
deposits / bank balances 32 3,847 7,580

Revenue earned from shariah compliant business 27 29,955,525 21,844,810

Gain / (loss) or dividend earned from shariah
compliant investments:
Dividend income 32 - 163,918

Profits earned or interest paid on any conventional
loan / advance:

Interest income on loans and advances to Maple
Leaf Cement Factory Limited - 21,297
Profit earned on deposits with banks 32 10,281 39,572
Interest paid on loans 33 565,409 655,223
Short term borrowing from Maple Leaf Capital Limited 33 2,004 80,308

Relationship with shariah compliant banks

Name Relationship at reporting date

Al-Baraka Bank (Pakistan) Limited Bank balance
Bank Islami Pakistan Limited Bank balance
MCB Islamic Bank Limited Bank balance
Meezan Bank Limited Bank balance

47. DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue on ________________________ by the Board of
Directors of the Company.

ANNUAL REPORT 2021 229

 48. NON-ADJUSTING EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE

The Board of Directors of the Company in their meeting held on 13 August 2021 has proposed a final
cash dividend of Rupees 1 per share (10%) amounting to Rupees 299.296 million (2020: Rupees
299.296 million) for the year ended 30 June 2021 for approval of the members at the Annual General
Meeting to be held on 28 September 2021. The financial statements for the year ended 30 June 2021
do not include the effect of the proposed final cash dividend which will be accounted for in the period
ending 30 June 2022.

49. CORRESPONDING FIGURES

No significant rearrangements / reclassifications have been made except for Gas Infrastructure
Development Cess (GIDC) payable amounting to Rupees 250.011 million which has been reclassified
from creditors to current portion of non-current liabilities for the purpose of better presentation.

50. GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

230 KOHINOOR TEXTILE MILLS LIMITED

PATTERN OF SHAREHOLDING
1. CUIN (Incorporation Number) 0002805

1.1 Name of the Company KOHINOOR TEXTILE MILLS LIMITED

2.1 Pattern of holding of the shares 30.06.2021
held by the shareholders as at

2.2
No. of S h a r e h o l d i n g s Total
Shareholders From To Shares Held

2,575 1 - 100 68,136

961 101 - 500 276,990
378 501 - 1,000 274,518
521 1,001 - 5,000 1,351,363
132 5,001 - 10,000 943,472
63 10,001 - 15,000 805,051
30 15,001 - 20,000 539,431
28 20,001 - 25,000 653,942
15 25,001 - 30,000 412,968
15 30,001 - 35,000 485,650
12 35,001 - 40,000 457,209
11 40,001 - 45,000 468,382
13 45,001 - 50,000 634,214
5 50,001 - 55,000 258,492
4 55,001 - 60,000 237,125
6 60,001 - 65,000 375,168
4 65,001 - 70,000 273,982
3 70,001 - 75,000 214,723
4 75,001 - 80,000 306,501
4 80,001 - 85,000 331,965
4 85,001 - 90,000 357,300
5 90,001 - 95,000 463,870
3 95,001 - 100,000 298,227
1 100,001 - 105,000 101,586
1 105,001 - 110,000 110,000
1 115,001 - 120,000 119,000
1 125,001 - 130,000 125,635
2 130,001 - 135,000 267,000
3 135,001 - 140,000 413,342
1 140,001 - 145,000 140,500
1 145,001 - 150,000 150,000
1 150,001 - 155,000 153,800
2 160,001 - 165,000 324,620
2 165,001 - 170,000 339,850
2 170,001 - 175,000 350,000
1 185,001 - 190,000 188,231
1 190,001 - 195,000 195,000
1 195,001 - 200,000 200,000
2 205,001 - 210,000 417,500
2 220,001 - 225,000 448,500
1 230,001 - 235,000 234,000
4 245,001 - 250,000 995,911
1 250,001 - 255,000 251,474
2 270,001 - 275,000 545,650

ANNUAL REPORT 2021 231

 2.2
No. of S h a r e h o l d i n g s Total
Shareholders From To Shares Held

2 275,001 - 280,000 553,946

1 295,001 - 300,000 300,000
1 315,001 - 320,000 316,743
1 335,001 - 340,000 337,673
1 385,001 - 390,000 385,016
1 440,001 - 445,000 442,500
1 445,001 - 450,000 447,000
1 450,001 - 455,000 450,300
2 455,001 - 460,000 917,464
1 495,001 - 500,000 496,500
1 595,001 - 600,000 599,163
1 615,001 - 620,000 617,000
1 765,001 - 770,000 766,749
3 795,001 - 800,000 2,394,878
1 820,001 - 825,000 824,760
1 995,001 - 1,000,000 996,000
1 1,010,001 - 1,015,000 1,010,500
1 1,020,001 - 1,025,000 1,020,500
1 1,085,001 - 1,090,000 1,089,500
2 1,090,001 - 1,095,000 2,184,665
1 1,305,001 - 1,310,000 1,306,000
1 1,375,001 - 1,380,000 1,375,718
1 1,430,001 - 1,435,000 1,430,259
1 1,570,001 - 1,575,000 1,572,125
1 1,575,001 - 1,580,000 1,575,710
1 1,605,001 - 1,610,000 1,608,040
1 3,005,001 - 3,010,000 3,009,001
1 3,500,001 - 3,505,000 3,503,121
1 4,695,001 - 4,700,000 4,698,621
1 5,745,001 - 5,750,000 5,748,497
1 6,750,001 - 6,755,000 6,751,669
1 11,220,001 - 11,225,000 11,222,490
1 12,645,001 - 12,650,000 12,648,322
1 13,300,001 - 13,305,000 13,302,658
1 30,375,001 - 30,380,000 30,377,143
1 43,425,001 - 43,430,000 43,425,059
1 49,635,001 - 49,640,000 49,639,992
1 73,390,001 - 73,395,000 73,390,896

4,872 299,296,456

Note : The Slabs not applicable above have not been shown.

232 KOHINOOR TEXTILE MILLS LIMITED

2.3 Categories of Shares Percentage
Shareholders Held of Capital

2.3.1 Directors, Chief Executive Officer and their spouses and minor children.

Mr. Tariq Sayeed Saigol, Chairman 12,648,322 4.226
Mr. Taufique Sayeed Saigol, Chief Executive Officer 43,425,059 14.509
Mr. Sayeed Tariq Saigol 385,016 0.129
Mr. Waleed Tariq Saigol 33,471 0.011
Mr. Danial Taufique Saigol 3,046 0.001
Ms. Jahanara Saigol 2,500 0.001
Mr. Shafiq Ahmed Khan 3,046 0.001
Mr. Zulifikar Monnoo 3,000 0.001
Mrs. Shehla Tariq Saigol, Spouse of Mr. Tariq Sayeed Saigol 30,377,143 10.150

86,880,603 29.029

2.3.2 Associated Companies, undertakings and related parties.

Mercury Management Inc. 73,390,896 24.521
Hutton Properties Limited 49,639,992 16.586

123,030,888 41.107
2.3.3 NIT and ICP

National Bank of Pakistan, Trustee Deptt. 10,583 0.004
Industrial Development Bank of Pakistan (IDBP) 13,914 0.005

24,497 0.009
2.3.4 Banks, Development Financial Institutions,
Non-Banking Financial Institutions. 3,628,942 1.212
2.3.5 Insurance Companies 263,090 0.088
2.3.6 Modarabas and Mutual Funds 37,802,613 12.630
2.3.7 Shareholders holding 10% refer to 2.3.1 & 2.3.2

2.3.8 General Public

a) Local 43,196,779 14.433
b) Foreign 1,021,978 0.341

2.3.9 Others

AGP Limited Staff Provident Fund 26,500
Agriauto Industries Limited Employees Provident Fund 9,000
Artal Restaurant Int Ltd Emp P.F 2,073
BPS Group Companies Employees Provident Fund 50,000
Bristol-Myers Squibb Pak (Pvt) Ltd Emp Prov Fund 5,000
BVA (Private) Limited Employees Provident Fund 5,000
Byco Petroleum Pakistan Limited Employees Provident Fund 16,500
CDC - Trustee AGIPF Equity Sub-Fund 18,000
CDC - Trustee AGPF Equity Sub-Fund 13,000
CDC - Trustee NAFA Islamic Pension Fund Equity Account 457,500
CDC - Trustee NAFA Pension Fund Equity Sub-Fund Account 223,500
CDC - Trustee Pakistan Pension Fund - Equity Sub Fund 135,800
CDC-Trustee Alhamra Islamic Pension Fund - Equity Sub Fund 90,470
Chevron Pakistan Lubricants (Pvt.) Ltd. EPF 6,500
Engro Fertilizers Limited Non-MPT Employees Gratuity Fund 18,000
Essity Pakistan Limited Employees Gratuity Fund 2,500
Essity Pakistan Limited Employees Provident Fund 6,500
Federal Board of Revenue 161,269

ANNUAL REPORT 2021 233

 2.3 Categories of Shares Percentage
Shareholders Held of Capital

2.3.9 Others

Fikree Development Corp. (Pvt.) Limited 50

Gatron (Industries) Limited Staff Provident Fund 6,000
Hussain Trustees Limited. 297
I2C Pakistan (Private) Limited Employees Provident Fund Trust 3,500
Nestle Pakistan Limited Employees Pension Fund 25,000
Nestle Pakistan Ltd, Employees Gratuity Fund 18,400
Novo Nordisk Pharma (Pvt.) Ltd. Staff Prov. Fund 5,000
Official Assignee of Karachi 1,297
Pakistan Petroleum Executive Staff Pension Fund (DC Shariah) 175,000
Pakistan Stock Exchange Limited 70,178
Pakistan Telecommunication Employees Trust 77,000
Thal Limited Employees Provident Fund 46,000
Thal Limited Employees Retirement Benefit Fund 2,000
The Crescent Textile Mills Ltd Employees Provident Fund 5,500
The Deputy Administrator. Abandoned Properties 193
The Ida Rieu Poor Welfare Association 404
The Okhai Memon Madressah Association 1
Trustee National Bank of Pakistan Employees Pension Fund 337,673
Trustee of Hommie and Jamshed Nusserwanjee Charitable Trust 3,000
Trustee Pak. Petroleum Exec. Staff Pen. Fund DC Conventional 42,000
Trustee Pakistan Petroleum Executive Staff Pension Fund 496,500
Trustee Pakistan Petroleum Junior Provident Fund 92,000
Trustee Pakistan Petroleum Non Executive Staff Gratuity Fund 83,000
Trustee Pakistan Petroleum Non Executive Staff Pension Fund 207,500
Trustee Pakistan Petroleum Senior Provident Fund 195,000
Trustee-ANPL Man Staff Defined Contribution
Superannuation FD 12,500
Trustee-ANPL Management Staff Gratuity Fund 13,000
Trustee-ANPL Management Staff Pension Fund 12,500
Trustee-ANPL Management Staff Provident Fund 14,500
Trustees Moosa Lawai Foundation 4,285
Trustees of Cresent Steel & Allied Products Ltd-Pension Fund 1,315
Trustees of Karachi Sheraton Hotel Employees Provident Fund 210
Trustees of Philip Morris (Pakistan) Limited E.C.P.F Trust 47,000
Trustees of Philip Morris (Pakistan) Limited Empl G.F Trust 25,000
Trustees Pakistan Petroleum Executive Staff Gratuity Fund 61,000
Trustees UBL Fund Managers Ltd. Employees Gratuity Fund 6,000
Trustee-The Crescent Textile Mills Ltd Empl. Provident Fund 3,307
Trustee-The Kot Addu Power Co. Ltd. Employees Pension Fund 36,500
Trustee-The Kot Addu Power Co. Ltd. Employees
Provident Fund 9,500
United Executers & Trustee Company Limited 164
University of Sindh 680
Wellcome Pakistan Limited Provident Fund 60,000

3,447,066 1.151

Grand Total : 299,296,456 100.000

234 KOHINOOR TEXTILE MILLS LIMITED

 Directors’ Report on Consolidated
Financial Statements 237
Independent Auditors’ Report 238
Consolidated Statement of Financial Position 244
Consolidated Statement of Profit or Loss 246
Consolidated Statement of Comprehensive Income 247
Consolidated Statement of Changes in Equity 248
Consolidated Statement of Cash Flows 249
Notes to the Consolidated Financial Statements 250
PROXY FORM

ANNUAL REPORT 2021 235

236 KOHINOOR TEXTILE MILLS LIMITED
DIRECTOR’S REPORT ON
CONSOLIDATED FINANCIAL STATEMENTS
The Directors are pleased to present the audited consolidated financial statements of Kohinoor Textile
Mills Limited (the Holding Company) and its Subsidiary Companies Maple Leaf Cement Factory Limited
(56.12%), Maple Leaf Power Limited (56.12%) and Maple Leaf Capital Limited (82.92%) (Together referred
to as Group) for the year ended 30 June 2021.

GROUP RESULTS
The Group has earned gross profit of Rupees 15,453 million as compared to Rupees 4,871million of
corresponding year. The Group has earned / incurred pre-tax profit of Rupees 13,694 million this year as
compared to pre-tax loss of Rupees 2,592 million during the previous year. The overall Group financial
results are as follows:
2021 2020
(Rupees in million)

Revenue 65,451 50,848

Gross profit 15,453 4,871
Profit from operations 15,757 1,006
Financial charges 2,062 3,598
Net profit / (loss) after taxation 11,054 (2,595)

---------- (Rupees) ----------

Earnings / (loss) per share - Basic and diluted 28.26 (3.32)

SUBSIDIARY COMPANIES

Maple Leaf Cement Factory Limited (MLCFL)

It has recorded an increase of 22.40% in its sales over previous year and has earned / incurred gross profit
/ (loss) of 21.06% (30 June 2020: (2.40%)) amounting to Rupees 7,505 million (30 June 2020: (699) million).

It has earned / incurred after tax profit / (loss) of Rupees 6,254 million (30 June 2020: Rupees (4,843) million).

Maple Leaf Power Limited (MLPL)

MLPL has earned after tax profit of Rupees 1,153 million (30 June 2020: Rupees 1,292 million).

Maple Leaf Capital Limited (MLCL)

MLCL has earned / incurred after tax profit / (loss) of Rupees 4,119 million (30 June 2020: Rupees (614)
million).

In compliance with the Companies Act, 2017 all relevant matters of Section 227 have been placed in our
Standalone Director’s Report to the Shareholders.

ACKNOWLEDGMENT

The Directors are grateful to the Group’s members, financial institutions, customers and employees for their
cooperation and support. They also appreciate the hard work and dedication of the employees working at
various divisions.

For and on behalf of the Board

Lahore Taufique Sayeed Saigol Syed Mohsin Raza Naqvi

13 August 2021 Chief Executive Officer Director

ANNUAL REPORT 2021 237

 2-A, ATS Centre, 30-West,
Fazal-ul-Haq Road,Blue Area,
Islamabad, Pakistan
T: +92 (51) 227 4121 - 2
F: +92 (51) 227 8859
racoisd@[Link]
[Link]

INDEPENDENT AUDITOR’S REPORT

To the members of Kohinoor Textile Mills Limited

Opinion

We have audited the annexed consolidated financial statements of Kohinoor Textile Mills Limited and its
subsidiaries (the Group), which comprise the consolidated statement of financial position as at 30 June
2021, and the consolidated statement of profit or loss, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies and other explanatory information.

In our opinion, consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at 30 June 2021, and of its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with the accounting and reporting standards as applicable
in Pakistan.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in
Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Consolidated Financial Statements section of our report. We are independent of the
Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and
we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

238 KOHINOOR TEXTILE MILLS LIMITED

Following are the key audit matters:

Sr. Key audit matters How the matters were addressed in our audit
No.
1 Inventory existence and valuation:

Inventory of the textile business of the Group Our procedures over existence and valuation of
as at 30 June 2021 represented a material inventory included, but were not limited to:
position in the consolidated statement of
financial position. • To test the quantity of inventories at all locations,
we assessed the corresponding inventory
Inventory is measured at the lower of cost observation instructions and participated in
and net realizable value. inventory counts on sites. Based on samples,
we performed test counts and compared the
We identified existence and valuation of quantities counted by us with the results of the
inventory as a key audit matter due to its counts of the management;
size and the judgment involved in valuation.
• For a sample of inventory items, re-performed
For further information on inventory, refer to the weighted average cost calculation and
the following: compared the weighted average cost appearing
on valuation sheets;

- Summary of significant accounting • We tested that the ageing report used by

policies, Inventories note 2.19 to the management correctly aged inventory items by
consolidated financial statements. agreeing a sample of aged inventory items to the
- Stores, spare parts and loose tools last recorded invoice;
note 25 and Stock-in-trade note 26 to
the consolidated financial statements. • On a sample basis, we tested the net realizable
value of inventory items to recent selling prices
and re-performed the calculation of the inventory
write down, if any;

• We assessed the percentage write down applied

to older inventory with reference to historic
inventory write downs and recoveries on slow
moving inventory;

• In the context of our testing of the calculation, we

analysed individual cost components and traced
them back to the corresponding underlying
documents. We furthermore challenged changes
in unit costs;

• We also made enquiries of management,

including those outside of the finance function,
and considered the results of our testing above
to determine whether any specific write downs
were required.

ANNUAL REPORT 2021 239

 Sr. Key audit matters How the matters were addressed in our audit
No.
2 Capital expenditures

The textile business of the Group is investing Our procedures included, but were not limited to:
significant amounts in its operations and there
are a number of areas where man¬agement • We tested operating effectiveness of controls
judgment impacts the carrying value of in place over the property, plant and equipment
property, plant and equipment and its cycle including the controls over whether costs
respective depreciation profile. These include incurred on activities is capital or operating in
among other the decision to capitalize or nature;
expense costs; and review of useful lives of
the assets including the impact of changes in • We evaluated the appropriateness of
the Group’s strategy. capitalization policies and depreciation rates;

We focused on this area since the amounts • We performed tests of details on costs
have a significant impact on the financial capitalized;
position of the Group and there is significant
management judgment required that has • We verified the accuracy of management’s
significant impact on the reporting of the calculation used for the impairment testing.
consolidated financial position for the
Group. Therefore, considered as one of the
key audit matters.

For further information, refer to the following:

- Summary of significant accounting

policies, Property, plant, equipment
and depreciation note 2.8 to the
consolidated financial statements.
- Property, plant and equipment note 19
to the consolidated financial statements.
3 Revenue recognition

The Group recognized net revenue of Our procedures included, but were not limited to:
Rupees 65,450.738 million for the year
ended 30 June 2021. • We obtained an understanding of the process
relating to recognition of revenue and testing
We identified recognition of revenue as a the design, implementation and operating
key audit matter because revenue is one effectiveness of key internal controls over
of the key performance indicators of the recording of revenue;
Group and gives rise to an inherent risk that • We compared a sample of revenue transactions
revenue could be subject to misstatement recorded during the year with sales orders, sales
to meet expectations or targets. invoices, delivery documents and other relevant
underlying documents;
For further information, refer to the following: • We compared a sample of revenue transactions
recorded around the year-end with the sales
- Summary of significant accounting orders, sales invoices, delivery documents and
policies, Revenue from contracts other relevant underlying documentation to
with customers note 2.26 to the assess if the related revenue was recorded in the
consolidated financial statements. appropriate accounting period;
• We assessed whether the accounting policies
- Revenue note 34 to the consolidated for revenue recognition complies with the
financial statements. requirements of IFRS 15 ‘Revenue from
Contracts with Customers’;
• We compared the details of a sample of
journal entries posted to revenue accounts
during the year, which met certain specific
risk-based criteria, with the relevant underlying
documentation;
• We also considered the appropriateness
of disclosures in the consolidated financial
statements.
240 KOHINOOR TEXTILE MILLS LIMITED
Sr. Key audit matters How the matters were addressed in our audit
No.
4 Valuation of trade debts

Trade debts of cement business of the Our audit procedures included but were not limited to
Group as at 30 June 2021 represented the following:
a material position in the consolidated
statement of financial position. • We reviewed and evaluated the appropriateness
of the assumptions used (historical and
The Group has applied simplified approach forward looking) and judgments made by the
to determine expected credit losses (ECL) management to assess ECL in respect of trade
over debtors. debts;
• We assessed on a sample basis, the accuracy of
We have identified valuation of trade debts data used by the management for determining
as key audit matter because determination ECL in respect of trade debts;
of ECL provision for trade debts requires • We checked mathematical accuracy of ECL
significant judgment and assumptions model by performing recalculations;
including consideration of factors such as • We reviewed appropriateness of the accounting
historical credit loss experience and forward- policies and the adequacy of disclosures in the
looking macro-economic information. consolidated financial statements in accordance
with requirements of the applicable accounting
For further information refer to the following: and reporting standards.

- Summary of significant accounting

policies, note 2.14 and 2.20 to the
consolidated financial statements.

- Trade debts note 27 to the consolidated

financial statements

5 Investments in quoted securities

Quoted investments of the investment Our procedures over the existence, completeness
business of the Group as at 30 June 2021 and valuation of the Company’s
represented a material position in the portfolio of quoted investments included, but were
consolidated statement of financial position not limited to:
Due to the requirements of applicable
accounting and reporting standards • Documenting and assessing the processes
relating to classification, measurement and controls in place to record investment
and disclosures of investments, it is transactions and to value the portfolio.
considered to be the area which had the
significant effect on our overall audit strategy • Agreeing the valuation of all of quoted
and allocation of resources in planning and investments from prices quoted on the Pakistan
completing our audit. Stock Exchange Limited and redemption price in
case of open-end mutual funds.
Further, the value of the quoted investments
is a significant input to confirm the amount • Agreeing holding of all quoted investments
of unrealised gain / (loss) on remeasurement from the Account Balance Report of Central
of investments recognised in the statement Depository Company of Pakistan Limited and
of profit or loss. Statement of Account, In case of open-end
mutual funds.
For further information, refer to the following:
• Verifying the accuracy of management’s
- Summary of significant accounting judgement used in classification of Investments.
policies, note 2.12 to the consolidated
financial statements. • Assuring the completeness and accuracy of
gains / (losses) recognized in the statement of
- Short term investments note 32 to the profit or loss of quoted investments.
consolidated financial statements.

ANNUAL REPORT 2021 241

 Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the information
included in the annual report, but does not include the consolidated financial statements and our auditor’s
report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.

Responsibilities of Management and Board of Directors for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with accounting and reporting standards as applicable in Pakistan and Companies Act,
2017 and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.

Board of Directors is responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we

242 KOHINOOR TEXTILE MILLS LIMITED

 conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.

We also provide the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were
of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Raheel Arshad.

RIAZ AHMAD & COMPANY

Chartered Accountants

Islamabad

DATE: 13 August 2021

ANNUAL REPORT 2021 243

 CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As

at 30 June 2021 2021 2020
Note (Rupees in thousand)

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorised share capital
370,000,000 (2020: 370,000,000)
ordinary shares of Rupees 10 each 3,700,000 3,700,000
30,000,000 (2020: 30,000,000) preference
shares of Rupees 10 each 300,000 300,000

4,000,000 4,000,000

Issued, subscribed and paid-up share capital 3 2,992,964 2,992,964

Reserves 4
Capital reserves
Share premium 986,077 986,077
Surplus on revaluation of freehold land and investment properties 4,070,446 4,041,716

5,056,523 5,027,793
Revenue reserves
General reserve 1,450,491 1,450,491
Unappropriated profit 26,092,086 18,368,673

27,542,577 19,819,164

32,599,100 24,846,957

Equity attributable to equity holders of the Holding Company 35,592,064 27,839,921

Non-controlling interest 5 17,048,451 14,756,901

Total equity 52,640,515 42,596,822

LIABILITIES

NON-CURRENT LIABILITIES
Long term financing 6 14,810,723 15,067,045
Deferred government grants 7 73,856 -
Gas Infrastructure Development Cess (GIDC) payable 8 57,184 -
Long term deposits 9 8,214 8,664
Retirement benefits 10 228,266 214,952
Retention money payable 11 391,694 366,069
Deferred income tax liability 12 3,949,204 2,529,503

19,519,141 18,186,233
CURRENT LIABILITIES
Trade and other payables 13 10,246,551 10,241,661
Accrued mark-up 14 338,631 683,317
Short term borrowings 15 9,080,276 14,215,726
Current portion of non-current liabilities 16 3,335,310 881,629
Unclaimed dividend 17 58,726 77,822

23,059,494 26,100,155

TOTAL LIABILITIES 42,578,635 44,286,388

CONTINGENCIES AND COMMITMENTS 18

TOTAL EQUITY AND LIABILITIES 95,219,150 86,883,210

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

244 KOHINOOR TEXTILE MILLS LIMITED
 2021 2020
Note (Rupees in thousand)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 19 56,012,067 54,678,017
Investment properties 20 1,824,360 1,792,755
Intangibles 21 6,018 9,024
Long term loans to employees 22 17,004 19,196
Long term investments 23 157,410 42,000
Long term deposits 24 110,263 109,378

58,127,122 56,650,370









CURRENT ASSETS

Stores, spare parts and loose tools 25 10,859,200 9,568,983
Stock-in-trade 26 6,058,721 7,142,118
Trade debts 27 4,947,118 5,413,514
Loans and advances 28 1,104,374 798,948
Security deposits and short term prepayments 29 257,235 204,498
Other receivables 30 1,592,142 792,085
Taxation - net 31 1,364,178 1,012,570
Short term investments 32 10,065,021 3,904,641
Cash and bank balances 33 844,039 1,395,483

37,092,028 30,232,840

TOTAL ASSETS 95,219,150 86,883,210

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2021 245
 CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
For the year ended 30 June 2021
2021 2020
Note (Rupees in thousand)

REVENUE 34 65,450,738 50,848,263
COST OF SALES 35 (49,997,540) (45,977,075)

GROSS PROFIT 15,453,198 4,871,188

DISTRIBUTION COST 36 (2,334,122) (1,638,667)
ADMINISTRATIVE EXPENSES 37 (1,598,165) (1,519,974)
OTHER EXPENSES 38 (941,730) (1,638,177)

(4,874,017) (4,796,818)

10,579,181 74,370
OTHER INCOME 39 5,177,788 931,834

PROFIT FROM OPERATIONS 15,756,969 1,006,204

FINANCE COST 40 (2,062,473) (3,598,327)

PROFIT / (LOSS) BEFORE TAXATION 13,694,496 (2,592,123)

TAXATION 41 (2,640,861) (3,316)

PROFIT / (LOSS) AFTER TAXATION 11,053,635 (2,595,439)

SHARE OF PROFIT / (LOSS) ATTRIBUTABLE TO:

EQUITY HOLDERS OF HOLDING COMPANY 8,459,564 (992,306)

NON-CONTROLLING INTEREST 2,594,071 (1,603,133)

11,053,635 (2,595,439)

2021 2020
--------------Rupees--------------

EARNINGS / (LOSS) PER SHARE - BASIC AND DILUTED 42 28.26 (3.32)

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

246 KOHINOOR TEXTILE MILLS LIMITED

CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the year ended 30 June 2021
2021 2020
(Rupees in thousand)

PROFIT / (LOSS) AFTER TAXATION 11,053,635 (2,595,439)

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified subsequently to profit or loss

Re-measurement of defined benefit liability (27,456) 8,870
Related deferred income tax 7,832 (2,505)

(19,624) 6,365

Surplus on revaluation of freehold land 28,730 9,053

9,106 15,418

Items that may be reclassified subsequently to profit or loss - -

Other comprehensive income for the year - net of tax 9,106 15,418

TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE YEAR 11,062,741 (2,580,021)

SHARE OF TOTAL COMPREHENSIVE INCOME / (LOSS)
ATTRIBUTABLE TO:

EQUITY HOLDERS OF HOLDING COMPANY 8,477,281 (983,792)
NON-CONTROLLING INTEREST 2,585,460 (1,596,229)

11,062,741 (2,580,021)

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2021 247

248
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
ATTRIBUTABLE TO EQUITY HOLDERS OF THE HOLDING COMPANY
Reserves
Capital reserves Revenue reserves
Non-

KOHINOOR TEXTILE MILLS LIMITED

Share Surplus on Total Total controlling Total
capital Share revaluation of Sub - total General Unappropriated Sub-total reserves interest equity
premium freehold land reserves profit
and investment
properties
….……………….……...…..………….……...…..…..…..…… ( Rupees in thousand ) ….………………...….………...…..……….……...…..….……

Balance as at 01 July 2019 2,992,964 986,077 4,036,717 5,022,794 1,450,491 19,940,200 21,390,691 26,413,485 29,406,449 13,801,463 43,207,912
Transactions with owners:
- Issuance of right shares to Non-controlling
interest holders - net of issue cost - - - - - (58,968) (58,968) (58,968) (58,968) 2,684,596 2,625,628
- Final dividend for the year ended 30 June
2019 @ Rupee 0.75 per share - - - - - (224,472) (224,472) (224,472) (224,472) - (224,472)
- Interim dividend for the year ended 30 June
2020 @ Rupee 1.00 per share - - - - - (299,296) (299,296) (299,296) (299,296) - (299,296)
- Dividend paid to non-controlling interest holders - - - - - - - - - (132,929) (132,929)
- - - - - (582,736) (582,736) (582,736) (582,736) 2,551,667 1,968,931

Loss for the year - - - - - (992,306) (992,306) (992,306) (992,306) (1,603,133) (2,595,439)
Other comprehensive income for the year - - 4,999 4,999 - 3,515 3,515 8,514 8,514 6,904 15,418
Total comprehensive loss for the year - - 4,999 4,999 - (988,791) (988,791) (983,792) (983,792) (1,596,229) (2,580,021)
Balance as at 30 June 2020 2,992,964 986,077 4,041,716 5,027,793 1,450,491 18,368,673 19,819,164 24,846,957 27,839,921 14,756,901 42,596,822
Transactions with owners:
- Transaction with non-controlling interests - - - - - (126,546) (126,546) (126,546) (126,546) (293,910) (420,456)
- Final dividend for the year ended 30 June
2020 @ Rupee 1.00 per share - - - - - (299,296) (299,296) (299,296) (299,296) - (299,296)
- Interim dividend for the year ended 30 June
2021 @ Rupee 1.00 per share - - - - - (299,296) (299,296) (299,296) (299,296) - (299,296)
- - - - - (725,138) (725,138) (725,138) (725,138) (293,910) (1,019,048)

Profit for the year - - - - - 8,459,564 8,459,564 8,459,564 8,459,564 2,594,071 11,053,635
Other comprehensive income for the year - - 28,730 28,730 - (11,013) (11,013) 17,717 17,717 (8,611) 9,106
Total comprehensive income for the year - - 28,730 28,730 - 8,448,551 8,448,551 8,477,281 8,477,281 2,585,460 11,062,741

Balance as at 30 June 2021 2,992,964 986,077 4,070,446 5,056,523 1,450,491 26,092,086 27,542,577 32,599,100 35,592,064 17,048,451 52,640,515

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

CONSOLIDATED STATEMENT OF
CASH FLOWS
For the year ended 30 June 2021
2021 2020
Note (Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 43 12,309,290 2,593,707
Finance cost paid (2,407,159) (3,569,236)
Employee benefits paid (56,198) (35,724)
Income tax paid (1,931,266) (1,053,167)
Gas Infrastructure Development Cess (GIDC) paid (64,864) -
Net decrease in long term loans to employees 2,192 628
Net (increase) / decrease in long term deposits (1,335) 91

Net cash generated from / (used in) operating activities 7,850,660 (2,063,701)

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure on property, plant and equipment (4,924,252) (2,295,314)
Long term investments made (115,410) (42,000)
Proceeds from disposal of long term investments - 24,800
Proceeds from sale of property, plant and equipment 159,959 100,632
Increase in retention money payable 25,625 (2,430)
Interest received 40,000 114,467
Dividend received 175,677 155,045

Net cash used in investing activities (4,638,401) (1,944,800)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of right shares to non-controlling
interest holders - net of issue cost - 2,625,628
Transaction with non-controlling interests (420,456) -
Proceeds from long term financing 2,579,571 1,414,291
Repayment of long term financing (419,316) (5,367,030)
Grant received during the year 249,636 -
Short term borrowings - net (5,135,450) 6,381,167
Dividend paid (617,688) (643,023)

Net cash (used in) / from financing activities (3,763,703) 4,411,033

Net (decrease) / increase in cash and cash equivalents (551,444) 402,532
Cash and cash equivalents at the beginning of the year 1,395,483 992,951

Cash and cash equivalents at the end of the year 844,039 1,395,483

The annexed notes form an integral part of these consolidated financial statements.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2021 249

 NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
For the year ended 30 June 2021
1. THE GROUP AND ITS OPERATIONS

1.1 Holding Company

Kohinoor Textile Mills Limited is a public limited company incorporated in Pakistan under the
Companies Act, 1913 (now the Companies Act, 2017) and listed on Pakistan Stock Exchange
Limited. The registered office of the Holding Company is situated at 42-Lawrence Road, Lahore.
The principal activity of the Holding Company is manufacturing of yarn and cloth, processing
and stitching the cloth and trade of textile products.

1.2  Subsidiary companies

1.2.1 Maple Leaf Cement Factory Limited (MLCFL)

Maple Leaf Cement Factory Limited (“the Subsidiary Company”) was incorporated in Pakistan
on 13 April 1960 under the Companies Act, 1913 (now the Companies Act, 2017) as a public
company limited by shares. MLCFL is listed on Pakistan Stock Exchange Limited. The registered
office of MLCFL is situated at 42-Lawrence Road, Lahore. MLCFL is engaged in production and
sale of cement.

1.2.2 Maple Leaf Capital Limited (MLCL)

Maple Leaf Capital Limited (“the Subsidiary Company”) was incorporated in Pakistan on 25
April 2014 under the Companies Ordinance, 1984 (now the Companies Act, 2017) as a public
company limited by shares. The registered office of MLCL is situated at 42-Lawrence Road,
Lahore. The principal objects of MLCL are to buy, sell, hold or otherwise acquire or invest the
capital in any sort of financial instruments and commodities.

1.2.3 Maple Leaf Power Limited (MLPL)

Maple Leaf Power Limited was incorporated in Pakistan on 15 October 2015 as a public company
limited by shares under the Companies Ordinance, 1984 (now the Companies Act, 2017). It is
subsidiary of MLCFL, which is subsidiary of the Holding company. MLPL has been established
to set up and operate a 40-megawatt coal fired power generation plant at Iskanderabad, District
Mianwali for generation of electricity. The registered office of MLPL is located at 42-Lawrence
Road, Lahore. The principal object of MLPL is to develop, design, operate and maintain electric
power generation plant and in connection therewith to engage in the business of generation,
sale and supply of electricity to MLCFL.

MLPL was granted electricity generation license from National Electric and Power Regulatory
Authority (NEPRA) on 20 December 2016. On 04 July 2017, MLPL has entered into Power
Purchase agreement (PPA) with MLCFL which is valid for 20 years.

1.3 Geographical location and addresses of all business units are as follows:

Sr. No. Manufacturing units and office Address

Manufacturing units:

1 Spinning and Home textile units Peshawar Road, Rawalpindi.
2 Spinning unit Gulyana Road, Gujar Khan, District Rawalpindi.
3 Weaving unit 8 K.M. Manga Raiwind Road, District Kasur.
4 Cement and Power plant Iskanderabad, District Mianwali
Head office 42-Lawrence Road, Lahore.

250 KOHINOOR TEXTILE MILLS LIMITED

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of these consolidated financial statements are
set out below. These policies have been consistently applied to all years presented, unless otherwise stated:

2.1   Basis of preparation

a)      Statement of compliance

These consolidated financial statements have been prepared in accordance with the accounting
and reporting standards as applicable in Pakistan. The accounting and reporting standards
applicable in Pakistan comprise of:

- International Financial Reporting Standards (IFRSs) issued by the International Accounting

Standards Board (IASB) as notified under the Companies Act, 2017; and
- Provisions of and directives issued under the Companies Act, 2017.

Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRSs,
the provisions of and directives issued under the Companies Act, 2017 have been followed.

b) Accounting convention

These consolidated financial statements have been prepared under the historical cost convention
except as otherwise stated in the respective accounting policies.

c) Critical accounting estimates and judgments

The preparation of consolidated financial statements in conformity with the approved accounting
standards requires the use of certain critical accounting estimates. It also requires the
management to exercise its judgment in the process of applying the Group’s accounting policies.
Estimates and judgments are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under
the circumstances. The areas where various assumptions and estimates are significant to the
Group’s financial statements or where judgments were exercised in application of accounting
policies are as follows:

Useful lives, patterns of economic benefits and impairments

Estimates with respect to residual values, useful lives and pattern of flow of economic benefits
are based on the analysis of the management of the Group. Further, the Group reviews the value
of assets for possible impairment on an annual basis. Any change in the estimates in the future
might affect the carrying amount of respective item of property, plant and equipment, with a
corresponding effect on the depreciation charge and impairment.

Inventories

Inventory write-down is made based on the current market conditions, historical experience
and selling goods of similar nature. It could change significantly as a result of changes in market
conditions. A review is made on each reporting date on inventories for excess inventories,
obsolescence and declines in net realizable value and an allowance is recorded against the
inventory balances for any such declines.

Income tax

In making the estimates for income tax currently payable by the Group, the management takes
into account the current income tax law and the decisions of appellate authorities on certain
issues in the past.

Allowance for expected credit losses

The allowance for expected credit losses assessment requires a degree of estimation and
judgment. The Group has elected to measure loss allowance for trade debts using IFRS 9

ANNUAL REPORT 2021 251

 ‘Financial Instruments’ simplified approach based on the lifetime expected credit loss, grouped
based on days overdue, and makes assumptions to allocate an overall expected credit loss rate
for each group. These assumptions include recent sales experience and historical collection
rates.

Classification of investments

The management of the Group determines the appropriate classification of its investments at the
time of purchase or increase in holding and classifies its investments in accordance with IFRS 9
“Financial Instruments”.

Employee benefits

The Subsidiary Company Maple Leaf Cement Factory Limited (MLCFL) operates approved
funded gratuity schemes covering all its full time permanent workers who have completed the
minimum qualifying period of service as defined under the respective scheme. The gratuity
scheme is managed by trustees. The calculation of the benefit requires assumptions to be
made of future outcomes, the principal ones being in respect of increase in remuneration and
the discount rate used to convert future cash flows to current values. The assumptions used for
the plan are determined by independent actuary on annual basis.

The amount of the expected return on plan assets is calculated using the expected rate of
return for the year and the market - related value at the beginning of the year. Gratuity cost
primarily represents the increase in actuarial present value of the obligation for benefits earned
on employee service during the year and the interest on the obligation in respect of employee
service in previous years, net of the expected return on plan assets. Calculations are sensitive to
changes in the underlying assumptions.

The Subsidiary Company Maple Leaf Cement Factory Limited (MLCFL) also operates approved
unfunded accumulated compensated absences benefit scheme covering all its full time
permanent employees. The calculation of the benefit requires assumptions to be made of future
outcomes, The principal ones being in respect of increase in remuneration and the discount
rate used to convert future cash flows to current values. The assumptions used for the plan are
determined by independent actuary on annual basis. Accumulated compensated absences
cost primarily represents the increase in actuarial present value of the obligation for benefits
earned on employee service during the year and the Interest on the obligation in respect of
employee service in previous years and the related actuarial gain/loss. Calculations are sensitive
to changes in the underlying assumptions.

Impairment

The management of the Group reviews carrying amounts of its assets including receivables and
advances and cash generating units for possible impairment and makes formal estimates of
recoverable amount if there is any such indication.

Provisions

As the actual outflows can differ from estimates made for provisions due to changes in laws,
regulations, public expectations, technology, prices and conditions, and can take place many
years in the future, the carrying amounts of provisions are reviewed at each reporting date
and adjusted to take account of such changes. Any adjustments to the amount of previously
recognised provision is recognized in the consolidated statement of profit or loss unless the
provision was originally recognised as part of cost of an asset.

Contingencies

The Group reviews the status of all pending litigations and claims against the Group. Based
on the judgment and the advice of the legal advisors for the estimated financial outcome,
appropriate disclosure or provision is made. The actual outcome of these litigations and claims
can have an effect on the carrying amounts of the liabilities recognized at the consolidated
statement of financial position date.

252 KOHINOOR TEXTILE MILLS LIMITED

 Revaluation of land and investment properties (Note 52)

d) Amendments to published approved accounting standards that are effective in current year
and are relevant to the Group

Following amendments to published approved accounting standards are mandatory for the
Group’s accounting periods beginning on or after 01 July 2020:

· IAS 1 (Amendments) ‘Presentation of Financial Statements’ and IAS 8 (Amendments)
‘Accounting Policies, Changes in Accounting Estimates and Errors’;
· International Accounting Standards Board’s revised Conceptual Framework – March 2018
· IFRS 3 (Amendments) ‘Business Combination’;
·      IFRS 16 (Amendments) ‘Leases’;
·      Interest Rate Benchmark Reform which amended IFRS 9 ‘Financial Instruments’, IAS 39
‘Financial Instruments: Recognition and Measurement’ and IFRS 7 ‘Financial Instruments:
Disclosures’.

The above-mentioned amendments to approved accounting standards did not have any impact
on the amounts recognised in prior period and are not expected to significantly affect the current
or future periods.

e) Amendments to published approved accounting standards that are effective in current year
but not relevant to the Group

There are amendments to published standards that are mandatory for accounting periods
beginning on or after 01 July 2020 but are considered not to be relevant or do not have any
significant impact on the Group’s financial statements and are therefore not detailed in these
consolidated financial statements.

f) Amendments to published approved accounting standards that are not yet effective but
relevant to the Group

Following amendments to existing standards have been published and are mandatory for the
Group’s accounting periods beginning on or after 01 July 2021 or later periods:

Classification of liabilities as current or non-current (Amendments to IAS 1 ‘Presentation of
Financial Statements’) effective for the annual period beginning on or after 01 January 2023.
These amendments in the standards have been added to further clarify when a liability is
classified as current. The standard also amends the aspect of classification of liability as non-
current by requiring the assessment of the entity’s right at the end of the reporting period to
defer the settlement of liability for at least twelve months after the reporting period. An entity
shall apply those amendments retrospectively in accordance with IAS 8 ‘Accounting Policies,
Changes in Accounting Estimates and Errors’.

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37 ‘Provisions, Contingent
Liabilities and Contingent Assets’) effective for the annual period beginning on or after 01 January
2022 amends IAS 1 ‘Presentation of Financial Statements’ by mainly adding paragraphs which
clarifies what comprise the cost of fulfilling a contract. Cost of fulfilling a contract is relevant when
determining whether a contract is onerous. An entity is required to apply the amendments to
contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting
period in which it first applies the amendments (the date of initial application). Restatement of
comparative information is not required, instead the amendments require an entity to recognize
the cumulative effect of initially applying the amendments as an adjustment to the opening
balance of retained earnings or other component of equity, as appropriate, at the date of initial
application.

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16 ‘Property,
Plant and Equipment’) effective for the annual period beginning on or after 1 January 2022.
Clarifies that sales proceeds and cost of items produced while bringing an item of property,
plant and equipment to the location and condition necessary for it to be capable of operating
in the manner intended by management e.g. when testing etc., are recognized in consolidated

ANNUAL REPORT 2021 253

 profit or loss in accordance with applicable Standards. The entity measures the cost of those
items applying the measurement requirements of IAS 2 ‘Inventories’. The standard also removes
the requirement of deducting the net sales proceeds from cost of testing. An entity shall apply
those amendments retrospectively, but only to items of property, plant and equipment that are
brought to the location and condition necessary for them to be capable of operating in the
manner intended by management on or after the beginning of the earliest period presented
in the financial statements in which the entity first applies the amendments. The entity shall
recognize the cumulative effect of initially applying the amendments as an adjustment to the
opening balance of retained earnings (or other component of equity, as appropriate) at the
beginning of that earliest period presented.

The following annual improvements to IFRS standards 2018-2020 are effective for annual
reporting periods beginning on or after 01 January 2022:

IFRS 9 ‘Financial Instruments’ – The amendment clarifies that an entity includes only fees paid
or received between the entity (the borrower) and the lender, including fees paid or received
by either the entity or the lender on the other’s behalf, when it applies the ‘10 per cent’ test in
paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability.

IFRS 16 ‘Leases’ – The amendment partially amends Illustrative Example 13 accompanying
IFRS 16 ‘Leases’ by excluding the illustration of reimbursement of leasehold improvements by
the lessor. The objective of the amendment is to resolve any potential confusion that might arise
in lease incentives.

IAS 41 ‘Agriculture’ – The amendment removes the requirement in paragraph 22 of IAS 41 for
entities to exclude taxation cash flows when measuring the fair value of a biological asset using
a present value technique.

Disclosure of Accounting Policies (Amendments to IAS 1 ‘Presentation of Financial Statements’
and IFRS Practice Statement 2 ‘Making Materiality Judgement’) effective for annual periods
beginning on or after 01 January 2023. These amendments are intended to help preparers in
deciding which accounting policies to disclose in their consolidated financial statements. Earlier,
IAS 1 states that an entity shall disclose its ‘significant accounting policies’ in their consolidated
financial statements. These amendments shall assist the entities to disclose their ‘material
accounting policies’ in their financial statements.

Covid-19-Related Rent Concessions (Amendment to IFRS 16 ‘Leases’) effective for annual
reporting periods beginning on or after 01 April 2021. These amendments permit a lessee to
apply the practical expedient regarding COVID-19-related rent concessions. The entity shall
recognize the cumulative effect of initially applying the amendments as an adjustment to the
opening balance of retained earnings (or other component of equity, as appropriate) at the
beginning of that earliest period presented.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to
IAS 12 ‘Income taxes’) effective for annual periods beginning on or after 01 January 2023. These
amendments clarify how companies account for deferred tax on transactions such as leases
and decommissioning obligations.

Change in definition of Accounting Estimate (Amendments to IAS 8 ‘Accounting Policies,
Changes in Accounting Estimates and Errors) effective for annual periods beginning on or after 1
January 2023. This change replaced the definition of Accounting Estimate with a new definition,
intended to help entities to distinguish between accounting policies and accounting estimates.

The International Accounting Standards Board (IASB) has published ‘Reference to the Conceptual
Framework (Amendments to IFRS 3)’ with amendments to IFRS 3 ‘Business Combinations’
that update an outdated reference in IFRS 3 without significantly changing its requirements.
Effective for business combinations for which the acquisition date is on or after the beginning
of annual period beginning on or after 01 January 2022. The amendments also add to IFRS 3
an exception to its requirement for an entity to refer to the Conceptual Framework to determine
what constitutes an asset or a liability. The standard is effective for transactions in the future and
therefore would not have an impact on past financial statements.

254 KOHINOOR TEXTILE MILLS LIMITED

 Interest Rate Benchmark Reform – Phase 2 which amended IFRS 9 ‘Financial Instruments’, IAS
39 ‘Financial Instruments: Recognition and Measurement’, IFRS 4 ‘Insurance Contracts’ and
IFRS 7 ‘Financial Instruments: Disclosures’ is applicable for annual financial periods beginning
on or after 01 January 2021. The changes made relate to the modification of financial assets,
financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure
requirements applying IFRS 7 to accompany the amendments regarding modifications and
hedge accounting.

The above amendments and improvements are likely to have no significant impact on the
consolidated financial statements.

g) Standards and amendments to approved published standards that are not yet effective and
not considered relevant to the Group

There are other standards and amendments to published standards that are mandatory for
accounting periods beginning on or after 01 July 2021 but are considered not to be relevant or
do not have any significant impact on the Group’s financial statements and are therefore, not
detailed in these financial statements.

2.2 Basis of consolidation

Subsidiaries are all entities (Including structured entities) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct
the activities of the entity. The subsidiaries are fully consolidated from the date of acquisition,
being the date on which the Holding Company obtains control, and continue to be consolidated
until the date that such control ceases.

The financial statements of the Subsidiary Company has been consolidated on a line-by-line
basis and the carrying values of investment held by the Holding Company has eliminated against
the shareholders’ equity in the Subsidiary Company are prepared for the same reporting year as
of the Holding Company, using consistent accounting policies.

Non-controlling interest is that part of net results of the operations and of net assets of the
Subsidiaries which are not own by the Holding Company either directly or indirectly. Non-
controlling interest is presented as a separate item in the consolidated financial statements.
Since the Subsidiary Company is 100% owned by the Holding Company, no non-controlling
interest is presented as separate item in the consolidated financial statements.

On the loss of control, the Group derecognize the assets and liabilities of the subsidiary, any
non-controlling interests and other component of equity related to the subsidiary. Any surplus
or deficit arising on the loss of control is recognized in consolidated profit or loss account. In
addition, any amount previously recognized in other comprehensive income in respect of that
subsidiary are reclassified to the consolidated profit or loss account. If the Group retains any
interest in the previous subsidiary, then such interest is measured at fair value at the date that
control is lost. Subsequently that retained interest is accounted for as an equity-accounted
investee, joint venture or as an available for sale financial asset depending on level of influence
retained.

Intra-group balances and transactions have been eliminated.

2.3 Employee benefits

i) Defined contribution plan

The Group operates an approved funded provident fund scheme covering all permanent
employees. Equal monthly contributions are made both by the Group and employees to the
fund. The Group’s contributions to the fund are charged to consolidated statement of profit or
loss.

ANNUAL REPORT 2021 255

 ii) Defined benefit plan

Subsidiary company MLCFL operate approved funded gratuity scheme for all its workers who
have completed the minimum qualifying period of service as defined under the respective
scheme. Provision is made annually to cover obligations under the scheme on the basis of
actuarial valuation and is charged to consolidated statement of profit or loss.

Net obligation in respect of defined benefit plan is calculated by estimating the amount of future
benefit that employees have earned in the current and prior periods, discounting that amount
and deducting the fair value of any plan assets.

Calculation of defined benefit obligation is performed annually by a qualified actuary using the
projected unit credit method. When the calculation results in a potential asset, the recognized
asset is limited to the present value of economic benefits available in the form of any future refunds
from the plan or reductions in future contribution to the plan. To calculate the present value of
economic benefits, consideration is given to any applicable minimum funding requirements.

Re-measurement of the net defined benefit liability, which comprise actuarial gains and losses,
the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding
interest), are recognized immediately in consolidated statement of comprehensive income. Net
interest expense (income) on the net defined benefit liability (asset) for the period by applying
the discount rate used to measure the defined benefit obligation at the beginning of the annual
period to the then net defined benefit liability (asset), taking into account any changes in the net
defined benefit liability (asset) during the period as a result of contributions and benefit payments.
Net interest expense and other expenses related to defined benefit plan is recognized in the
consolidated statement of profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in
benefit that relates to past service or the gain or loss on curtailment is recognized immediately
in the consolidated statement of profit or loss. Gains and losses on the settlement of a defined
benefit plan are recognized when the settlement occurs.

iii) Liability for employees’ compensated absences

MLCFL accounts for the liability in respect of employees’ compensated absences in the year in
which these are earned. Provision to cover the obligations is made using the current salary level
of employees. The unutilized leaves are accumulated subject to a maximum of 90 days. The
unutilized accumulated leaves enchased at the time the employee leaves Group service. The
Group uses the actuarial valuations carried out using the projected unit credit method for valuation
of its accumulated compensating absences. The latest valuation was carried out on 30 June 2021.
Provisions are made annually to cover the obligation for accumulating compensated absences
based on actuarial valuation and are charged to the consolidated statement of profit or loss.
The amount recognized in the consolidated statement of the financial position represents the
present value of the defined benefit obligations. Actuarial gains and losses are charged to the
consolidated statement of profit or loss immediately in the period when these occur.

2.4 Taxation

Current

Provision for 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. 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 liability method in respect of all temporary differences
arising from differences between the carrying amount of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the computation of the taxable
profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and

256 KOHINOOR TEXTILE MILLS LIMITED

 deferred tax assets 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 utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the
differences reverse based on tax rates that have been enacted or substantively enacted by the
reporting date. Deferred tax is charged or credited in the consolidated statement of profit or loss,
except to the extent that it relates to items recognized in other comprehensive income or directly
in equity. In this case the tax is also recognized in other comprehensive income or directly in
equity, respectively.

2.5 Functional and presentation currency

Items included in the consolidated financial statements of the Group are measured using the
currency of the primary economic environment in which the Group operates (the functional
currency). The consolidated financial statements are presented in Pak Rupees, which is the
Group’s functional and presentation currency. Figures are rounded off to the nearest thousand
of Pak Rupees.

2.6 Foreign currency transactions and translation

All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at
exchange rates prevailing at the reporting date. Transactions in foreign currencies are translated
into Pak Rupees at exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the translation at
year end exchange rates of monetary assets and liabilities denominated in foreign currencies
are charged or credited to consolidated statement of profit or loss. Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign currency are translated into
Pak 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 Pak
Rupees at exchange rates prevailing at the date when fair values are determined.

2.7 Provisions

Provisions are recognized when the Group 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 obligations and a reliable estimate of the amount can be made.

2.8 Property, plant, equipment and depreciation

Operating fixed assets

Operating fixed assets except freehold land and capital work-in-progress are stated at cost less
accumulated depreciation and accumulated impairment losses (if any). Cost of operating fixed
assets consists of historical cost, borrowing cost pertaining to erection / construction period of
qualifying assets and other directly attributable cost of bringing the asset to working condition.
Freehold land is stated at revalued amount less any identified impairment loss. Capital work-in-
progress is stated at cost less any recognized impairment loss.

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

Increases in the carrying amounts arising on revaluation of freehold land are recognized,
in consolidated other comprehensive income and accumulated in revaluation surplus in
shareholders’ equity. To the extent that increase reverses a decrease previously recognized in
the consolidated statement of profit or loss, the increase is first recognized in the consolidated
statement of profit or loss. Decreases that reverse previous increases of the same asset are first
recognized in consolidated other comprehensive income to the extent of the remaining surplus
attributable to the asset; all other decreases are charged to the consolidated statement of profit
or loss.

ANNUAL REPORT 2021 257

 Depreciation

Depreciation on operating fixed assets is charged to the consolidated statement of profit or loss
applying the reducing balance method except that straight-line method is used for the plant and
machinery and buildings of MLCFL relating to dry process plant and power plant of MLPL after
deducting residual value, so as to write off the cost / depreciable amount of the asset over their
estimated useful lives at the rates given in Note 19.1. Depreciation on additions is charged from
the month the assets are available for use while no depreciation is charged in the month in which
the assets are disposed of. The residual values and useful lives of assets are reviewed by the
management, at each financial year end and adjusted if impact on depreciation is significant.

De-recognition

An item of operating fixed assets is de-recognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of
the asset is included in the consolidated statement of profit or loss in the year the asset is de-
recognized.

Capital work-in-progress

Capital work-in-progress is stated at cost less identified impairment losses, if any. All expenditure
connected with specific assets incurred during installation and construction period are carried
under capital work-in-progress. These are transferred to operating fixed assets as and when
these are available for use.

2.9 Intangible assets

Intangible assets, which are non-monetary assets without physical substance, are recognized
at cost, which comprise purchase price, non-refundable purchase taxes and other directly
attributable expenditure relating to their implementation and customization. After initial recognition
an intangible asset is carried at cost less accumulated amortization and impairment losses, if
any. Intangible assets are amortized from the month, when these assets are available for use,
using the straight line method, whereby the cost of the intangible asset is amortized over its
estimated useful life over which economic benefits are expected to flow to the Group. The useful
life and amortization method is reviewed and adjusted, if appropriate, at each consolidated
statement of financial position date.

2.10 Investment properties

Land and buildings held for capital appreciation or to earn rental income are classified as
investment properties. Investment properties are carried at fair value which is based on active
market prices, adjusted, if necessary, for any difference in the nature, location or condition of the
specific asset. The valuation of the properties is carried out with sufficient regularity.

Gain or loss arising from a change in the fair value of investment properties is recognized in the
consolidated statement of profit or loss for the year in which it arises.

2.11 IFRS 16 “Leases”

Right-of-use assets

A right-of-use asset is recognized at the commencement date of a lease. The right-of-use asset
is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before the commencement date net of any lease
incentives received, any initial direct costs incurred, and, except where included in the cost
of inventories, an estimate of costs expected to be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the
lease or the estimated useful life of the asset, whichever is shorter. Where the Group expects to
obtain ownership of the leased asset at the end of the lease term, the depreciation is charged
over its estimated useful life. Right-of-use assets are subject to impairment or adjusted for any
re-measurement of lease liabilities.

258 KOHINOOR TEXTILE MILLS LIMITED
 The Group has elected not to recognize a right-of-use asset and corresponding lease liability
for short-term leases with terms of 12 months or less and leases of low-value assets. Lease
payments on these assets are charged to income as incurred.

Lease liabilities

A lease liability is recognized at the commencement date of a lease. The lease liability is initially
recognized at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any
lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option
when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed
in the period in which they are incurred.

Lease liabilities are measured at amortized cost using the effective interest method. The carrying
amounts are re-measured if there is a change in the following: future lease payments arising
from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase
option and termination penalties. When a lease liability is re-measured, an adjustment is made
to the corresponding right-of-use asset, or to statement of profit or loss if the carrying amount
of the right-of-use asset is fully written down.

2.12 Investment and other financial assets

a) Classification

The Group classifies its financial assets in the following measurement categories:

· those to be measured subsequently at fair value (either through other comprehensive
income, or through profit or loss), and
· those to be measured at amortized cost

The classification depends on the Group’s business model for managing the financial assets and
the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss
or other comprehensive income. For investments in debt instruments, this will depend on the
business model in which the investment is held. For investments in equity instruments, this will
depend on whether the Group has made an irrevocable election at the time of initial recognition
to account for the equity investment at fair value through other comprehensive income. The
Group reclassifies debt investments when and only when its business model for managing those
assets changes.

b) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for
managing the asset and the cash flow characteristics of the asset. There are three measurement
categories into which the Group classifies its debt instruments:

ANNUAL REPORT 2021 259

 Amortized cost

Financial assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortized cost. Interest
income from these financial assets is included in other income using the effective interest rate
method. Any gain or loss arising on derecognition is recognized directly in profit or loss and
presented in other income / (other expenses) together with foreign exchange gains and losses.
Impairment losses are presented as separate line item in the consolidated statement of profit or
loss.

Fair value through other comprehensive income (FVTOCI)

Financial assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVTOCI. Movements in the carrying amount are taken through other comprehensive
income, except for the recognition of impairment losses (and reversal of impairment losses),
interest income and foreign exchange gains and losses which are recognized in profit or loss.
When the financial asset is de-recognized, the cumulative gain or loss previously recognized in
other comprehensive income is reclassified from equity to profit or loss and recognized in other
income / (other expenses). Interest income from these financial assets is included in other income
using the effective interest rate method. Foreign exchange gains and losses are presented in
other income / (other expenses) and impairment losses are presented as separate line item in
the consolidated statement of profit or loss.

Fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortized cost or FVTOCI are measured at FVTPL. A
gain or loss on a debt instrument that is subsequently measured at FVTPL is recognized in profit
or loss and presented net within other income / (other expenses) in the period in which it arises.

Equity instruments

The Group subsequently measures all equity investments at fair value for financial instruments
quoted in an active market, the fair value corresponds to a market price (level 1). For financial
instruments that are not quoted in an active market, the fair value is determined using valuation
techniques including reference to recent arm’s length market transactions or transactions
involving financial instruments which are substantially the same (level 2), or discounted cash
flow analysis including, to the greatest possible extent, assumptions consistent with observable
market data (level 3).

Fair value through other comprehensive income (FVTOCI)

Where the Group’s management has elected to present fair value gains and losses on equity
investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss. Impairment losses (and reversal of impairment losses) on
equity investments measured at FVTOCI are not reported separately from other changes in fair
value.

Fair value through profit or loss

Changes in the fair value of equity investments at fair value through profit or loss are recognized
in other income / (other expenses) in the consolidated statement of profit or loss as applicable.

Dividends from such investments continue to be recognized in profit or loss as other income
when the Group’s right to receive payments is established.

2.13 Financial liabilities - classification and measurement

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated
as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognized in profit or loss. Other financial

260 KOHINOOR TEXTILE MILLS LIMITED

 liabilities are subsequently measured at amortized cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognized in consolidated
statement of profit or loss. Any gain or loss on de-recognition is also included in profit or loss.

2.14 Impairment of financial assets

The Group recognizes loss allowances for ECLs on:

- Financial assets measured at amortized cost;
- Debt investments measured at FVTOCI; and
- Contract assets.

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the
following, which are measured at 12-month ECLs:

- Debt securities that are determined to have low credit risk at the reporting date; and

- Other debt securities and bank balances for which credit risk (i.e. the risk of default
occurring over the expected life of the financial instrument) has not increased significantly
since initial recognition.

12-month ECLs are the portion of ECLs that result from default events that are possible within
the 12 months after the reporting date (or a shorter period if the expected life of the instrument
is less than 12 months).

When determining whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating ECLs, the Group considers reasonable and supportable
information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Group’s historical experience
and informed credit assessment and including forward-looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more
than past due for a reasonable period of time. Lifetime ECLs are the ECLs that result from all
possible default events over the expected life of a financial instrument. 12-month ECLs are the
portion of ECLs that result from default events that are possible within the 12 months after the
reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period
over which the Group is exposed to credit risk.

The Group has elected to measure loss allowances for trade debts using IFRS 9 simplified
approach and has calculated ECLs based on lifetime ECLs. The Group has established a matrix
that is based on the Group’s historical credit loss experience, adjusted for forward-looking factors
specific to the debtors and the economic environment. When determining whether the credit
risk of a financial asset has increased significantly since initial recognition and when estimating
ECLs, the Group considers reasonable and supportable information that is relevant and available
without undue cost or effort. This includes both quantitative and qualitative information and
analysis, based on the Group’s historical experience and informed credit assessment including
forward-looking information.

Loss allowances for financial assets measured at amortized cost are deducted from the gross
carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Group has no reasonable
expectations of recovering of a financial asset in its entirety or a portion thereof. The Group
individually makes an assessment with respect to the timing and amount of write-off based
on whether there is a reasonable expectation of recovery. The Group expects no significant
recovery from the amount written off. However, financial assets that are written off could still be
subject to enforcement activities in order to comply with the Group’s procedures for recovery of
amounts due.

At each reporting date, the Group assesses whether financial assets carried at amortised cost
and debt securities at FVTOCI are credit-impaired. A financial asset is ‘credit-impaired’ when
oneor more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.

ANNUAL REPORT 2021 261

 Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of the debtor;
- a breach of contract such as a default;
- the restructuring of a loan or advance by the Group on terms that the Group would not
consider otherwise;
- it is probable that the debtor will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for a security because of financial difficulties.

2.15 De-recognition of financial assets and financial liabilities

a) Financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from
the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred,
or it neither transfers nor retains substantially all of the risks and rewards of ownership and does
not retain control over the transferred asset. Any interest in such de-recognized financial assets
that is created or retained by the Group is recognized as a separate asset or liability.

b) Financial liabilities

The Group derecognizes a financial liability (or a part of financial liability) from its consolidated
statement of financial position when the obligation specified in the contract is discharged or
cancelled or expires.

2.16 Offsetting of financial instruments

Financial assets and financial liabilities are set off and the net amount is reported in the
consolidated financial statements when there is a legal enforceable right to set off and the
Group intends either to settle on a net basis or to realize the assets and to settle the liabilities
simultaneously.

2.17 Hedge accounting

IFRS 9 requires that hedge accounting relationships are aligned with its risk management
objectives and strategy and to apply a more qualitative and forward-looking approach to
assessing hedge effectiveness.

There is no impact of the said change on these consolidated financial statements as there is no
hedge activity carried on by the Group during the year ended 30 June 2021.

2.18 Investment in gold

Investment in gold is initially recognized at fair value less cost to sell. Subsequent to initial
recognition, these are measured at fair value using spot rate fixed by the Pakistan Mercantile
Exchange Limited (PMEX). Gain or loss arising from changes in fair value less cost to sell are
recognized in the consolidated statement of profit or loss in the period of change.

2.19 Inventories

Inventories, except for stock in transit and waste stock / rags, are stated at lower of cost and
net realizable value. Cost is determined as follows:

Stores, spare parts and loose tools

Useable stores, spare parts and loose tools are valued principally at moving average cost, while
items considered obsolete are carried at nil value. Items in transit are valued at cost comprising
invoice value plus other charges paid thereon.

262 KOHINOOR TEXTILE MILLS LIMITED

 Stock-in-trade

Cost of raw materials, work-in-process and finished goods is determined as follows:

(i) For raw materials: Annual average basis.
(ii) For work-in-process and finished goods: Average manufacturing cost including a
portion of production overheads.

Materials in transit are valued at cost comprising invoice value plus other charges paid thereon.
Waste stock / rags are valued at net realizable value.

Net realizable value signifies the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make a sale.

2.20 Trade and other receivables

Trade debts are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any allowance for expected credit losses.

Other receivables are recognized at amortized cost, less any allowance for expected credit
losses.

2.21 Borrowings

Financing and borrowings are recognized initially at fair value and are subsequently stated at
amortized cost. Any difference between the proceeds and the redemption value is recognized in
the consolidated statement of profit or loss over the period of the borrowings using the effective
interest method.

2.22 Borrowing cost

Interest, mark-up and other charges on long-term finances are capitalized up to the date of
commissioning of respective qualifying assets acquired out of the proceeds of such long-term
finances. All other interest, mark-up and other charges are recognized in consolidated statement
of profit or loss.

2.23 Trade and other payables

Liabilities for trade and other amounts payable are initially recognized at fair value, which is
normally the transaction cost.

2.24 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit
accounts and other short term highly liquid instruments that are readily convertible into known
amounts of cash and which are subject to insignificant risk of changes in values.

2.25 Share capital

Ordinary shares of the Holding Company are classified as share capital. Incremental cost directly
attributable to the issue of new shares are shown in equity as a deduction, net of tax.

2.26 Revenue from contracts with customers

i) Revenue recognition

Sale of goods

Revenue from the sale of goods is recognized at the point in time when the customer obtains
control of the goods, which is generally at the time of delivery.

ANNUAL REPORT 2021 263

 Processing services

The Holding Company provides processing services to local customers. These services are
rendered separately and the Holding Company’s contract with the customer for services
constitute a single performance obligation.

Revenue from services is recognized at the point in time, generally at the time of dispatch. There
are no terms giving rise to variable consideration under the Holding Company’s contracts with
its customers.

Interest

Interest income is recognized as interest accrues using the effective interest method. This is a
method of calculating the amortized cost of a financial asset and allocating the interest income
over the relevant period using the effective interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to the net carrying
amount of the financial asset.

Dividend

Dividend on equity investments is recognized when right to receive the dividend is established.

Other revenue

Other revenue is recognized when it is received or when the right to receive payment is
established.

Realized gain

a) Realized capital gains / (losses) arising on sale of investments are included in the consolidated
statement of profit or loss on the date at which the transaction takes place.

b) Realized gains / (losses) arising on sale of gold are included in the consolidated statement
of profit or loss on the date at which the transaction takes place.

Unrealized gain

a) Unrealized capital gains / (losses) arising on changes in the fair value of investments
classified as “Fair value through profit or loss” are included in the consolidated statement of
profit or loss in the period in which they arise.

b) Unrealized gains / (losses) arising on revaluation of gold are included in the consolidated
statement of profit or loss in the period in which they arise.

ii) Contract assets

Contract assets arise when the Group performs its performance obligations by transferring
goods to a customer before the customer pays its consideration or before payment is due.
Contract assets are treated as financial assets for impairment purposes.

iii) Customer acquisition costs

Customer acquisition costs are capitalized as an asset where such costs are incremental to
obtaining a contract with a customer and are expected to be recovered. Customer acquisition
costs are amortized on a straight-line basis over the term of the contract.

Costs to obtain a contract that would have been incurred regardless of whether the contract
was obtained or which are not otherwise recoverable from a customer are expensed as incurred
to profit or loss. Incremental costs of obtaining a contract where the contract term is less than
one year is immediately expensed to profit or loss.

264 KOHINOOR TEXTILE MILLS LIMITED
 iv) Customer fulfillment costs

Customer fulfillment costs are capitalized as an asset when all the following are met: (i) the costs
relate directly to the contract or specifically identifiable proposed contract; (ii) the costs generate
or enhance resources of the Group that will be used to satisfy future performance obligations;
and (iii) the costs are expected to be recovered. Customer fulfillment costs are amortized on a
straight-line basis over the term of the contract.

v) Right of return assets

Right of return assets represents the right to recover inventory sold to customers and is based
on an estimate of customers who may exercise their right to return the goods and claim a
refund. Such rights are measured at the value at which the inventory was previously carried prior
to sale, less expected recovery costs and any impairment.

vi) Contract liabilities

Contract liability is the obligation of the Group to transfer goods to a customer for which the
Group has received consideration from the customer. If a customer pays consideration before
the Group transfers goods, a contract liability is recognized when the payment is made. Contract
liabilities are recognized as revenue when the Group performs its performance obligations under
the contract.

vii) Refund liabilities

Refund liabilities are recognized where the Group receives consideration from a customer and
expects to refund some, or all, of that consideration to the customer. A refund liability is measured
at the amount of consideration received or receivable for which the Group does not expect to
be entitled and is updated at the end of each reporting period for changes in circumstances.
Historical data is used across product lines to estimate such returns at the time of sale based
on an expected value methodology.

2.27 Derivative financial instruments

Derivatives are initially recognized at fair value. Any directly attributable transaction costs are
recognized in the consolidated statement of profit or loss as incurred. They are subsequently
remeasured at fair value on regular basis and at each reporting date as a minimum, with all their
gains and losses, realized and unrealized, recognized in the consolidated statement of profit or
loss.

2.28 Segment reporting

Segment reporting is based on the operating (business) segments of the Group. An operating
segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to the transactions
with any of the Group’s other components. An operating segment’s operating results are reviewed
regularly by the chief executive officer to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the chief executive officer include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis. Those incomes,
expenses, assets, liabilities and other balances which cannot be allocated to a particular
segment on a reasonable basis are reported as unallocated.

The Group has six reportable business segments. Spinning (Producing different quality of yarn
using natural and artificial fibers), Weaving (Producing different quality of greige fabric using
yarn), Processing and Home Textile (Processing greige fabric for production of printed and dyed
fabric and manufacturing of home textile articles), Power (generation of electricity), Investment
(invest the capital in any sort of financial instruments and commodities) and Cement.

ANNUAL REPORT 2021 265

 Transaction among the business segments are recorded at arm’s length prices using admissible
valuation methods. Inter segment sales and purchases are eliminated from the total.

2.29 Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting
date to determine whether there is any indication of impairment. If such indication exists, the
recoverable amount of such asset is estimated. An impairment loss is recognized wherever the
carrying amount of the asset exceeds its recoverable amount. Impairment losses are recognized
in consolidated statement of profit or loss except for impairment loss on revalued assets, which
is adjusted against the related revaluation surplus to the extent that the impairment loss does
not exceed the surplus on revaluation of that asset.

2.30 Government grants

The Group follows deferral method of accounting for government grant related to subsidized
long term loan. Government grant is initially recognized as deferred grant and measured as the
difference between the initial carrying value of the long term loan recorded at market rate (i.e. fair
value of the long term loan in this case) and the proceeds of subsidized long term loan received.
In subsequent years, the grant is recognized in consolidated statement of profit or loss, in
line with the recognition of interest expenses the grant is compensating and is presented as a
reduction of related interest expense.

2.31 Earnings per share

The Group presents earnings per share (EPS) data for its ordinary shares. EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares outstanding during the year.

2.32 Contingent assets

Contingent assets are disclosed when the Group has a possible asset that arises from past
events and whose existence will only be confirmed by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the Group. Contingent assets are
not recognized until their realization becomes certain.

2.33 Contingent liabilities

Contingent liability is disclosed when the Group has a possible obligation as a result of past
events whose existence will only be confirmed by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the control of the Group. Contingent liabilities
are not recognized, only disclosed, unless the possibility of a future outflow of resources is
considered remote. In the event that the outflow of resources associated with a contingent
liability is assessed as probable, and if the size of the outflow can be reliably estimated, a
provision is recognized in the consolidated financial statements.

2.34 Dividend and other appropriations

Dividend distribution to the Group’s shareholders is recognized as a liability in the Group’s
consolidated financial statements in the period in which the dividends are declared and other
appropriations are recognized in the period in which these are approved by the Board of
Directors.

266 KOHINOOR TEXTILE MILLS LIMITED

3. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL

2021 2020 2021 2020
(Number of Shares) (Rupees in thousand)

1,596,672 1,596,672 Ordinary shares of Rupees 10 each allotted on

reorganization of Kohinoor Industries Limited 15,967 15,967

26,156,000 26,156,000 Ordinary shares allotted under scheme of
arrangement of merger of Part II of Maple
Leaf Electric Company Limited 261,560 261,560

26,858,897 26,858,897 Ordinary shares allotted under scheme of
arrangement of merger of K ohinoor Raiwind
Mills Limited and Kohinoor Gujar
Khan Mills Limited 268,589 268,589

75,502,560 75,502,560 Ordinary shares of Rupees 10 each issued
as fully paid bonus shares 755,025 755,025

169,182,327 169,182,327 Ordinary shares of Rupees 10 each issued
as fully paid in cash 1,691,823 1,691,823

299,296,456 299,296,456 2,992,964 2,992,964

2021 2020
Note (Rupees in thousand)
4. RESERVES

Composition of reserves is as follows:

Capital reserves

Share premium 4.1 986,077 986,077

Surplus on revaluation of freehold land and
investment properties

Freehold land
As at 01 July 2,778,124 2,773,125
Increase due to revaluation to fair value 19.1 28,730 4,999

As at 30 June 2,806,854 2,778,124
Investment properties 1,263,592 1,263,592

4,070,446 4,041,716

5,056,523 5,027,793
Revenue reserves
General reserve 1,450,491 1,450,491
Unappropriated profit 26,092,086 18,368,673

27,542,577 19,819,164

32,599,100 24,846,957

ANNUAL REPORT 2021 267

 This reserve can be utilized by the Group only for the purposes specified in section 81 of the
4.1
Companies Act, 2017.

2021 2020
Note (Rupees in thousand)

5. NON-CONTROLLING INTEREST

Opening balance 14,756,901 13,801,463
Add / (less): Share during the year:
Issuance of right shares - net of issue cost - 2,684,596
Transaction with non-controlling interests (293,910) -
Profit / (loss) for the year 2,594,071 (1,603,133)
Other comprehensive (loss) / income for the year (8,611) 6,904

2,291,550 1,088,367
Less : Dividend paid - (132,929)

17,048,451 14,756,901

6. LONG TERM FINANCING

From banking companies and other
financial institution - secured

Holding Company 6.1 4,206,691 2,968,283

Subsidiary Company - MLCFL 6.2 13,341,361 12,298,102

Subsidiary Company - MLPL - Long term portion of
finance against trust receipts 15 - 32,956

17,548,052 15,299,341
Less: Current portion shown under current liabilities 16 (2,737,329) (232,296)

14,810,723 15,067,045

268 KOHINOOR TEXTILE MILLS LIMITED

 RATE OF
TOTAL NUMBER OF INTEREST
LENDER 2021 2020 INTEREST PER SECURITY
FACILITY ANNUM INSTALLMENTS PAYABLE

.....Rupees in thousand.....
6.1 Holding Company

The Bank of 128,087 129,004 600,000 SBP LTFF Sixteen equal quarterly Quarterly Joint pari passu charge
Punjab rate + installments commenced amounting to Rupees 2,000
2.50% from 09 September 2016 million (inclusive of 25% margin)
and ending on 07 November on all the fixed assets (excluding
2021. land and building) of the
Company.

384,684 387,775 400,000 SBP LTFF Thirty six equal quarterly Quarterly
rate + 1% installments commenced
from 31 January 2018 and
ending on 19 February 2030.

465,504 461,143 500,000 SBP LTFF Twenty four equal quarterly Quarterly
rate + 1% installments commenced
from 26 February 2019 and
ending on 02 July 2030.

978,275 977,922 1,500,000

The Bank of 129,600 - 400,000 3 Month Twenty four equal quarterly Quarterly Ranking charge amounting to
Punjab Kibor + 1% installments after grace Rupees 533 million (inclusive
period for every tranche from of 25% margin) on all the fixed
its date of disbursement. assets (excluding land and
building) of the Company.

MCB Bank 26,032 78,804 317,679 SBP LTFF Twenty eight equal quarterly Quarterly First pari passu charge over land
Limited rate + 2.5% installments commenced and building of Raiwind Division
from 25 November 2015 amounting to Rupees 467
and ending on 10 December million, and plant and machinery
2021. of the Company and personal
guarantees of the sponsor
directors.

MCB Bank 418,522 - 500,000 SBP TERF Twenty four equal quarterly Quarterly Ranking charge amounting to
Limited (Note rate + 1% installments commencing Rupees 667 million on all the
6.3) from 25 May 2023 and fixed assets (excluding land and
ending on 04 June 2031. building) of the Company.

National Bank 474,449 452,750 500,000 SBP LTFF Twelve equal half yearly Half yearly Joint pari passu charge
of Pakistan rate + installments commenced amounting to Rupees 1,624
1.25% from 30 June 2018 and million (inclusive of 25% margin)
ending on 10 February over plant and machinery of the
2025. Company.

202,710 217,530 218,000 SBP LTFF Twelve equal half yearly Half yearly
rate + installments commenced
1.25% from 27 June 2020 and
ending on 24 June 2026.

340,371 373,466 500,000 SBP LTFF Twelve equal half yearly Half yearly
rate + installments after expiry of 18
1.00% months from the date of first
disbursement.

1,017,530 1,043,746 1,218,000

National Bank 89,362 - 143,000 SBP LTFF Twelve equal half yearly Half yearly Ranking charge amounting to
of Pakistan rate + 1% installments commencing Rupees 190.667 million on all
from 18th month of first the fixed assets (excluding land
drawdown and subsequently and building) of the Company.
every 6 month or as per
SBP finalized repayment
schedule.

National Bank 18,107 - 500,000 SBP LTFF Twelve equal half yearly Half yearly Ranking charge amounting to
of Pakistan rate + 1% installments commencing Rupees 667 million on all the
from 18th month of fixed assets (excluding land and
first drawdown and building) of the Company.
subsequently every 6 month
or as per SBP finalized
repayment schedule.

PAIR 180,484 180,484 300,000 SBP LTFF Twenty four equal quarterly Quarterly Joint pari passu charge over
Investment rate + 1% installments commenced fixed assets (excluding land and
Company from 17 July 2018 and building) amounting to Rupees
Limited ending on 23 August 2025. 400 million of Rawalpindi
and Gujar Khan Division and
personal guarantees of the
sponsor directors.

54,033 - 119,500 SBP LTFF Twenty equal quarterly Quarterly

rate + 1.5% installments commencing
from 27th month of the date
of first disbursement.

234,517 180,484 419,500

ANNUAL REPORT 2021 269

 RATE OF
TOTAL NUMBER OF INTEREST
LENDER 2021 2020 INTEREST PER SECURITY
FACILITY ANNUM INSTALLMENTS PAYABLE

.....Rupees in thousand.....

Askari Bank 172,558 211,781 350,000 SBP LTFF Thirty six equal quarterly Quarterly First pari passu charge over land
Limited rate + installments commenced and building of Raiwind Division
1.25% from 28 January 2018 and amounting to Rupees 467
ending on 31 October 2027. million, and plant and machinery
of the Company and personal
guarantees of the sponsor
directors.

Allied Bank 410,790 132,641 500,000 SBP LTFF Twenty four equal quarterly Quarterly Joint pari passu charge
Limited rate + installments commencing amounting to Rupees 2,000
1.00% from 21 July 2021 and million (inclusive of 25 % Margin)
ending on 23 June 2028. over plant and machinery of the
Company.

Allied Bank 711,398 342,905 1,000,000 SBP LTFF Eight equal quarterly Quarterly
Limited (Note rate for installments commenced
6.4) payment from 31 January 2021 and
of wages ending on 25 November
& salaries 2022.
+ 0.5% to
1.00%

1,122,188 475,546 1,500,000

4,206,691 2,968,283 6,848,179

6.2 Subsidiary Company (MLCFL)

Askari Bank 707,129 707,129 707,130 3 month KIBOR + 20 equal quarterly Quarterly 1st joint pari passu charge of
Limited - Term 75bps p.a payable installments starting from Rupees 1333.33 million over
Finance quarterly in arrears 28 March 2022 fixed assets of MLCFL with 25%
from 1st drawdown margin
to be set on last
business day before
first draw down and
then on immediately
preceding day of
each quarter.

The Bank 1,253,119 1,253,119 1,253,119 3 month KIBOR + 20 equal quarterly Quarterly 1st joint pari passu charge over
of Punjab 75bps p.a payable installments starting from all present and future fixed assets
- Demand quarterly in arrears 27 May 2022 of MLCFL with 25% margin
Finance to be reset on last amounting to Rupees 4,666.67
working day of million and personal guarantee of
preceding calendar Mr. Tariq Sayeed Saigol and Mr.
quarter. Sayeed Tariq Saigol (sponsoring
directors).

MCB Bank 1,367,920 1,367,920 1,451,920 3 month KIBOR + 20 equal quarterly Quarterly 1st joint pari passu charge of
Limited - 75bps p.a payable installments starting from Rupees 6,667 million over all
Demand quarterly in arrears 22 June 2022 present and future fixed assets
Finance to be reset on 1st of MLCFL with 25% margin
working day of each
quarter.

National Bank 2,994,285 2,994,285 5,500,000 3 month KIBOR + 21 equal quarterly Quarterly 1st joint pari passu charge of
of Pakistan 75bps p.a payable installments starting from Rupees 7,334 million over fixed
- Demand quarterly in arrears 30 September 2021 assets of MLCFL and personal
Finance to be set on last guarantee of Mr. Tariq Sayeed
business day before Saigol and Mr. Sayeed Tariq
first draw down and Saigol (sponsoring directors).
then on immediately
preceding day
of each calendar
quarter

Samba Bank 450,000 450,000 450,000 3 month KIBOR + 12 equal quarterly Quarterly Joint pari passu charge of
Limited - Term 75bps p.a payable installments starting from Rupees 600 million on entire
Finance quarterly in arrears 01 April 2022 present and future fixed assets
to be reset on 1st of MLCFL
working day of each
calendar quarter

MCB Bank 1,488,379 1,488,379 1,488,379 3 month KIBOR + 21 equal quarterly Quarterly 1st joint pari passu charge of
Limited (EX 75bps p.a payable installments starting from 4 Rupees 6,667 million over all
NIB) - Term quarterly in arrears May 2022 present and future fixed assets
Finance to be set on the first of MLCFL with 25% margin
working day of every
calendar quarter.

270 KOHINOOR TEXTILE MILLS LIMITED

 RATE OF
TOTAL NUMBER OF INTEREST
LENDER 2021 2020 INTEREST PER SECURITY
FACILITY ANNUM INSTALLMENTS PAYABLE

.....Rupees in thousand.....

MCB Islamic 1,104,167 1,104,167 1,500,000 3 month KIBOR + 18 equal quarterly Quarterly 1st joint pari passu charge
Bank Limited 70 bps p.a payable installments starting from of Rupees 2,000 million over
- Diminishing quarterly in arrears 27 March 2022 all present and future fixed
Musharikah to be set on the assets, personal guarantee of
date of first day Mr. Tariq Sayeed Saigol and Mr.
of disbursement Sayeed Tariq Saigol (sponsoring
and to be reset on directors).
1st working day of
calendar quarter.

Habib Bank 714,286 714,286 1,000,000 3 month KIBOR + 20 equal quarterly Quarterly Joint pari passu equitable and
Limited - Term 75bps p.a payable installments starting from hypothecation charge of Rupees
Finance quarterly in arrears 28 September 2022 1,334 million over all present and
to be set on last future fixed assets of MLCFL.
business day before
first draw down and
then on immediately
preceding day of
each quarter

Askari Bank 125,000 125,000 125,000 3 month KIBOR + 5 equal quarterly Quarterly 1st joint pari passu charge of
Limited - Term 125 bps p.a payable installments starting from Rupees 667 million over fixed
Finance quarterly in arrears 04 March 2022 assets of MLCFL with 25%
to be set on last margin.
business day before
first draw down and
then on immediately
preceding day of
each quarter

The Bank 374,339 374,339 374,339 3 month KIBOR 5 equal quarterly Quarterly 1st joint pari passu charge over
of Punjab + 125 bps p.a installments starting from all present and future fixed assets
- Demand payable quarterly in 06 April 2022 of MLCFL with 25% margin
Finance arrears to be set on amounting to Rupees 4,666.67
the day of 1st draw million and personal guarantee of
down and then on Mr. Tariq Sayeed Saigol and Mr.
last working day of Sayeed Tariq Saigol (sponsoring
preceding calendar directors).
quarter.

MCB Bank 37,029 185,145 185,145 3 month KIBOR + 5 equal quarterly Quarterly 1st joint pari passu charge of
Limited - 115bps p.a payable installments starting from Rupees 6,667 million over all
Demand quarterly in arrears 06 April 2022 present and future fixed assets
Finance to be reset on 1st of MLCFL .
working day of each
calendar quarter

National Bank 250,000 250,000 1,000,000 3 month KIBOR 5 equal quarterly Quarterly 1st pari passu charge of Rupees
of Pakistan + 125 bps p.a installments starting form 1334 million over all present and
- Demand payable quarterly 06 April 2022 future fixed assets of MLCFL,
Finance in arrears to be set personal guarantee of Mr.
on the date of first Tariq Sayeed Saigol and Mr.
disbursement and Sayeed Tariq Saigol (sponsoring
subsequently at the directors).
beginning of each
Calendar quarter
on the basis of rate
as at last working
day of immediately
preceding calendar
quarter.

MCB Islamic 166,667 166,667 500,000 3 month KIBOR +70 8 equal quarterly Quarterly Joint pari passu charge of
Bank Limited bps p.a payable installments starting from Rupees 666.67 million over all
- Diminishing quarterly in arrears 13 December 2022 present and future fixed assets
Musharikah to be set on the date of MLCFL, personal guarantee of
of first disbursement Mr. Tariq Sayeed Saigol and Mr.
and subsequently Sayeed Tariq Saigol (sponsoring
at the beginning of directors).
each quarter.

Pair 150,000 150,000 300,000 3 month KIBOR 8 equal quarterly Quarterly 1st pari passu charge over
Investment + 100 bps p.a. installments starting from present and future fixed assets
Company payable quarterly 28 September 2021 of MLCFL with 25% margin.
Limited with the first
payment falling due
at the end of the 3rd
month from the first
disbursement date
and subsequently
every three months
thereafter.

ANNUAL REPORT 2021 271

 RATE OF
TOTAL NUMBER OF INTEREST
LENDER 2021 2020 INTEREST PER SECURITY
FACILITY ANNUM INSTALLMENTS PAYABLE

.....Rupees in thousand.....

Askari Bank 97,964 - 900,000 3 month KIBOR + 20 equal quarterly Quarterly Cushion available against
Limited - Term 75 bps p.a payable installments starting from existing registered 1st joint pari
Finance quarterly in arrears 17 November 2021 passu charge of Rupees 2,000
to be set on the million, to the extent of Rupees
day of 1st draw 890.493 million, over fixed assets
down and then on of MLCFL with 25% margin and
last working day of ranking hypothecation charge
preceding calendar of Rupees 310 million with 25%
quarter. margin, over all present and
future fixed assets (excluding
land and building) of MLCFL (to
be upgraded to 1st Joint Pari
Passu charge).

Askari Bank 522,951 - 900,000 SBP Rate + 200 20 equal quarterly Quarterly Ranking hypothecation charge
Limited bps p.a payable installments starting from of Rupees 310 million, Margin
- TERF quarterly in arrears. 17 November 2021 25% over all present and future
(Note 6.3) fixed assets (excluding land
and building) of MLCFL to be
registered with SECP.

Allied Bank 609,385 433,179 933,000 SBP rate plus 50bps 8 equal quarterly Quarterly 1st pari passu charge over all
Limited- SBP to 100bps p.a installments starting from fixed assets of MLCFL with 25%
refinance payable quarterly. 31 January 2021 margin.
for Wages
and Salaries
(Note 6.4)

The Bank 161,102 - 1,000,000 3 month KIBOR + 24 equal quarterly Quarterly 1st joint pari passu charge over
of Punjab 75 bps p.a payable installments starting from all present and future fixed assets
- Demand quarterly in arrears 14 Dec 2021 of MLCFL with 25% margin
Finance to be set on the amounting to Rupees 4,666.67
day of 1st draw million and personal guarantee of
down and then on Mr. Tariq Sayeed Saigol and Mr.
last working day of Sayeed Tariq Saigol (sponsoring
preceding calendar directors).
quarter.

National Bank 198,302 - 3,000,000 3 month KIBOR+ 32 equal quarterly Quarterly Ranking charge of Rupees 4,000
of Pakistan 125bps p.a payable installments starting form million, to be upgraded to Ist joint
- Demand quarterly in arrears 18 September 2023 parri passu charge, over present
Finance to be reset on last and future fixed assets of MLCFL
working day of with 25% margin and personal
preceding calendar guarantee of Mr. Tariq Sayeed
quarter. Saigol and Mr. Sayeed Tariq
Saigol (sponsoring directors).

The Bank 182,555 - 3,000,000 3 month KIBOR + 32 equal quarterly Quarterly Cushion available against
of Punjab 90 bps p.a payable installments starting form existing registered 1st joint
- Demand quarterly in arrears 18 June 2023 pari passu charge of Rupees
Finance to be reset on last 4,666.66 million, to the extent
working day of of Rupees 763.9 million, over
preceding calendar fixed assets of MLCFL with 25%
quarter. margin and initial ranking charge
of Rupees 3236.1 million with
25% margin, over all present and
future fixed assets of MLCFL (to
be upgraded to 1st Joint Pari
Passu charge).

MCB Bank 136,931 - 2,000,000 3 month KIBOR +75 32 equal quarterly Quarterly 1st joint pari passu charge of
Limited - bps p.a payable installments starting form Rupees 6,667 million over all
Demand quarterly in arrears 18 June 2023 present and future fixed assets
Finance to be reset on last of MLCFL with 25% margin
working day of
preceding calendar
quarter.

Habib Bank 249,851 - 2,000,000 SBP+ 150bps p.a 20 equal quarterly Quarterly 1st joint pari passu charge
Limited - LTFF payable on calendar installments starting from of Rupees 4,000 million over
quarter. 25 September 2023 present and future fixed assets
of MLCFL with 25% margin

13,341,361 11,763,615 29,568,032

Long term - 534,487

portion of
cash finance
and others

13,341,361 12,298,102

272 KOHINOOR TEXTILE MILLS LIMITED

 6.2.1 MLCFL has un-availed long term facilities amounting to Rupees 2,000 million (2020: Rupees
3,000 million) for the purpose of expansion / BMR of new cement product line.

6.3 This represents long-term loan obtained by the Group under “SBP Temporary Economic
Refinance Facility” for import of plant and machinery and setting up of Waste Heat Recovery
Plant. The facility carries markup at the rate specified by State Bank of Pakistan plus spread of
1% to 2% per annum. The loan has been measured at its fair value in accordance with IFRS
9 (Financial Instruments) using market rates. The difference between fair value of loan and loan
proceeds has been recognised as deferred grant as per requirements of IAS 20 (Accounting
for Government Grants and Disclosure of Government Assistance) and as per selected opinion
issued in November 2020 by the Institute of Chartered Accountants of Pakistan. The reconciliation
of the carrying amount is as follows:

MLCFL KTML Total
2021 2020 2021 2020 2021 2020
----------------(RUPEES IN THOUSAND)----------------

Balance at beginning of the year - - - - - -

Disbursements during the year 591,957 - 441,534 - 1,033,491 -
Repayments during the year - - - - - -

591,957 - 441,534 - 1,033,491 -

Discounting adjustments for
recognition at fair value - deferred
government grant (73,786) - (23,575) - (97,361) -
Unwinding of discount on liability 4,780 - 563 - 5,343 -

Balance as at end of the year 522,951 - 418,522 - 941,473 -

6.4 These represent long-term loans obtained by the Group under SBP Refinance Scheme for
payment of wages and salaries to workers. The loan has been measured at its fair value in
accordance with IFRS 9 (Financial Instruments) using market rates. These loans are repayable
in 8 equal quarterly installments commenced from 31 January 2021. The difference between
fair value of loan and loan proceeds has been recognised as deferred grant as per requirements
of IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance) and
as per Circular 11/2020 issued by the Institute of Chartered Accountants of Pakistan. The
reconciliation of the carrying amount is as follows:

MLCFL KTML Total
2021 2020 2021 2020 2021 2020
----------------(RUPEES IN THOUSAND)----------------

Balance at beginning of the year 433,179 - 342,905 - 776,084 -

Disbursements during the year 420,081 433,179 657,095 342,905 1,077,176 776,084
Repayments during the year (213,315) - (250,000) - (463,315) -

639,945 433,179 750,000 342,905 1,389,945 776,084

Discounting adjustments for
recognition at fair value - deferred
government grant (68,306) - (83,969) - (152,275) -
Unwinding of discount on liability 37,746 - 45,367 - 83,113 -

Balance as at end of the year 609,385 433,179 711,398 342,905 1,320,783 776,084

ANNUAL REPORT 2021 273

 2021 2020
Note (Rupees in thousand)

7. DEFERRED GOVERNMENT GRANTS

Government grant recognised during the year 7.1 249,636 -

Less: Amortisation of deferred government
grant during the year (88,456) -

161,180 -
Less: Current portion of deferred government grant 16 (87,324) -

73,856 -

7.1 This represent deferred government grants in respect of long term loans obtained by the Group
under “SBP Temporary Economic Refinance Facility” and SBP Refinance Scheme for payment
of wages and salaries to workers as disclosed in note 6.3 & 6.4 to these consolidated financial
statements, respectively. There are no unfulfilled conditions or other contingencies attached to
these grants.

2021 2020
Note (Rupees in thousand)

8. GAS INFRASTRUCTURE DEVELOPMENT

CESS (GIDC) PAYABLE

Balance at the beginning of the year 649,333 649,333
Less: Gain on remeasurement of GIDC 39 (50,596) -
Less: Payments made during the year (64,864) -
Add: Unwinding of discount on GIDC payable 40 33,968 -

567,841 649,333
Less: Current portion of GIDC payable 16 (510,657) (649,333)

8.1 57,184 -

8.1 This represents non-current portion of Gas Infrastructure Development Cess (GIDC) payable
to Sui Northern Gas Pipelines Limited (SNGPL). During previous years, the Group, along with
various other companies had challenged the legality and validity of levy and demand of GIDC in
Honorable Lahore High Court which was pending adjudication at the end of last year. However,
during the year Supreme Court of Pakistan vide judgement dated 13 August 2020, while
dismissing appeals filed by various industrial and commercial entities with respect to the legality
and validity of levy and demand of GIDC, has decided the case in favor of SNGPL. Now the
Group is to pay the balance amount of GIDC in 24 equal monthly installments. This liability has
been recognized at fair value using discount rate of 8.23% and 8.31% per annum by Holding
Company and MLCFL respectively. The difference between the fair value and the total amount
of liability is recognized in statement of profit or loss as other income. Subsequent to initial
recognition, the effect of unwinding of liability is recognized in statement of profit or loss as
finance cost.

9. LONG TERM DEPOSITS

These represent deposits received from dealers and are being utilized by the Subsidiary Company,
MLCFL in accordance with the terms of dealership agreements. These deposits have not been kept in
a separate bank account.

274 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

10. RETIREMENT BENEFITS

Subsidiary Company - MLCFL

Accumulated compensated absences 10.1 137,775 126,963
Gratuity 10.2 90,491 87,989

228,266 214,952

10.1 Accumulated compensated absences

The actuarial valuation of the MLCFL’s accumulated compensated absences was conducted
on 30 June 2021 using projected unit credit method. Detail of obligation for accumulated
compensated absences is as follows:

2021 2020
(Rupees in thousand)

10.1.1 Movement in the present value of defined

benefit obligations is as follows:

Present value of defined benefit obligations at
beginning of the year 126,963 106,184
Current service cost 10,053 12,275
Interest cost for the year 9,957 14,354
Actuarial losses on present value of defined
benefit obligations 10,450 8,531
Less: Benefits paid during the year (19,648) (14,381)

137,775 126,963

10.1.2 Charge for the year

Consolidated statement of profit or loss:
Current service cost for the year 10,053 12,275
Interest cost for the year 9,957 14,354
Actuarial losses on present value of defined
benefit obligations 10,450 8,531

30,460 35,160

10.1.3 Sensitivity analysis

If the significant actuarial assumptions used to estimate the liability of compensated absences at
the reporting date, had fluctuated by 100 bps with all other variables held constant, the present
value of the defined benefit obligation as at 30 June 2021 would have been as follows:

Compensated absences
Impact on present value of
defined benefit obligation
Increase Decrease
(Rupees in thousand)

Discount rate + 100 bps 124,097 153,994

Future salary increase + 100 bps 153,723 124,108

ANNUAL REPORT 2021 275

 The sensitivity analysis of the defined benefit obligation to the significant actuarial assumptions
has been performed using the same calculation techniques as applied for calculation of defined
benefit obligation reported in the statement of financial position.

10.1.4 At 30 June 2021, the average duration of the defined benefit obligation was 11 years.

2021 2020
(Percentage)

10.1.5 Actuarial assumptions

The following are the principal actuarial

assumptions as at 30 June 2021:

Discount rate used for interest cost 8.50% 14.50%

Discount rate used for year end obligations 10.00% 8.50%
Expected rate of growth per annum in future salaries 9.00% 7.50%
Expected mortality rate SLIC 2001 - 2005
Setback 1 Year
Retirement assumptions 60 Years

10.2 Gratuity

The latest actuarial valuation of the Subsidiary Company’s (MLCFL) defined benefit plan, was
conducted on 30 June 2021 using projected unit credit method. Detail of obligation for defined
benefit plan is as follows:

2021 2020
Note (Rupees in thousand)

The amounts recognized in the consolidated

statement of financial position are as follows:

Present value of defined benefit obligation 10.2.1 168,575 156,026
Less: Fair value of plan assets 10.2.2 (78,084) (70,163)
Plus: Payable to ex-employees - 2,126

Net liability at end of the year 90,491 87,989

Net liability at beginning of the year 87,989 99,170
Charge to consolidated statement of profit
or loss for the year 10.2.3 11,596 19,032
Charge to consolidated statement of
comprehensive income for the year 10.2.3 27,456 (8,870)
Contributions made during the year (36,550) (21,343)

Net liability at end of the year 90,491 87,989

276 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
(Rupees in thousand)

10.2.1 Movement in the present value of defined
benefit obligation is as follows:

Present value of defined benefit obligations at
Beginning of the year 156,026 167,576
Current service cost for the year 5,852 6,695
Interest cost for the year 11,708 21,900
Benefits due but not paid - (1,269)
Adjustment of Payables (already paid in last year) 2,126 -
Actuarial losses on present value of defined
benefit obligations 29,414 (12,363)
Benefits paid during the year (36,551) (26,513)
Present value of defined benefit obligation
at end of the year 168,575 156,026


10.2.2 Movement in the fair value of plan assets is as follows:

Fair value of plan assets at beginning of the year 70,163 69,263
Contributions made during the year 36,550 21,343
Expected return on plan assets for the year 5,964 9,563
Return on plan assets excluding interest income 1,958 (3,493)
Benefits paid during the year (36,551) (26,513)

Fair value of plan assets at end of the year 78,084 70,163

Plan assets comprise of:

NAFA Government Securities Liquid Fund 23,424 20,053
Special saving certificates 53,280 48,000
Cash at bank 1,380 2,110
Bank charges paid by Subsidiary on behalf of fund - -
Less : Benefits payable - -

78,084 70,163


2021 2020
Plan assets comprise of:

Equity 30.00% 28.58%
Special saving certificates 68.23% 68.41%
Cash at bank 1.77% 3.01%

100.00% 100.00%

ANNUAL REPORT 2021 277

 2021 2020
(Rupees in thousand)

10.2.3 Charge for the year:

In consolidated statement of profit or loss
Current service cost for the year 5,852 6,695
Interest cost for the year 11,708 21,900
Expected return on plan assets for the year (5,964) (9,563)

11,596 19,032
In consolidated statement of comprehensive income
Actuarial loss / (gain) on retirement benefits - net 27,456 (8,870)

39,052 10,162

Actuarial assumptions:

The following are the principal actuarial
assumptions at 30 June:

Discount rate used for year end obligation 10.00% 8.50%
Discount rate used for interest cost in profit or loss 8.50% 14.25%
Expected rate of growth per annum in future salaries 9.00% 7.50%
Expected mortality rate SLIC 2001 - 2005
Setback 1 Year
Retirement assumptions 60 Years


10.2.4 Sensitivity analysis

If the significant actuarial assumptions used to estimate the defined benefit obligation at the
reporting date, had fluctuated by 100 bps with all other variables held constant, the present
value of the defined benefit obligation as at 30 June 2021 would have been as follows:

Gratuity
Impact on present value of
defined benefit obligation
Increase Decrease
(Rupees in thousand)


Discount rate + 100 bps 161,490 176,312

Future salary increase + 100 bps 176,312 161,364

The sensitivity analysis of the defined benefit obligation to the significant actuarial assumptions
has been performed using the same calculation techniques as applied for calculation of defined
benefit obligation reported in the consolidated statement of financial position.

10.2.5 At 30 June 2021, the average duration of the defined benefit obligation was 4 years (2020: 4
years).

10.3 MLCFL expects to charge Rupees 13.537 million to consolidated statement of profit or loss on
account of defined benefit plan in the year ending 30 June 2022.

278 KOHINOOR TEXTILE MILLS LIMITED

11. RETENTION MONEY PAYABLE

This represents retention money payable by MLCFL to M/s FLS Smidth amounting to Euro 3.796
million (equivalent to Rupees 421.841 million at the exchange rate prevailing on the date of signing
of contract, i.e. 16 January 2017) on meeting the agreed performance guarantee. The amount is
payable after the expiry of two years period following the fulfillment of performance guarantee and has
been accounted for at present value using discount rate of 7% per annum and unwinding of liability
amounting to Rupees 25.625 million is charged to consolidated statement of profit or loss.

2021 2020
Note (Rupees in thousand)

12. DEFERRED INCOME TAX LIABILITY

This comprises of following:
Deferred tax liability on taxable temporary
differences in respect of:
Accelerated tax depreciation 5,955,056 5,684,514
Short term investments 435,383 59,534
6,390,439 5,744,048
Deferred tax asset on deductible temporary
differences in respect of:
Allowance for expected credit losses (106,222) (68,042)
Provision against obsolete stock-in-trade (1,132) (1,132)
Unused tax losses 12.1 (1,991,241) (2,781,037)
Tax credit under section 65B - (119,870)
Provision against slow moving stores, spare
parts and loose tools (1,094) (1,094)
Available tax loss on sale of investments and
trading in derivatives - (182,658)
Alternative corporate tax (276,429) -
Employees’ retirement benefits (65,117) (60,712)
(2,441,235) (3,214,545)
3,949,204 2,529,503
Movement in deferred tax balances is as follows:
At beginning of the year 2,529,503 3,106,416
Recognized in consolidated statement of profit or loss:
- Accelerated tax depreciation on operating fixed assets 270,542 568,765
- Short term investments 375,849 79,075
- Unrealized loss on re-measurement of futures contracts - shares - (1,915)
- Allowance for expected credit losses (38,180) (12,699)
- Unrealized gain on re-measurement of futures contracts - gold - 2,124
- Unused tax losses 789,796 (1,460,493)
- Tax credit under section 65B 119,870 440,969
- Provision against slow moving stores, spare
parts and loose tools - (740)
- Available tax loss on sale of investments and trading in derivatives 182,658 (182,658)
- Employees’ retirement benefits 3,427 (11,846)
- Alternative corporate tax (276,429) -
41 1,427,533 (579,418)
Recognized in consolidated statement of comprehensive income
- Employees’ retirement benefits (7,832) 2,505
3,949,204 2,529,503

ANNUAL REPORT 2021 279

 12.1 This represents deferred tax asset of Subsidiary Company, MLCFL on unused tax losses
amounting to Rupees 6,866.35 million (2020: Rupees 9,589.78 million) recognized on the basis
of future expected taxable profits. As at 30 June 2021, unused tax losses represent unabsorbed
depreciation which is available for adjustment for indefinite period in accordance with the
provisions of Income Tax Ordinance, 2001.

12.2 Deductible temporary differences are considered to the extent that the realization of related tax
benefits is probable from reversals of existing taxable temporary differences and future taxable
profits.
2021 2020
Note (Rupees in thousand)

13. TRADE AND OTHER PAYABLES

Creditors 3,955,017 4,455,068
Bills payable - secured 752,517 750,472
Accrued liabilities 1,153,193 1,027,945
Security deposits, repayable on demand 13.1 64,242 64,101
Contract liabilities - unsecured 401,711 384,642
Contractors’ retention money 43,296 271,258
Workers’ profits participation fund 13.2 1,725,945 1,477,908
Workers’ welfare fund 176,523 43,174
Duties and taxes 1,737,937 1,626,892
Payable against redemption of preference shares 1,016 -
Withholding income tax payable 4,385 8,522
Sindh infrastructure development cess 99,238 68,880
Payable to employees’ provident fund trust 20,739 11,841
Unrealised loss on re-measurement of futures contracts - shares 59,915 -
Others 50,877 50,958

10,246,551 10,241,661

13.1 This represents security deposits received from distributors and contractors of MLCFL.
Distributors and contractors have given MLCFL a right to utilize deposits in ordinary course of
business.

2021 2020
Note (Rupees in thousand)

13.2 Workers’ profits participation fund (WPPF)

Balance as on 01 July 1,477,908 1,483,332
Allocation for the year 38 432,966 163,283
Interest for the year 40 10,172 14,524

1,921,046 1,661,139
Less: Payments during the year (195,101) (183,231)

1,725,945 1,477,908

13.2.1 The Holding Company retains workers’ profits participation fund for its business operations till
the date of allocation to workers. Interest is paid at prescribed rate under the Companies Profits
(Workers’ Participation) Act, 1968 on funds utilized by the Holding Company till the date of
allocation to workers.

13.2.2 The outstanding WPPF liability of subsidiary companies, MLCFL and MLPL includes leftover
amount of Rupees 1,284.35 million payable to Workers Welfare Fund in terms of Companies
Profits Worker’s Participation Act, 1968 pertaining to the financial year ended 30 June 2012 to
30 June 2019. According to the 18th amendment to the Constitution of Pakistan in 2010, all
labor / labor welfare laws have become provincial subject, and accordingly the left over amount

280 KOHINOOR TEXTILE MILLS LIMITED

 is no more payable to the Federal Treasury. Major strength of Subsidiary Company’s employees
eligible for benefit of WPPF are working in the Province of Punjab and accordingly potential
amount of left over amount of WPPF is required to be paid to the relevant provincial authority as
held by the Honorable Sindh High Court in its judgment in C.P. No. D-1313 of 2013 announced
on 12 February 2018. The Government of Punjab has enacted Companies Profits (Workers’
Participation) (Amendment) Ordinance 2018 which is silent about the payment of the amount
in excess of employees’ entitlement. Further in view of legal constraints and constraints as
aforementioned, the management is of the view that no markup is due on the unpaid amount.

13.2.3 Workers’ profits participation fund has not been provided for in these consolidated financial
statements with respect to Subsidiary Company, MLCL on the advice of the MLCL’s legal
consultant.

13.3 This represents provision for infrastructure cess imposed by the Province of Sindh through Sindh
Finance Act, 1994 and its subsequent versions including the final version i.e. Sindh Development
and Maintenance of Infrastructure Cess Act, 2017. The Holding Company filed writ petition in
Honorable Sindh High Court, Karachi whereby stay was granted and directions were given
to provide bank guarantees in favor of Director Excise and Taxation, Karachi. The Honorable
Sindh High Court, Karachi passed order dated 04 June 2021 against the Holding Company and
directed that bank guarantees should be encashed. Being aggrieved by the order, the Holding
Company along with others are in the process of filing petitions for leave to appeal before
Honorable Supreme Court of Pakistan against the Sindh High Court’s judgment in relation to
Sindh infrastructure development cess.

2021 2020
Note (Rupees in thousand)

14. ACCRUED MARK-UP

Long term financing 240,854 340,455

Short term borrowings 97,777 342,862

338,631 683,317

15. SHORT TERM BORROWINGS

From banking companies - secured
Short term running finances 15.1 & 15.2 & 15.5 1,881,528 2,570,861
Finance against trust receipts:
Finance against trust receipts availed - 364,469
Classified to non-current 6 - (32,956)

15.6 - 331,513
Other short term finances 15.1 & 15.3 2,673,252 7,435,786
State Bank of Pakistan (SBP) refinances 15.1 & 15.4 4,519,777 3,538,802

9,074,557 13,876,962
Temporary bank overdraft - unsecured 15.7 5,719 338,764

9,080,276 14,215,726

15.1 These finances are obtained from banking companies under mark-up arrangements and are
secured by pledge of raw material and shares of listed companies as disclosed in note 32.2.1
to these consolidated financial statements, charge on current and future assets of the Group
including hypothecation of work-in-process, stores and spares, letters of credit, firm contracts,
book debts, lien marked over import documents and title of ownership of goods imported under
letters of credit and personal guarantees of the sponsor directors. These form part of total credit
facilities of Rupees 17,433 million (2020: Rupees 14,212 million).

ANNUAL REPORT 2021 281

 15.2 The rates of mark-up range from 7.75% to 9.09% (2020: 3% to 20%) per annum on balance
outstanding.

15.3 The rates of mark-up range from 2.97% to 14.81% (2020: 2.97% to 15.41% ) per annum on
balance outstanding.

15.4 The rate of mark-up was 3% (2020: 3% ) per annum on balance outstanding.

15.5 The running finance facility of Subsidiary Company, MLPL is secured against first pari passu charge
of Rupees 267 million over all present and future current assets and moveable fixed assets and
Rupees 467 million over fixed assets of the Subsidiary Company, MLPL with a margin of 25%,
cross corporate guarantee of MLCFL.

15.6 Last year this balance includes amount of Rupees 331.513 million in respect of finance against trust
receipt facilities (FATR) availed from various banks by MLPL with the cumulative sanctioned limit
of Rupees 1500 million. This carried mark-up rates ranging from 3 month / 1 month KIBOR plus
0.50% to 0.75% per annum, payable quarterly. At the current year end, the MLPL has unavailed
FATR facility with sanction limit of Rupees 500 million from the Bank of Punjab which carries
markup at the rate of three month KIBOR plus 0.75%, payable quarterly. This is secured against
first pari passu charge of Rupees 667 million over all present and future moveable fixed assets of
the Company with 25% margin, corporate guarantee of the MLCFL, assignment of receivables of
the MLCFL, trust receipts and lien on title of goods under import documents. The expiry date of
the facility is 31 December 2021.

15.7 This represents temporary overdraft due to cheques issued by the Group at the statement of
financial position date.

2021 2020
Note (Rupees in thousand)

16. CURRENT PORTION OF NON-CURRENT LIABILITIES

Long term financing 6 2,737,329 232,296

Deferred government grant 7 87,324 -
Current portion of GIDC payable 8 510,657 649,333

3,335,310 881,629

17. UNCLAIMED DIVIDEND

It is payable on demand.

18. CONTINGENCIES AND COMMITMENTS

18.1 Contingencies

Holding Company

a) The Company filed an appeal before Appellate Tribunal Inland Revenue, Lahore for the tax year 2003
against order of Commissioner Inland Revenue (Appeals) (CIR(A)) dated 18 September 2008 passed
under section 122 (5A) of the Income Tax Ordinance, 2001 wherein the order of the Assessing Officer
creating demand of Rupees 20.780 million was upheld. In addition to above, another appeal for the tax
year 2003 was filed by the tax department before Appellate Tribunal Inland Revenue against the order of
CIR (A) passed under section 221, through which order of the assessing officer regarding disallowance
of depreciation expense amounting to Rupees 62.666 million and penalty levied amounting to Rupees
17.484 million had been annulled. An appeal before Appellate Tribunal Inland Revenue is pending for
hearing. No provision has been made in these consolidated financial statements as the Company is
hopeful of favorable outcome of these cases.

282 KOHINOOR TEXTILE MILLS LIMITED

 b) The Company filed income tax return for the tax year 2011 having tax loss amounting to Rupees
721.390 million and creating a refund of Rupees 107.808 million. Assessment under section 122 (5A)
dated 12 June 2017 of the Income Tax Ordinance, 2001 was finalized by restricting loss to Rupees
435.435 million and reducing refund to Rupees Nil. The Company filed an appeal before CIR (A)
who granted partial relief to the Company vide order dated 08 March 2021. Another assessment
under section 122(5A) dated 14 February 2017 was finalized by creating a demand of Rupees 12.185
million. The Company filed an appeal before CIR (A) who upheld the order of assessing officer through
order dated 28 January 2021. The Company filed appeals before Honorable Appellate Tribunal Inland
Revenue against above orders which are still pending for hearing. No provision has been made in
these consolidated financial statements as the Company is hopeful of a favorable outcome.

c) The Company filed income tax return for tax year 2012 having tax loss of Rupees 766.104 million
and creating a refund of Rupees 56.126 million. An assessment under section 221 of the Income Tax
Ordinance, 2001 has been finalized on the issue that full & final tax on exports cannot be adjusted
against minimum tax @ 1% and creating demand of Rupees 49.807 million and the same has been
upheld by the CIR(A). The impugned demand has been adjusted against refund for tax year 2013.
An appeal has been filed by the Company in ATIR, which is still pending for hearing. Furthermore, an
assessment under section 122(5A) of the Income Tax Ordinance, 2001 dated 22 December 2017
has been finalized and taxable income has been assessed at Rupees 520.126 million by creating
demand of Rupees 91.535 million. The Company filed an appeal before Commissioner Inland Revenue
(Appeals) who, vide its order dated 08 March 2021, granted relief on major issues, while upheld the
order on various other issues. The Company filed appeal before the Honorable Appellate Tribunal
Inland Revenue where the case is still pending. No provision has been made in these consolidated
financial statements as the Company is hopeful of a favorable outcome.

d) The Company filed income tax return for tax year 2014 having tax loss of Rupees 178.170 million
and creating a refund of Rupees 11.051 million. An assessment under section 122(1) of the Income
Tax Ordinance, 2001 has been finalized and taxable income had been assessed at Rupees 234.312
million creating demand of Rupees 22.462 million. The Company filed an appeal before Commissioner
Inland Revenue (Appeals) who granted relief on major issues, while upheld the order on various other
issues. The Company filed appeal before the Honorable Appellate Tribunal Inland Revenue who, vide
its order dated 25 January 2021, decided the case in favour of the Company. The department has filed
appeal against this order in Lahore High Court which is pending adjudication. No provision has been
made in these consolidated financial statements as the Company is hopeful of a favorable outcome.

e) The Company has filed a petition against the National Highway Authority’s (NHA) demand for
payment of registration fee of Rupees 75 million in accordance with the National Highway Authority Act
of 1991. The argument is based on the fact that the Company is registered with relevant local bodies at
the time of its establishment and that registration with NHA is not required. Moreover, legislation cannot
be applied retrospectively to any company. A single bench of the Lahore High Court granted interim
relief in favour of the Company in its order dated 22 October 2020, and the issue is presently pending
adjudication. No provision has been made in these consolidated financial statements as the Company
is hopeful of a favorable outcome.

f) The Company and tax authorities filed appeals before different appellate authorities regarding
sales tax and custom duty matters. Pending the outcome of appeals filed by the Company and tax
authorities, no provision has been made in these consolidated financial statements which on the basis
adopted by the authorities would amount to Rupees 175.619 million (2020: Rupees 87.996 million),
since the Company has strong grounds against the assessments framed by the relevant authorities.

g) The Company filed recovery suit in Lahore High Court, Rawalpindi Bench amounting to Rupees
14.683 million (2020: Rupees 14.683 million) against supplier for goods supplied by him. Pending the
outcome of the cases, no provision has been made in these consolidated financial statements since
the Company is confident about favorable outcome of the cases.

h) The Company filed suits before Civil Court, Rawalpindi and Lahore High Court, against demands
raised by Sui Northern Gas Pipelines Limited (SNGPL) amounting to Rupees 72.811 million. No
provision has been made in these consolidated financial statements, since the Company is confident
about favorable outcome.

ANNUAL REPORT 2021 283

 i) The Company filed an appeal before Supreme Court of Pakistan against an order of Lahore High
Court, Rawalpindi Bench on an appeal filed by supplier for non-payment by the Company. The
Company has provided a guarantee of Rupees 4.254 million on the directions of Supreme Court of
Pakistan. Appeal is pending adjudication and the Company expects a favorable outcome.

j) Guarantees issued by various commercial banks, in respect of financial and operational obligations
of the Company, to various institutions and corporate bodies aggregate to Rupees 371.011 million
(2020: Rupees 331.011 million).

Subsidiary Company - Maple Leaf Cement Factory Limited

a) The Company filed writ petitions before the Honorable Lahore High Court against the legality of
judgment passed by the Customs, Excise and Sales Tax Appellate Tribunal in 2004 whereby the
Company was held liable on account of wrongful adjustment of input sales tax on raw materials. The
amount involved pending adjudication before the Honorable Lahore High Court is Rupees 10.01 million
out of which Rupees 3 million had already been paid during previous years. During the year Lahore
High Court remanded the case back to Appellate Tribunal for Decision afresh. However, hearing of
the appeals by the Appellate Tribunal is yet to be fixed. No further provision has been made in these
consolidated financial statements in respect of the matter as the management and the Company’s
legal advisor are confident that the ultimate outcome of this case will be in favor of the Company.

b) The Company has filed an appeal before the Customs, Central Excise and Sales Tax Appellate
Tribunal, Karachi against the order of the Deputy Collector Customs whereby the refund claim of the
Company amounting to Rupees 12.35 million was rejected and the Company was held liable to pay
an amount of Rupees 37.05 million by way of 10% customs duty allegedly leviable in terms of SRO
584(I)/95 and 585(I)/95 dated 01 July 1995. The impugned demand was raised by the department on
the alleged ground that the Company was not entitled to exemption from payment of customs duty
and sales tax in terms of SRO 279(I)/94 dated 02 April 1994.

The Honorable Lahore High Court, upon the Company’s appeal, vide its order dated 06 November 2001
has decided the matter in favor of the Company; however, the Collector of Customs has preferred a
petition before the Honorable Sindh High Court, which is pending adjudication. The management and
the legal advisor of the Company are confident that the ultimate outcome of this case will be in favor
of the Company. However, no receivable of Rupees 12.35 million was booked by the management in
previous years and no further provision has been booked by the management in these consolidated
financial statements.

c) The Show Cause Notice was issued to the Company on 04 December 1999 and demand was raised
by the CBR for payment of duties and taxes on the plant and machinery imported by the Company
(pursuant to the exemption granted in terms of SRO 484(I)/92 allegedly on the ground that the plant
could be locally manufactured and was therefore not exempt). A total demand of Rupees 1,386.72
million was raised by the CBR out of which an amount of Rupees 449.328 Million was deposited by the
Company (initially the Company deposited Rupees 269.328 million and subsequently deposited further
amount of Rupees 180.00 million). Initially, the matter was decided in favor of the Company as per the
judgment of the Lahore High Court in W.P. No. 6794/2000. Against the aforesaid judgment of Lahore
High Court, the customs department had filed appeal before the Supreme Court of Pakistan which was
decided by the Honourable Supreme Court vide judgment dated 21 December 2011 with the direction
to file reply to the Show Cause Notice before the Collector of Customs, Faisalabad. The Company
has filed its reply before the Collector of Customs, Faisalabad who decided the same against the
Company through an Order-in-Original No. 6/2014 dated 09 July 2014. The said Order-in-Original was
challenged by the Company by way of filing of Appeal No. 172/LB/2014 before the Customs Appellate
Tribunal, Lahore who vide Judgment dated 21 August 2019 has granted partial relief to the Company
with direction to the Customs Department to recalculate the customs duty in accordance with the list
communicated by EDB vide letter dated 21 June 2006. However, the Collector of Customs instead of
making fresh calculations through a Demand Notice bearing C. No. CA-1946/2000(Pt-I)/8169 dated
23 October 2019 restored the original demand raised by the earlier Order-in-Original No. 06/2014 and
directed the Company to pay the amount of Rupees 933.810 million within a period of seven days.
The said demand of tax was challenged by the Company before the Honorable Lahore High Court,

284 KOHINOOR TEXTILE MILLS LIMITED

 wherein stay against recovery was granted to it by the Honorable Lahore High Court vide order dated
04 November 2019. This matter is still pending before the Honorable Lahore High Court, Lahore and
next date of hearing is yet to be fixed by the office of the High Court. No provision has been made in
these consolidated financial statements in respect of the above stated amount as the management
and the legal advisor of the Company are confident that the ultimate outcome of this case will be in
favor of the Company.

d) The Company filed an appeal before the Honorable Supreme Court of Pakistan against the judgment
of the Division Bench of the Honorable High Court of Sindh at Karachi. The Division Bench, by judgment
dated 15 September 2008, had partly accepted the appeal by declaring that the levy and collection of
infrastructure cess / fee prior to 28 December 2006 was illegal and ultra vires and after 28 December
2006, it was legal and the same was collected by the Excise Department in accordance with the
law. The Company and the Province of Sindh and Excise and Taxation Department both preferred
an appeal against the matters decided against them. The Honorable Supreme Court consolidated
both the appeals and were set aside. Thereafter, law was challenged in constitution petition in the
Honorable Sindh High Court Karachi. Stay was granted by the Honorable Sindh High Court on 31 May
2011 on payment of 50% of the cess to the Excise Department and on furnishing of bank guarantee
for remaining 50% to them. The Company also filed an appeal before the Honorable Sindh High Court
to challenge Sindh Development and Maintenance on levy and collection of infrastructure cess under
Infrastructure Cess Act 2017. Stay was granted by the Honorable High Court on 27 November 2017
in line with earlier petitions as explained above, i.e. on payment of 50% of the cess to the Excise
Department and on furnishing of bank guarantee for remaining 50% to them.

All the petitions mentioned were heard together and Honorable Sindh High Court by a consolidated
judgment dated 04 June 2021, has decided the matter against the Company by stating that levy is a
cess and has been validly levied for the purpose of maintenance of infrastructure and Infrastructure
Cess Act 2017 is valid with retrospective effect from 1994. However, the said judgment would remain
suspended for a period of ninety days, up to 3 September 2021, and the interim arrangement of
paying 50% of the cess and securing 50% of the cess through deposit of a bank guarantee would
continue. The management being aggrieved with the decision of the Honorable Sindh High Court is in
process of filing an appeal before Honorable Supreme Court of Pakistan. The management and legal
advisor of the Company are confident that the case will ultimately be decided in favor of the Company.
However, being prudent, the management has not booked receivable of 50% cess already paid in
these consolidated financial statements.

e) The Competition Commission of Pakistan, vide order dated 27 August 2009, imposed penalty
on twenty cement factories of Pakistan at the rate of 7.5% of the turnover value. In doing so, the
Commission imposed penalty amounting to Rupees 586.19 million on the Company. The Commission
alleged that provisions of section 4(1) of the Competition Commission Ordinance, 2007 have been
violated. However, after the abeyance of Honorable Islamabad High Court pursuant to the judgment of
Honorable Supreme Court of Pakistan dated 31 July 2009, the titled petition has become infructuous
and the Company has filed a writ petition no. 15618/2009 before the Honorable Lahore High Court
(LHC). During the year, Honorable LHC vide its order dated 26 October 2020 decided the writ petition
challenging the vires of the law against the Company and the appeal impugning the levy of penalty vide
order dated 28 August 2009 has been referred to the Competition Appellate Tribunal. The Company
has challenged decision of LHC before the Honorable Supreme Court of Pakistan which is pending
adjudication at the year end. No provision has been made in these consolidated financial statements
as the management and the legal advisor of the Company are confident that the ultimate outcome of
this case will be in favor of the Company.

f) The Additional Collector, Karachi issued show cause notice alleging therein that the Company
has wrongly claimed the benefits of SRO No. 575(I)/2006 dated 05 June 2006 on the import of
pre-fabricated buildings structure. Consequently, the Company is liable to pay Government dues
amounting to Rupees 5.55 million. The Company submitted reply to the show cause notice and
currently proceedings are pending before the Additional Collector. No provision has been made in
these consolidated financial statements as the management and the legal advisor of the Company are
confident that the ultimate outcome of this case will be in favor of the Company.

ANNUAL REPORT 2021 285

 g) The customs department filed an appeal against the judgment dated 19 May 2009, passed in favor
of the Company pursuant to which the Company is not liable to pay custom duty amounting to Rupees
0.81 million relating to import of some machinery vide L/C No. 0176-01-46-518-1201 in terms of SRO
484(1)/92 dated 14 May 1992, and SRO 978(1)/95 dated 04 October 1995. The appeal is pending
before the Honorable Lahore High Court. No provision has been made in these consolidated financial
statements as the management and the legal advisor of the Company are confident that the ultimate
outcome of this case will be in favor of the Company.

h) Deputy Commissioner Inland Revenue through order dated 31 July 2017 raised a demand of Rupees
2.46 million under section 122(5A) for the tax year 2011 of the Income Tax Ordinance, 2001. The
demand was later reduced to Rupees 2.056 million on 14 March 2018. The Company has preferred
an appeal before CIR(A). During last year, CIR(A), through order dated 17 April 2020, decided the
issues relating to enhancement of minimum tax liability and apportionment of admissible / inadmissible
deductions against the Company. Being aggrieved, the Company has preferred an appeal before
the ATIR, which is pending adjudication. However, management and tax advisor of the Company are
hopeful of favorable outcome of the case. Accordingly no provision has been incorporated in these
consolidated financial statements.

i) The Additional Commissioner Inland Revenue, Audit, Range, Zone - 1, Large Taxpayers Unit, Lahore
(ACIR) initiated proceedings related to the tax year 2017, vide order dated 13 March 2019, against
the Company under section 122(9) read with section 122(5A) of the Income Tax Ordinance 2001
(the “Ordinance”). The notice was duly responded by tax advisor of the Company. During last year,
proceedings were concluded and ACIR raised an additional tax demand of Rupees 303.360 million
through amendment order, dated 27 January 2020, passed under section 122(5A) of the Ordinance.
The Company preferred an appeal against the amendment order before the Commissioner Inland
Revenue (Appeals) - CIR(A). The CIR(A), through his order dated 6 May 2020, decided all the matters
in favor of the Company except for issues relating to claim of depreciation and initial allowance,
without reducing tax credit claimed under section 65B of the Ordinance from the cost of the asset
and apportionment of advertisement & sales promotion expenses. The Company, as well as the tax
authorities, have preferred an appeal before the Appellant Tribunal Inland Revenue (ATIR), which is
pending adjudication at the year end. However, management of the Company is confident of favorable
outcome of the case. Therefore, no provision has been incorporated in these consolidated financial
statements.

j) The Deputy Commissioner Inland Revenue, Audit - 2, Zone I, Large Taxpayers Unit, Lahore (‘DCIR’)
passed an appeal effect order dated 31 July 2017, related to tax year 2015, under section 124/129 of
the Ordinance, giving effect to an earlier order passed by CIR(A). While passing the order, the DCIR made
certain errors which were assailed before CIR(A) in second round of appeal. During last year, CIR(A),
through order dated 17 April 2020, decided the issues relating to enhancement of minimum tax liability
and apportionment of admissible deductions, aggregating to Rs 180 million, against the Company.
Being aggrieved, the Company has preferred an appeal before the ATIR, which is pending adjudication.
However, management and tax advisor of the Company are hopeful of favorable outcome of the case.
Accordingly no provision has been incorporated in these consolidated financial statements.

k) During the year, the Commissioner Inland Revenue Audit - I Large Taxpayers Office, Lahore [‘CIR’],
via notices dated 26 February 2021, has selected the Company’s case for audit of its income tax affairs
for tax years 2015, 2016, 2017, 2018 & 2019. Being aggrieved, the Company has challenged the vires
of selection by the CIR before the Honorable Lahore High Court, Lahore [‘LHC’] and the honorable LHC
vide interim order dated 01 April 2021, directed that the audit proceedings shall continue, however, no
final order shall be passed till the disposal of writ petition. Following the directions of LHC the Company
responded to audit proceedings and tax authorities issued show cause notices, under section 122(9)
and section 111 of Income Tax Ordinance 2001, dated 11 June 2021 and 25 June 2021 respectively
for all five tax years which are yet to be responded at the year end. However, management and tax/
legal advisor of the Company are hopeful of favorable outcome of the case. Therefore, no provision has
been incorporated in these consolidated financial statements.

286 KOHINOOR TEXTILE MILLS LIMITED

 l) During the year, FBR through computerized balloting selected the Company’s case for audit of its sales
tax affairs for the tax period from July 2017 to June 2018. Subsequently, the Deputy Commissioner
Inland Revenue, Audit - 2, Zone I, Large Taxpayers Unit, Lahore (‘DCIR’) issued audit report and show
cause notice dated 8 March 2021 and 17 March 2021 respectively. The proceedings were finalized
through order dated 31 March 2021 through which an aggregate sales tax demand of Rupees
1,399,890,879 was created against the Company. The Company, being aggrieved, has preferred an
appeal against the above referred order which was disposed of by the CIR vide appellate order dated
15 July 2021. Through such order, majority of the issues which were pressed in appeal were settled in
favor of the Company. Regarding the issues decided against the Company, the Company is in process
of preferring an appeal before the ATIR. However, management and tax advisor of the Company are
hopeful of favorable outcome of the case. Therefore, no provision has been incorporated in these
consolidated financial statements.

m) During the year, through notices dated 3 March 2021, the Commissioner Inland Revenue Audit
- I Large Taxpayers Office, Lahore [‘CIR’] selected the Company’s case for sales tax audit for tax
periods from 01 July 2015 to 30 June 2017 and 01 July 2018 to 30 June 2020. The Company
challenged the vires of selection by the CIR before the Honorable Lahore High Court, Lahore [‘LHC’]
and the Honorable LHC vide interim order dated 30 March 2021, directed that the audit proceedings
shall continue, however, no final order shall be passed till the disposal of writ petition. Following the
directions of Honorable LHC the Company responded to audit proceedings and tax authorities issued
show cause notice, dated 31 May 2021, under section 11 of the Sales Tax Act 1990 for the subject
tax periods which is yet to be responded at the year end. However, management and tax/legal advisor
of the Company are hopeful of favorable outcome of the case. Therefore, no provision has been
incorporated in these consolidated financial statements.

n) The Additional Commissioner Inland Revenue, Audit, Range, Zone - 1, Large Taxpayers Unit, Lahore
(ACIR), via notice dated 21 May 2020, initiated proceedings against the Company, related to tax year
2018, under Section 122 (9) read with section 122 (5A) of the Income Tax Ordinance 2001 (Ordinance).
The above proceedings were concluded by the ACIR through amendment order dated 02 September
2020, passed under section 122(5A) of Ordinance through, which income tax demand of Rs 376.182
million was created against the Company. The Company, being aggrieved, preferred an appeal against
the amendment order before the Commissioner Inland Revenue (Appeals) [‘CIR(A)’]. During the year,
the CIR (A) through appellate order dated 30 December 2020, decided majority of the issues in favor
of the Company. The Company, as well as the tax authorities, have preferred an appeal before the
Appellant Tribunal Inland Revenue [‘ATIR’] which is pending adjudication. However, management and
tax advisor of the Company is hopeful of favorable outcome of the case. Therefore, no provision has
been incorporated in these consolidated financial statements.

o) Guarantees given by banks on behalf of MLCFL are of Rupees 683.06 million (2020: Rupees
774.01 million) in favor of Sui Northern Gas Pipeline Limited and Government Institutions.

Subsidiary Company - Maple Leaf Power Limited

a) The Subsidiary Company MLPL had filed appeal before the Honorable Sindh High Court challenging
the levy and collection of infrastructure cess under Sindh Development and Maintenance Infrastructure
Cess Act 2017. Stay was granted by the Honorable High Court on 27 November 2017 on payment of
50% of the cess to the Excise Department and on furnishing of bank guarantee for remaining 50% to
them. All petitions on the same issue were heard together and decided by the Honorable High Court
by a consolidated judgment dated 4 June 2021. In its judgement, the Honorable Court ruled that levy
is a cess and has been validly levied for the purpose of maintenance of infrastructure. However the
judgment would remain suspended for a period of ninety days, up to 3 September 2021, and the
interim arrangement of paying 50% of the cess and securing 50% of the cess through deposit of a
bank guarantee would continue. The management being aggrieved with the decision of the Honorable
High Court is planning to file an appeal before Supreme Court and is confident that the ultimate
outcome of this case will be in favor of the Subsidiary Company.

b) During the year, the Subsidiary Company MLPL was issued show caused notice by Deputy
Commissioner Inland Revenue (DCIR) vide notice no. 209/13 dated 09 February 2021 under section 11

ANNUAL REPORT 2021 287

 (2) of Sales Tax Act, 1990 for the tax period from July 2016 to June 2018 on account of in-admissible
adjustment of input tax credit under sections 8(1 )(a), (ca), (f), (h), (i), and (j) of the Sales Tax Act, 1990.
In response to the show cause notice and corrigendum issued, the Subsidiary Company submitted
various replies. The learned DCIR by non-reading/ misreading the replies along with documents
submitted by the Subsidiary Company, passed an order under section 11 (2) of the Sales Tax Act,
1990 bearing number U-13/Enf-11/19/2021 dated 27 May 2021 by creating a demand of Rupees
367.62 million. The Subsidiary Company has filed an appeal before Commisioner Inland Rrevenue
Appeals (CIR(A)) which is pending for fixation. The Subsidiary Company on the basis of advice by tax
advisor believes that the matter will be decided in its favor however, till the finalization of the case, the
Subsidiary Company is contingently liable for amount of Rupees 367.620 million.

c) During the year, DCIR issued show cause notices to the Subsidiary Company MLPL under section
11(2) of the Sales Tax Act, 1990 for the tax periods from July 2016 to Dec 2020 on account of
inadmissibility of adjustment of input tax credit adjustment against Capacity Purchase Price (CPP)
component of electricity tariff. In response to the show cause notices, the Subsidiary Company
submitted various replies. The DCIR by ignoring the replies along with documents submitted by the
Subsidiary Company, passed the orders no. 04/21 and 05/21 dated 15 July 2021 and 17 July 2021
respectively and raised sales tax demand aggregating to Rupees 1,026.41 million on account of non-
apportionment of input tax credit against CPP component of electricity tariff. The Subsidiary Company
is in process of filling an appeal before CIR(A). The Subsidiary Company on the basis of advice by
tax advisor believes that the matter will be decided in its favor and, till the finalization of the case, the
Subsidiary Company is contingently liable for amount of Rupees 1,026.41 million.

d) Guarantees given by banks on behalf of Subsidiary Company MLPL are of Rupees 25 million (2020:
Rupees 25 million) in favor of Director Excise and Taxation Karachi.

18.2 Commitments in respect of:

a) Contracts for capital expenditure amounting to Rupees Nil (2020: Rupees 12.035 million).
b) Letters of credit for capital expenditure amount to Rupees 12,185.517 million (2020: Rupees
121.610 million).
c) Letters of credit other than for capital expenditure amounting to Rupees 3,388.249 million (2020:
Rupees 691.750 million).
d) Future contracts - shares in respect of which the settlement is outstanding amounting to Rupees
1,772.168 million (2020: Rupees Nil).

2021 2020
(Rupees in thousand)


19. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets - Owned (Note 19.1) 52,462,922 53,313,404
Capital work in progress (Note 19.3) 3,441,203 1,310,566
Stores held for capitalization (Note 19.3.3) 107,942 54,047

56,012,067 54,678,017

288 KOHINOOR TEXTILE MILLS LIMITED


19.1 OPERATING FIXED ASSETS

Factory and Residential Services Computers Furniture
Freehold Office other and other Plant and and other and IT and Office Quarry Share of
Vehicles Total
land buildings machinery equipment equipment joint assets
buildings buildings equipment installations fixtures

(Rupees in thousand)
At 30 June 2019

Cost / revalued amount 3,922,541 56,445 16,157,445 171,490 60,529,472 62,462 119,401 573,399 54,997 622,093 177,391 6,000 82,453,136
Accumulated depreciation - (8,989) (3,656,116) (87,040) (21,962,773) (37,836) (95,370) (402,462) (32,077) (260,319) (155,674) (5,806) (26,704,462)

Net book value 3,922,541 47,456 12,501,329 84,450 38,566,699 24,626 24,031 170,937 22,920 361,774 21,717 194 55,748,674

Year ended 30 June 2020

Opening net book value 3,922,541 47,456 12,501,329 84,450 38,566,699 24,626 24,031 170,937 22,920 361,774 21,717 194 55,748,674
Additions / transfers - 1,288 276,081 11,119 1,100,391 400 19,807 17,184 6,899 46,813 14,853 - 1,494,835
Revaluation surplus 9,053 - - - - - - - - - - - 9,053

Disposals:
Cost / revalued amount - - - - (181,709) - (502) - - (47,355) - - (229,566)
Accumulated depreciation - - - - 128,726 - 351 - - 30,126 - - 159,203

- - - - (52,983) - (151) - - (17,229) - - (70,363)
Depreciation charge - (358) (700,299) (3,749) (3,041,213) (1,516) (8,076) (35,728) (2,516) (62,368) (12,972) - (3,868,795)

Closing net book value 3,931,594 48,386 12,077,111 91,820 36,572,894 23,510 35,611 152,393 27,303 328,990 23,598 194 53,313,404

At 30 June 2020

Cost / revalued amount 3,931,594 57,733 16,433,526 182,609 61,448,154 62,862 138,706 590,583 61,896 621,551 192,244 6,000 83,727,458
Accumulated depreciation - (9,347) (4,356,415) (90,789) (24,875,260) (39,352) (103,095) (438,190) (34,593) (292,561) (168,646) (5,806) (30,414,054)

Net book value 3,931,594 48,386 12,077,111 91,820 36,572,894 23,510 35,611 152,393 27,303 328,990 23,598 194 53,313,404

Year ended 30 June 2021

Opening net book value 3,931,594 48,386 12,077,111 91,820 36,572,894 23,510 35,611 152,393 27,303 328,990 23,598 194 53,313,404
Additions / transfers - - 772,741 19,734 1,795,865 20,296 14,190 65,285 10,012 95,492 - - 2,793,615
Revaluation surplus 28,730 - - - - - - - - - - - 28,730

Disposals:
Cost / revalued amount - - - - (382,014) - (1,028) - - (37,808) - - (420,850)
Accumulated depreciation - - - - 244,528 - 632 - - 18,553 - - 263,713

- - - - (137,486) - (396) - - (19,255) - - (157,137)
Depreciation charge - (369) (776,024) (4,678) (2,621,402) (2,373) (11,410) (31,857) (3,074) (61,263) (3,240) - (3,515,690)

Closing net book value 3,960,324 48,017 12,073,828 106,876 35,609,871 41,433 37,995 185,821 34,241 343,964 20,358 194 52,462,922

At 30 June 2021

Cost / revalued amount 3,960,324 57,733 17,206,267 202,343 62,862,005 83,158 151,868 655,868 71,908 679,235 192,244 6,000 86,128,953
Accumulated depreciation - (9,716) (5,132,439) (95,467) (27,252,134) (41,725) (113,873) (470,047) (37,667) (335,271) (171,886) (5,806) (33,666,031)

Net book value 3,960,324 48,017 12,073,828 106,876 35,609,871 41,433 37,995 185,821 34,241 343,964 20,358 194 52,462,922

Depreciation rate (%) - 5 - 10 5 - 10 5 - 10 5 - 20 10 30 10 10 20 20 10

19.1.1 Freehold land of the Holding Company was revalued by an independent valuer Anderson Consulting (Private) Limited (Evaluators, Surveyors, Stock Inspectors, Architects & Engineers) as at 30 June 2021. Book value
of freehold land on cost basis is Rupees 160.105 million (2020: Rupees 160.105 million) as on 30 June 2021. Had there been no revaluation, the value of freehold land would have been lower by Rupees 2,608.182
million (2020: Rupees 2,579.452 million). Forced sale value of freehold land of the Holding Company at 30 June 2021 was Rupees 2,353.044 million (2020: Rupees 2,328.623 million). Freehold land of MLCFL was
revalued by Arif Evaluators as at 30 June 2020, Had there been no revaluation, the net book value of freehold land of MLCFL would have been Rupees 822.154 million (2020: Rupees 822.154 million). Forced sale
value at 30 June 2021 was Rupees 953.630 million (2020: Rupees 953.630 million).

19.1.2 Ownership of the housing colony’s assets included in the operating fixed assets of the subsidiary Company, MLCFL is shared by the MLCFL jointly with Agritech Limited in ratio of 101:245 since the time when both
the companies were managed by Pakistan Industrial Development Corporation. These assets are in possession of the housing colony establishment for mutual benefits.

ANNUAL REPORT 2021

289
 2021 2020
Note (Rupees in thousand)

19.1.3 Depreciation charged during the year has

been allocated as follows:

Cost of sales 35 3,397,816 3,766,128
Distribution cost 36 7,109 6,690
Administrative expenses 37 110,765 95,977

3,515,690 3,868,795

19.1.4 Particulars of immovable properties (i.e. land and buildings) are as follows:

Location Usage of Immovable Total Area
Property (Acres)

Peshawar Road, Rawalpindi Manufacturing facilities 64.68
Residential and offices 56.58

8 KM, Manga Raiwind Road, Manufacturing facilities 13.22
District Kasur Residential and offices 8.11
Land 11.24

Gulyana Road, Gujar Khan, Manufacturing facilities 13.18
District Rawalpindi Residential and offices 23.96
Land 13.54

Iskanderabad, District Mianwali Manufacturing facilities and offices 1,268.13

1,472.64

290 KOHINOOR TEXTILE MILLS LIMITED

 19.2 Detail of operating fixed assets, exceeding the book value of Rupees 500,000 disposed of during the year is as follows:

Accumulated Net book Sale Gain/ Mode of

Description
Cost Particulars of purchasers
depreciation value proceeds (loss) disposal

---------------(Rupees
in thousand) ---------------
Plant and Machinery
Carding Crossrol MK-6 14,195 10,403 3,792 7,720 3,928 Negotiation Ideal Trading Company, Faisalabad
Schlafhorst Auto Winder RM-338 11,642 8,630 3,012 3,453 441 Negotiation Crescent Cotton Mill Limited, Faisalabad
Schlafhorst Auto Winder RM-338 22,855 17,019 5,836 4,566 (1,270) Negotiation Husnain Textile Mills (Private) Limited, Lahore
Comber Rieter E-60 Model-1995 2,203 764 1,439 1,752 313 Negotiation AN Textile Mills Limited, Faisalabad
Rieter Draw Frame RSB D-30
& SB-2 10,474 8,393 2,081 6,039 3,958 Negotiation Quetta Textile Mills Limited, Karachi
Rieter Draw Frame Rsb D-30 3,548 2,736 812 2,772 1,960 Negotiation Asher Imran Spinning Mills (Private) Limited, Lahore
Carding Crosrol MK-6 5,291 3,791 1,500 2,180 680 Negotiation Shakarganj Limited, Lahore
Mk-7 Cards Crosrol 30,555 11,483 19,072 19,110 38 Negotiation Paradise Spinning Mills (Private) Limited, Faisalabad
Auto Cone Winder Savio Orion-M 9,068 6,718 2,350 2,200 (150) Negotiation HIK Textiles (Private) Limited, Lahore
Juki - DDL-5550N - L/S 6,501 5,293 1,208 1,318 110 Negotiation Instant Print System (Private) Limited, Islamabad
Auto Cone Winder Savio Orion-L 15,039 8,782 6,257 5,200 (1,057) Negotiation HIK Textiles (Private) Limited, Lahore
Boiler-Complete 7,324 6,377 947 868 (79) Negotiation Sanadeed Trading Company, Faisalabad
Autowinder Schlafhorst RM-338 57,267 43,476 13,791 18,865 5,074 Negotiation Husnain Textile Mills (Private) Limited, Lahore
Delta Machine Single
Needle Quilting 11,585 8,400 3,185 12,600 9,415 Negotiation Zubaida Industry, Karachi
Charge Air Cooler 18V50 {476014 } 4,356 1,229 3,127 944 (2,183) Auction M/s Muhammad Hayat
Charge Air Cooler {476015} 4,419 1,246 3,173 958 (2,215) Auction M/s Muhammad Hayat
Variable Displacment Pump
A4Vg250Ep2D1/32R-Nsd10F0 1,722 461 1,261 10 (1,251) Auction Retire/Disposal
Gear Box Complete Type :Mr C21
360 Uo2A (305) Ross 4,477 1,518 2,959 970 (1,989) Auction M/s Muhammad Hayat
Wear Segment Drg# 2.205412 4,304 2,785 1,519 4 (1,515) Auction Retire/Disposal
Wear Segment, 50008583,
2.205411, Xf-21 49, Atox A 6,511 4,212 2,299 14 (2,285) Auction Retire/Disposal
Flow Control Gate 400Mm
Pneumatic Operat 873 262 611 80 (531) Auction Retire/Disposal
Wear Segment Kit 1.091698
Xf- 1808(8Nos) 2,999 1,248 1,751 - (1,751) Auction Retire/Disposal
Brevini Gear Box Type:
Sc6003 /Fs / 164.1/ 65.105 2,229 1,108 1,121 30 (1,091) Auction Retire/Disposal
Analyzer , Easy Line , Part No: 4,175 2,847 1,328 260 (1,068) Auction Retire/Disposal
Screw Conveyor 1,507 811 696 327 (369) Auction M/s Muhammad Hayat
Burner Pipe, Mainly Of Heat
Resistant Steel, Dia 4,868 1,331 3,537 1,055 (2,482) Auction M/s Muhammad Hayat
Bearing Self Alligning Roller
(Drg# 3541’’5’’23992 1,450 684 766 314 (452) Auction M/s Muhammad Hayat
Thrust Bearing Housing
Drg#778.1678.07.0 Item Posi 6,538 3,084 3,454 1,417 (2,037) Auction M/s Muhammad Hayat

ANNUAL REPORT 2021

291
292
Accumulated Net book Sale Gain/ Mode of
Description
Cost Particulars of purchasers
depreciation value proceeds (loss) disposal

--------------- (Rupees in thousand) ---------------

KOHINOOR TEXTILE MILLS LIMITED

Nozzle Ring Complete , Assembly
Drawing 10046639 , 7,319 5,342 1,977 1,586 (391) Auction M/s Muhammad Hayat
Preventive Maintenance Kit 9
Years For Frequency D 2,098 351 1,747 788 (959) Auction Retire/Disposal
Steel Cord Belt 550/H16/148020,
Artical No. 300605 8,150 4,694 3,456 1,766 (1,690) Auction M/s Muhammad Hayat
Bearing Housing Dwg#10018210,
Pn- 684778,Part List# 84,497 52,920 31,577 18,314 (13,263) Auction M/s Muhammad Hayat
Rotor For Pfister Type: Drw 4.12 3,088 1,352 1,736 88 (1,648) Auction Retire/Disposal

363,127 229,750 133,377 117,568 (15,809)
Vehicles
Toyota GLI RI-15-899 1,890 1,167 723 1,870 1,147 Negotiation E.F.U. General Insurance Limited, Karachi
Toyota GLI RI-16-499 1,922 1,088 834 1,900 1,066 Negotiation E.F.U. General Insurance Limited, Karachi
Honda Vezel Hybrid AHJ-600 4,292 1,645 2,647 4,300 1,653 Negotiation Anjum Shahzad Malik, Rawalpindi
Suzuki Cultus 1,644 591 1,053 1,300 247 Buy Back Zeeshan Afzal Khan
AUDI Q3 6,376 2,552 3,824 6,450 2,626 Auction Shaheen Safdar
Suzuki Cultus 1,419 544 875 1,300 425 Buy Back Ghulam Jillani
Suzuki Cultus 1,419 662 757 1,250 493 Buy Back Rafi Ahmed
Toyota Corolla 2,273 1,282 991 1,500 509 Buy Back Mr. M. Ali Rehmat
Toyota Corolla 2,272 1,307 965 1,850 885 Buy Back Aamir Ali Niazi
Suzuki Cultus 1,558 615 943 1,250 307 Buy Back Sohaib Khakwani
Suzuki Cultus 1,419 622 797 1,406 609 Insurance Claim EFU General Insurance Limited
Suzuki Cultus 1,419 797 622 850 228 Buy Back Faizan Naseer

27,903 12,872 15,031 25,226 10,195

391,030 242,622 148,408 142,794 (5,614)

Aggregate of other items of
operating fixed assets with
individual book values not
exceeding Rupees 500,000 29,820 21,091 8,729 17,165 8,436

420,850 263,713 157,137 159,959 2,822
 19.3 Capital work in progress

Civil Plant and Advances Total
Note works and machinery for capital
buildings expenditure

At 30 June 2019 381,355 21,806 101,056 504,217

Add: Additions during the year 519,780 1,024,729 2,393 1,546,902
Less: Transferred to operating fixed
assets during the year (234,941) (431,046) (74,566) (740,553)

At 30 June 2020 666,194 615,489 28,883 1,310,566

Add: Additions during the year 1,189,661 1,665,854 1,478,067 4,333,582
Less: Transferred to operating fixed
assets during the year (792,475) (1,306,455) (104,015) (2,202,945)

At 30 June 2021 19.3.1 & 19.3.2 1,063,380 974,888 1,402,935 3,441,203

19.3.1 This includes borrowing cost amounting to Rupees 22.72 million (2020: Rupees Nil) capitalized
during the year.

19.3.2 The Subsidiary Company, MLCFL is in the process of setting up grey cement manufacturing
Line-IV with production capacity of 7,000 metric tons per day having expected cost of Rupees
20 billion.

19.3.3 Stores held for capitalization represents capital expenditure related to MLCFL expansion
projects.

2021 2020
Note (Rupees in thousand)

20. INVESTMENT PROPERTIES

Opening net book value 1,792,755 1,792,755

Fair value gain 39 31,605 -

Closing net book value 1,824,360 1,792,755

20.1 The fair value of investment properties comprising land situated at Rawalpindi and Lahore have
been determined by an independent valuer Anderson Consulting (Private) Limited (Evaluators,
Surveyors, Stock Inspectors, Architects & Engineers) as at 30 June 2021.

20.2 Forced sale value of these properties as at 30 June 2021 was Rupees 1,550.707 million (2020:
Rupees 1,523.843 million).

20.3 Particulars of investment properties are as follows:

Description Address Total Area Covered Area

(Acres) (Sqr feet)

Land Peshawar Road, Rawalpindi 43.95 -
Land & building 42-Lawrence Road, Lahore 4.70 26,059

48.65 26,059

ANNUAL REPORT 2021 293

 2021 2020
Note (Rupees in thousand)

21. INTANGIBLES - computer softwares

Intangible assets 21.1 6,018 9,024

21.1 Intangible assets

At beginning of the year 83,885 83,885
Additions during the year - -

At end of the year 83,885 83,885

Accumulated amortization
At beginning of the year 74,861 70,355
Amortization for the year 3,006 4,506

At end of the year 77,867 74,861

Net book value 6,018 9,024

Amortization rate per annum 33% 33%

21.2 Amortization charged for the year has been
allocated as follows:

Cost of sales 35 1,110 1,664
Administrative expenses 37 1,896 2,842

3,006 4,506

22. LONG TERM LOANS TO EMPLOYEES - Secured

House building 7,101 11,360
Vehicles 2,021 1,995
Others 18,874 17,350

27,996 30,705
Less: Current portion shown under current assets 28 (10,992) (11,509)

17,004 19,196

22.1 These loans are secured against employees’ retirement benefits and carry interest at the rates
ranging from 6.00% (2020: 6.00%) per annum. These loans are recoverable in 30 to 60 monthly
installments.

22.2 These include loans to executives amounting to Rupees 6.08 million (2020: Rupees 10.72 million)
which further include loan to key management personnel (Muhammad Basharat) amounting to
Rupees 2.2 million (2020: Rupees 5.5 million). The maximum aggregate amount outstanding
from key management personnel (Muhammad Basharat) at any time during the year calculated
with reference to month end balance is Rupees 5.2 million (2020: Rupees 8.6 million). Further,
no amount is due from Directors and Chief Executive at the year end (2020: Rupees Nil).

294 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

23. LONG TERM INVESTMENTS

Equity instruments - fair value through other
comprehensive income

- Block Tech Limited - unquoted 23.1 7,000 -
- Universal Network Systems Limited - unquoted 23.2 46,286 -
Advance for purchase of shares 23.3 & 23.4 104,124 42,000

157,410 42,000

23.1 The Subsidiary Company, MLCL has made an initial investment of Rupees 7.000 million by
subscribing 700,000 ordinary shares of Rupees 10 each in BlockTech Limited. This represents
28 percent of total issued and subscribed share capital of the investee company. Subsequent to
the reporting date, the Subsidiary Company has disposed of its 13 percent stake of investment
by way of surrendering 325,000 ordinary shares of the investee company at a consideration of
Rupees 3.250 million. One of the Company’ employee is on the board of directors of the investee
company; therefore, it is concluded that the Company has no significant role in policy-making
process including decisions about dividends or other distributions from investee company. The
investee company has not yet started its operations; hence, cost of investment is considered as
an appropriate estimate of fair value as on the reporting date.

23.2 The Subsidiary Company, MLCL has entered into an agreement for investment of Rupees
46.286 million by subscribing 1,028,571 ordinary shares of Rupees 10 each in Universal Network
Systems Limited. This represents 5 percent of total issued and subscribed share capital of the
investee company. Shares of the investee company have been transferred in the CDC account
of the Subsidiary Company. The Subsidiary Company has invested at Rupees 45 per share
which is at 10 percent discount to the IPO price going to be held by 30 September 2021. In case
of failure of IPO, the aforesaid agreement will be terminated. Consideration of this investment
will be paid at the time of IPO. The Subsidiary Company cannot divest its investment without
the approval of the existing shareholders of the investee company. However, once the IPO is
concluded, the Subsidiary Company will have the option of putting its entire shareholding, from
the 6th to 18th month commencing from the date of IPO, for sale at a premium of 25 percent
IRR annualized on investment amount calculated from the date of payment. As on the reporting
date, the investee company is an un-quoted company, hence, the aforesaid price per share is
considered as fair value being considered an orderly transaction between market participants at
the measurement date.

23.3 This represents advance given by Subsidiary Company, MLCL to Convenience Stores (Private)
Limited and Ah-Brigelinx Solutions (Private) Limited for purchase of shares.

23.4 As on 07 June 2021, the Subsidiary Company, MLCL has entered into an agreement with AH-
Bridgelinx Solutions (Private) Limited (incorporated under the laws of Pakistan) and BridgeLinx
Technologies PTE Ltd (incorporated under the laws of Singapore). The Subsidiary Company
has agreed to make an investment of US Dollars 400,000 in Pak Rupees equivalent in the
designated bank account of AH-Bridgelinx Solutions (Private) Limited on 08 June 2021. Against
this deposit, subject to the conditions of Foreign Exchange Manual published by the State Bank
of Pakistan under Foreign Exchange Regulation Act,1947, the Subsidiary Company will take up
shares of BridgeLinx Technologies PTE Ltd. AH-Bridgelinx Solutions (Private) Limited will issue
shares of the equivalent value in favour of BridgeLinx Technologies PTE Ltd and in consideration
of those shares, BridgeLinx Technologies PTE Ltd will issue shares of equal value in favour of
the Subsidiary Company. This investment is subject to the compliance with the applicable laws
of Pakistan, applicable laws of Singapore and approval from State Bank of Pakistan under
forex laws of Pakistan. In case of refusal from State Bank of Pakistan, the entire amount in Pak
Rupees will be returned to the Subsidiary Company.

ANNUAL REPORT 2021 295

 24. LONG TERM DEPOSITS

These include deposits with various utility companies, regulatory authorities and others.

2021 2020
Note (Rupees in thousand)

25. STORES, SPARE PARTS AND LOOSE TOOLS

Stores 25.1 6,395,503 5,173,261
Spare parts 4,282,236 4,234,245
Loose tools 185,233 165,249

10,862,972 9,572,755
Less: Provision against slow moving stores, spare
parts and loose tools (3,772) (3,772)

10,859,200 9,568,983

25.1 This includes stores in transit of Rupees 1,262.719 million (2020: Rupees 1,526.205 million).

2021 2020
Note (Rupees in thousand)

26. STOCK-IN-TRADE

Raw materials 26.1 & 26.3 2,312,391 2,767,098
Packing materials 231,303 209,413
Work-in-process 2,160,126 1,903,951
Finished goods 26.2 1,358,805 2,265,560

6,062,625 7,146,022

Provision against obsolete stock-in-trade (3,904) (3,904)

6,058,721 7,142,118

26.1 Raw materials and finished goods include stock in transit of Rupees 17.094 million (2020:
Rupees 7.060 million) and Rupees 39.851 million (2020: Rupees 9.720 million) respectively.

26.2 Finished goods of Rupees 91.276 million (2020: Rupees 68.273 million) are being carried at net
realizable value and the aggregate amount of write-down of inventories to net realizable value
recognized as an expense during the year was Rupees 3.039 million (2020: Rupees 3.417
million).

26.3 Raw materials include stock amounting to Rupees 23.897 million (2020: Rupees 149.814
million) with external parties.

296 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

27. TRADE DEBTS

Considered good:

Secured (against letters of credit) 1,964,783 1,204,650
Unsecured 3,348,615 4,443,490

5,313,398 5,648,140
Less: Allowance for expected credit losses 27.2 (366,280) (234,626)

4,947,118 5,413,514

27.1 Holding Company recognized revenue from the sale of goods at the time of delivery, while
payment is generally due with in 30 to 90 days from delivery in case of local sales, and 45 to 120
days in case of export sales.

2021 2020
Note (Rupees in thousand)

27.2 Allowance for expected credit losses

Opening balance 234,626 190,835

Recognized during the year 38 131,654 43,791

Balance at end of year 366,280 234,626

27.3 As at 30 June 2020, trade debts of Rupees 1,940.690 million (2020: Rupees 3,139.236 million)
were past due but not impaired. These relate to a number of independent customers from
whom there is no recent history of default. The aging analysis of these trade debts is as follows:

2021 2020
(Rupees in thousand)

Upto 1 month 835,600 1,542,432
1 to 6 months 717,401 1,029,782
More than 6 months 387,689 567,022

1,940,690 3,139,236

27.4 Default is triggered when more than 360 days have passed. As at the reporting date there were
no defaulting parties of outstanding trade debts from export sales.

27.5 The majority of export debts of the Group are situated in Asia, Europe and America.

ANNUAL REPORT 2021 297

 2021 2020
Note (Rupees in thousand)

28. LOANS AND ADVANCES - Unsecured, considered good

Loans and advances to employees: 28.1
- Executives 28.2 4,168 11,719
- Other employees 8,569 9,987
- Current portion of long term loans to employees 22 10,992 11,509

23,729 33,215
Government Authorities:
- Collector of customs 28.3 206,118 219,868
- Refunds from Government 28.4 16,797 16,797

222,915 236,665

Advances to suppliers 28.5 694,821 506,684

Letters of credit 162,909 22,384

1,104,374 798,948

28.1 These advances are not carried at amortized cost as the impact was considered immaterial.

28.2 This includes loan to key management personnel (Amir Feroze) amounting to Rupees 3.05
million (2020: Rupees 3.37 million). The maximum aggregate amount outstanding from key
management personnel (Amir Feroze) at any time during the year calculated with reference to
month end balance is Rupees 3.05 million (2020: Rupees 3.37 million). Further, no amount is
due from Directors and Chief Executive at the year end (2020: Rupees Nil).

28.3 This includes Rupees 180 million paid by MLCFL under protest as disclosed in note 18.1 (c) to
these consolidated financial statements.

28.4 This represents amount paid to Government under protest for various cases which have been
decided in favor of MLCFL.

28.5 This includes an amount of Rupees 103.59 million (2020: Rupees 78.56 million) advanced to
Ministry of Railways for transportation of coal and cement.

2021 2020
(Rupees in thousand)

29. SECURITY DEPOSITS AND SHORT

TERM PREPAYMENTS

Short term deposit - 200

Margin against:
- Letters of credit 5,942 20,523
- Bank guarantees 231,035 166,205
Prepayments 20,258 17,570

257,235 204,498

298 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

30. OTHER RECEIVABLES

Considered good:

Sales tax refundable 735,009 453,366
Custom duty receivable 15,993 15,993
Mark up rate support receivable from financial institutions 3,633 3,633
Export rebate 43,848 33,529
Duty draw back receivable 487,117 235,640
Margin deposits with brokers 234,167 3,552
Dividend receivable 2,216 282
Accrued interest 6,136 3,384
Others 64,023 42,706

1,592,142 792,085

31. TAXATION - NET

Balance as at 01 July 1,012,570 542,137
Add: Tax deducted at source / paid during the year 1,931,266 1,352,085
Less: Provision for the year (1,213,328) (582,734)
Less: Provision for worker’s welfare fund (160) -
Less: Tax refunds received during the year (366,170) (298,918)

Balance as at 30 June 1,364,178 1,012,570

32. SHORT TERM INVESTMENTS

FINANCIAL INSTRUMENTS

Debt instruments
Investment - Amortized cost 32.1 228,366 132,797
Equity instruments
Investments - Fair value through profit or loss 32.2 9,728,127 3,771,844

Advance against purchase of shares 32.3 108,528 -

10,065,021 3,904,641

32.1 Debt instruments - amortized cost

Holding Company
Term deposit receipts 32.1.1 133,866 82,797
Subsidiary Company - MLCFL
Term deposit receipts 32.1.2 94,500 50,000

228,366 132,797

32.1.1 This represents term deposit receipts of United Bank Limited having maturity period of one year
and carrying profit at effective rate of 6.50% (2020: 6.25%). It is under lien with the bank against
guarantees given on behalf of the Holding Company.

32.1.2 This represents term deposit receipts having maturity period of one year starting from 22
September 2020 and 15 April 2021 carrying a mark-up at the rate of 7.20% and 6.50% per
annum respectively.

ANNUAL REPORT 2021 299

 32.2 Investments-Fair Value through profit or loss

2021 2020
Carrying Unrealized Market Carrying Unrealized Market
value gain / (loss) value value gain / (loss) value
- - - - - - - - - - - - (Rupees in thousand) - - - - - - - - - - - -
Subsidiary Company - MLCL

Mutual funds

ABL Cash Fund Nil (2020: 281,699) units - - - 2,864 3 2,867
Alfalah GHP Sovereign Fund Nil (2020: 1,257) units - - - 134 - 134
Faysal Money Market Fund Nil (2020: 986,594) units - - - 100,345 160 100,505
NAFA Money Market Fund 161,252 (2020: 0) units 1,594 3 1,596 - - -
HBL Government Securities Fund Nil (2020: 1,221) units - - - 130 7 137
HBL Money Market Fund Nil (2020: 139,514) units - - - 14,259 21 14,280
Primus Income Fund Nil (2020: 1,256) units - - - 133 1 134
UBL Money Market Fund Nil (2020: 1,287) units - - - 129 - 129
UBL Cash Fund Nil (2020: 567) units - - - 2 55 57
HBL Growth Fund - Class A 1 (2020: 1) units - - - - - -
HBL Growth Fund - Class B 1 (2020: 1) units - - - - - -
First Habib Cash Fund Nil (2020: 2,009,208) units - - - 200,721 963 201,684

1,594 3 1,596 318,717 1,210 319,927

Shares in listed companies
Worldcall Telecom Limited 50,500,001 (2020: 1) fully paid
ordinary shares of Rupees 10 each 179,252 20,728 199,980 - - -
HUM Network Limited 30,232,501 (2020: 1) fully paid
ordinary shares of Rupees 10 each 217,750 24,715 242,465 - - -
Pioneer Cement Limited 24,609,001 (2020: 22,520,001)
fully paid ordinary shares of Rupees 10 each 1,616,880 1,608,622 3,225,502 1,156,872 262,789 1,419,661
TRG Pakistan Limited - Class ‘A’ 20,108,633 (2020: 1)
fully paid ordinary shares of Rupees 10 each 2,545,763 798,906 3,344,669 - - -
Flying Cement Company Limited 4,060,001 (2020: 1)
fully paid ordinary shares of Rupees 10 each 93,200 (6,803) 86,397 - - -
Nishat Chunian Power Limited 4,020,501 (2020: 1)
fully paid ordinary shares of Rupees 10 each 79,088 (18,700) 60,388 - - -
Pakistan Telecommunication Company Limited 3,500,001
(2020: 1) fully paid ordinary shares of Rupees 10 each 36,882 4,558 41,440 - - -
Attock Refinery Limited 3,223,501 (2020: 1) fully paid
ordinary shares of Rupees 10 each 849,436 (22,770) 826,666 - - -
Images Pakistan Limited (Formerly Tri-Star Polyester Limited)
1,930,001 (2020: 1) fully paid ordinary shares of Rupees 10 each 53,745 (2,117) 51,628 - - -
Systems Limited 1,675,421 (2020: 920,001) fully paid ordinary
shares of Rupees 10 each 355,578 583,026 938,604 151,838 17,147 168,985
Honda Atlas Cars (Pakistan) Limited 576,901 (2020: 1) fully
paid ordinary shares of Rupees 10 each 222,982 (23,501) 199,481 - - -
Lucky Cement Limited 464,754 (2020: 623,695) fully paid
ordinary shares of Rupees 10 each 367,403 33,885 401,288 293,268 (5,383) 287,885
Pak Suzuki Motor Company Limited 150,001 (2020: 1) fully
paid ordinary shares of Rupees 10 each 54,859 (1,542) 53,317 - - -
Orix Leasing Pakistan Limited 75 (2020: 72) fully paid
ordinary shares of Rupees 10 each 2 - 2 - - -
Other listed companies 375 (2020: 6,763,534) fully paid o
rdinary shares of Rupees 10 each 45 11 56 1,429,014 121,127 1,550,141

6,672,865 2,999,018 9,671,883 3,030,992 395,680 3,426,672

Subsidiary Company - MLCFL

Shares in listed company
Next Capital Limited 1,500,000 (2020: 1,500,000) fully paid
ordinary shares of Rupees 10 each, 1,875,000 (2020: 1,875,000)
fully paid right shares of Rupees 8 each and 337,500 (2020: Nil)
bonus shares having Market value of Rs. 14.72 per share
(2020: Rs. 7.48 per share) 30,000 24,648 54,648 30,000 (4,755) 25,245

6,704,459 3,023,669 9,728,127 3,379,709 392,135 3,771,844

300 KOHINOOR TEXTILE MILLS LIMITED

 32.2.1 Following shares are pledged against running finance facilities obtained by MLCL from the
banking companies:

2021 2020
(Rupees in thousand)

Attock Refinery Limited 2,213,500 -

Lucky Cement Limited 464,500 -
Nishat Chunian Power Limited 4,020,500 -
Pioneer Cement Limited 3,000,000 -
Systems Limited 1,360,000 -
TRG Pakistan Limited 8,306,500 -

32.3 Advance against purchase of shares

This represents advance paid to Topline Securities Limited by MLCL against purchase of shares
of Citi Pharma Limited under book building process. Against this advance, 3,391,500 shares of
the investee company have been allotted at strike price of Rupees 32 per share through book
building process. Shares have been transferred into the CDC account of the MLCL as on 07 July
2021. Subsequent to the reporting date, trading of the shares of the investee company has been
started on 09 July 2021 on Pakistan Stock Exchange Limited (PSX). The investee company was
not listed on PSX as on the reporting date; hence, aforesaid strike price is considered as fair
value.

2021 2020
Note (Rupees in thousand)

33. CASH AND BANK BALANCES

Cash in hand 6,819 13,820

Cash at bank:
- On current accounts 33.1 430,004 688,931
- On saving accounts 33.2 & 33.3 407,216 692,732

837,220 1,381,663

844,039 1,395,483

33.1 The balances in current and deposit accounts include USD 146,311 (2020: USD 138,606)
and GBP 2,000 (2020: GBP 2,000).

33.2 The balances in saving accounts carry interest ranging from 2.34% to 6.75% (2020:
2.79% to 15.30%) per annum.

33.3 The balances in saving accounts include an amount of Rupees 15.155 million (2020:
Rupees 15.155 million) held under lien against guarantees issued by the bank on behalf
of the Holding Company.

ANNUAL REPORT 2021 301

 2021 2020
Note (Rupees in thousand)

34. REVENUE

Revenue from contracts with customers:

- Export sales 13,844,910 10,342,368
- Local sales 34.1 51,239,271 40,334,633

65,084,181 50,677,001
Duty draw back 278,204 116,759
Export rebate 88,353 54,503

65,450,738 50,848,263

34.1 Local sales 70,135,756 61,318,024

Less:
Sales tax 11,078,857 10,162,275
Federal excise duty 7,043,999 10,040,696
Commission 233,060 226,643
Discount 540,569 553,777

51,239,271 40,334,633

302 KOHINOOR TEXTILE MILLS LIMITED

 34.2 Disaggregation of revenue

In the following table, revenue is disaggregated by primary geographical market, major products and service lines and timing of revenue recognition. The table also includes a
reconciliation of the disaggregated revenue with the Group’s reportable segments (Note 47).

Processing and
Spinning Weaving Cement Group
Home Textile
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020

----------------------------------------------- ( R u p e e s in t h o u s a n d ) -------------------------------------------------
Primary geographical markets

Europe - - 1,917,794 1,639,883 2,027,775 3,363,884 - - 3,945,569 5,003,767
United States of America and Canada - - 162,987 - 4,887,395 3,158,376 - - 5,050,382 3,158,376
Asia, Africa, Australia - - 260,652 10,765 2,692,959 1,009,225 1,895,348 1,160,235 4,848,959 2,180,225
Pakistan 14,463,555 10,279,559 2,998,046 2,074,595 177,805 137,261 33,599,865 27,843,218 51,239,271 40,334,633
Export rebate and duty draw back - - - - 366,557 171,262 - - 366,557 171,262

14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 35,495,213 29,003,453 65,450,738 50,848,263

Major product / service lines
Yarn 14,393,124 10,156,699 - - - - - - 14,393,124 10,156,699
Greige fabric - - 5,339,479 3,725,243 - - - - 5,339,479 3,725,243
Made-ups - - - - 9,229,624 7,285,754 - - 9,229,624 7,285,754
Finished fabric - - - - 492,058 341,443 - - 492,058 341,443
Processing income - - - - 21,654 11,956 - - 21,654 11,956
Cement - - - - - - 35,495,213 29,003,453 35,495,213 29,003,453
Waste 70,431 122,860 - - 42,598 29,593 - - 113,029 152,453
Export rebate and duty draw back - - - - 366,557 171,262 - - 366,557 171,262

14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 35,495,213 29,003,453 65,450,738 50,848,263

Revenue from contracts with customers 14,463,555 10,279,559 5,339,479 3,725,243 9,785,934 7,668,746 35,495,213 29,003,453 65,084,181 50,677,001
Export rebate and duty draw back - - - - 366,557 171,262 - - 366,557 171,262

14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 35,495,213 29,003,453 65,450,738 50,848,263

Timing of revenue recognition

Products transferred at a point in time 14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 35,495,213 29,003,453 65,450,738 50,848,263
Products and services transferred over time - - - - - - - - - -

External revenue as reported 14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 35,495,213 29,003,453 65,450,738 50,848,263

Revenue is recognised at point in time as per the terms and conditions of underlying contracts with customers.

ANNUAL REPORT 2021

303
 2021 2020
Note (Rupees in thousand)

35. COST OF SALES

Raw materials consumed 35.1 16,534,070 14,154,167
Salaries, wages and other benefits 35.2 3,413,753 3,261,295
Processing charges 44,409 61,487
Stores, spare parts and loose tools consumed 2,971,284 2,468,258
Packing materials consumed 3,642,008 3,767,692
Freight and forwarding 543,688 557,435
Fuel and power 17,766,982 17,976,739
Repair and maintenance 517,269 572,008
Insurance 116,890 134,267
Other factory overheads 35.3 397,681 537,864
Amortization 21.2 1,110 1,664
Depreciation 19.1.3 3,397,816 3,766,128

49,346,960 47,259,004
Work-in-process

Opening stock 1,903,951 1,728,160
Closing stock (2,160,126) (1,903,951)

(256,175) (175,791)

Cost of goods manufactured 49,090,785 47,083,213

Finished goods

Opening stock 2,265,560 1,159,422
Closing stock (1,358,805) (2,265,560)

906,755 (1,106,138)

Cost of sales 49,997,540 45,977,075

35.1 Raw materials consumed

Opening stock 2,767,098 2,484,993
Add: Purchased during the year 16,079,363 14,436,272

18,846,461 16,921,265
Less: Closing stock (2,312,391) (2,767,098)

16,534,070 14,154,167

35.2 Salaries, wages and other benefits include provident fund contribution of Rupees 108.365 million
(2020: Rupees 103.757 million), gratuity and compensated absences amounting to Rupees
32.693 million (2020: Rupees 43.221 million).

35.3 Other factory overheads include housing colony expenses aggregating to Rupees 64.33 million
(2020: Rupees 88.17 million).

304 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
Note (Rupees in thousand)

36. DISTRIBUTION COST

Salaries and other benefits 36.1 345,550 293,898

Outward freight and handling 69,818 30,975
Clearing and forwarding 838,319 427,315
Commission to selling agents 157,918 209,315
Travelling and conveyance 124,154 112,489
Insurance 13,750 5,094
Vehicles’ running 40,042 35,215
Electricity, gas and water 3,090 2,458
Postage, telephone and fax 8,987 10,020
Sales promotion and advertisement 503,020 403,633
Depreciation 19.1.3 7,109 6,690
Miscellaneous 222,365 101,565

2,334,122 1,638,667

36.1 Salaries and other benefits include provident fund contribution of Rupees 15.345 million
(2020: Rupees 11.657 million), gratuity and compensated absences amounting to Rupees
2.90 million (2020: Rupees 2.49 million).

2021 2020
Note (Rupees in thousand)

37. ADMINISTRATIVE EXPENSES

Salaries and other benefits 37.1 853,564 773,491
Travelling and conveyance 89,468 99,000
Repair and maintenance 36,113 59,152
Rent, rates and taxes 25,589 19,061
Insurance 13,137 17,600
Vehicles’ running 58,861 46,807
Printing, stationery and periodicals 33,949 30,130
Electricity, gas and water 10,302 8,563
Postage, telephone and fax 26,365 26,379
Legal and professional 109,931 117,434
Security, gardening and sanitation 39,902 40,835
Amortization 21.2 1,896 2,842
Depreciation 19.1.3 110,765 95,977
Miscellaneous 188,323 182,703

1,598,165 1,519,974

37.1 Salaries and other benefits include provident fund contribution of Rupees 27.416 million
(2020: Rupees 22.222 million), gratuity and compensated absences amounting to Rupees
6.466 million (2020: Rupees 8.483 million).

ANNUAL REPORT 2021 305

 2021 2020
Note (Rupees in thousand)

38. OTHER EXPENSES

Auditor’s remuneration 38.1 9,583 7,950
Donations 38.2 47,214 114,895
Workers’ profits participation fund 13.2 432,966 163,283
Workers welfare fund 150,700 38,330
Advances written off 18,335 7,755
Unrealised loss on re-measurement of futures
contracts - shares 59,915 -
Loss on trading in gold futures contracts - net - 26,689
Loss on trading in shares futures contracts - net - 816,339
Loss on sale of quoted shares - net - 329,742
Loss on trading in oil futures contracts - net - 83,741
Exchange loss - net 23,847 -
Bad debts written off 38.3 46,355 5,643
Allowance for expected credit losses 27.2 131,654 43,791
Impact of de-recognition of financial instrument
carried at amortized cost - 19
Miscellaneous 21,161 -

941,730 1,638,177

38.1 Auditors’ remuneration

Riaz Ahmad and Company

Audit fee 2,950 2,750
Certifications - 150
Reimbursable expenses 485 454

3,435 3,354
KPMG Taseer Hadi and Company
Audit fee 2,360 2,298
Interim review 540 540
Taxation services 2,258 -
Other certifications 315 1,100
Reimbursable expenses 675 658

6,148 4,596

9,583 7,950

306 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
(Rupees in thousand)

38.2 Donations for the year have been given to:

Gulab Devi Chest Hospital, Lahore 26,688 97,083
Prime Minister fund for COVID-19. - 500
Bushra Shaheen - 225
Maple CSR Initiative as per DC Office requirement 4,223 6,060
Auditorium at Police Public School 1,500 3,500
Speed Monitoring System - 2,000
Food Hampers Covid-19 - 2,000
Road Safety Campaign DPO Mianwali 150 500
Financial assistance for the training certification program - 315
City Entrance Wall Monument & Globe - 119
Beacon House National University - 706
Rescue Office 1122 58 -
Daudkhel Police Station 3,500 -
Daud Khel water supply project 72 1,314
World Wildlife Fund - Pakistan - 150
Pakistan Stock Exchange - 100
TFT GT (Private) Limited - 300
Housing Colony Water Turbine 2,000 -
Eduljee Dinshaw Road Project Trust 150 -
Miscellaneous 8,873 23

47,214 114,895

38.2.1 None of the directors and their spouses have any interest in the donee’s fund.

2021 2020
(Rupees in thousand)

38.3 The details of defaulting parties out of total export
debtors of MLCFL and default (write off) amounts
are as follows:

Balaji Bricks - Republic of India 4 -
Kirubai Agencies - Republic of India 9 -
Ludhiana Cement Corporation - Republic of India 24 -
Parth Impex - Republic of India 45 -
SSB Enterprises - Republic of India 20 -
R.K & Sons - Republic of India 1 -
Abhishek Trading Co. - Republic of India 1 -
Indian Trading Company - Republic of India 1 -

105 -

38.3.1 Neither of these parties are related parties.

ANNUAL REPORT 2021 307

 2021 2020
Note (Rupees in thousand)

39. OTHER INCOME

Income from financial assets:
Exchange gain - net - 35,501
Gain on sale of quoted shares - net 1,298,830 -
Return on bank deposits 36,510 101,099
Long outstanding liabilities written back 250 111
Unrealised gain on re-measurement of investments at FVTPL 3,028,424 404,248
Gain on redemption of units of mutual funds - net 653 67,883
Gain on trading in shares futures contracts - net 425,001 -
Return on term deposit receipts 6,242 12,253
Interest on loans to employees 398 696
Dividend income 177,611 150,860

4,973,919 772,651
Income from non-financial assets:
Scrap sales 80,214 51,150
Gain on trading in physical gold - net - 38,143
Gain on disposal of property, plant and equipment 19.2 2,822 30,269
Gain on remeasurement of investment properties 20 31,605 -
Gain on remeasurement of GIDC payable 8 50,596 -
Gain on sale of stores, spare parts and loose tools - 814
Miscellaneous 38,632 38,807

203,869 159,183

5,177,788 931,834

40. FINANCE COST

Mark-up / finance charges / interest on:
Long term financing 1,054,636 2,067,297
Short term borrowings 815,979 1,419,964
Unwinding interest - Retention money payable 25,625 -
Unwinding of discount on GIDC payable 8 33,968 -
Workers’ profits participation fund 13.2 10,172 14,524

1,940,380 3,501,785
Bank charges and commission 122,093 96,542

2,062,473 3,598,327

41. TAXATION

Current tax:
- Current year 1,293,969 508,675
- Prior year (80,641) 74,059

1,213,328 582,734
Deferred tax 12 1,427,533 (579,418)

2,640,861 3,316

308 KOHINOOR TEXTILE MILLS LIMITED

 2021 2020
(Rupees in thousand)

41.1 Reconciliation of tax charge for the year

Profit / (loss) before tax 13,694,496 (2,592,123)

Tax on profit @ 29% (2020: 29%) 3,971,404 (751,716)
Tax effect of lower rate on certain income / expenses (151,667) 764,397
Tax effect of exempt income / permanent differences (1,202,723) (58,699)
Tax effect of change in proportion of local and export sales 50,556 -
Tax effect of prior year adjustment (80,641) 74,059
Others 53,932 (24,725)

2,640,861 3,316

42. EARNINGS / (LOSS) PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic earnings per share which is based on:

2021 2020

Profit / (loss) attributable to ordinary shareholders
of the Holding Company (RUPEES IN THOUSAND) 8,459,564 (992,306)

Weighted average number of ordinary shares (NUMBERS) 299,296,456 299,296,456

Earnings / (loss) per share (RUPEES) 28.26 (3.32)

2021 2020
Note (Rupees in thousand)

43. CASH GENERATED FROM OPERATIONS

Profit / (loss) before taxation 13,694,496 (2,592,123)
Adjustment for non-cash charges and other items:
Depreciation 3,515,690 3,868,795
Amortization 3,006 4,506
Finance cost 2,062,473 3,598,327
Gain on sale of property, plant and equipment (2,822) (30,269)
Dividend income (177,611) (150,860)
Allowance for expected credit losses 131,654 43,791
Impact of de-recognition of financial instrument carried
at amortized cost - 19
Return on term deposit receipts (6,242) (12,253)
Gain on remeasurement of investment properties (31,605) -
Long outstanding liabilities written back (250) -
Gain on remeasurement of GIDC payable (50,596) -
Unrealized loss on re-measurements of forward contracts - shares 59,915 -
Gain on trading in physical gold - net - (38,143)
Advances written off 18,335 7,755
Bad debts written off 46,355 5,643
Employees’ retirement benefits 42,056 54,192
Return on bank deposits (36,510) (101,099)
Working capital changes 43.1 (6,959,054) (2,064,574)

12,309,290 2,593,707

ANNUAL REPORT 2021 309

 2021 2020
(Rupees in thousand)

43.1 Working capital changes

(Increase) / decrease in current assets:
Stores, spare parts and loose tools (1,290,217) (1,562,475)
Stock-in-trade 1,083,397 (1,588,757)
Trade debts 288,387 (1,235,314)
Loans and advances (323,761) 380,569
Security deposits and short term prepayments (52,737) 9,616
Short term investments (5,873,892) 563,280
Other receivables (795,371) 57,819

(6,964,194) (3,375,262)
Increase in trade and other payables 5,140 1,310,688

(6,959,054) (2,064,574)

43.2 Reconciliation of movement of liabilities to cash flows arising from financing activities

2021

Liabilities from financing activities

Long term Deferred Short term Unclaimed Total

financing government borrowings dividend
grants
----------------------------- (RUPEES IN THOUSAND) -----------------------------

Balance as at 01 July 2020 15,299,341 - 14,215,726 77,822 29,592,889

Proceeds from long term financing 2,579,571 - - - 2,579,571
Repayment of long term financing (419,316) - - - (419,316)
Grant received during the year - 249,636 - - 249,636
Amortisation of deferred government
grant during the year 88,456 (88,456) - - -
Short term borrowings - net - - (5,135,450) - (5,135,450)
Dividend declared - - - 598,592 598,592
Dividend paid - - - (617,688) (617,688)

Balance as at 30 June 2021 17,548,052 161,180 9,080,276 58,726 26,848,234

2020

Liabilities from financing activities

Long term Deferred Short term Unclaimed Total

financing government borrowings dividend
grants
----------------------------- (RUPEES IN THOUSAND) -----------------------------

Balance as at 01 July 2019 19,252,080 - 7,834,559 64,148 27,150,787

Proceeds from long term financing 1,414,291 - - - 1,414,291
Repayment of long term financing (5,367,030) - - - (5,367,030)
Short term borrowings - net - - 6,381,167 - 6,381,167
Dividend declared - - - 656,697 656,697
Dividend paid - - - (643,023) (643,023)

Balance as at 30 June 2020 15,299,341 - 14,215,726 77,822 29,592,889

310 KOHINOOR TEXTILE MILLS LIMITED

44. REMUNERATION OF CHIEF EXECUTIVE OFFICERS, DIRECTORS AND EXECUTIVES

The aggregate amounts charged in these consolidated financial statements in respect of remuneration
including certain benefits to the Chief Executive Officers, Directors and Executives of the Group are
given below:

Chairman Chief Executive Directors Executives

Officers

2021 2020 2021 2020 2021 2020 2021 2020

-----------------------( Rupees in Thousand )---------------------

Managerial remuneration 32,625 30,450 73,080 67,658 41,363 34,532 395,047 290,178

Allowances - - - - - - 23 17
House rent 7,425 6,930 14,732 14,306 2,954 3,059 104,914 81,830
Conveyance - - 1,627 2,233 914 973 25,189 20,795
Medical - - 1,980 1,980 1,362 1,088 17,451 14,375
Utilities - - 12,286 10,353 8,957 7,383 47,462 37,336
Special allowance - - 13,147 12,240 8,511 6,597 34,931 27,548
Contribution to provident fund 2,475 2,310 4,215 3,778 3,295 2,753 29,783 23,566

42,525 39,690 121,067 112,548 67,356 56,385 654,800 495,645

Number of persons 1 1 4 4 3 3 154 121

The Chief Executive Officers, Directors and some of the Executives are provided with the Group’s
maintained vehicles, free medical facilities and residential telephone facilities for both business and
personal use.

Executives are provided with the vehicles in accordance with the Group’s policy.

The aggregate amount charged in these consolidated financial statements in respect of directors’
meeting fee paid to 7 (2020: 6) non-executive directors was Rupees 664,998 (2020: Rupees 451,110).

No remuneration was paid to non-executive directors of the Group.

45. TRANSACTIONS WITH RELATED PARTIES

2021 2020
(Rupees in thousand)

Key management personnel

Remuneration and other benefits 196,694 181,787

Post employment benefit plan
Contribution to provident fund 240,813 240,624

Contribution to gratuity fund 36,550 21,343

The Saim Family Trust, British Virgin Islands (BVI) through Mercury Management Inc., BVI and Hutton
Properties Limited, BVI (related parties) holds 73,390,896 [24.52%] (2020: 73,390,896) and 49,639,992
[16.59%] (2020: 49,639,992) ordinary shares respectively of the Holding Company on which dividend
amounting to Rupees 146,781,792 (2020: Rupees 128,434,068) and Rupees 99,279,984 (2020:
Rupees 86,869,986) respectively was paid during the year.

ANNUAL REPORT 2021 311

 2021 2020
46. PLANT CAPACITY AND ACTUAL PRODUCTION

Holding Company

SPINNING:

- Rawalpindi Division (NUMBERS)

Spindles (average) installed / worked 85,680 85,680

(KILOGRAMS IN THOUSAND)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,098 shifts) 45,337 46,185
Actual production converted into 20s count based on
3 shifts per day for 1,094 shifts (2020: 1,056 shifts) 41,252 36,324

(NUMBERS)

Rotors (average) installed / worked 2,712 2,712

(KILOGRAMS IN THOUSAND)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,098 shifts) 6,037 4,514
Actual production converted into 20s count based on
3 shifts per day for 1,094 shifts (2020: 1,056 shifts) 5,284 3,486

- Gujar Khan Division (NUMBERS)

Spindles (average) installed / worked 72,864 72,864

(KILOGRAMS IN THOUSAND)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,098 shifts ) 41,944 41,449
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2020: 1,050 shifts) 37,773 34,382

WEAVING:

- Raiwind Division (NUMBERS)

Looms installed / worked 288 288

(SQUARE METERS IN
THOUSAND)

100% plant capacity at 60 picks based on 3 shifts per
day for 1,095 shifts (2020: 1,098 shifts) 104,909 104,909
Actual production converted to 60 picks based on
3 shifts per day for 1,095 shifts (2020: 939 shifts) 98,283 85,439

312 KOHINOOR TEXTILE MILLS LIMITED

 PROCESSING OF CLOTH :

- Rawalpindi Division (METERS IN THOUSAND)

Capacity at 3 shifts per day for 1,095 shifts (2020: 1,098 shifts) 42,090 42,090
Actual production at 3 shifts per day for 1,095 shifts
(2020: 1,098 shifts) 17,525 18,468

POWER PLANT:

- Rawalpindi Division (MEGA WATTS)

Annual rated capacity based on 365 days (2020: 366 days) 241,706 224,186
Actual generation
Furnace engines 31,862 35,476
Gas engines 21,257 18,355
Solar 7,129 2,995

- Raiwind Division

Annual rated capacity based on 365 days (2020: 366 days) 96,360 96,360
Actual generation 30,221 37,340

- Gujar Khan Division

Annual rated capacity based on 30 days (2020: Nil days) 1,584 -
Actual generation - solar 240 -

Stitching

The plant capacity of this division is indeterminable due to multi-product plant involving varying
processes of manufacturing and run length of order lots.

REASONS FOR LOW PRODUCTION

- Due to stoppage for normal maintenance, doffing, change of spin plans and cloth quality.
- Cloth processing units working capacity was limited to actual export / local orders in hand.
- The generation of power was limited to actual demand.

2021 2020
(METERS IN THOUSAND)
Subsidiary Company - MLCFL

CEMENT:

Clinker:
Annual rated capacity (Based on 300 days) 46.1 5,585 5,550
Annual production for the year 4,882 4,964


46.1 Until last year, the subsidiary company, MLCFL had aggregate clinker / cement production
capacity of 18,500 tons per day. The capacity as disclosed in these consolidated financial
statements is worked out based on 300 working days. During the year, the subsidiary company,
MLCFL increased the clinker / cement production capacity of line III from 7,300 tons per day
to 7,800 tons per day due to debottlenecking and balancing, modernization and replacement
program. Increase in capacity as compared to last year is due to additional capacity available
from line III which was added in May 2021.

ANNUAL REPORT 2021 313

314
47. SEGMENT INFORMATION
Processing and Elimination of inter-
Spinning Weaving Cement Investment P
ower Group
Home Textile segment transactions

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
-----------------------------------------------------------(R U P E E S IN T H O U S A N D) -------------------------------------------------------------
REVENUE:
EXTERNAL 14,463,555 10,279,559 5,339,479 3,725,243 10,152,491 7,840,008 35,495,213 29,003,453 - - - - - - 65,450,738 50,848,263
INTER-SEGMENT 806,245 1,668,855 1,531,164 1,618,914 7,764 881 144,968 114,281 - - 4,236,412 4,716,609 (6,726,553) (8,119,540) - -

KOHINOOR TEXTILE MILLS LIMITED

15,269,800 11,948,414 6,870,643 5,344,157 10,160,255 7,840,889 35,640,181 29,117,734 - - 4,236,412 4,716,609 (6,726,553) (8,119,540) 65,450,738 50,848,263
COST OF SALES (11,661,101) (10,034,763) (6,070,009) (4,828,446) (8,436,960) (6,280,071) (27,446,617) (29,525,018) - - (3,109,406) (3,428,317) 6,726,553 8,119,540 (49,997,540) (45,977,075)

GROSS PROFIT 3,608,699 1,913,651 800,634 515,711 1,723,295 1,560,818 8,193,564 (407,284) - - 1,127,006 1,288,292 - - 15,453,198 4,871,188

DISTRIBUTION COST (44,737) (38,707) (133,372) (77,448) (1,040,281) (705,454) (1,115,732) (817,058) - - - - - - (2,334,122) (1,638,667)
ADMINISTRATIVE EXPENSES (267,920) (231,156) (148,429) (144,785) (226,774) (226,526) (789,006) (747,203) (159,360) (163,871) (6,676) (6,433) - - (1,598,165) (1,519,974)

(312,657) (269,863) (281,801) (222,233) (1,267,055) (931,980) (1,904,738) (1,564,261) (159,360) (163,871) (6,676) (6,433) - - (3,932,287) (3,158,641)
PROFIT BEFORE TAX AND UNALLOCATED
INCOME AND EXPENSES 3,296,042 1,643,788 518,833 293,478 456,240 628,838 6,288,826 (1,971,545) (159,360) (163,871) 1,120,330 1,281,859 - - 11,520,911 1,712,547

UNALLOCATED INCOME AND EXPENSES:
FINANCE COST (2,062,473) (3,598,327)
OTHER EXPENSES (941,730) (1,638,177)
OTHER INCOME 5,177,788 931,834
TAXATION (2,640,861) (3,316)

(467,276) (4,307,986)

PROFIT / (LOSS) AFTER TAXATION 11,053,635 (2,595,439)

47.1 Reconciliation of reportable segment assets and liabilities

Processing and
Spinning Weaving Cement Investment Power Group
Home Textile

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
----------------------------------------------------------- (R U P E E S IN T H O U S A N D) -------------------------------------------------------------
TOTAL ASSETS FOR REPORTABLE
SEGMENT 6,987,209 6,997,298 3,619,156 3,176,202 5,555,619 4,967,109 57,278,959 56,277,833 10,848,991 4,135,872 5,435,850 6,144,653 89,725,784 81,698,967

UNALLOCATED ASSETS 5,493,366 5,184,243

TOTAL ASSETS AS PER STATEMENT OF FINANCIAL POSITION 95,219,150 86,883,210
All segment assets are allocated to reportable segments other than those directly relating to corporate and tax assets.


TOTAL LIABILITIES FOR REPORTABLE
SEGMENT 3,581,834 2,206,675 781,283 2,302,479 6,089,278 6,901,316 16,273,777 20,347,028 1,631,074 - 30,624 555,375 28,387,870 32,312,873

UNALLOCATED LIABILITIES 14,190,765 11,973,515

TOTAL LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION 42,578,635 44,286,388

All segment liabilities are allocated to reportable segments other than trade and other payables, current and deferred tax liabilities.
 47.2 Geographical Information

47.2.1 The Groups’s revenue from external customers by geographical location is detailed in note 34.2
to these consolidated financial statements.

47.2.2 All non-current assets as at reporting date are located and operating in Pakistan.

47.3 Revenue from major customers

Revenue from major customers whose revenue accounts for more than 10% of the segment’s
revenue in Weaving segment was Rupees 1,462 million (2020: Rupees 1,109 million) whereas
in the Processing and Home Textile segment was Rupees 4,301 million (2020: Rupees 2,696
million).

47.4 Based on the judgment made by the management printing, dyeing and home textile operating
segments of the Group have been aggregated into a single operating segment namely
‘Processing and Home Textile’ as these segments have similar economic characteristics in
respect of nature of the products, nature of production process, type of customers, method of
distribution and nature of regulatory environment.

48. PROVIDENT FUND RELATED DISCLOSURES

As at the reporting date, all investments out of provident fund have been made in accordance with
the section 218 of the Companies Act, 2017 and the regulations formulated for this purpose by the
Securities and Exchange Commission of Pakistan.

2021 2020
Number of employees
49. NUMBER OF EMPLOYEES

Number of employees as on 30 June 6,977 6,931

Average number of employees during the year 6,968 6,828

50. FINANCIAL RISK MANAGEMENT

50.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency
risk, other price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall
risk management programme focuses on the unpredictability of financial markets and seeks
to minimize potential adverse effects on the Group’s financial performance. The Group uses
derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by the Group’s finance department under policies approved by
the Board of Directors. The Group’s finance department evaluates and hedges financial risks.
The Board provides principles for overall risk management, as well as policies covering specific
areas such as currency risk, other price risk, interest rate risk, credit risk, liquidity risk, use
of derivative financial instruments and non derivative financial instruments and investment of
excess liquidity.

(a) Market risk

(i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. Currency risk arises mainly from future
commercial transactions or receivables and payables that exist due to transactions in foreign
currencies.

ANNUAL REPORT 2021 315


The Group is exposed to currency risk arising from various currency exposures, primarily with
respect to the United States Dollar (USD), Euro, CHF and Yen. Currently, the Group’s foreign
exchange risk exposure is restricted to bank balances and the amounts receivable / payable
from / to the foreign entities. The Group’s exposure to currency risk was as follows:

2021 2020
(Rupees in thousand)

Cash at banks - USD 146 139
Cash at banks - GBP 2 2
Trade debts - USD 9,364 4,153
Trade debts - Euro 421 -
Trade and other payables - USD 4,151 4,370
Trade and other payables - Euro 33 61
Trade and other payables - RMB 45 -
Outstanding letters of credit - USD 393 584
Outstanding letters of credit - Euro 107 746
Outstanding letters of credit - SEK - 170
Outstanding letters of credit - RMB - 345
Outstanding letters of credit - SGD - 1
Net exposure - USD 4,966 (662)
Net exposure - Euro 281 (807)
Net exposure - GBP 2 2
Net exposure - SEK - (170)
Net exposure - RMB (45) (345)
Net exposure - SGD - (1)

2021 2020
The following significant exchange rates were
applied during the year:
Rupees per US Dollar
Average rate 160.22 157.03
Reporting date rate 157.80 168.25

Rupees per Euro
Average rate 188.53 175.06
Reporting date rate 188.12 189.11

Rupees per SGD
Average rate - 115.03
Reporting date rate - 120.76
Rupees per SEK
Average rate - 16.59
Reporting date rate - 18.09

Rupees per RMB
Average rate 24.41 22.77
Reporting date rate 24.76 23.92

Rupees per GBP

Average rate 217.00 199.63
Reporting date rate 218.58 207.68 -

316 KOHINOOR TEXTILE MILLS LIMITED

 Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5% against the
USD, EURO, GBP, SEK, RMB and SGD with all other variables held constant, the impact on
profit before taxation for the year would have been Rupees 36.486 million, Rupees 2.471 million,
Rupees 0.021 million, Rupees Nil, Rupees 0.053 million and Rupees Nil (2020: Rupees 5.643
million, Rupees 7.249, Rupees 0.02 million, Rupees 0.146 million, Rupees 0.392 million and
Rupees 0.006 million) respectively higher / lower, mainly as a result of exchange gains / losses
on translation of foreign exchange denominated financial instruments. Currency risk sensitivity
to foreign exchange movements has been calculated on a symmetric basis. In management’s
opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year end
exposure does not reflect the exposure during the year.

(ii) Other price risk

Other price risk represents the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market prices (other than those arising from interest rate
risk or currency risk), whether those changes are caused by factors specific to the individual
financial instrument or its issuer, or factors affecting all similar financial instruments traded in
the market. The Group is also exposed to commodity price risk as it hold financial instruments
based commodity prices.

Sensitivity analysis

The table below summarizes the impact of increase / decrease in the Pakistan Stock Exchange
Limited (PSX) Index and Pakistan Mercantile Exchange Limited (PMEX) Index on the Group’s
profit after taxation for the year and on equity (fair value reserve). The analysis is based on the
assumption that the indices had increased / decreased by 5% with all other variables held
constant and all the Group’s financial instruments moved according to the historical correlation
with the indices:

Index Impact on profit after taxation

2021 2020
(Rupees in thousand)

PSX 100 (5% increase) 410,831 146,706

PSX 100 (5% decrease) (410,831) (146,706)

The Group’s investment in mutual fund amounting to Rupees 1.596 million (2020: Rupees
319.927 million) is exposed to price risk due to change in Net Asset Value (NAV) of such fund.

(iii) Interest rate risk

This represents the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.

The Group has no significant long-term interest-bearing assets. The Group’s interest rate risk
arises from long term financing and short term borrowings. Financial instruments at variable
rates expose the Group to cash flow interest rate risk. Financial instruments at fixed rate expose
the Group to fair value interest rate risk.

ANNUAL REPORT 2021 317


At the reporting date the interest rate profile of the Group’s interest bearing financial instruments
was:
2021 2020
(Rupees in thousand)

Fixed rate instruments

Financial assets

Term deposit receipt 228,366 132,797

Financial liabilities

Long term financing 5,459,278 2,625,378
Short term borrowings 4,519,777 3,538,802

Floating rate instruments

Financial assets

Bank balances - saving accounts 407,216 692,732

Financial liabilities

Long term financing 12,088,774 12,673,963
Short term borrowings 4,554,780 10,338,160

Fair value sensitivity analysis for fixed rate instruments

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

Cash flow sensitivity analysis for variable rate instruments

If interest rate at the year end date, fluctuates by 1% higher / lower with all other variables held
constant, profit after taxation for the year would have been Rupees 114.301 million (2020:
Rupees 166.010 million) lower / higher, mainly as a result of higher / lower interest expense /
income on floating rate financial instruments. This analysis is prepared assuming the amounts of
financial instruments outstanding at reporting dates were outstanding for the whole year.

(b) Credit risk

Credit risk represents the risk that one party to a financial instrument will cause a financial loss
for the other party by failing to discharge an obligation. The carrying amount of financial assets
represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was as follows:
2021 2020
(Rupees in thousand)

Investments 10,065,021 3,904,641

Deposits 347,240 296,106
Trade debts 4,947,118 5,413,514
Other receivables 306,542 49,924
Loans and advances 40,733 52,411
Bank balances 837,220 1,381,663

16,543,874 11,098,259

318 KOHINOOR TEXTILE MILLS LIMITED

 The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings (If available) or to historical information about counterparty default rate.

Rating 2021 2020

Short term Long term Agency (Rupees in thousand)

Banks
Al-Baraka Bank (Pakistan) Limited A1 A PACRA 15,207 14,829
Allied Bank Limited A1+ AAA PACRA 8,919 23,125
Askari Bank Limited A1+ AA+ PACRA 17,829 39,475
Bank Alfalah Limited A1+ AA+ PACRA 14,877 11,920
Bank Al-Habib Limited A1+ AA+ PACRA 161,388 192,932
Bank Islami Pakistan Limited A1 A+ PACRA 13,356 208,890
Faysal Bank Limited A1+ AA PACRA 2,017 7,847
Habib Bank Limited A-1+ AAA JCR-VIS 67,495 89,977
MCB Bank Limited A1+ AAA PACRA 217,983 340,580
Meezan Bank Limited A-1+ AA+ JCR-VIS 42,163 11,976
National Bank of Pakistan A1+ AAA PACRA 49,744 66,232
MCB Islamic Bank Limited A1 A PACRA 119,321 142,647
Silkbank Limited A-2 A- JCR-VIS 60 11
The Bank of Punjab A1+ AA+ PACRA 24,274 20,049
Habib Metropolitan Bank Limited A1+ AA+ PACRA 31,034 32,585
United Bank Limited A-1+ AAA JCR-VIS 41,233 134,501
FINCA Microfinance Bank Limited A1 A PACRA 1,873 1,442
NRSP Microfinance Bank Limited A1 A PACRA 140 4,281
Dubai Islamic Bank Pakistan Limited A1+ AA JCR-VIS 2,580 2,580
Samba Bank Limited A-1 AA JCR-VIS 1,278 9,681
Soneri Bank Limited A1+ AA- PACRA 102 102
Standard Chartered Bank (Pakistan) Limited A1+ AAA PACRA 3,423 25,077
Summit Bank Limited A3 BBB- JCR-VIS 25 25
U Micro finance Bank Limited A1 A JCR-VIS 899 899

837,220 1,381,663

Investments
United Bank Limited - term deposit receipts A-1+ AAA JCR-VIS 133,866 82,797
The Bank of Punjab - term deposit receipts A1+ AA+ PACRA 94,500 50,000

228,366 132,797

The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a
lifetime expected loss allowance for all trade debts.

To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics and the days past due. These trade receivables are netted off with the collateral
obtained from these customers to calculate the net exposure towards these customers. The Group
has concluded that the expected loss rates for trade debts against local sales are different from the
expected loss rates for trade debts against export sales.

The expected loss rates are based on the payment profiles of sales over a period of 36 months
before 30 June 2021 and the corresponding historical credit losses experienced within this period. The
historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of the customers to settle the receivables. The Group has identified the
Gross Domestic Product, Unemployment, Interest, and the inflation Index of the country in which
it majorly sells its goods and services to be the most relevant factors, and accordingly adjusts the
historical loss rates based on expected changes in these factors.

ANNUAL REPORT 2021 319

 On that basis, the loss allowance as at 30 June 2021 and 30 June 2020 was determined as follows:

Holding Company

At 30 June 2021
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (RUPEES IN % (RUPEES IN
THOUSAND) THOUSAND)

Not past due 0.00% 23,322 - 0.00% - -

Up to 30 days 9.19% 246,596 22,660 0.00% - -
31 to 60 days 12.25% 63,132 7,736 0.00% - -
61 to 90 days 24.34% 32,333 7,870 0.00% - -
91 to 180 days 37.98% 78,035 29,640 0.00% - -
181 to 360 days 54.73% 1,091 597 0.00% - -
Above 360 days 100.00% 4,385 4,385 0.00% - -

448,894 72,888 - -

Trade debts which are not
subject to risk of default 1,406,804 - 1,483,919 -

1,855,698 72,888 1,483,919 -

At 30 June 2020
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (RUPEES IN % (RUPEES IN
THOUSAND) THOUSAND)

Not past due 0.00% 5,816 - 0.00% - -

Up to 30 days 9.58% 121,189 11,604 0.00% - -
31 to 60 days 18.21% 60,596 11,032 0.00% - -
61 to 90 days 31.87% 27,529 8,774 0.00% - -
91 to 180 days 42.76% 30,821 13,178 0.00% - -
181 to 360 days 76.24% 5,285 4,030 0.00% - -
Above 360 days 100.00% 5,319 5,319 0.00% - -

256,555 53,937 - -

Trade debts which are not
subject to risk of default 1,369,366 - 788,066 -

1,625,921 53,937 788,066 -

320 KOHINOOR TEXTILE MILLS LIMITED

 Subsidiary Company - Maple Leaf Cement Factory Limited
At 30 June 2021
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (RUPEES IN % (RUPEES IN
THOUSAND) THOUSAND)
Not past due 0.26% 701,152 1,805 0.00% 7,669 -
1 to 90 days 1.36% 669,896 9,108 0.00% - -
91 to 180 days 7.39% 215,727 15,952 0.00% - -
181 - 270 days 25.98% 62,964 16,357 0.00% - -
271 - 365 days 26.01% 46,914 12,202 0.00% - -
Above 365 days 88.53% 268,774 237,948 0.00% - -
1,965,427 293,372 7,669 -

At 30 June 2020
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (RUPEES IN % (RUPEES IN
THOUSAND) THOUSAND)
Not past due 0.15% 927,456 1,356 0.00% 26,051 -
1 to 90 days 0.14% 1,292,750 1,819 0.00% - -
91 to 180 days 3.69% 431,275 15,922 0.00% - -
181 - 270 days 9.15% 295,994 27,095 0.00% - -
271 - 365 days 8.06% 94,960 7,656 0.00% - -
Above 365 days 77.16% 164,333 126,803 0.00% - -
3,206,768 180,651 26,051 -

Subsidiary Company - Maple Leaf Capital Limited

At 30 June 2021
Local sales Export sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% (RUPEES IN % (RUPEES IN
THOUSAND) THOUSAND)

Not past due 0.00% 685 - 0.00% - -

Local sales Export sales

Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
(RUPEES IN % % (RUPEES IN
THOUSAND) THOUSAND)
At 30 June 2020

Not past due 0.00% 1,334 - 0.00% - -

Due to the Group’s long standing business relationships with these counter parties and after giving
due consideration to their strong financial standing, management does not expect non-performance
by these counter parties on their obligations to the Company. Accordingly the credit risk is minimal.

ANNUAL REPORT 2021 321

 (c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities.

The Group manages liquidity risk by maintaining sufficient cash and the availability of funding through
an adequate amount of committed credit facilities. At 30 June 2021, the Group had Rupees 13,165
million (2020: Rupees 11,588 million) available borrowing limits from financial institutions and Rupees
844.039 million (2020: Rupees 1,395.483 million) cash and bank balances. The management believes
the liquidity risk to be low. Following are the contractual maturities of financial liabilities, including
interest payments. The amount disclosed in the table are undiscounted cash flows:

Contractual maturities of financial liabilities as at 30 June 2021.

Carrying Contractual 6 month 6-12 1-2 More than

amount cash flows or less month Year 2 Years
------------------- (Rupees in thousand) --------------------
Holding Company
Non-derivative financial liabilities:
Long term financing 4,206,691 4,618,407 590,942 556,801 870,407 2,600,257
Trade and other payables 1,684,449 1,684,449 1,684,449 - - -
Accrued mark-up 65,021 65,021 65,021 - - -
Short term borrowings 5,558,536 5,611,468 5,611,468 - - -
Unclaimed dividend 30,592 30,592 30,592 - - -

11,545,289 12,009,937 7,982,472 556,801 870,407 2,600,257

Subsidiary Company Carrying Contractual Less than Between 1 5 years

Maple Leaf Cement Factory Limited amount cash flows 1 year to 5 years and above
---------------- (Rupees in thousand) -----------------
Non-derivative financial liabilities:

Long term loans from banking 13,440,927 16,665,786 2,747,709 12,256,541 1,661,536
Long term deposits 8,214 8,214 - 8,214 -
Retention money payable 391,694 421,841 - 421,841 -
Trade and other payables 4,636,505 4,636,505 4,636,505 - -
Unclaimed dividend 28,134 28,134 28,134 - -
Accrued mark-up 239,537 239,537 239,537 - -
Short term borrowings 1,894,115 1,894,115 1,894,115 - -

20,639,126 23,894,132 9,546,000 12,686,596 1,661,536

Subsidiary Company
Maple Leaf Power Limited

Non derivative financial liabilities:

Trade and other payables 32,096 32,096 32,096 - -
Accrued mark-up 624 624 624 - -
Short term borrowings 30,000 30,000 30,000 - -

62,720 62,720 62,720 - -

Subsidiary Company
Maple Leaf Capital Limited

Non derivative financial liabilities:

Trade and other payables 47,318 47,318 47,318 - -
Accured Mark-up 33,449 33,449 33,449 - -
Short term borrowings 1,597,625 1,620,118 1,620,118 - -

1,678,392 1,700,885 1,700,885 - -

Derivative financial liabilities:

Unrealised loss on re-measurement
of futures contracts - shares 59,915 59,915 59,915 - -

322 KOHINOOR TEXTILE MILLS LIMITED

 Contractual maturities of financial liabilities as at 30 June 2020

Carrying Contractual 6 month 6-12 1-2 More than

amount cash flows or less month Year 2 Years

------------------- (Rupees in thousand) --------------------

Holding Company

Non-derivative financial liabilities:

Long term financing 2,968,283 3,235,415 42,652 142,875 731,403 2,318,485
Trade and other payables 1,671,625 1,671,625 1,671,625 - - -
Accrued mark-up 196,614 196,614 196,614 - - -
Short term borrowings 7,479,127 7,664,417 7,432,566 231,851 - -
Unclaimed dividend 29,769 29,769 29,769 - - -

12,345,418 12,797,840 9,373,226 374,726 731,403 2,318,485

Subsidiary Company Carrying Contractual Less than Between 1 5 years

Maple Leaf Cement Factory Limited amount cash flows 1 year to 5 years and above
---------------- (Rupees in thousand) -----------------
Non-derivative financial liabilities:

Long term loans from banking 12,331,058 17,130,841 1,679,632 12,257,657 3,193,552
Long term deposits 8,664 8,664 - 8,664 -
Retention money payable 366,069 421,841 - 421,841 -
Trade and other payables 4,747,583 4,747,583 4,747,583 - -
Unclaimed dividend 48,053 48,053 48,053 - -
Accrued mark-up 486,072 486,072 486,072 - -
Short term borrowings 6,650,302 6,650,302 6,650,302 - -

24,637,801 29,493,356 13,611,642 12,688,162 3,193,552

Subsidiary Company
Maple Leaf Power Limited

Non derivative financial liabilities:

Long term loans from banking 32,956 37,623 4,667 32,956 -
Trade and other payables 132,360 132,360 132,360 - -
Accrued mark-up 23,862 23,862 23,862 - -
Short term borrowings 531,513 531,513 531,513 - -

720,691 725,358 692,402 32,956 -

Subsidiary Company
Maple Leaf Capital Limited

Non derivative financial liabilities:

Trade and other payables 33,691 33,691 33,691 - -

Derivative financial liabilities:

Unrealized loss on re-measurement of
futures contracts - gold - - - - -

The contractual cash flows relating to the above financial liabilities have been determined on the basis
of interest rates / mark-up rates effective as at 30 June. The rates of interest / mark up have been
disclosed in note 6 and note 15 to these consolidated financial statements.

ANNUAL REPORT 2021 323

 50.2 Financial instruments by categories

2021 2020

At fair At fair
At fair At fair
value value
value value
Amortized through Amortized through
through Total through Total
cost other com- cost other com-
profit or profit or
prehensive prehensive
loss loss
income income

---------------------------------------------- (RUPEES IN THOUSAND) ----------------------------------------------

Financial assets

Investments 228,366 9,836,655 157,410 10,222,431 132,797 3,771,844 42,000 3,946,641
Deposits 347,240 - - 347,240 296,106 - - 296,106
Trade debts 4,947,118 - - 4,947,118 5,413,514 - - 5,413,514
Other receivables 306,542 - - 306,542 49,924 - - 49,924
Loans and advances 40,733 - - 40,733 52,411 - - 52,411
Cash and bank balances 844,039 - - 844,039 1,395,483 - - 1,395,483

6,714,038 9,836,655 157,410 16,708,103 7,340,235 3,771,844 42,000 11,154,079

Financial liabilities

Long term financing 17,548,052 - - 17,548,052 15,299,341 - - 15,299,341
Long term deposits 8,214 - - 8,214 8,664 - - 8,664
Retention money payable 391,694 - - 391,694 366,069 - - 366,069
Short term borrowings 9,080,276 - - 9,080,276 14,215,726 - - 14,215,726
Trade and other payables 6,340,453 59,915 - 6,400,368 6,585,259 - - 6,585,259
Accrued mark-up 338,631 - - 338,631 683,317 - - 683,317
Unclaimed dividend 58,726 - - 58,726 77,822 - - 77,822

33,766,046 59,915 - 33,825,961 37,236,198 - - 37,236,198

50.3 Reconciliation to the line items presented in the statement of financial position is as follows:

2021 2020
Financial Non- Total Financial Non- Total
assets financial as per assets financial as per
assets statement assets statement
of financial of financial
position position
----- RUPEES IN THOUSAND ----- ----- RUPEES IN THOUSAND -----
Assets as per statement of
financial position

Trade debts 4,947,118 - 4,947,118 5,413,514 - 5,413,514
Investments 10,222,431 - 10,222,431 3,946,641 - 3,946,641
Deposits 347,240 - 347,240 296,106 - 296,106
Loans and advances 40,733 1,080,645 1,121,378 52,411 765,733 818,144
Other receivables 306,542 1,285,600 1,592,142 49,924 742,161 792,085
Cash and bank balances 844,039 - 844,039 1,395,483 - 1,395,483

16,708,103 2,366,245 19,074,348 11,154,079 1,507,894 12,661,973

Liabilities as per statement of

financial position

Long term financing 17,548,052 - 17,548,052 15,299,341 - 15,299,341
Long term deposits 8,214 - 8,214 8,664 - 8,664
Retention money payable 391,694 - 391,694 366,069 - 366,069
Short term borrowings 9,080,276 - 9,080,276 14,215,726 - 14,215,726
Trade and other payables 6,400,368 3,846,183 10,246,551 6,585,259 3,656,402 10,241,661
Accrued mark-up 338,631 - 338,631 683,317 - 683,317
Unclaimed dividend 58,726 - 58,726 77,822 - 77,822

33,825,961 3,846,183 37,672,144 37,236,198 3,656,402 40,892,600

324 KOHINOOR TEXTILE MILLS LIMITED

 50.4 Offsetting financial assets and liabilities

As on reporting date, recognized financial instruments are not subject to offsetting as there are
no enforceable master netting arrangements and similar agreements.

50.5 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as
a going concern in order to provide returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
issue new shares or sell assets to reduce debt. Consistent with others in the industry and the
requirements of the lenders, the Group monitors the capital structure on the basis of gearing
ratio. This ratio is calculated as borrowings divided by total capital employed. Borrowings
represent long term financing and short term borrowings obtained by the Group as referred to
in Note 6 and Note 15 respectively. Total capital employed includes ‘total equity’ as shown in the
statement of financial position plus ‘borrowings’. The Group’s strategy, remain unchanged from
the last year.

2021 2020
(Rupees in thousand)

Borrowings 26,628,328 29,515,067

Total equity 52,640,515 42,596,822

Total capital employed 79,268,843 72,111,889

Gearing ratio 33.59% 40.93%

The decrease in gearing ratio resulted primarily from decrease in borrowings of the Group.

51. RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS

(i) Fair value hierarchy

Certain financial assets and financial liabilities are not measured at fair value if the carrying amounts
are a reasonable approximation of fair value. Due to short term nature, carrying amounts of certain
financial assets and financial liabilities are considered to be the same as their fair value. Judgments and
estimates are made in determining the fair values of the financial instruments that are recognized and
measured at fair value in these financial statements. To provide an indication about the reliability of the
inputs used in determining fair value, the Group has classified its financial instruments into the following
three levels. An explanation of each level follows underneath the table.

At 30 June 2021 Level 1 Level 2 Level 3 Total

------- ( Rupees in thousand ) ------
Recurring fair value measurements

Financial assets

Financial assets at fair value through profit or loss 9,728,127 - - 9,728,127

Total financial assets 9,728,127 - - 9,728,127

Financial liabilities
Unrealized loss on re-measurement of
futures contracts - shares 59,915 - - 59,915

Total financial liabilities 59,915 - - 59,915

ANNUAL REPORT 2021 325

 At 30 June 2020 Level 1 Level 2 Level 3 Total

------- ( Rupees in thousand ) ------
Recurring fair value measurements

Financial assets

Financial assets at fair value through profit or loss 3,771,844 - - 3,771,844

Total financial assets 3,771,844 - - 3,771,844

Financial liabilities

Unrealized loss on re-measurement
of futures contracts - gold - - - -

Total financial liabilities - - - -

The above table does not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amounts are a reasonable approximation of fair value. Due to
short term nature, carrying amounts of certain financial assets and financial liabilities are considered to
be the same as their fair values.

There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.
Further, there was no transfer in and out of level 3 measurements as the Group has no investments
which are classified under level 3 of fair value hierarchy table.

The Group’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the
end of the reporting period.

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end
of the reporting period. The quoted market price used for financial assets held by the Group is the
current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximize the use of
observable market data and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument
is included in level 3. This is the case for unlisted equity securities.

(ii) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include the use of quoted market
prices.

52. RECOGNIZED FAIR VALUE MEASUREMENTS - NON-FINANCIAL ASSETS

(i) Fair value hierarchy

Judgments and estimates made in determining the fair values of the non-financial assets that are
recognized and measured at fair value in the financial statements. To provide an indication about the
reliability of the inputs used in determining fair value, the Group has classified its non-financial assets
into the following three levels.

326 KOHINOOR TEXTILE MILLS LIMITED

 At 30 June 2021 Level 1 Level 2 Level 3 Total

------- ( Rupees in thousand ) ------

Investment properties - 1,824,360 - 1,824,360

Freehold land - 2,768,287 1,192,037 3,960,324

Total non-financial assets - 4,592,647 1,192,037 5,784,684

At 30 June 2020 Level 1 Level 2 Level 3 Total

------- ( Rupees in thousand ) ------

Investment properties - 1,792,755 - 1,792,755

Freehold land - 2,739,557 1,192,037 3,931,594

Total non-financial assets - 4,532,312 1,192,037 5,724,349

The Group’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the
end of the reporting period.

There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.
Further, there was no transfer in and out of level 3 measurements.

(ii) Valuation techniques used to determine level 1 & 2 fair values

The Group obtains independent valuations for its investment properties and freehold land (classified as
property, plant and equipment) at least annually. At the end of each reporting period, the management
updates the assessment of the fair value of each property, taking into account the most recent
independent valuations. The management determines a property’s value within a range of reasonable
fair value estimates. The best evidence of fair value of land is current prices in an active market for
similar lands. The best evidence of fair value of buildings is to calculate fair depreciated market value
by applying an appropriate annual rate of depreciation on the new construction / replacement value of
the same building.

Investment in gold is non-financial asset. Its fair value is based on the quoted market price in active
markets.

Valuation processes

The Group engages external, independent and qualified valuers to determine the fair value of the
Group’s investment properties and freehold land at the end of every financial year. As at 30 June 2021,
the fair values of the investment properties and freehold land of the Holding Company have been
determined by Anderson Consulting (Private) Limited (an approved valuer). MLCFL’s freehold land was
revalued by Arif Evaluators, an independent valuer approved by Pakistan Banks’ Association (PBA) in
“any amount” category, at 30 June 2020.

Changes in fair values are analyzed at each reporting date during the annual valuation discussion
between the Chief Financial Officer and the valuers. As part of this discussion the team presents a
report that explains the reason for the fair value movements.

ANNUAL REPORT 2021 327

 53. INTEREST IN OTHER ENTITIES

The Group’s principal subsidiaries as at 30 June 2021 are set out below. Unless otherwise stated,
they have share capital consisting solely of ordinary shares that are held directly by the Group, and the
proportion of ownership interest held equals the voting rights held by the Group. The country of the
incorporation or registration is also their principal place of business.

Place of Owner ship

business / Ownership interest interest held by
Name of the entity Principal Activities
country of held by the Group non-controlling
incorporation interests

2021 2020 2021 2020

Maple Leaf Cement Factory Limited Pakistan 56.12% 55.22% 43.88% 44.78% Production and sale
of cement
Maple Leaf Capital Limited Pakistan 82.92% 82.92% 17.08% 17.08% To buy, sell, hold, or
otherwise acquire or
invest capital in
financial instruments
Maple Leaf Power Limited Pakistan 56.12% 55.22% 43.88% 44.78% Generation, sale and
supply of electricity

53.1 Non controlling interests (NCI)

Set out below is summarized financial information for each subsidiary that has non-controlling interests
that are material to the group. The amounts disclosed for each subsidiary are before inter-company
eliminations.
Maple Leaf Cement Maple Leaf Capital Maple Leaf Power
Factory Limited Limited Limited

2021 2020 2021 2020 2021 2020
------------------------------ (Rupees in thousand) ---------------------------------

Summarized statement of financial position

Current assets 16,923,416 16,607,191 10,681,436 4,371,940 562,385 1,106,748
Current liabilities 11,449,448 15,313,775 1,863,499 120,468 571,337 1,066,944

Current net assets 5,473,968 1,293,416 8,817,937 4,251,472 (8,952) 39,804

Non-current assets 45,510,097 49,402,580 167,555 179,428 5,934,690 8,037,905
Non-current liabilities 16,161,630 19,375,165 - - 41,633 32,956

Non-current net assets 29,348,467 30,027,415 167,555 179,428 5,893,057 8,004,949

Net assets 34,822,435 31,320,831 8,985,492 4,430,900 5,884,105 8,044,753

Summarized statement of
comprehensive income

Revenue 35,640,181 29,117,734 5,013,141 (495,833) 4,236,412 4,716,609

Profit / (loss) for the year 6,766,689 (4,843,265) 4,119,033 (613,595) 1,152,701 1,291,916

Other comprehensive (loss) / income (19,624) 6,365 - - - -

Profit / (loss) allocated to NCI 2,969,223 (2,168,814) 703,531 (104,802) 505,805 578,520

Dividend paid to NCI - 132,929 - - - -

Summarized statement of cash flows

Cash generated from / (used in)
operating activities 6,551,967 (937,724) (2,190,488) (129,276) 1,869,597 2,074,237
Cash generated from / (used in)
investing activities 251,007 (823,587) 535,697 27,484 2,239,638 (1,907,386)
Cash (used in) / from financing activities (6,732,688) 2,786,392 1,597,625 - (3,932,858) (14,839)

Net increase / (decrease) in cash and
cash equivalents 70,286 1,025,081 (57,166) (101,792) 176,377 152,012

328 KOHINOOR TEXTILE MILLS LIMITED

54. DISCLOSURES BY COMPANY LISTED ON ISLAMIC INDEX

2021 2020
Description (Rupees in thousand)

Holding Company
Loans / advances obtained as per Islamic mode:
Contract liabilities 151,146 148,422

Shariah compliant bank deposits / bank balances:

Bank balances 84,588 51,758

Profit earned from shariah compliant bank
deposits / bank balances 3,847 7,580

Revenue earned from shariah compliant business 29,955,525 21,844,810

Gain / (loss) or dividend earned from shariah
compliant investments:
Dividend income - 163,918

Profits earned or interest paid on any conventional
loan / advance:

Interest income on loans and advances to Maple
Leaf Cement Factory Limited - 21,297
Profit earned on deposits with banks 10,281 39,572
Interest paid on loans 565,409 655,223
Short term borrowing from Maple Leaf Capital Limited 2,004 80,308

Relationship with shariah compliant banks

Name Relationship at
reporting date

Al-Baraka Bank (Pakistan) Limited Bank balance
Bank Islami Pakistan Limited Bank balance
MCB Islamic Bank Limited Bank balance
Meezan Bank Limited Bank balance

Subsidiary company (MLCFL)

Loans / advances obtained as per Islamic mode:
Loans 1,270,834 1,270,834
Contract liabilities 250,491 235,928

Shariah compliant bank deposits / bank balances
Bank balances 19,254 211,369

Profit earned from shariah compliant bank deposits /
bank balances 2,764 9,600

Revenue earned from shariah compliant business 35,640,181 29,117,734

Gain / (loss) or dividend earned from shariah
compliant investments

Realized gain on disposal of short term investments - 7,358

Exchange gain earned 95,981 33,560

Mark-up paid on islamic mode of financing 308,000 -

Profits earned or interest paid on any conventional loan / advance

Profit earned on deposits with banks 14,585 19,544
Interest paid on loans 894,855 2,768,794

ANNUAL REPORT 2021 329

 Relationship with shariah compliant banks

Name Relationship at
reporting date

MCB Islamic Bank Limited Bank balance and financing
Bank Islami Pakistan Limited Bank balance
Dubai Islamic Bank Pakistan Limited Bank balance
Al-Baraka Bank (Pakistan) Limited Bank balance

2021 2020
Description (Rupees in thousand)

Subsidiary company (MLPL)

Loans / advances obtained as per Islamic mode:
Contract liabilities 74 292

Exchange gain earned 3,413 6,793

Profits earned or interest paid on any conventional
loan / advance

Profit earned on deposits with banks 1,371 4,568
Interest paid on loans 29,986 84,541

2021 2020
Description (Rupees in thousand)

Subsidiary company (MLCL)

Shariah compliant bank deposits / bank balances
Bank balances 90,690 112,281

Profit earned from shariah compliant bank
deposits / bank balances 3,479 15,176

Gain / (loss) or dividend earned from shariah
compliant investments

Realized gain /(loss) on disposal of quoted shares - net 1,298,830 (329,742)
Dividend income 177,611 150,860

Profits earned or interest paid on any
conventional loan / advance

Profit earned on deposits with banks 183 5,059
Interest paid on loans 72,365 -

Relationship with shariah compliant banks

Name Relationship at
reporting date

MCB Islamic Bank Limited Bank balance

330 KOHINOOR TEXTILE MILLS LIMITED

55. IMPACT OF COVID-19 (CORONA VIRUS)

The pandemic of COVID-19 that has rapidly spread all across the world has not only endangered
human lives but has also adversely impacted the global economy. During the year, the Government of
the Punjab from time to time announced a temporary smart lock downs as a measure to reduce the
spread of the COVID–19. However, after implementing all the necessary Standard Operating Procedures
(SOPs) to ensure safety of employees, the Group continued to carry out its operations and has taken all
necessary steps to ensure smooth and adequate continuation of its business. Management is actively
monitoring the impact of the pandemic on its financial condition, liquidity, operations, supply chain,
and workforce, which at this point is not considered to be significant. However, during the year the
Group obtained term loan / SBP COVID-19 relief facility, under “SBP refinance scheme for payment of
wages and salaries” introduced by Government of Pakistan as explained in note 6.1 and 6.2 to these
consolidated financial statements. Further, management believes that the Group has sufficient liquidity
available to continue to meet its financial commitments for the foreseeable future when they become
due. From the very outset of Covid-19, the management has adopted various policies and practices
to minimize adverse impact of Covid-19 on the business and is continuously monitoring the situation
in order to proactively address any challenges which may arise from Covid-19. However, according
to management’s assessment, there is no significant accounting impact of the effects of COVID-19 in
these consolidated financial statements.

56. DATE OF AUTHORIZATION FOR ISSUE

These consolidated financial statements were authorized for issue on 13 August 2021 by the Board of
Directors of the Holding Company.

57. NON ADJUSTING EVENTS AFTER THE REPORTING DATE

The Board of Directors of the Holding Company in their meeting held on 13 August 2021 has proposed
a final cash dividend of Rupees 1 per share (10%) amounting to Rupees 299.296 million (2020: Rupees
299.296 million) for the year ended 30 June 2021 for approval of the members at the Annual General
Meeting to be held on 28 September 2021. The consolidated financial statements for the year ended
30 June 2021 do not include the effect of the proposed final cash dividend which will be accounted for
in the period ending 30 June 2022.

58. CORRESPONDING FIGURES

No significant rearrangements / reclassifications have been made except for Gas Infrastructure
Development Cess (GIDC) payable amounting to Rupees 649.333 million which has been reclassified
from creditors and accrued liabilities to current portion of non-current liabilities for the purpose of better
presentation.

59. GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2021 331

332 KOHINOOR TEXTILE MILLS LIMITED
KOHINOOR TEXTILE MILLS LIMITED
42-LAWRENCE ROAD, LAHORE
PROXY FORM
I/We___________________________________________________________________________________

of __________________________________________________________________________________________

being a member of KOHINOOR TEXTILE MILLS LIMITED hereby appoint ______________________________
____________________________________________________________________________________________
Name (Folio / CDC A/c No., if Member)

of __________________________________________________________________________________________

or failing him/her _____________________________________________________________________________

Name (Folio / CDC A/c No., if Member)

of __________________________________________________________________________________________
as my/our proxy to attend, speak and vote for and on my/our behalf at the 53rd Annual General Meeting
of the Company to be held at its Registered Office, 42-Lawrence Road, Lahore, Tuesday, September 28,
2021 at 12:00 Noon and/or any adjournment thereof.

As witness given under my/our hand(s) _________________ day of September, 2021.

1. Witness: 2. Witness:
Signature : _______________________ Signature : _______________________
Name : _______________________ Name : _______________________
CNIC :
_______________________ CNIC : _______________________
Address : _______________________ Address : _______________________
:
_______________________ : _______________________


Affix
Revenue
Stamp of Rs. 50/-

Notes:
1. Proxies, in order to be effective, must be received
at the Company’s Registered Office not later than Signature of Member / Attorney
48 hours before the time for holding the meeting (Please also affix company stamp,
and must be duly stamped, signed and witnessed. in case of corporate entity)

2.
CDC beneficial owners
and Proxy Holders must Shares Held: __________________________
bring with them their Computerized National
Identity Cards (CNIC)/Passports in original to
prove his/her identity and in case of Proxy, CDC
beneficial owners and Proxy Holders must enclose
an attested copy of their CNIC/Passport with Proxy Folio No. CDC Account No.
Form.
Participant Account
I.D. No.
3. In case of corporate entity, the Board of Directors’
resolution / power of attorney with specimen
signature of the nominee (unless it has been
provided earlier) should be attached with the proxy
form or may be provided at the time of meeting. CNIC No.

ANNUAL REPORT 2021 333

 AFFIX
CORRECT
POSTAGE

The Company Secretary

KOHINOOR TEXTILE MILLS LIMITED

42-LAWRENCE ROAD, LAHORE
Tel: 042-36302261-62

334 KOHINOOR TEXTILE MILLS LIMITED

 AFFIX
CORRECT
POSTAGE

The Company Secretary

KOHINOOR TEXTILE MILLS LIMITED

42-LAWRENCE ROAD, LAHORE
Tel: 042-36302261-62

336 KOHINOOR TEXTILE MILLS LIMITED

344 KOHINOOR TEXTILE MILLS LIMITED