Annual Report 2018

DELIVERING QUALITY THROUGH

EXCELLENCE
DELIVERING QUALITY THROUGH
EXCELLENCE
Entering in the era of third generation with
expertise acquired over a period of more
than half-century, our people have
achieved excellence in production
processes, product development and
delivering unmatchable quality products
to our valued customers. Our commitment
is to continue strengthening the value
proposition by striving for operational
excellence and efficiency across the
organization. Innovative production
technologies lead us to deliver the
high-quality products while remaining
cost effective.
CONTENTS
ORGANISATIONAL OVERVIEW AND EXTERNAL
ENVIRONMENT.......................................................... 3
Company Profile & Principal Business Activities......... 4
Company Information................................................. 7
Our Vision................................................................... 8
Our Statement............................................................ 8
Our Values................................................................ 11
Code of Business Conduct and Ethical Principles.... 12
Culture...................................................................... 13
Corporate Strategy................................................... 13
Group Structure........................................................ 14 OUTLOOK................................................................ 89
Organizational Chart................................................. 15 Forward Looking statement...................................... 90
Geographical Presence............................................ 16 SWOT Analysis
Position in Value Chain............................................. 17 ................................................................................. 91
Factors Effecting External Environment.................... 18 PERFORMANCE AND POSITION............................ 94
Compliance with International Financial
STRATEGY AND RESOURCE ALLOCATION.......... 21 Reporting Standards (IFRS)...................................... 95
Strategic Objectives 2018-2019............................... 22 Integrated Reporting................................................. 95
Strategies and Management Objectives................... 23 Financial Review....................................................... 96
Key Performance Indicators (KPIs)........................... 24 Statement of Cash Flows - (Direct Method).............. 99
Results Reporting in Interim Financial S
RISKS AND OPPORTUNITIES................................. 26 tatements and Final Accounts................................ 100
Risks and Opportunities Analysis.............................. 27 Value Added and How Distributed......................... 102
Objectives, Risk and Countable Measures............... 28 Horizontal Analysis of Financial Statements............ 103
Opportunity Analysis................................................. 30 Vertical Analysis of Financial Statements................ 105
Key Risks and Opportunities of Capitals.................. 31 Key Operating and Financial Data.......................... 108
DuPont Analysis...................................................... 112
GOVERNANCE........................................................ 32 Definition and Glossary of Terms............................ 114
Notice of Annual General Meeting............................ 33
Chairman’s Review................................................... 45 FINANCIAL STATEMENTS..................................... 116
Directors’ Report...................................................... 46 Independent Auditors’ Report................................ 117
Statement of Compliance with the Listed Statement of Financial Position............................... 122
Companies (Code of Corporate Governance) Statement of Profit or Loss..................................... 124
Regulations, 2017..................................................... 55 Statement of Comprehensive Income.................... 125
Review Report to the Members on the.......................... Statement of Cash Flows....................................... 126
Statement of Compliance Contained in Listed Statement of Changes in Equity............................. 127
Companies (Code of Corporate Governance) Notes to the Financial Statements.......................... 128
Regulations, 2017..................................................... 59 Pattern of Shareholding.......................................... 177
Report of the Audit Committee................................. 60
Brief Profile of Directors............................................ 62 CONSOLIDATED FINANCIAL STATEMENTS......... 183
Terms of Reference of Board Committees............... 68 Directors’ Report on Consolidated
Management Committees & Terms of Reference..... 70 Financial Statements.............................................. 184
Other Corporate Matters.......................................... 72 Independent Auditors’ Report................................ 185
Consolidated Statement of Financial Position........ 192
STAKEHOLDERS RELATIONSHIP AND Consolidated Statement of Profit or Loss............... 194
ENGAGEMENT........................................................ 79 Consolidated Statement of Comprehensive
ANNUAL REPORT 2018

Policy for Stakeholders’ Engagement....................... 80 Income.................................................................... 195

Consolidated Statement of Cash Flows................. 196
CORPORATE SUSTAINABILITY............................... 83 Consolidated Statement of Changes in Equity....... 197
Calendar of Corporate Events.................................. 88 Notes to the Consolidated Financial Statements.... 198
Calendar of Other Notable Events............................ 88 PROXY FORM

01
 2018
YEAR AT A GLANCE

Revenue Dividend
per Share
Rs. 17,834
million
Rs. 2.75
Net Profit
after Tax (NPAT) GP Ratio
Rs. 1,664 13.89%
Gross Profit
million
(GP) NPAT Ratio
Rs. 2,478 9.33%
million Cash from
Return Operations
on Equity to Sales Ratio

10.52% 2.21
Times Cash used in
Investing Activities

Rs.2,203
million
Basic EPS Dividend Yield

Rs. 5.64 28%

Cash Cash
Generated from Generated from Interest Cover
Operating Activities Financing Activities
6.95
Rs.395 Rs.1,815 Times
million Debt to
million
Equity Ratio

10:90
Financial
Leverage Current Ratio

0.57 0.93
Times Times
KOHINOOR TEXTILE MILLS LIMITED

02
 ORGANISATIONAL
OVERVIEW AND EXTERNAL
ENVIRONMENT

ANNUAL REPORT 2018

03
 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.
KOHINOOR TEXTILE MILLS LIMITED

04
The Company’s spinning production facilities now comprise 157,488 ring spindles and 1,848 open end rotors
capable of spinning a wide range of counts using cotton and man-made fibres. The weaving facilities at
Raiwind comprise 288 looms 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.

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 our 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.

Product Portfolio – To cater to varying needs of the market, the Company produces the following products:

• Yarn
• Greige Fabric
• Dyed and Printed Fabric
• 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 mainly exported to Europe, America & Australia.
ANNUAL REPORT 2018

05
 KOHINOOR TEXTILE MILLS LIMITED

06
COMPANY INFORMATION
Board of Directors Company Secretary Bankers of the Company
Mr. Tariq Sayeed Saigol Chairman Mr. Muhammad Ashraf Al Baraka Bank
Mr. Taufique Sayeed Saigol Chief Executive (Pakistan) Limited
Mr. Sayeed Tariq Saigol Chief Internal Auditor Allied Bank Limited
Mr. Waleed Tariq Saigol Mr. Zeeshan Malik Bhutta Askari Bank Limited
Mr. Danial Taufique Saigol Bank Alfalah Limited
Mr. Shafiq Ahmed Khan Auditors Bank Al-Habib Limited
Mr. Arif Ijaz M/s. Riaz Ahmad & Company Faysal Bank Limited
Syed Mohsin Raza Naqvi Chartered Accountants JS Bank Limited
MCB Bank Limited
Legal Adviser
Audit Committee Meezan Bank Limited
Mr. Muhammad Salman Masood
Mr. Shafiq Ahmed Khan Chairman National Bank of Pakistan
Advocate High Court
Mr. Arif Ijaz Member PAIR Investment Company
Mr. Sayeed Tariq Saigol Member Limited
Registered Office
Mr. Waleed Tariq Saigol Member 42-Lawrence Road, Lahore. The Bank of Punjab
Tel: (0092-42) 36302261-62 United Bank Limited
Human Resource & Fax: (0092-42) 36368721
Remuneration Committee
Mr. Shafiq Ahmed Khan Chairman Share Registrar
Mr. Arif Ijaz Member Vision Consulting Limited
Mr. Sayeed Tariq Saigol Member 1st Floor, 3-C, LDA Flats,
Mr. Danial Taufique Saigol Member Lawrence Road, Lahore
Tel: (0092-42) 36283096-97
Chief Financial Officer Fax: (0092-42) 36312550
Syed Mohsin Raza Naqvi E-Mail: shares@[Link]

Mills
• Peshawar Road, Rawalpindi
Tel: (0092-51) 5495328-32 Fax: (0092-51) 5495304

• 8 K.M., Manga Raiwind Road, District Kasur

Tel: (0092-42) 32560683-85, Fax: (0092-42) 32560686-87

• Gulyana Road, Gujar Khan, District Rawalpindi

Tel: (0092-51) 3564472-74

Website:
• [Link]

Note -KTML’s Financial Statements are also available at the above website
ANNUAL REPORT 2018

07
 OUR VISION
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.

OUR MISSION
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.
KOHINOOR TEXTILE MILLS LIMITED

08
 ANNUAL REPORT 2018

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 KOHINOOR TEXTILE MILLS LIMITED

10
OUR VALUES
EMPATHY
We share each others’ feelings and
emotions, making us a stronger, more
cohesive team; we communicate effectively
and approach challenges collectively.

INTEGRITY
We ensure adherence to moral and ethical
principles; we act with honesty, we do not
compromise our values.

PASSION
It’s about growth & success; we chase
our goals and objectives – personal &
professional – with the highest level of
ANNUAL REPORT 2018

energy and enthusiasm.

11
 CODE OF BUSINESS CONDUCT AND
ETHICAL PRINCIPLES
The following principles constitute the code of business, presume to speak for the Company
conduct which all directors and employees of unless they are certain that the views that
Kohinoor Textile Mills Limited are required to apply they express are those of the Company and
in their daily work and observe in the conduct of it is the Company’s desire that such views be
Company’s business. publicly disseminated.

While the Company will ensure that all employees are 5. All employees share a responsibility for the
fully aware of these principles, it is the responsibility Company’s good public relations particularly
of each employee to implement the Company’s at the community level. Their readiness to
policies. Contravention is viewed as misconduct. help with religious, charitable, educational
and civic activities is accordingly encouraged
The code emphasizes the need for a high standard provided it does not create an obligation
of honesty and integrity which are vital for the that interferes with their commitment to the
success of any business. Company’s best interests.

ETHICAL PRINCIPLES 6. The Company has strong commitment to

the health and safety of its employees and
1. Directors and employees are expected not preservation of the environment and the
to engage in any activity which can cause Company will persevere towards achieving
conflict between their personal interest and continuous improvement of its Health,
the interest of the Company such as interest Safety and Environment (HSE) performance
in an organization supplying goods/ services by reducing potential hazards, preventing
to the Company or purchasing its products. In pollution and improving awareness.
case a relationship with such an organization Employees are required to operate the
exists, the same must be disclosed to the Company’s facilities and processes keeping
Management. this commitment in view.

2. Dealings with third parties which include 7. Commitment and team work are key
Government officials, suppliers, buyers, elements to ensure that the Company’s
agents and consultants must always ensure work is carried out effectively and efficiently.
that the integrity and reputation of the Also, all employees will be equally respected
Company are not in any way compromised. and actions such as sexual harassment
and disparaging remarks based on gender,
3. Directors and employees are not allowed religion, race or ethnicity will be avoided.
to accept 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
KOHINOOR TEXTILE MILLS LIMITED

12
CULTURE CORPORATE
Organisational culture in Kohinoor Textile
Mills Limited depicts the Company’s STRATEGY
philosophy which is based on shared values We, at Kohinoor Textile Mills Limited,
and beliefs. The Company is committed manufacture and market yarn, cloth and
to build a strong corporate culture based wide range of textile products. Our strategy
on its core value at the highest standards is to be competitive in the market through
of Empathy, Integrity and Passion. The quality and efficient operations. As a
Company believes in empowering its people responsible member of the community, we
by encouraging a culture of collective efforts are committed to serve the interests of our
for the achievement of Company’s vision stakeholders and contribute towards the
and objectives followed by self-assessment prosperity of the Country.
ANNUAL REPORT 2018

for continuous improvement.

13
 GROUP STRUCTURE
The Company is a part of Kohinoor Maple Leaf Group (KMLG). KMLG structure comprises of two listed public
limited companies i.e. Kohinoor Textile Mills Limited (KTML) and Maple Leaf Cement Factory Limited (MLCF)
and two unlisted public limited companies i.e. Maple Leaf Capital Limited (MLCL) and Maple Leaf Power
Limited (MLPL).

The Holding Company

Kohinoor Textile Mills Limited

(KTML)

Maple Leaf Cement Factory Limited Maple Leaf Capital Limited

(MLCF) (MLCL)

Wholly-owned subsidiary of MLCF

Maple Leaf Power Limited

(MLPL)

KTML is a parent company of other three mentioned Maple Leaf Power Limited (MLPL), a wholly owned
companies. The initial capacity of its Rawalpindi unit subsidiary of MLCF, an unlisted public limited
comprised 25,000 spindles and 600 looms. Later, company, has established a 40 MW Coal Fired
fabric processing facilities were added and spinning Power Plant at Iskanderabad, District Mianwali which
capacity was augmented. Additional production has successfully started its commercial production
facilities were acquired on the Raiwind-Manga Road on 12th October 2017. The project was completed
near Lahore in District Kasur and on the Gulyana
within budget and as per the planned timelines. The
Road near Gujar Khan, by way of merger.
principal activity of MLPL is to generate, purchase,
Maple Leaf Cement Factory Limited (MLCF) was transform, distribute and supply electric power
incorporated in Pakistan on 13 April 1960 under to MLCF. This project will add another reliable and
the Companies Act, 1913 (now the Companies Act, inexpensive source of power compared to the
2017) as a public company limited by shares. The national grid and reduce dependency on the same.
Company is listed on Pakistan Stock Exchange. The It will also provide a cushion against current bullish
cement factory is located at Iskanderabad District trend in furnace oil prices and is expected to be
Mianwali in the province of Punjab. The principal the cheapest source of electricity after waste heat
activity of the Company is production and sale of recovery plant.
cement. The Company is a subsidiary of Kohinoor
Textile Mills Limited (“the Holding Company”). Maple Leaf Capital Limited (MLCL) was incorporated
in Pakistan on 25 April 2014 under the Companies
MLCF is also establishing an additional dry process
Ordinance 1984 (now the Companies Act, 2017) as
KOHINOOR TEXTILE MILLS LIMITED

clinker production line of 7,300 tpd grey clinker

production for enhancing grey cement capacity upto a public company limited by shares. The principal
18,000 tons per day at the existing plant site (brown object of MLCL is to buy, sell, hold or otherwise
field project) with total project cost estimated at acquire or invest its capital in any sort of financial
Rs.25 billion. Commercial production is expected to instruments. MLCL is a subsidiary of KTML.
commence during following financial year.

14
ORGANIZATION CHART

Audit Committee

HR & R Committee

Senior Senior Senior Senior

Legends:
KTML: Kohinoor Textile Mills Limited
Administrative Reporting
Functional Reporting
ANNUAL REPORT 2018

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 GEOGRAPHICAL
PRESENCE

Regional Sales Office Mills Mills Head office Mills

25-West Wharf Road, Gulyana Road, Peshawar Road, 42 - Lawrence 8 K.M., Manga Raiwind
Karachi Gujar Khan, Rawalpindi Road, Lahore Road, District: Kasur
KOHINOOR TEXTILE MILLS LIMITED

Rawalpindi

16
 POSITION IN VALUE CHAIN

ANNUAL REPORT 2018

17
 FACTORS EFFECTING EXTERNAL
ENVIRONMENT
External Factors Organizational response
Component

Political • Transition of government • Management proactively plans for different

from one political party demand scenarios with the help of budgeting,
to another has posed forecasts and projections.
the risk of change of
preferences on allocation • Exploring new export markets to efficiently
of Public Sector utilize production capacities in response to
Development Program reduction in sales volumetric growth in local
(PSDP). market.

• Prolonged political unrest • Regular market analysis by senior management

badly impacting the and the Board.
performance of Pakistan
Stock Exchange (PSX). • 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. It further helped
increase and sustain foreign shareholding in the
total capital structure of the Company.

Economic • Price hike in major input • Commencement of commercial production

costs especially fuel and of coal fired power project has resulted in a
power . handsome decline in the overall power cost
pool which led to a reduction in per ton power
• Devaluation of local cost.
currency.
• The Company met price hikes in input costs
• Inflation by;

- Efficient procurement of cotton because of

better negotiation.

- Effective inventory management by

meticulously reviewing inventory holding
periods.

- Cost reduction initiatives to control

production and non-production related
fixed costs.

• The Company avoided the enormous forex

hit by paying maximum portion of LC of its
ongoing expansion projects and procurement
KOHINOOR TEXTILE MILLS LIMITED

of raw materials.

18
External Factors Organizational response
Component

Social • Stakeholders’ inclination • Ensuring compliance with all requirements of

towards CSR compliant Corporate Social responsibility.
organizations.
• The Company supports provision of
• Better retention in educational facilities for public at large and
organizations offering the Board has approved the construction
affordable health and of Al-Aleem medical college in Ghulab Devi
educational facilities . Educational Complex.

• Attitude change towards

welfare of public at large.

• The Company has the most novel technology

Technological • Technical obsolescence to avoid any risk of technical obsolescence and
of production facilities . keep on investing on BMR.

• Continuous development • The Company continuously invests in the

of information technology robust hardware and software for system
infrastructures and up-gradation and MIS. Recently company has
Management Information implemented ERP modules for meeting latest
Systems (MIS) software. reporting needs.

• Communication • The Company has ensured the provision

infrastructure . of latest Microsoft outlook software to
meet communication needs of all company
personals internally and with all external
stakeholder groups.

Environmental • Attitude towards and • The Company is successfully operating waste

support for renewable heat recovery project (WHRP) for steam
energy. generation from emitted heat of the engines.

• Air pollution & • Planting trees to limit the emission of harmful

deforestation. gases in the atmosphere and to ensure
maintenance and lifting up the underground
• Lowering of underground water level by reducing the evaporation
water belt. process.

• Growing attention • The Company has been approved the

towards “green” standards of ISO 14001 and ISO 18001 for
attitudes. complying with an effective Environmental
Management System (EMS) and Occupational
Health and Safety Assessment Series (OHSAS)
requirements.
ANNUAL REPORT 2018

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 External Factors Organizational response
Component

Legal • Enforcement of new • The Company has engaged an efficient team

Companies Act, 2017. of professionals to ensure compliance with all
enacted and or substantially enacted statutes,
• Continuous amendment in acts and ordinances. It further equips the
the provisions of Income Company with an up to date knowledge of all
Tax Ordinance 2001, prevailing legal requirements.
and Sales Tax Act 1990,
resulting from finance bill • The Company ensures that all taxes and duties
on annual basis. payments, whether income tax or sales tax,
are made timely by having an effective cash
• Amendments in the management system in place.
requirements of Code of
Corporate Governance, • The Company has equipped itself with a
Pakistan Stock Exchange competent legal team to make itself updated
rules and the requirements on employment and industrial laws. It further
of SECP act. helps the management in complying with
requisite updates on timely basis.
• Severe FBR actions to
deter non- compliance and
late payments.

• Amendments in
employment laws and
industrial relations
regulations.

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.

SIGNIFICANT CHANGES FROM PRIOR YEARS

In comparison to the prior years, there is no significant change in organization and group structure as
compared to structure reported in prior years. However, the 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.
KOHINOOR TEXTILE MILLS LIMITED

20
STRATEGY AND
RESOURCE
ALLOCATION

ANNUAL REPORT 2018

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 STRATEGIC OBJECTIVES
2018 – 2019
Following are the main areas that constitute the strategic objectives of Kohinoor Textile Mills Limited: -

Short Term Objectives

1. Effective use of available resources.

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.

10. Implementation of projects in the social and economic development of communities.

KOHINOOR TEXTILE MILLS LIMITED

22
 STRATEGIES AND
Management has the objective to transform the culture
of the Company into highly customer driven, empowered

MANAGEMENT
and cross functionality focused company in order to
maximize the return for stakeholders. Management

OBJECTIVES has the belief that Quality may not be achieved without
implementation of Key Performance Indicators (KPI’s) in
all the critical, contemporary areas of performance. Total

Quality Management team has been formed to monitor the KPI’s in all the key areas on continuous basis
and make corrective actions instantly where required. We strive to achieve our objectives with collective
wisdom and empathy. We believe that training was and will remain the source of all process driven thinking.
Accordingly, trainings for management team have been regularly arranged during the year 2017-18 and will
continue in the year 2018-19. We have framed well-defined different teams to address the key areas like Team
energy, Team strategy, Team Culture Development etc.

We have reduced variable cost due to efficient energy management and other cost reduction measures. The
to-date result, financial and non-financial, are the reflection of achievement of management’s 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.

There is no material change in Company’s objective and strategies from the previous year.

ENTITY’S SIGNIFICANT RESOURCES

Our resources consist of mainly 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.
ANNUAL REPORT 2018

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 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 and Gas

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.
KOHINOOR TEXTILE MILLS LIMITED

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

24
LIQUIDITY AND FINANCIAL CAPITAL
MANAGEMENT
Our liquidity condition has improved over the period with reduced
payment cycle. The management has a balanced team of suitably

of best practices in liquidity management pertaining to policies,

processes, regulatory constraints, tax considerations and liquidity
management system.

level which supports the long-term objectives of the company and

improve its liquidity position. Keeping in line with plant modernization
strategy, Moreover, the Company continued its strategy to utilize

Management believes that there is no inadequacy in capital structure

in status quo.

SIGNIFICANT PLANS AND DECISIONS

The Company’s initial 1-MW solar installation has been a great success
and we are currently on track to expand our renewable energy footprint
in working towards becoming a truly “green” manufacturer. Now
company is planning to undertake a 2-MW solar power plant and will
hopefully be a success in the coming year. This project, in combination
with recently installed 1-MW solar power plant, will help reduce average
power generation cost.

dramatically reduce freshwater usage is afoot and will hopefully be a

ANNUAL REPORT 2018

success in the coming year.

25
 KOHINOOR TEXTILE MILLS LIMITED

26
RISKS AND
OPPORTUNITIES
RISKS AND OPPORTUNITIES ANALYSIS
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:

STRATEGY FORMULATION

Management reviews the Statement of Strategic Objectives annually that represent the Stakeholders’
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.

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:

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..

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,
understanding 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.
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 OBJECTIVES, RISK AND COUNTER MEASURES
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
Increasing prices of raw Magnitude: home 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 requirements within the Magnitude: of raw materials. To meet
market being compliant Country and in exportable Medium the Health and Safety
with all relevant laws of the markets. standards Company
country and international Changes and Reforms in is actively following
regulations. 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 invests 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 production quality goods and services. High partners / vendors in order
KOHINOOR TEXTILE MILLS LIMITED

and minimize idle time. Business constraints faced to increase their potential for
by associated ventures timely sourcing of required
may adversely affect the goods & services to the
customer servicing of the Company.
Company.
Source: External/Internal

28
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 Operational Risk: Low well-equipped health
of employees in workplaces. Accidents can take place Magnitude: and safety department
which can cause serious Medium is operational which
injuries to employees. continuously monitors
Source: Internal the HSE conditions in the
Company and takes the
Unforeseen calamities and remedial actions as and
natural disasters may result when required.
in human loss.
Source: External

Environment: Commercial 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. Medium requirements of various
regulatory authorities.
Apart from that various
Waste from operations
initiatives are in process to
may be disposed of in an reduce to the maximum
inappropriate manner. possible minimum level the
Source: Internal discharge of hazardous
chemicals in water and air.

Finance: Financial Risk: Management has

To maintain strong financial Increase in the cost of Likelihood: addressed the risk of
position and produce borrowing may limit the Low shortage of working
financial performance avenues for availability of Magnitude: capital by availing sufficient
which is reflective of sufficient working capital. Medium lines from the diversified
financial institutions in
the Company’s scale of Source: External
order to meet the short-
business and Shareholders’ term finance requirements
expectations Payment defaults by counter Likelihood: of the Company. Moreover,
parties may leave the Low average credit period
Company with inadequate Magnitude: of the Company is also
resources for discharging its Medium being improved along with
own liabilities. improved operation cycle.
Source: External
Credit risk from counter
Devaluation of Pak. Rupee Likelihood: parties is being addressed
may further adversely affect Low by frequent reviews of
outstanding balances
the raw materials cost of Magnitude:
of major parties, and
spinning segment. Medium reconciliations after short
Source: External time intervals to avoid
ANNUAL REPORT 2018

the chance of disputed

amounts / transactions.

29
 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 Directors’ Report.

Key opportunity Impact area Strategy to materialize

Growing demand in local Social and relationship The Company has increased its capacity
market capital and of fabric printing by adding a latest
Financial Capital machine 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
technology waste heat recovery plant at site which
converts heat from power engine into
steam, which was previously lost, into
energy. Furthermore, the recent launch of
Source: Internal its 1-MW solar power plant provides free
electricity and another 2-MW project is in
pipeline.

Development of human Human capital Developing the human resource is

relations/resource engraved in the Company’s mission
statement and long-term objectives.
By conducting extensive trainings and
Source: Internal through its development program, the
human resource add 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

Source: Internal • Efficient cash management system
• Making sound liquid investments
• Effective control over inventory
KOHINOOR TEXTILE MILLS LIMITED

30
KEY RISKS AND OPPORTUNITIES OF CAPITALS

FORM OF CAPITAL KEY RISK KEY OPPORTUNITIES

Financial Capital Increased packing Growing demand in local market.

and power generation cost

Human Capital Loss of qualified and Bagging unparalleled and

competent staff ideal workforce from the market.

Manufacturing Capital Obsolesce 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 Easy access to local raw materials for yarn
and fabric manufacture.

ANNUAL REPORT 2018

31
 GOVERNANCE

CORPORATE BRIEFING
• NOTICE OF ANNUAL GENERAL MEETING
• CHAIRMAN’S REVIEW
• DIRECTORS’ REPORT
• STATEMENT OF COMPLIANCE WITH LISTED COMPANIES (CODE
OF CORPORATE GOVERNANCE) REGULATIONS, 2017
• REVIEW REPORT ON THE STATEMENT OF COMPLIANCE
CONTAINED IN LISTED COMPANIES (CODE OF CORPORATE
KOHINOOR TEXTILE MILLS LIMITED

GOVERNANCE) REGULATIONS, 2017

• REPORT OF THE AUDIT COMMITTEE
• OTHER CORPORATE MATTERS

32
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 50th Annual General at the mark-up rate of one percent above the
Meeting of the members of Kohinoor Textile Mills three months KIBOR or one percent above
Limited (the “Company”) will be held on Saturday, the average borrowing cost of the Company,
October 27, 2018 at 12:00 Noon at its Registered whichever is higher. Vide special resolution
Office, 42-Lawrence Road, Lahore, to transact the passed in general meeting held on October 26,
following business: - 2017 by the shareholders, the Company was
authorized to extend a facility of similar nature to
Ordinary Business: the extent of Rs. 1,000 million which is valid till
October 31, 2018.
1) To receive, consider and adopt the audited
accounts of the Company including consolidated Resolved further that the Chief Executive Officer
financial statements for the year ended June 30, and the Company Secretary of the Company be
2018 together with the Directors’ and Auditors’ and are hereby authorized singly to take all steps
Reports thereon. necessary, ancillary and incidental, corporate
and legal formalities for the completion of
2) To approve final cash dividend for the year ended transactions in relation to the loans / advances
June 30, 2018 at Re. 1/- per share (10%), as to the subsidiary company but not limited to filing
recommended by the Board of Directors. This is of all the requisite statutory forms and all other
in addition to the interim cash dividend already documents with the Securities and Exchange
paid to the shareholders at Rs. 1.25 per share Commission of Pakistan (SECP), executing
(12.50%), thus making a total cash dividend at documents all such notices, reports, letters and
Rs. 2.25 per share (22.50%) for the year. any other document or instrument to give effect
to the above resolution.”
3) To appoint Auditors for the year ending on June
30, 2019 and fix their remuneration. The Board 5) To ratify and approve transactions conducted
has recommended, as suggested by the Audit with the Related Parties for the year ended
Committee, the appointment of M/s. Riaz Ahmad June 30, 2018 by passing the following special
& Company, Chartered Accountants, the retiring resolution with or without modification: -
auditors and being eligible offer themselves for
re-appointment. “Resolved that the transactions conducted with
the Related Parties as disclosed in the note 37 of
Special Business: the unconsolidated financial statements for the
year ended June 30, 2018 and specified in the
4) To consider and, if deemed fit, pass the following Statement of Material Information under Section
resolution as a special resolution under Section 134(3) be and are hereby ratified, approved and
199 of the Companies Act, 2017, with or without confirmed.”
modification, as recommended by the Directors:-
6) To authorize the Board of Directors of the
Resolved by way of special resolution that Company to approve transactions with the
consent and approval of Kohinoor Textile Mills related parties for the financial year ending on
Limited (the “Company”) be and is hereby June 30, 2019 by passing the following special
accorded under Section 199 of the Companies resolution with or without modification: -
Act, 2017 (the “Act”) for investment in the form
of loans / advances from time to time to Maple “Resolved that the Board of Directors of the
Leaf Cement Factory Limited, a subsidiary of the Company be and is hereby authorized to
Company, upto an aggregate sum of Rs. 1,000 approve the transactions to be conducted with
million (Rupees one thousand million only) for a the Related Parties on case to case basis for the
ANNUAL REPORT 2018

period of one year commencing November 01, financial year ending on June 30, 2019.
2018 to October 31, 2019 (both days inclusive)

33
 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)

October 06, 2018 Company Secretary

NOTES:

1. The Share Transfer Books of the Company will remain closed from October 20, 2018 to October 27, 2018
(both days inclusive). Physical transfers / CDS Transaction IDs received at the Company’s Share Registrar,
M/s. Vision Consulting Ltd, 3-C, LDA Flats, First Floor, Lawrence Road, Lahore, at the close of business on
October 19, 2018 will be considered in time for the purpose of above entitlement and to determine voting
rights of the shareholders for attending the meeting.

2. A member eligible to attend, speak and vote at this meeting may appoint another member as his/her proxy.
CDC shareholders shall attach an attested copy of his/her Computerized National Identity Card (CNIC) /
Passport with Proxy Form. Proxies, in order to be effective, must be received at the Company’s Registered
Office not later than 48 hours before the time for holding the meeting and must be duly stamped, signed
and witnessed. In case of corporate entity, the Board of Directors’ resolution / power of attorney with
specimen signature of the nominee should be attached with the proxy form.

3. Members holding aggregate 10% or more shareholding, residing in a city, may demand the facility of video
link for participation in the annual general meeting.

In this regard, please fill the following and submit at the Registered Office of the Company situated at
42-Lawrence Road, Lahore, at least 07 days prior to the date of Annual General Meeting.

“I/We, _____________________ of ___________________, being a member of Kohinoor Textile Mills Limited,

holder of ___________ Ordinary Share(s) as per Registered Folio / CDC A/c # _______ hereby opt for video
conference facility at ___________.

Signature of Member / Attorney”

4. The Members, who desire for receiving the annual audited financial statements and AGM Notice through
e-mail, are requested to send their written consent on a Standard Request Form available on website
[Link] in order to avail this facility. The audited financial statements for the year ended June 30,
2018 are available on website of the Company. Further, the Company has sent its Annual Report 2018
through CD/DVD/USB to the shareholders at their available Registered Addresses instead of hard copy.
However, hard copy of Annual Report will be provided free of cost on written request of the shareholder.
KOHINOOR TEXTILE MILLS LIMITED

5. Shareholders are requested to notify / submit the following information & documents, in case of book entry
securities in CDS to their respective CDS participants and in case of physical shares to our Share Registrar,
if not earlier provided / notified: -

34
a. Change in their addresses;

b. Pursuant to requirement of Section 242 of the Companies Act, 2017, any dividend payable in cash declared
by a listed company shall only be paid through electronic mode directly into the bank account designated by
the entitled shareholder. Accordingly, shareholders who have not yet provided / updated their International
Bank Account Number (IBAN) details, are requested to furnish the information as provided on website of
the Company on priority basis. In case of non-submission of IBAN of 24 digits, the Company will withhold
the payment of dividends under the Companies (Distribution of Dividends) Regulations, 2017;

c. In case of non-submission of valid & legible copy of CNIC, the Company will be unable to comply with
SRO 831(I)/2012 dated July 05, 2012 of SECP and will be constrained under the Companies Act, 2017 to
withhold the payment of dividend to such shareholders;

d. Valid and legible copies of National Tax Number (NTN) or NTN Certificate(s) of corporate entities and must
quote the company name and their respective Folio / CDC Account Numbers thereon while sending the
copies to the Share Registrar of the Company;

e. Filer & Non-Filer shareholders will pay tax on dividend income @15% and 20% respectively. Therefore,
please ensure that their name(s) have been entered into Active Taxpayers List (ATL) provided on website
[Link] of the Federal Board of Revenue (FBR), despite the fact that the shareholder is a filer, before
the date of approval of cash dividend at the Annual General Meeting on October 27, 2018, otherwise tax on
their cash dividend will be deducted @20% instead of 15%;

f. As per clarification of FBR, each joint holder is to be treated individually as either a ‘Filer’ or ‘Non-Filer’ and tax
will be deducted on the basis of shareholding notified by each joint holder. Accordingly, such shareholder(s)
may notify in writing within 07 days from entitlement date i.e. October 19, 2018 as per following format to
our Share Registrar. If no notification is received to our Share Registrar, then it will be assumed that the
shares are held in equal proportion by the principal shareholder and the joint holder(s): -

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

Account No. Shares

Name & Shareholding Name & Shareholding

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

g. Valid income tax exemption certificate issued by the concerned Commissioner of Inland Revenue is to
be furnished to the Company / Share Registrar in order to avail tax exemption u/s 150 of the Income Tax
Ordinance 2001 (tax on dividend) where the statutory exemption under clause 47B of Part-IV of Second
Schedule is available and want to avail exemption u/s 150 of the Ordinance, otherwise tax will be deducted
under the provisions of laws;

h. Members are requested to submit their Notarized Declarations (CZ-50) as per Zakat & Ushr Ordinance, 1980
for zakat exemption, if they want to claim exemption towards non-deduction of zakat on cash dividend;

i. Pursuant to requirement of Section 244 of the Companies Act, 2017, shareholders who could not collect
their cash dividends / physical shares, are advised to contact at the Registered Office of the Company to
collect / enquire about their unclaimed dividends or physical shares, if any;

j. For any query / information, the shareholders may contact with the Company Secretary at the above
ANNUAL REPORT 2018

Registered Office and / or Mr. Abdul Ghaffar Ghaffari of Share Registrar, Vision Consulting Ltd, 3-C, LDA
Flats, Lawrence Road, Lahore, Ph. Nos. (042) 36283096-97.

35
 STATEMENT UNDER SECTION
This statement 134(3) OF THE ACT:
sets out the Agenda Item No. 4 of the Notice -
Investment in Maple Leaf Cement Factory
material facts Limited
pertaining to the
Maple Leaf Cement Factory Limited, having its
special business Registered Office at 42-Lawrence Road, Lahore
to be transacted (the “MLCF”), is a subsidiary of the Company and
the Company being a holding company, holds
at the Annual 327,836,727 ordinary shares constituting 55.22%
of the aggregate paid-up capital in MLCF, a
General Meeting public listed company engaged in the business of
of the Company manufacturing and sale of cement and the factory is
located at Iskanderabad, District Mianwali.
to be held on
The Board of Directors of the Company in their
October 27, meeting held on September 18, 2018 has approved
2018. Rs. 1,000 million as loans / advances, being a
reciprocal facility, to MLCF on the basis of satisfactory
profit trend of MLCF subject to approval of the
members. The Company shall extend the facility
of loans / advances from time to time for working
capital requirements to MLCF in accordance with an
agreement in writing including all relevant terms and
conditions as prescribed in the Regulations.

Directors of the Company have also provided their

duly signed undertaking / due diligence report
with recommendations that they have carried
out necessary due diligence for the proposed
investment in MLCF and it has been kept at the
Registered Office of the Company for inspection
of the members along with audited and the latest
interim financial statements of MLCF as required
under the Regulations.
KOHINOOR TEXTILE MILLS LIMITED

36
 ANNUAL REPORT 2018

37
 THE INFORMATION UNDER CLAUSES 3(1)(a), 3(1)(c) & 4(1) OF
THE COMPANIES (INVESTMENT IN ASSOCIATED COMPANIES OR
ASSOCIATED UNDERTAKINGS) REGULATIONS, 2017.
3(1)(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 “MLCF”)

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

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

(iii) Earnings per share for the last three years; (Rupees)
Year Basic Diluted
30.06.2016 9.00 9.00
30.06.2017 8.81 8.81
30.06.2018 6.29 6.29

Break-up value per share, based on latest As on June 30, 2018

(iv) audited financial statements; With revaluation surplus Rs. 50.38
Without revaluation surplus Rs. 43.20

Financial position, including main items of Based on the audited financial statements for
(v) statement of financial position and profit the financial year ended 30 June 2018, the
and loss account on the basis of its latest financial position of MLCF is as under:-
financial statements;
Particulars Amount
Rupees (000)
Paid up capital 5,937,007
Capital reserves 5,640,300
Accumulated profits 14,069,289
Surplus on revaluation
of fixed assets–net of tax 4,264,543
Current liabilities 11,953,924
Current assets 12,731,681
Sales - Net 25,699,113
Gross Profit 7,515,924
Operating Profit 5,220,918
Net Profit 3,632,201
Earnings per share (Rs.) 6.29
KOHINOOR TEXTILE MILLS LIMITED

38
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 MLCF from time to
from such investment and period of time for working capital requirements of MLCF.
investment;
Benefits: The Company will receive mark up at
the rate of one percent above the three months
KIBOR or one percent above the average
borrowing cost of the Company, whichever is
higher. This shall benefit the Company’s cash
flow by earning profit on idle funds.

Period: For a period of one year from

November 01, 2018 to October 31, 2019.

(iii) Source of funds to be utilized for Loan and/or advance will be given out of own
investment funds of the Company.
where the investment is intended to be
made using borrowed funds, -
(I) Justification for investment through
borrowings;
(II) Detail of collateral, guarantees N/A
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 advance being provided to MLCF
proposed investment; which will augment the Company’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 the Company, whichever
is higher.
Repayment Principal plus mark-up / profit
upto October 31, 2019
Penalty
charges @ 3-months KIBOR plus one
percent in addition to the
outstanding amount(s).
ANNUAL REPORT 2018

39
 Ref. Requirement Information
No.

(v) Direct or indirect interest of directors, Investing Company i.e. the Company is a
sponsors, majority shareholders and holding company of MLCF and Seven Directors
their relatives, if any, in the associated are common in both the companies may be
company or associated undertaking or deemed to be interested to the extent of their
the transaction under consideration; shareholding.

None of the Directors or their relatives or

associates are interested in any of the above
resolution in any way except as members of
the Company.

(vi) In case any investment in associated A similar nature of loan/advance facility of

company or associated undertaking has Rs.1,000 million from time to time for working
already been made, the performance capital requirements has been granted by
review of such investment including the valued shareholders of the Company vide
complete information/justification for any special resolution passed in the Annual General
impairment or write offs; and Meeting held on October 26, 2017 which is valid
till October 31, 2018. 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 the Company is
company, the Karachi Inter Bank Offered 4.94% for the year ended June 30, 2018.
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 MLCF at one
or commission etc. to be charged by percent above the three months KIBOR or one
investing company; percent above the average borrowing cost of
the Company, whichever is higher.
KOHINOOR TEXTILE MILLS LIMITED

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

be obtained in relation to the proposed since MLCF is a subsidiary company of the
investment; Company.

40
 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, N/A
circumstances in 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, 2018 to October
given to the associated company or 31, 2019 (both days inclusive). MLCF will pay
associated undertaking. interest / mark-up on quarterly basis whereas
repayment of principal amount shall be on or
before October 31, 2019.

Six Directors including Sponsor Directors of associated company i.e. MLCF are also the members of the
Company and are interested to the extent of their shareholding as under: -

Name %age of shareholding %age of shareholding

in MLCF in the Company

Mr. Tariq Sayeed Saigol & his spouse 0.0194 14.3755

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
Mr. Shafiq Ahmed Khan 0.0014 0.0010

AGENDA ITEM NO. 5 OF THE NOTICE - RATIFICATION AND APPROVAL OF THE RELATED PARTY
TRANSACTIONS:

Transactions conducted with the related parties 2017. However, during the year since majority of
have to be approved by the Board of Directors duly the Company’s Directors were interested due to
recommended by the Audit Committee on quarterly their common directorships and therefore these
basis pursuant to clause 15 of the Listed Companies transactions are being placed for the approval by
(Code of Corporate Governance) Regulations, shareholders in the Annual General Meeting.
ANNUAL REPORT 2018

41
 All transactions with related parties to be ratified have been disclosed in the note 37 to the unconsolidated
financial statements for the year ended June 30, 2018. Party-wise details of such related party transactions
are given below: -

Sr. Name of Related Relationship Description of Transactions Rupees in

No. Party thousands

1) Maple Leaf Cement Subsidiary Purchase of goods and services 50,361

Factory Limited Company Purchase of property, plant and
equipment 1,785
Dividend Income 1,001,724
Investment made 2,367,710
Loan and advances paid 290,000
Interest income on loan and advances 4,592
Purchase of property, plant
2) Maple Leaf Capital Subsidiary
and equipment 665
Limited Company
Sale of property, plant and
equipment 1,359
Loan obtained 1,250,000
Loan repaid 818,470
Mark-up on loan 37,604
Provident Fund Post-employment Contribution 50,494
3)
benefit plan

The Company carries out transactions as per the 30, 2019 as per the approved policy with respect
approved policy with respect to ‘transactions with to ‘transactions with related parties’ in the normal
related parties’ in the normal course of business. All course of business. The majority of Directors are
transactions entered into with related parties require interested due to their common directorship in
the approval of the Audit Committee of the Company, the subsidiary/associated companies. In order
which is chaired by an Independent Director of the to promote transparent business practices, the
Company. Upon the recommendation of the Audit shareholders are required to authorize the Board of
Committee, such transactions were placed before Directors to approve transactions with the related
the Board of Directors for approval. parties from time-to-time and on case to case
basis for the year ending on June 30, 2019, which
The nature of relationship with these related parties transactions shall be deemed to be approved by
has also been indicated in the unconsolidated the Shareholders. The nature and scope of such
financial statements for the year ended June 30, related party transactions is explained above. These
2018. The Directors are interested in the resolution transactions shall be placed before the shareholders
only to the extent of their shareholding and having in the next AGM for their formal approval/ratification.
their common directorships in such related parties.
The Directors are interested in the resolution only
AGENDA ITEM NO. 6 OF THE NOTICE - to the extent of their shareholding and/or only their
AUTHORIZATION FOR THE BOARD OF DIRECTORS common directorships in such related parties.
TO APPROVE THE RELATED PARTY TRANSACTIONS
DURING THE YEAR ENDING ON JUNE 30, 2019.
KOHINOOR TEXTILE MILLS LIMITED

The Company shall be conducting transactions with

its related parties during the year ending on June

42
 ANNUAL REPORT 2018

43
 KOHINOOR TEXTILE MILLS LIMITED

44
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, 2018 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 and production
the financial year 2017-18. The Management of the facilities to ensure continued growth in the bottom
Company is encouraged by the future prospects line which should hopefully result in high growth.
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
2017, 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 2018 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
2018, 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.
Lahore (Tariq Sayeed Saigol)
STRATEGIC DECISION MAKING: 18 September 2018 Chairman
ANNUAL REPORT 2018

Overall corporate strategy and objectives have been

set in line with the strategic vision of the Board from

45
 DIRECTORS’ REPORT
to the Shareholders
In compliance with Section 227 of the Companies
Act, 2017, the Directors are pleased to present
50th Annual Report along with audited financial
statements and Auditors’ Report thereon for the
year ended 30 June 2018.
KOHINOOR TEXTILE MILLS LIMITED

46
Kohinoor Textile Mills Limited (“the Company”) The Company’s initial 1-MW solar installation has
is a public limited company incorporated in been a great success and we are currently on
Pakistan and listed on Pakistan Stock Exchange track to expand our renewable energy footprint
Limited. The principal activity of the Company is in working towards becoming a truly “green”
manufacturing of yarn and cloth, processing and manufacturer. Experimentation to completely reuse
stitching the cloth and trade of textile products. treated effluent in an effort to dramatically reduce
freshwater usage is afoot and will hopefully be a
REVIEW OF OPERATIONS
success in the coming year.
The results of the final quarter of the year under
review improved over the previous quarter due in Dividends from the Company’s subsidiaries are
large part to improvement in yarn prices as a result expected to remain healthy in the coming year.
of devaluation of the Rupee, leading to increased
costs of raw materials. As the Company was well- FINANCIAL REVIEW
covered, it was able to take advantage of increased
selling rates. During the year under review, Company’s sales
increased to Rs.17,834 million (2017: Rs.17,405
Over the course of the year under review the million), while cost of sales increased to
Company continued its policy of modernization Rs.15,356 million (2017: Rs.14,823 million). This
and replacement of spinning equipment, which will resulted in gross profit of Rs.2,478 million (2017:
further strengthen its position in the fine-counts Rs.2,581million).
market. This policy will continue in the coming
financial year.
Operating profit for the period under review stood
at Rs.2,516 million (2017: Rs.3,170 million). The
The Company intends to cover its raw material
Company made an after tax profit of Rs.1,664
adequately for the coming year and has already
begun raw material procurement. We remain million (2017: Rs.2,352 million). Earnings per share
hopeful we shall be able to cover our needs at for the year ended 30 June 2018 were at Rs.5.64
workable prices. against Rs.8.25 for the last year.

In our continuing quest for value-addition, the GROUP FINANCIAL REVIEW

Company has procured advanced digital printing
equipment and increased its investment in new During the year under review, Company’s
equipment to provide customers with a greater consolidated revenue increased to Rs.43,467
assortment of embellished products, which will million (2017: Rs.41,248 million), while cost of sales
also continue into the next financial year as the increased to Rs. 32,167 million (2017: Rs.28,992
Company seeks to further differentiate itself from million). This resulted in gross profit of Rs.11,300
local competition. million (2017: Rs.12,255 million). Earnings per
share for the year ended 30 June 2018 were at
It is envisaged that the new Government will take an
Rs.11.95 against Rs.16.38 for the last year.
active role in promoting exports and take necessary
steps to ensure a competitive environment on a
global scale. This will be a challenging assignment DIVIDEND & APPROPRIATIONS
but one that is necessary for the financial viability
of our economy. Keeping in view the results, the Board of Directors
has announced final cash dividend for the year
We once again request the government to ended June 30, 2018 at Re.1/- per share (10%).
immediately disburse sales tax refunds, approved This is in addition to interim cash dividend already
export subsidies and other tax refunds so cash flow paid at Rs.1.25 per share (12.50%), thus making a
issues are minimized. This should immediately result total cash dividend at Rs. 2.25 per share (22.50%)
in increased exports which is the need of the hour.
ANNUAL REPORT 2018

for the year.

47
 The Directors recommend as under:

Description Rs “000”

Profit before taxation 2,154,091

Provision for taxation (489,769)
Profit after taxation 1,664,322
Final dividend declared for the year ended 30 June 2017 (423,533)
Interim dividend declared during the year ended 30 June 2018 (374,121)
Accumulated profit brought forward 5,681,382

Accumulated profit carried forward 6,548,050

RIGHT ISSUE
PRINCIPAL RISKS AND UNCERTAINTIES
In order to partially finance the subscription of 12.50%
right shares of Maple Leaf Cement Factory Limited, - Declining export sales due to increased
a subsidiary company, the Board of Directors in competition at global as well as regional levels.
its meeting held on 17th August, 2017 decided to
offer right shares. Accordingly, 6% right shares were - Rupee devaluation causing escalation in prices of
offered at a price of Rs. 60/- per share (inclusive imported raw cotton, packaging and dyes, which
of premium of Rs. 50/- per share) and a sum of truncating profit margins.
Rs.1,016.478 million was raised through right issue.
The Directors and Sponsors subscribed their portion - Increased energy cost due to rising fuel and
of rights. 96.6% of public portion was subscribed power prices.
by shareholders, whereas the remaining 2.4% of the
total right issue was taken up by the underwriters. - Overall inflationary increase in operating
expenses.
FUTURE PROSPECTS
- Increased finance cost due to enhancement of
We expect future results of the Spinning and Home discount rate by central bank which resulted
Textiles divisions to be at least as profitable as increase in KIBOR.
those achieved during the period under review and
hopefully improve due to addition of new product CHANGE IN NATURE OF BUSINESS
lines. In addition, we feel positive that the new
government is determined to increase exports and No changes have been occurred during the financial
will take measures to achieve this goal. Changes to year concerning the nature of the business of the
the exchange regime have had a salutary impact Company or of its subsidiaries, or any other company
already. in which the Company has interest.

SUBSEQUENT EVENTS CORPORATE SOCIAL RESPONSIBILITY

No material changes or commitments affecting the The Company acknowledges its responsibility
financial position of the Company have occurred towards society and performs its duty by providing
between the end of the financial year of the Company financial assistance to projects for society
and the date of this report. development by various charitable institutions on
consistent basis. The Company has been recognized
KOHINOOR TEXTILE MILLS LIMITED

DEFAULT OF REPAYMENTS, DEBT/LOAN ETC. by the Pakistan Centre for Philanthropy as a leader in
social and charitable contributions and strives to be
The Company is current on repayment of its debt a constructive member of the communities in which
obligations and no default has been occurred till cut it has a presence.
of date of these financial statements.

48
The Company has contributed in medical social
sciences project and in this regard, during
the current year, the Company’s Board of
Directors and the Board of Maple Leaf Cement
Factory Limited have jointly decided to donate
Rs.132.495 Million to Gulab Devi Educational
Complex, Lahore towards construction of Al-
Aleem Medical College in Gulab Devi Chest
Hospital (GDCH), Lahore. A committee of
the members of Board is formed for better
monitoring and execution of this task.

The Company has also contributed in the past

for medical social service projects and in this
regard the Company had donated a state of
the art Cardiac facility to the Gulab Devi Chest
Hospital (GDCH) in Lahore by building Sayeed
Saigol Cardiac Complex at GDCH.

Kohinoor Maple Leaf Group has received

“7th Corporate Social Responsibility National
Excellence Award” on account of its
performance of various social obligations.

IMPACT OF COMPANY’S BUSINESS ON

THE ENVIRONMENT

Management understands the harmful effects

of contaminated water on the surrounding
areas after emission from the mill’s premises.
To prevent the potentially harmful effects
of any chemicals used in processing on
the surrounding water table, a waste water
treatment plant has been constructed
minimizing or negating any contamination in
water discharged from the factory. Further,
the Company continues to investigate and
implement pilot projects into alternative,
sustainable energy sources.

ADEQUACY OF INTERNAL CONTROL

The Board of Directors has established an

efficient system of internal financial controls,
for ensuring effective and efficient conduct
of operations, safeguarding of Company
assets, compliance with applicable laws and
regulations and reliable financial reporting.
The independent Internal Audit function of the
ANNUAL REPORT 2018

Company regularly appraises and monitors the

implementation of financial controls, whereas

49
 KOHINOOR TEXTILE MILLS LIMITED

50
the Audit Committee reviews the effectiveness of the
internal control framework and financial statements
on quarterly basis.

MANAGEMENT’S RESPONSIBILITY TOWARD

PREPARATION AND PRESENTATION OF
FINANCIAL STATEMENTS

The Management is aware of its responsibility 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.

AUDITORS’ REPORT

The Auditors have expressed un-modified opinion on

the separate and consolidated financial statements of
the Company.

AUDITORS

The present auditors of the Company, M/s. Riaz

Ahmad & Company, Chartered Accountants, audited
the financial statements of the Company and have
issued report to the members. The auditors will retire
at the conclusion of the Annual General Meeting.
Being eligible, they have offered themselves for re-
appointment. The Board of Directors has endorsed, as
suggested by the Audit Committee, the appointment
of M/s. Riaz Ahmad & Company, Chartered
Accountants as auditors for the ensuing year subject
to approval of the members in the forthcoming Annual
General Meeting.

COMPOSITION OF BOARD OF DIRECTORS

Total Number of Directors:

a) Male 8
b) Female -

Composition:

Independent Director 1
ANNUAL REPORT 2018

Other Non-Executive Directors 4

Executive Directors 3

51
 NAME OF DIRECTORS AND BOARD MEETINGS
During the year under review, six meetings of the Board of Directors were held in Pakistan and no
meeting was held outside Pakistan. Attendance by each Director was as follows: -

Category Names Meetings Attended

Independent Director Mr. Shafiq Ahmed Khan 5

Other Non-Executive Directors Mr. Tariq Sayeed Saigol 6
Mr. Sayeed Tariq Saigol 6
Mr. Waleed Tariq Saigol 2
Mr. Arif Ijaz 6
Executive Directors Mr. Taufique Sayeed Saigol 6
Mr. Danial Taufique Saigol 6
Syed Mohsin Raza Naqvi 5

Leave of absence was granted to the Directors who could not attend the Board meetings.
Following Executive Directors are also Non-Executive Directors in other companies: -

Category Names No. of directorships

in other companies

Executive Directors Mr. Taufique Sayeed Saigol 3
Mr. Danial Taufique Saigol 3
Syed Mohsin Raza Naqvi 2

Pursuant to requirement of the Listed Companies (Code of Corporate Governance) Regulations,

2017, the following Committees were re-constituted: -
AUDIT COMMITTEE
A total number of five meetings of the Audit Committee were held during the year. The attendance
of each member was as under: -

Name Designation Meetings Attended

Mr. Shafiq Ahmed Khan Chairman / Independent Director 5

Mr. Arif Ijaz Member / Non-Executive Director 5
Mr. Sayeed Tariq Saigol Member / Non-Executive Director 5
Mr. Waleed Tariq Saigol Member / Non-Executive Director -

Leave of absence was granted to the Member(s) who could not attend the meetings. However,
Mr. Waleed Tariq Saigol joined the Audit Committee effective May 01, 2018.

Members of Audit Committee were present in the last AGM of the Company held on October 26, 2017.
KOHINOOR TEXTILE MILLS LIMITED

52
 ANNUAL REPORT 2018

53
 HUMAN RESOURCE AND REMUNERATION COMMITTEE

NAME DESIGNATION

Mr. Shafiq Ahmed Khan Chairman / Independent Director

Mr. Arif ijaz Member / Non-Executive Director
Mr. Sayeed Tariq Saigol Member / Non-Executive Director
Mr. Danial Taufique Saigol Member / Executive Director

NUMBER OF MEETINGS HELD – 01 (All Members attended the meeting held on November 17, 2017).
However, Mr. Shafiq Ahmed Khan joined HR & R Committee effective January 01, 2018 as Chairman in place
of Mr. Arif Ijaz.

REMUNERATION TO NON-EXECUTIVE / INDEPENDENT DIRECTORS

The Board of Directors has approved a ‘Directors’ Remuneration Policy’, the salient features of which are:-

• No Director shall determine his/her own remuneration.

• Meeting fee of a Director other than regular paid Chief Executive, Sponsors and / or family Directors and
full time working Director(s), shall be net of tax amounting to Rs.10,000/- (Rupees ten thousand only) per
meeting or as time to time determined by the Board for attending the Board and its Committee meetings.

• Any tax obligation against such payment applicable for the time being and/or amended hereinafter shall
be borne by the Company.

• The Directors shall be entitled to be paid all reasonable expenses, including travelling, hotel charges and
other expenses incurred by them for attending meetings and for other business conducted for and on
behalf of the Company.

PATTERN OF SHAREHOLDING

Pattern of shareholding of the Company in accordance with the Companies Act, 2017 as at June 30, 2018 is
annexed.

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

KOHINOOR TEXTILE MILLS LIMITED

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

18 September 2018 Director Chief Executive

54
STATEMENT OF COMPLIANCE
With the Listed Companies (Code of Corporate Governance)
Regulations, 2017
Name of Company: Kohinoor Textile Mills Limited
Year Ended: June 30, 2018

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

1. The total number of Directors is Eight as per the following: -

Male: 8
Female: -

The requirement of minimum number of female and independent Directors on the Board would be
complied by within the time allowed by these Regulations.

2. The Composition of Board is as follows: -

Category Names

Independent Director Mr. Shafiq Ahmed Khan

Other Non-Executive Directors Mr. Tariq Sayeed Saigol

Mr. Sayeed Tariq Saigol
Mr. Waleed Tariq Saigol
Mr. Arif Ijaz

Executive Directors Mr. Taufique Sayeed Saigol

Mr. Danial Taufique Saigol
Syed Mohsin Raza Naqvi

3. The Directors have confirmed that none of them is serving as a Director on more than five listed
companies, including this Company.

4. The Company has prepared a Code of Conduct and has ensured that appropriate steps have been
taken to disseminate it throughout the Company along with its supporting policies and procedures.

5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies
of the Company. A complete record of particulars of significant policies along with the dates on which
they were approved or amended has been maintained.

6. All the powers of the Board have been duly exercised and decisions on relevant matters have been
taken by the Board / Shareholders as empowered by the relevant provisions of the Act and these
Regulations.

7. The meetings of the Board were presided over by the Chairman. The Board has complied with the
requirements of Act and the Regulations with respect to frequency, recording and circulating minutes
of meeting of the Board.
ANNUAL REPORT 2018

8. The Board of Directors have a formal policy and transparent procedures for remuneration of Directors
in accordance with the Act and these Regulations.

55
 KOHINOOR TEXTILE MILLS LIMITED

56
9. The Board had arranged Orientation Courses for its Directors during the preceding years from recognized
institutions of Pakistan that meet the criteria specified by the SECP whereas some Directors having
the requisite experience on the Board(s) of Listed Companies are exempt from the Directors’ Training
Program for which SECP’s approval would be obtained within the time allowed in these Regulations.
Further, the Directors have also provided declarations that they are aware of their duties, powers and
responsibilities under the applicable law.

10. The Board has approved appointment of CFO, 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. CFO and CEO duly endorsed the financial statements before approval of the Board.

12. The Board has formed committees comprising of members given below:

AUDIT COMMITTEE

NAME DESIGNATION

Mr. Shafiq Ahmed Khan Chairman / Independent Director

Mr. Arif Ijaz Member / Non-Executive Director
Mr. Sayeed Tariq Saigol Member / Non-Executive Director
Mr. Waleed Tariq Saigol Member / Non-Executive Director

HUMAN RESOURCE & REMUNERATION COMMITTEE

NAME DESIGNATION

Mr. Shafiq Ahmed Khan Chairman / Independent Director

Mr. Arif Ijaz Member / Non-Executive Director
Mr. Sayeed Tariq Saigol Member / Non-Executive Director
Mr. Danial Taufique Saigol Member / Executive Director

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 Five meetings were held during the financial year.
Human Resource and Remuneration Committee One meeting was held during the financial year.

15. The Board has set up an effective internal audit function who are considered suitably qualified and
experienced for the purpose and are conversant with the policies and procedures of the Company.
ANNUAL REPORT 2018

57
 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 ICAP and registered with Audit Oversight Board of
Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares
of the Company and that the firm and all its partners are in compliance with International Federation of
Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.

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.

18. We confirm that all other requirements of the Regulations have been complied with.

(TARIQ SAYEED SAIGOL)

Date: 18 September 2018 CHAIRMAN
KOHINOOR TEXTILE MILLS LIMITED

58
REVIEW REPORT ON THE STATEMENT
of Compliance contained in Listed Companies (Code of
Corporate Governance) Regulations, 2017
To the members of Kohinoor Textile Mills Limited

Review Report on the Statement of Compliance contained in Listed Companies (Code of Corporate
Governance) Regulations, 2017

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, 2017 (the Regulations) prepared by the Board of Directors of Kohinoor Textile Mills
Limited (the Company) for the year ended 30 June 2018 in accordance with the requirements of regulation
40 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 and also ensure compliance with the requirements of section 208 of the Companies Act, 2017.
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. We
have not carried out procedures to assess and determine the Company’s process for identification of related
parties and that whether the related party transactions were undertaken at arm’s length price or not.

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 2018.

RIAZ AHMAD & COMPANY

Chartered Accountants

Lahore

Date: 18 September 2018

ANNUAL REPORT 2018

59
 REPORT OF THE AUDIT COMMITTEE

The Audit Committee comprises of one independent Act, 2017, and the external reporting is
non-executive Director and three non-executive consistent with management processes and
Directors. The Chief Financial Officer, the Chief adequate for shareholder needs.
Internal Auditor and the external auditors attend the
Audit Committee meetings as provided in the Code 4) The Audit Committee reviewed and approved all
of Corporate Governance. Five meetings of the Audit related party transactions.
Committee were held during the year 2017-2018.
Based on reviews and discussions in these meetings, 5) No cases of material complaints regarding
the Audit Committee reports that:- accounting, internal accounting controls or
audit matters, or Whistle Blowing were received
1) The Audit Committee reviewed and approved by the Committee.
the quarterly, half yearly and annual financial
statements of the Company including 6) The Company’s system of internal control is
consolidated financial statements and sound in design and is continually evaluated for
recommended them for approval of the Board effectiveness and adequacy.
of Directors.
7) The Board has established internal audit
2) Appropriate accounting policies have been function being an independent appraisal
consistently applied. All core and other function for the review of the internal control
applicable International Accounting Standards system in all areas of the business activity
were followed in preparation of financial and provides management with objective
statements of the Company and consolidated evaluations, appraisals and recommendations
financial statements on a going concern basis, on the adequacy, effectiveness and compliance
which present fairly the state of affairs, results of with each system reviewed.
operations, cash flows and changes in equity of
KOHINOOR TEXTILE MILLS LIMITED

the Company. 8) Company’s internal audit function is headed

by a Chartered Accountant with a team of
3) Accounting estimates are based on reasonable professionals who are suitably qualified and
and prudent judgment. Proper and adequate experienced and well aware of the Company’s
accounting records have been maintained by the policies and procedures.
Company in accordance with the Companies

60
9) Internal audit function operates under the rating. They carry out objective examination
charter approved by the Audit Committee and and evaluation of the financial statements to
head of the internal audit function has direct make sure that the records are fair and accurate
access to the Audit Committee. representation of the transactions. They confirm
every year that the firm and all Partners in the
10) Company’s internal audit function prepares firm are compliant with the IFAC guidelines on
annual plan for the financial year and a strategic code of Ethics as adopted by the Institute of
audit plan for following two years during which Chartered Accountants of Pakistan.
all major systems and areas of activity will be
audited. Annual and strategic audit plan is 17) The external auditors, Riaz Ahmad & Company,
approved by the Audit Committee. Chartered Accountants, were allowed direct
access to the Audit Committee and necessary
11) Internal audit reports include findings, coordination with internal auditors was also
conclusions, recommendations and action ensured. Major findings arising from audits and
plans agreed with management. These are any matters that the external auditors wished to
reported promptly to the appropriate level of highlight were freely discussed with them.
management. Follow up in implementation is
ensured. 18) The Audit Committee reviewed the Management
Letter issued by the external auditors and the
12) The Audit Committee, on the basis of the management response thereto. Observations
internal audit reports, reviewed the adequacy of were discussed with the auditors and required
controls and compliance shortcomings in areas actions recorded.
audited and discussed corrective actions in
the light of management’s responses. This has 19) Appointment of external auditors and fixing
ensured the continual evaluation of controls and of their audit fee was reviewed and the Audit
improved compliance. Committee following this review recommended
to the Board of Directors reappointment of Riaz
13) The Audit Committee has reviewed the Annual Ahmad & Company, Chartered Accountants, as
Report for the last financial year and found it external auditors for the year 2018-2019.
fair, balance and understandable to users of
financial statements. Annual Report provides
the necessary information to all the stakeholders
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, By order of the Audit Committee
the Committee is devising a checklist for self-
evaluation of its performance.

15) The Audit Committee ensured that statutory

and regulatory obligations and requirements of (Shafiq Ahmed Khan)
best practices of governance have been met. Chairman, Audit Committee
18 September 2018
16) Present Auditors, M/s. Riaz Ahmad & Company,
Chartered Accountants, were appointed as on
December 30, 2004. They are professional
services company having satisfactory QCR
ANNUAL REPORT 2018

61
 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 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

Maple Leaf Cement Factory Limited and graduated from Government College, University,
Maple Leaf Power Limited Lahore 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, energy and
cement manufacturing.

He remained Chairman All Pakistan Textile Mills

Association from 1992-94, President of Lahore Chamber
of Commerce and Industry for 1995-97 and Chairman,
All Pakistan Cement Manufacturers Association from
2003-06. 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
its critique prepared in 2006. He joined 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 in

Pakistan. He has been a member of the Board of Governors
of Lahore University of Management Sciences, Aitchison
College, Founding Chairman of the Board of Governors of
Chandbagh School, Founder Trustee of Textile University
of Pakistan and member of the Syndicate of University of
Health Sciences. He is conferred with Sitara-e-Isaar by
President of Pakistan in 2006.

He is a keen golfer and has represented Pakistan at Golf

KOHINOOR TEXTILE MILLS LIMITED

in Sri Lanka and Pakistan in 1967.

62
 Mr. Taufique Sayeed Saigol is the Chief Executive
MR. TAUFIQUE SAYEED SAIGOL of Kohinoor Textile Mills Limited and Director in all
(CHIEF EXECUTIVE / DIRECTOR) KMLG companies. He is a leading and experienced
industrialist of Pakistan. He graduated as an Industrial
OTHER ENGAGEMENTS Engineer from Cornell University, USA in 1974. He
widely travelled and his special forte is in the export
DIRECTOR business. He is a business man of impeccable
Maple Leaf Cement Factory Limited credibility and vision and has substantial experience of
Maple Leaf Power Limited working in different environments.
CHAIRMAN / DIRECTOR
Maple Leaf Capital Limited

Mr. Sayeed Tariq Saigol is the Chief Executive of Maple

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

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

MR. DANIAL TAUFIQUE SAIGOL Mr. Danial Taufique Saigol is the younger son of
(DIRECTOR) Mr. Taufique Sayeed Saigol, CEO of KTML. Danial
began his career with KMLG in January 2012 as
OTHER ENGAGEMENTS Executive Director. He holds a bachelor’s degree in
Finance from McGill University, Montreal, Canada.
DIRECTOR He is currently posted at Kohinoor Textile Mills
Maple Leaf Cement Factory Limited Limited, Rawalpindi.
Maple Leaf Power Limited
Maple Leaf Capital Limited
ANNUAL REPORT 2018

63
 Mr. Arif Ijaz has done his bachelor in Electrical Engineering from
MR. ARIF IJAZ University of Engineering and Technology (UET) Lahore, Pakistan
(DIRECTOR) and MBA from Iran Centre for Management Studies. He has
over 26 years of experience in the development and growth of
OTHER ENGAGEMENTS business strategy. He has also served as the CEO of Adamjee
Insurance, CEO of KSB Pumps, Director of Pakistan Steel Mills,
DIRECTOR National Refinery, Lahore Stock Exchange, HUBCO, and Lahore
Maple Leaf Power Limited University of Management Sciences (LUMS).
Maple Leaf Capital Limited
He is serving as MBA Faculty member at UET Lahore and former
visiting faculty member of LUMS.

Mr. Shafiq Ahmed Khan got his bachelor degree from Punjab
MR. SHAFIQ AHMED KHAN University and joined Habib Bank Limited at entry level in
(DIRECTOR) 1968 and spent over a period of 24 years in order to become
Executive Vice President while performing in different areas of
OTHER ENGAGEMENTS services. Since 1992, he spent a period of five years in Fidelity
Investment Bank Limited, Lahore, as first President and CEO of
DIRECTOR a major investment bank in the country and guided with sound
Maple Leaf Cement Factory business and risk management.
Limited
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. 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 heading Board’s Audit Committee as well as
Human Resource and Remuneration Committee.

Mr. Mohsin Naqvi, Fellow member of Institute of Chartered

SYED MOHSIN RAZA NAQVI Accountants of Pakistan (FCA), with over 29 years of Financial
(DIRECTOR/GROUP DIRECTOR FINANCE/ Management experience. Areas of expertise include: financial
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,
implementing budgetary control procedures, implementing
DIRECTOR / CHIEF FINANCIAL OFFICER financial software, organizing finance and treasury functions of
Maple Leaf Cement Factory Limited the Company.
DIRECTOR He is former board member of Kohinoor Mills Limited, Al-Wazan
Maple Leaf Power Limited Group, Kuwait and Trust Investment Bank Limited. He has
Maple Leaf Capital Limited experience of working in several countries which include Saudi
Arabia, Kuwait, Philippines, Morocco, Jordan and Pakistan.
KOHINOOR TEXTILE MILLS LIMITED

64
 ANNUAL REPORT 2018

65
 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 the Listed Companies (Code of Corporate Governance) Regulations, 2017.

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.

FORMAL ORIENTATION TRAINING by the Board. As sanctioned by the Companies Act

PROGRAM FOR DIRECTORS / 2017 and authorised by Articles of Association of
DIRECTORS’ TRANING PROGRAM the Company, following decisions are taken by the
Board namely: -
The Board had arranged Orientation Courses for
its Directors namely, Mr. Danial Taufique Saigol and • Issue of shares;
Syed Mohsin Raza Naqvi, during the preceding • Approval of financial statements;
years from recognized institutions of Pakistan
approved by the SECP whereas some Directors • Approval of bonus to employees;
having the requisite experience on the Board(s) of • Incurring capital expenditure and disposal of
Listed Companies are exempt from the Directors’ fixed assets;
Training Program.
• Declaration of interim dividend;
Further, the Directors have also provided declarations • Writing off bad debts, advances and receivables;
that they are aware of their duties, powers and
responsibilities under the Companies Act, 2017 and • Writing off inventories and other assets of the
the Listing Regulations of Pakistan Stock Exchange. company;
• Make borrowings in the form of loans,
KOHINOOR TEXTILE MILLS LIMITED

MATTERS DECIDED BY THE BOARD OF debentures, leasing contracts or redeemable

DIRECTORS capital

The Board of Directors approves overall corporate • Investment of funds of the Company;
strategy which is in line with Company’s Vision. All • To determine the terms of and the circumstances
the Strategic Decisions of the Company are taken in which a law suit may be compromised and

66
 a claim or right in favor of a company may be COMPENSATION POLICY OF EXECUTIVE
released, extinguished or relinquished DIRECTORS WHO ALSO SERVE OTHER
COMPANIES BOARD OF DIRECTORS
• Other matters of strategic nature e.g. taking
Executive Directors of the company shall be
over a company or acquiring a controlling or
appropriately compensated for their service
substantial stake in another company;
in the Company and for representation on the
Company’s Board. This compensation shall take
MATTERS DELEGATED TO THE MANAGEMENT
into consideration the amount of time required to be
devoted to Board activities, the fiduciary responsibility
Management of the Company is entrusted with the
of such positions and the competitiveness of the
responsibility to conduct operations of the Company
compensation levels. Compensation is subject to
adhering to corporate strategy approved by Board
change at the discretion of the Board. Board may
of Directors. Tactical and operational matters are
approve revision in Directors’ Compensation Policy
delegated to the Management of the Company
from time to time.
which mainly include:
No fee is paid to Executive Directors of the Company
• Cash flow Management; by way of their appointment in other associated
companies in the capacity of Non-Executive Director.
• Selling and Marketing;
Moreover, none of our Executive Director is working
• Compliance with legal requirements;
as Non-Executive Director in companies which are
• Production Management; not associated companies.
• Procurement Management and
SECURITY CLEARANCE OF FOREIGN DIRECTOR
• Other support functions like Human Resource
No foreign director was on Board of Directors of the
Management.
Company during the year.
ANNUAL REPORT 2018

67
 TERMS OF REFERENCE OF BOARD
COMMITTEES
AUDIT COMMITTEE • compliance with applicable accounting
standards;
The Main terms of reference of the Audit Committee
of the Company include the following: - • compliance with these regulations
and other statutory and regulatory
a) Determination of appropriate measures to requirements; and
safeguard the Company’s assets;
• all related party transactions.
b) Review of annual and interim financial
statements of the Company, prior to their c) Review of preliminary announcements of
approval by the Board of Directors, focusing results prior to external communication and
on: publication;

• major judgmental areas; d) Facilitating the external audit and discussion

with external auditors of major observations
• significant adjustments resulting from the arising from interim and final audits and any
audit; matter that the auditors may wish to highlight
(in the absence of management, where
• going concern assumption; necessary);
KOHINOOR TEXTILE MILLS LIMITED

• any changes in accounting policies and e) Review of management letter issued by external
practices; auditors and management’s response thereto;

68
f) Ensuring coordination between the internal and o) Recommend to the Board of Directors
external auditors of the Company; the appointment of external auditors, their
removal, audit fees, the provision of any service
g) Review of the scope and extent of internal audit, permissible to be rendered to the Company by
audit plan, reporting framework and procedures the external auditors in addition to audit of its
and ensuring that the internal audit function has financial statements. The Board of Directors shall
adequate resources and is appropriately placed give due consideration to the recommendations
within the Company; of the Audit Committee and where it acts
otherwise it shall record the reasons thereof.
h) Consideration of major findings of internal
investigations of activities characterized by p) Consideration of any other issue or matter as
fraud, corruption and abuse of power and may be assigned by the Board of Directors.
management’s response thereto;
HUMAN RESOURCE & REMUNERATION
i) Ascertaining that the internal control systems COMMITTEE
including financial and operational controls,
accounting systems for timely and appropriate The Main terms of reference of HR&R Committee of
recording of purchases and sales, receipts the Company include the following:-
and payments, assets and liabilities and the
reporting structure are adequate and effective; i. Recommending human resource management
policies to the Board;
j) Review of the Company’s statement on internal
control systems prior to endorsement by the ii. Recommending to the Board the selection,
Board of Directors and internal audit reports; evaluation, development, compensation
(including retirement benefits) of Chief
k) Instituting special projects, value for money Operating Officer, Chief Financial Officer,
studies or other investigations on any matter Company Secretary and Head of Internal
specified by the Board of Directors, in Audit;
consultation with the Chief Executive Officer
and to consider remittance of any matter to the iii. Consideration and approval on
external auditors or to any other external body; recommendations of Chief Executive Officer
on such matters for key management positions
l) Determination of compliance with relevant who report directly to Chief Executive Officer or
statutory requirements; Chief Operating Officer; and

m) Monitoring compliance with these regulations iv. Where human resource and remuneration
and identification of significant violations thereof; consultants are appointed, their credentials
shall be known by the committee and a
n) Review of arrangement for staff and statement shall be made by them as to
management to report to Audit Committee in whether they have any other connection with
confidence, concerns, if any, about actual or the Company.
potential improprieties in financial and other
matters and recommend instituting remedial
and mitigating measures;
ANNUAL REPORT 2018

69
 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: 12

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: 42 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
KOHINOOR TEXTILE MILLS LIMITED

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

70
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: 22
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

ANNUAL REPORT 2018

within every function of the Company.

71
 OTHER CORPORATE MATTERS
ANNUAL EVALUATION OF BOARD 2. Capital and operating budgets approved
annually;
PERFORMANCE
3. Board receives regular financial reports;
The Board has set a criterion based on emerging and
leading practices to assist in the self-assessment of an
4. Procedure for annual audit;
individual director and the full Board’s performance. It
is not intended to be all-inclusive. When completing
5. Board approves annual business plan;
the performance evaluation, the Board considers
following main performance evaluation process or
6. Board focuses on goals and results;
behaviour: -
7. Availability of Board’s guideline to management;
• Adequate Board composition.
8. Regular follow up to measure the impact of
• Satisfactory Processes and Procedures for
Board’s decisions;
Board meetings.
9. Assessment to ensure compliance with code of
• The Board sets objectives and formulates an
ethics and corporate governance.
overall corporate strategy.
During the year under review, the performance
• The Board has set up adequate number of its
review of Board was not carried out by any external
Committees.
consultant.
• Each Director has adequate knowledge of
economic and business environment in which PERFORMANCE REVIEW OF
the Company operates. BOARD COMMITTEES
• Each Board member contributes towards Performance of Board Committees is regularly
effective and robust oversight. evaluated by the Board of Directors based on the
terms of reference as defined and approved by the
• The Board has established a sound internal Board.
control system and regularly reviews it.
CEO’S PERFORMANCE REVIEW
• The Board reviews the Company’s significant
accounting policies according to the adequate The performance of the CEO is regularly evaluated by
financial reporting regulatory framework. the Board of Directors and this evaluation is based
on the criteria defined by the Board of Directors
• The Board considers the quality and which includes various financial and nonfinancial key
appropriateness of financial accounting and performance indicators (KPIs). At the start of the year,
reporting and the transparency of disclosures. CEO presents his KPI for the upcoming year to the
Board of Directors. The Board periodically evaluates
EVALUATION CRITERIA OF BOARD the actual performance against those KPIs during
PERFORMANCE the year and discusses the future course of action
to attain the Company’s stated goals. The CEO also
Following is the main criteria: appraises to the Board regarding an assessment of
senior management and their potential to achieve the
1. Financial policies reviewed and updated; objectives of the Company.
KOHINOOR TEXTILE MILLS LIMITED

72
BOARD’S REVIEW OF BUSINESS
Further, it seeks to set out the process, procedures
CONTINUITY AND DISASTER
and internal controls to facilitate compliance with the
RECOVERY PLAN Policy as well as to highlight the consequences of
non-compliance with the Policy by all its employees
The Board of Directors periodically review the
and Directors. The Company Policy provides a guide
Company’s Business Continuity & Disaster Recovery
as to what constitutes a conflict of interest, the
(BC/DR) plan to ensure that critical business functions
processes and procedures that are in place in order to
will be available to customers, suppliers, regulators,
facilitate compliance and, the consequences of non-
and other entities that have access to those functions
compliance. The Policy is intended to assist directors
even under extraordinary circumstances. BC/ DR
and employees in making the right decisions when
plan mainly includes daily tasks such as customer/
confronted with potential conflict of interest issues.
supplier correspondence, production data, trading
activities, project management, system backups and
help desk operations.
MANAGEMENT OF CONFLICT OF
INTEREST
The primary activities of the Board for the execution
of the plan include: The primary goal of Kohinoor policy is to manage
conflicts of interest to ensure that decisions are
1) To develop and maintain a formal plan that is made and are seen to be made on proper grounds,
responsive to the Company’s current business for legitimate reasons and without bias. To do this
needs and operating environment. Kohinoor has set the following procedures to manage
and monitor the conflict of Interest:
2) To ensure that a Business Continuity Recovery
Team includes representatives from all business 1. Identify areas of risk.
units.
2. Develop strategies and responses for risky
3) To provide ongoing business continuity training to areas.
all employees, including executive management
and the Board. 3. Educate all employees about the conflict of
interest policy.
4) Ensure that thorough current business impact
analysis and risk assessments are maintained. 4. Communicate with stakeholders to provide the
platform for proper disclosure.
5) Ensure a centralized executive view of the
business continuity plan and programs. 5. Enforce the policy.

Further, the directors are annually reminded of the

CONFLICT OF INTEREST
insider trading circular issued by the Securities and
MANAGEMENT POLICY Exchange Commission of Pakistan to avoid dealing
in shares while they are in possession of the insider
The Company has the policy for actual and perceived
information. Every director is required to provide to
conflicts of interest and measures are adopted to
the Board complete details regarding any material
avoid any conflict of interest, identify the existence of
transaction which may bring conflict of interest
any conflict of interest, and to disclose the existence of
with the Company for prior approval of the Board.
conflict of Interest. The Company annually circulates
The interested director does not participate in the
and obtains a signed copy of Code of Conduct
discussion neither they vote on such matters. The
applicable to all its employees and Directors, which
transactions with all the related parties are made
also relates to matters relating to conflict of interest.
on arms-length basis and complete details are
ANNUAL REPORT 2018

73
 provided to the Board for their approval. Further protection of privacy and freedom of information
all the transactions with the related parties are fully services throughout the Company to promote
disclosed in the financial statements of the Company. collegiality and knowledge sharing;
• Information will be held only as long as required,
INVESTORS’ GRIEVANCES POLICY and disposed of in accordance with the record
retention policy and retention schedules and
The Company believes that Investor services is a vital • Records and information are owned by the
element for sustained business growth and we want Company, not by the individual or team.
to ensure that our Investors receive exemplary service
across different touch points of the Company. Prompt IT GOVERNANCE POLICY
and efficient service is essential to retain existing
relationships and therefore, Investor satisfaction Kohinoor has properly documented and
becomes critical to the Company. Investor queries implemented IT governance Policy to ensure an
and complaints constitute an important voice of integrated framework for evolving and maintaining
Investor, and this policy details grievance handling existing information technology and acquiring new
through a structured grievance framework. technology to achieve the Company’s strategic
focus. The purpose of this policy is to define the IT
Grievance policy is supported by a review mechanism, governance scope, and its roles and responsibilities.
to minimize the recurrence of similar issues in future. IT Governance policy consist of the following:
The Company’s Grievance policy follows the following
principles: • To provide a structured decision-making process
around IT investment decisions.
• Investors are treated fairly at all times. • Promotes accountability, due diligence, efficient
• Complaints raised by Investors are dealt with and economic delivery of the Company’s IT
courtesy and in a timely manner. services.
• Investors are informed of avenues to raise their • Lay down solid foundation for management
queries and complaints within the organization decision making and oversight.
and their rights if they are not satisfied with the • Safeguard of Company’s financial data.
resolution of their complaints. • Development and up gradation of different
• Queries and complaints are treated efficiently modules to provide reliable, efficient and timely
and fairly. information.
• The Company’s employees work in good faith • To create a culture of paper less environment
and without prejudice, towards the interests of within the Company.
the Investors.
HUMAN RESOURCE MANAGEMENT
SAFETY OF RECORDS
The Company is committed to build a strong
The Company is effectively implementing the policy to organizational culture that is shaped by empowered
ensure the safety of the records. All records must be employees who demonstrate a deep belief in
retained for as long as they are required to meet legal, Company’s vision and values. Therefore, Human
administrative, operational, and other requirements Resource Management (HRM) is an integral part
of the Company. The main purposes of the Company of our business strategy. The Company fosters
Policy are: leadership, individual accountability and teamwork.
The main objectives of the Company’s HRM policy
• To ensure that the Company’s Records are are:
created, managed, retained, and disposed of in
an effective and efficient manner; • Selecting the right person, with the right
KOHINOOR TEXTILE MILLS LIMITED

• To facilitate the efficient management of the experience, at the right time, offering the right
Company’s Records through the development of compensation.
a coordinated Records Management program;
• To ensure preservation of the Company’s • Developing management philosophies and
Records of permanent value to support both practices to promote and encourage motivation

74
 ANNUAL REPORT 2018

75
 and retention of the best employees. SOCIAL AND ENVIRONMENTAL
RESPONSIBILITY POLICY
• Recognizing and rewarding employees’
contribution to the business.
The Company’s Social and Environmental
Responsibility Policy reflects the Company’s
• Fostering the concept of team work and
recognition that there is a strong, positive correlation
synergetic efforts
between financial performance and corporate, social
and environmental responsibility. The Company
• Encouraging and supporting team concepts
believes that the observance of sound environmental
and team building techniques.
and social strategies is essential for building strong
brand and safeguarding reputation, which in turn is
• Nurturing a climate of open communications
vital for long term success.
between management and employees.

• Making all reasonable efforts to achieve a high

SOCIAL RESPONSIBILITY POLICY:
quality of work-life balance.
• Implementation of Employee Code of Conduct
that fits with local customs and regulations.
SUCCESSION PLANNING
• Culture of ethics and behaviour which improve
The Company believes in proactive approach values like integrity and transparency.
towards succession planning. We recruit employees,
develop their knowledge, skills, abilities, and prepare • Focusing on social involvement by developing
them for advancement or promotion into ever more multicultural teams with different competencies.
challenging roles. Rigorous succession planning is • Promoting the culture of work facilitation and
also in place throughout the organization. Succession knowledge transfer.
planning ensures that employees are constantly
developed to fill each needed role. We look for people • Carrying out corporate philanthropy actions
who exemplify continuous improvement when we that focus in particular on preserving life and the
are spotting future successors. In this relation, the environment.
Company also expends a lot in terms of finances and • Maintaining collaborative relations with the
time for the training of its resources as is evident from society through a good harmony and effective
the below trainings held during the year: communication.

1. Emotional Intelligence
ENVIRONMENTAL RESPONSIBILITY
2. Effective Communication Skills
POLICY
• Ensure our products, operations and services
3. Project Management
comply with relevant environmental legislation
and regulations.
4. Supply Chain Management
• Maintain and continually improve our
5. Simatic Program Logic Controllers environmental management systems to
conform to the ISO Standards or more stringent
6. Building Impactful Brands requirements as dictated by specific markets or
local regulations.
7. Benchmarking Session
• Operate in a manner that is committed to
KOHINOOR TEXTILE MILLS LIMITED

8. Management Development Program continuous improvement in environmental

sustainability through recycling, conservation
9. HSE Emergency Response Training of resources, prevention of pollution, product
development and promotion of environmental
10. Developing Future Leaders responsibility amongst our employees.

76
• Responsibly managing the use of hazardous non-conformance reporting was designed to provide
materials in our operations, products and an avenue for employees to raise concerns, and
services and promote recycling or reuse of our reassurance that they will be protected. As an aware
products. and attentive organization, Kohinoor believes in the
conduct of the affairs of its business in a fair and
• Inform suppliers, including contractors, of our see-through approach by adopting the uppermost
environmental expectations and require them principles of professionalism, truthfulness, reliability
to adopt environmental management practices and principled manners. The said policy has the
aligned with these expectations. following main procedures:-

POLICY ON DIVERSITY 1. All Protected Disclosures should be addressed

to the nominated Ombudsperson of the
At Kohinoor Textile Mills Limited, we aim to be an Company.
inclusive organisation, where diversity is valued,
respected and built upon. We recruit and retain a 2. Protected Disclosures should preferably be
diverse workforce irrespective of religious and political reported in writing so as to ensure a clear
beliefs, gender, race, ethnicity, disability, education, understanding of the issues raised and should
colour, language, age, socioeconomic background, either be typed or written in a legible in English,
and geographic location and region. The culture of Urdu or in the regional language.
the Company values differences and recognises
that stakeholders from different backgrounds and
3. The Protected Disclosure should be forwarded
experiences can bring valuable insights to enable a
under a covering letter which shall bear the
collaborative work environment by introduction of
identity of the Whistle Blower.
varied ideas and perspectives within the Company.
4. Protected Disclosures should be factual and
We Aim to pro-actively tackle discrimination and
not speculative or in the nature of a conclusion,
to ensure that no individual or group is directly
and should contain as much specific information
or indirectly discriminated against for any reason
as possible to allow for proper assessment of
regarding employment and the Company bears no
the nature and extent of the concern and the
tolerance for harassment/bullying and persecution.
urgency of a preliminary investigative procedure.
The Company has a whistle blowing policy in
place, and employees are encouraged to report all
such matters and related grievances to the Human 5. Anonymous disclosures will not be entertained
Resources department. by the Ombudsperson as it would not be
possible for it to interview the Whistle Blowers.
The Board ensures application of diversity policy
through Human Resource department by ensuring 6. If initial enquiries by the Ombudsperson indicate
that all talent hunting seminars, job fairs and that the concern / complaint has no basis, or it
advertisements specifically mention that we are is not a matter to be investigation pursued under
an equal opportunity employer in all areas and we this Policy, it may be dismissed at this stage.
nourish an organizational culture where individual
differences are appreciated rather than criticized for 7. Where initial enquiries indicate that further
novel ideas and improvements. Furthermore, Internal investigation is necessary, this will be carried
Audit department ensures and reports compliance of through in a fair manner, as a neutral fact-finding
diversity policy on periodic basis. process and without presumption of guilt. A
written report of the findings would be made.
WHISTLE BLOWING POLICY
In Kohinoor, no whistle blowing related incidence
In line with the Company’s commitment to open was highlighted and reported under the above said
ANNUAL REPORT 2018

communication, the whistle blowing policy through procedures during the year.

77
 GOVERNANCE PRACTICES EXCEEDING LEGAL REQUIREMENTS
The management of the Company believes to follow best governance practices that can be implemented in the
Company’s environment. To implement these practices the minimum benchmark is to comply with all the legal
requirements. However, the management goes ahead to implement best practices of corporate governance
that are followed globally and are in favour of the Company’s 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 Health, Safety and Environment Policy for better and safe work place environment for
employees, workers and surrounded community.

• The Company understands and fulfil its corporate social responsibility and has implemented various social
projects for welfare of the community.

RELATED PARTY TRANSACTIONS

The Company has made detailed disclosures about related party transactions in note 37 of unconsolidated
financial statements annexed with this annual report. Such disclosure is in line with the requirements of the 4th
Schedule to the Companies Act, 2017 and applicable International Financial Reporting Standards.

Moreover, the Company has also decided to place its related party transactions before the Annual General
Meeting for obtaining shareholders’ approval for the same. Details of party-wise disclosure of such transactions
is also given in the statement u/s 134 annexed with the Notice of AGM.

TRANSACTION / TRADE OF COMPANY’S SHARES

The Board has reviewed the threshold for disclosure of interest by executives holding of Company’s shares
which includes Chief Executive Officer, Chief Financial Officer, General Manager (Finance), Head of Internal
Audit and Company Secretary. None of the Directors, CEO, CFO, GM (Finance), Head of Internal Audit and
Company Secretary (including their spouses and minor children) traded in the shares of the Company.

However, 6% Right Shares were offered to the entitled shareholders and subscribed by them during the year
including investors and Directors of the Company.
KOHINOOR TEXTILE MILLS LIMITED

78
 STAKEHOLDERS
RELATIONSHIP AND
ENGAGEMENT

ANNUAL REPORT 2018

79
 POLICY FOR STAKEHOLDERS’
ENGAGEMENT
Kohinoor Textile Mills Limited maintains sound collaborative relationships with its stakeholders. The Company
understands the importance of continuous collaboration with shareholders of the Company regarding all
significant decisions to be made, the performance of the Company in varying circumstances, challenges it
faced and the necessary steps taken to mitigate those challenges.

BOARD’S INTERACTION WITH MAJOR SHAREHOLDERS

The Board has devised a mechanism to arrange interactive sessions between management of the Company
and its shareholders to solicit and understand views of shareholders. It includes management briefings to
its shareholders about the performance of the Company, macro and micro economic factors affecting the
Company, prospects of the Company and the steps taken by the Company to improve its performance in
challenging circumstances. These communications help the Board to understand and resolve the concerns of
the shareholders and to add synergy factor to achieve better results in the Company’s prospects.

PROCEDURES FOR STAKEHOLDERS ENGAGEMENT:

Procedures for stake-holders engagement includes effective communication, good harmony, compliance
with laws & regulations and customer focused approach which are the key success for establishment of
collaborative relationship with stakeholder.

ENGAGEMENT FREQUENCY

The Company maintains its good relationships with all stakeholders based on mutual interest, integrity and
confidence. The Company maintains collaborative relations with our stakeholders through harmonious and
effective communication and through our customer focused approach. Moreover, the Company maintains good
relationship with its Bankers and arranges Investors’ conferences periodically to discuss business prospects
and financial management plans with the Lenders which also enhances their confidence in the Company.
KOHINOOR TEXTILE MILLS LIMITED

80
 STAKEHOLDERS NATURE OF ENGAGEMENT FREQUENCY

SHAREHOLDERS Annual general meeting Annually

Annual report/Quarterly reports Annually/Quarterly
Investor Conference Annually
Analyst briefing Continuous

EMPLOYEES Kohinoor magazine Quarterly

Annual get together Annually
Team cultural activities Continuous

CUSTOMERS Customer events Continuous

SUPPLIERS Regular meeting with major suppliers Continuous

Supplier forums Occasionally
Newspapers advertisement As required

INSTITUTIONAL Business briefings Occasionally

INVESTOR Periodic meetings As required
Financial reporting Continuous
Head office/site visits As required

COMMUNITY ORGANIZATIONS Environmental campaign Continuous

Safety management system As required

MEDIA Media announcements and briefings As required

Media interviews As required

REGULATORS Submission of periodic reports Periodic basis

Responding/enquiring various queries/
information As required

ANALYST Corporate briefing and analysis As required

Forecasting and financial modelling As required

LOCAL BODIES Sponsorship of local events As required

Corporate social projects As required

BANK AND OTHER LENDERS Treasury operational transactions Continuous

Financing and borrowing As required
Investments As required

STEP TO ENGAGE MINORITY SHAREHOLDERS TO ATTEND GENERAL MEETINGS

Notice of Annual General Meeting is sent to all shareholders of the Company at least twenty-one days before
the date fixed for meeting. Such notice is published in Urdu and English languages in at least in one issue each
of daily newspaper of respective language having nationwide circulation. Further, notice of AGM is also placed
on Company’s website.
ANNUAL REPORT 2018

81
 ISSUES RAISED IN THE LAST AGM,
DECISIONS TAKEN AND THEIR
IMPLEMENTATION STATUS

On query of a shareholder, the House was informed

that cost had escalated tremendously over the period
eroding away margins. Increasing raw material cost,
gas tariff and minimum wages were also adversely
affecting the bottom line. Overall textile exports had
witnessed enormous decline owing to challenges
from the regional competitors with high cost of doing
business.

Further, it was informed that all operating divisions

had been major investment for upgradation resulting
in marked improvement in overall efficiency. The
Company had invested heavily in value addition and
the processing and cut and sew divisions had shown
strong results.

SIGNIFICANT CORPORATE BRIEFING

SESSIONS

The interactive sessions include the annual general

meeting, extra ordinary general meetings, corporate
briefings/road shows, responding to investor queries
either raised on email, website or on telephone.
During the year, following major international and
local road shows/corporate briefings sessions were
held with investors:

• MENA & Frontier Conference at Dubai

• EFG Hermes London Conference

• South Asia Conference, Dubai

• 14th Annual One on One Conference EFG

Hermes, Dubai

• Karachi PSX Brokers Meeting Organized by

AKD

INVESTORS’ RELATIONS SECTION ON

CORPORATE WEBSITE

The Company disseminates information to its

investors and shareholders through a mix of
information exchange platforms, including its
KOHINOOR TEXTILE MILLS LIMITED

corporate website. The website is updated regularly to

provide detailed and the latest Company information
including financial highlights, investor information and
other requisite information besides the link to SECP’s
investor education portal; the ‘Jamapunji’.

82
 CORPORATE
SUSTAINABILITY
ANNUAL REPORT 2018

83
 INDUSTRIAL RELATIONS
QUALITY MANAGEMENT SYSTEMS
The Company has established an Industrial Relations
(IR) department for determination of adequate The Company maintains its reputation as a high-
terms and conditions of employment. Further, the quality supplier and owes its current business, in
IR department is responsible for avoidance and large part, to this reputation. Quality control checks
settlement of disputes and differences between the occur at all points in the production chain, starting at
Company, its employees, and their representatives the delivery of raw material to the factories, through to
through negotiation. The Company operates a the Quality Assurance team acting as the customer’s
Provident Fund and a Worker’s Profit Participation representative when conducting audits of finished
Fund for its employees, as well as paying bonuses to goods before handing them over to the customer’s
employees on the basis of the Company’s profitability audit teams for the final inspection. It is worth noting
and individual performance. The Company is that the Company’s Quality Management Systems
committed to providing equal opportunities to are so highly regarded that several customers no
all existing and prospective employees without longer require the presence of external auditors
discrimination on the basis of race, religion, gender, before shipping of finished goods. The Company is
or age. ISO-9001:2008 certified and firmly believes in the
necessity of Quality Management Systems.
ENERGY SAVING MEASURES
INFORMATION TECHNOLOGY
Given the current energy crisis in Pakistan, Kohinoor’s
management recognises the importance of the Management has a strong commitment to strengthen
efficient usage of energy in the corporate sector, and the platform for information technology and
therefore has formed an energy committee with the information systems in order to remain competitive
aim of finding more efficient and sustainable methods and cater the requirements of coming era. The
for generating and managing energy. The Company’s Company continues to upgrade and improve our
processing department has already reaped large information systems and processes, an effort led by a
benefits through its collaboration with several major team of IT professionals with wide ranged experience
multinational chemical suppliers; together they have in latest information technologies.
substantially reduced the usage of water, chemicals,
and energy while maintaining or improving quality OCCUPATIONAL HEALTH, SAFETY
and environmental standards. The Company hopes AND ENVIRONMENTAL (HSE)
that future progress in these projects will yield further PROTECTION MEASURES
reductions in the costs of energy and usage of other
resources such as water, etc. Further, in anticipation The Company continues to meet and exceed the
of increased scarcity and load shedding of natural health and safety standards required for SA 8000
gas and electricity, the Company is taking steps to certification. Frequent audits are conducted by
further diversify its energy production capabilities, customers, regulatory agencies, and the Company’s
expanding into steam generation via wood, coal own audit teams in order to ensure compliance with
and waste heat recovery, and initiating a pilot project these standards and those set by the Company’s
in solar heating of water. The Company remains customers. The Company strives to provide a
committed to explore sustainable alternative energy safe and healthy workplace for its employees and
sources which is evident from installation of HFO to act responsibly towards the communities and
based engines in its weaving and power division. environment, in which it operates. It realizes this
through the commitment of its leadership, the
CONSUMER PROTECTION dedication of its staff, and application of the highest
MEASURES professional standards of work. Recently, we have
done a complete re-examination and improvement
We are committed to ensuring that our products of our fire safety protocols to further ensure the safety
KOHINOOR TEXTILE MILLS LIMITED

are shipped in a manner complying with the highest of our employees. Management takes all possible
safety standards and meeting or exceeding all legal measures to prevent unsafe activities by its hiring
requirements. The Company takes care and applies practices and through the implementation of effective
appropriate procedures to manufacture its products management, human resources and operational
so as to ensure that no harmful substances are policies.
present in any of its products.

84
BUSINESS ETHICS & ANTI- SECURITY
CORRUPTION MEASURES
The Company maintains its dedication to security,
The Company, through its training, management and is fully compliant with the Customs Trade Pact
standards and procedures, aims to develop a against Terrorism (CTPAT), performing frequent and
disciplined and constructive control environment regular audits to ensure it remains so. All areas of
in which all employees understand their roles and the Company premises are monitored using video
obligations. Employees are encouraged to report any surveillance, as per CTPAT requirements. We are also
deals that may be supported by kickbacks, and no compliant with the standards set by our international
employees are allowed to run parallel businesses. customers, many of which exceed those of CTPAT.
The Company maintains a system by which any
employee can report the non-conformance (NC) to CONTRIBUTION TO NATIONAL
the top management. All NCs reported are addressed EXCHEQUER
by the top management on timely basis and a regular
follow up activity is being carried out in order to During the year the Company has contributed
ensure that all issues highlighted are permanently amounted to Rs. 588.72 million (2017: 996.17 Million)
resolved. Further, the Company’s Internal Audit in respect of taxes, levies and duties. Moreover, we
department is empowered to perform regular and have also contributed (USD) 57.901 million (2017:
ad-hoc checks and audits of any and all functions 73.363 Million) to the national treasury by way of
and operations of the company and reports directly export sales.
to the Audit Committee. Moreover, the Company has
also formulated whistle blowing policy. EMPLOYMENT OF SPECIAL
PERSONS
ENVIRONMENTAL PROTECTION The Company has employed disabled persons in
MEASURES compliance with the rules set out by the Government
Management understands the harmful effects of of Pakistan which is 3% quota of the total workforce
contaminated water on the surrounding areas after necessitated to be allocated to disabled persons.
emission from the mill’s premises. In order to prevent
the potentially harmful effects of any chemicals used COMMUNITY INVESTMENT AND
in processing on the surrounding water table, a WELFARE SCHEMES
waste water treatment plant has been constructed The Company has a long tradition of maintaining
minimizing or negating any contamination in water good community relations, and many of its employees
discharged from the factory. Further, the Company are actively involved in welfare schemes. We believe
continues to investigate and implement pilot projects that investing in our communities is an integral part
into alternative, sustainable energy sources. of our social responsibility, and is vital to ensure the
sustained success of the Company. We aim to ensure
NATIONAL CAUSE DONATIONS that our businesses and factories have the resources
During the year, company has contributed donations and support to identify those projects, initiatives, and
to various charitable and Educational institutes partnerships that can make a real difference in their
serving for the community. communities, and those that will mean something to
our employees and their families.
The Company’s Board of Directors and the Board
of Maple Leaf Cement Factory Limited have jointly RURAL DEVELOPMENT PROGRAM
decided to donate Rs.132.495 Million to Gulab Devi
Educational Complex, Lahore towards construction The Company’s Mills are located in rural area therefore
of Al-Aleem Medical College in Gulab Devi Chest various corporate social responsibility activities are
Hospital (GDCH), Lahore. effectively implemented in those areas. The Company
has been working hard to initiate and sustain rural
The Company has also contributed in the past for development programs for the enhancement of health
medical social service projects and in this regard the of the rural population. Therefore a “Dengue Fever
Company had donated a state-of-the-art Cardiac Awareness Program” was carried out to demonstrate
facility to the Gulab Devi Chest Hospital (GDCH) in the prevention techniques and share knowledge with
ANNUAL REPORT 2018

Lahore by building Sayeed Saigol Cardiac Complex community members to ensure maximum awareness
at GDCH. at plant site and the local community.

85
 MITIGATING EFFORTS TO CONTROL
INDUSTRY EFFLUENTS
Traditionally, dying factories have been considered
environmentally hazardous but Kohinoor has installed the
most modern and state-of-the-art equipment to control
effluent discharge negating the effects industrial effluents
on the surrounding environment; the Company makes
every effort to ensure a healthy environment to employees
and locals. To enhance environmental standards and
continuously promoting a better and Green Environment
within the factory as well in the nearby areas the Company
is arranging regular Tree Plantation activities to provide
healthy environment to employees and other community
living in surroundings.

BEST CORPORATE REPORT AWARD

The Company again bagged award for “Best Corporate
Report 2017” in the award ceremony jointly hosted by
Institute of Chartered Accountants of Pakistan (ICAP) and
Institute of Cost and Management Accountants of Pakistan
(ICMAP) in Textile Sector by securing 1st position. This
achievement secured by the company reflects best ethical

values and management practices in corporate reporting. The Company has promoted accountability and
transparency through provision of accurate, informative, factual and reader-friendly Annual Reports on
timely basis for the valuable stake holders.

SAFA BEST PRESENTED ANNUAL REPORT AWARD

KOHINOOR TEXTILE MILLS LIMITED

Company’s financial statements for the year ended 30 June 2016 have been nominated by the Joint
Committee of ICAP and ICMAP for SAFA best presented accounts competition award and obtained
second position in manufacturing sector.

86
 Certificate of Approval Certificate of Approval
This is to certify that the Management System of: This is to certify that the Management System of:

Kohinoor Textile Mills Ltd Kohinoor Textile Mills Ltd (Gujar Khan Div)
Rawalpindi Division, Peshawar Road, Rawalpindi, Pakistan Gujar Khan Division, Gulyana Road, Gujar Khan, Pakistan

has been approved by LRQA to the following standards: has been approved by LRQA to the following standards:
ISO 9001:2015 ISO 9001:2015

Basem Obaid - Area Operations Manager Basem Obaid - Area Operations Manager
Issued by: Lloyd's Register Quality Assurance Limited Issued by: Lloyd's Register Quality Assurance Limited

Current issue date: 31 July 2018 Original approval(s): Current issue date: 31 July 2018 Original approval(s):
Expiry date: 30 June 2020 ISO 9001 – 23 June 1999 Expiry date: 30 June 2020 ISO 9001 – 16 February 1999
Certificate identity number: 10112216 Certificate identity number: 10112658

Approval number(s): ISO 9001 – 0049984 Approval number(s): ISO 9001 – 0049983

The scope of this approval is applicable to: The scope of this approval is applicable to:
Design & Manufacture of Yarn made from Cotton & Man Made Fibres. Fabric Conversion through Bleaching, Manufacture of Cotton Yarn.
Dyeing, Printing, Finishing and Stitching for Home Furnishings.

Lloyd's Register Group Limited, its affiliates and subsidiaries, including Lloyd's Register Quality Assurance Limited (LRQA), and their respective officers, employees or agents are, individually and collectively, referred to in this clause as
'Lloyd's Register'. Lloyd's Register assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document or howsoever provided, unless that Lloyd's Register Group Limited, its affiliates and subsidiaries, including Lloyd's Register Quality Assurance Limited (LRQA), and their respective officers, employees or agents are, individually and collectively, referred to in this clause as
person has signed a contract with the relevant Lloyd's Register entity for the provision of this information or advice and in that case any responsibility or liability is exclusively on the terms and conditions set out in that contract. 'Lloyd's Register'. Lloyd's Register assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document or howsoever provided, unless that
Issued by: Lloyd's Register Quality Assurance Limited, Dubai, Festival Office Tower, Suite 2001, Dubai Festival City, Dubai person has signed a contract with the relevant Lloyd's Register entity for the provision of this information or advice and in that case any responsibility or liability is exclusively on the terms and conditions set out in that contract.
Issued by: Lloyd's Register Quality Assurance Limited, Dubai, Festival Office Tower, Suite 2001, Dubai Festival City, Dubai
Page 1 of 1
Page 1 of 1

EU Ecolabel
Certificate

Ecolabelling Norway
has awarded the EU Ecolabel licence number
NO/016/002
to:
Kohinoor Textile Mills Limited
for
Textile products
See product specification enclosed.

This certificate is valid, together with the contract concluded between

Ecolabelling Norway and Kohinoor Textile Mills Limited, until 05-12-2020.

Norway, 23-11-2017,
Ecolabelling Norway

Anita Winsnes
Managing Director
ANNUAL REPORT 2018

87
 CALENDAR OF CORPORATE EVENTS
JULY 2017 - JUNE 2018
CORPORATE CALENDAR
Board Meeting to Offer 6% Right Shares 17-Aug-17
Announcement of annual results for year 2016-17 13-Sep-17
Final Dividend 2017 Declared @ Rs. 1.50 / Share 13-Sep-17
Declaration of 1st Quarter 2017-18 Financial Results 24-Oct-17
Annual General Meeting 2016-17 26-Oct-17
Declaration of Half Yearly 2017-18 Results 16-Feb-18
Interim Dividend 2017-18 Declared @ Rs. 1.25 / Share 16-Feb-18
Declaration of 3rd Quarter 2017-18 Results 25-Apr-18

CALENDAR OF OTHER NOTABLE EVENTS

JULY 2017 - JUNE 2018

2017 2017
9th November
Sep Edition
KTML Iqbal Day
1st Magazine

2017 2018
2017 18th May
14th August
Independence 2017
25th December
8th December
Mehfil-e-Milad
KTML Book Bank
Inauguration
Day
Christmas
Day

2018 2018
8th March
Women’s day
2018
20th,21st,25th March
4th April to 2nd May
Volley Ball
Tournament
Celebrations PSL Live
Screening
2018
6th June

2018 Executive
KOHINOOR TEXTILE MILLS LIMITED

Iftar Dinner
14th March
KGM Fun
Gala

88
 OUTLOOK
ANNUAL REPORT 2018

89
 FORWARD LOOKING STATEMENT
We, export-oriented textile manufacturer, expect that Financial & Non-financial considerations
Government will continue the DLTL scheme being
announced in the last financial year and will eliminate Financial considerations are used to make the
condition of 10% increase in the current year export projections of the Company which are as follows:
sales as compared with last year. Moreover, finance
ministry will release funds to settle the pending DLTL • Increase in sales volume for all types of products.
approved cases and sales tax refunds. This will
result in reduction of financial cost of the Company • Reduced cost of production through:
and will improve profit margins.
a. optimizing power generation mix
Some further minor hindrances need to be removed
in zero rated sales tax regime, which should lead b. lower weighted average cost of capital
to arrest the decline in exports from Pakistan. The
Company is actively taking advantage of the State Non-financial measures are the many intangible
Bank’s Long-Term Financing Facility, resulting variables that impact performance of the Company.
in large-scale investment in modernization and These are difficult to quantify compared to financial
expansion of our sites. It is hoped that this excellent measures but equally important. These indicators
facility will continue are more likely to be closer to the long-term
organizational strategies. Following are the non-
Dividend income from the Company’s subsidiaries financial measures in place by the Company:
is expected to be substantial and should further
bolster the Company’s balance sheet. We envisage • Stakeholder’s engagement – different
improved turnover in spinning division due to committees and forums are in place and
improved performance and better marketing meetings are held periodically to keep the
position in the Spinning division due to cost stakeholders involved in every aspect of the
reduction measures taken and favorable exchange business.
rates, going forward. Trading conditions in the
US are stable, although Europe continues to face • Customer satisfaction – Company places strong
difficulties. emphasizes on customers’ satisfaction and
ensure to produce & deliver the goods as per
We are confident that the Company will be able to specific demands of customers.
meet the challenges presented by local as well as
international conditions. Future financial forecasts • Employee’s development - the Company has
based on management’s best estimates are as conducted various training courses for the
follows: development of existing human capital.

FINANCIAL FORECAST • Innovation in manufacturing methods – ongoing

R&D is in place to improve the production
The projections are very encouraging with continued process and efficiencies
growth expected locally and internationally as new
potential businesses are being explored and various
measures adopted by the Company to reduce the
cost.

Financial Forecast FY 2018-19

Rs. in Million
Revenue 20,600
Gross Profit 3,058
Profit from Operations 2,445
KOHINOOR TEXTILE MILLS LIMITED

90
SWOT ANALYSIS
SWOT analysis is being used at Kohinoor Textile Mills Limited (KTML) as a strategy formulation tool, to match
our strengths with perceived opportunities and minimize our weaknesses to avoid market and other threats.

Management at KTML, considers the following factors of SWOT analysis relevant to us:

STRENGTHS WEAKNESSES

• Latest and state of the art equipment for meeting • High operating leverage (being capital
quality management standards intensive industry)
• Experienced Management & qualified team • Higher Taxation
• Dedicated customer services • Labor Productivity
• Strong local and International branding
• Vertically integrated composite units • Infrastructure issues
• Well diversified fuel mix and efficient operation
• Captive power producer
• Solar power generation
• Efficient information systems

OPPORTUNITIES THREATS

• Potential to expand product lines in new markets • Reliance on imported raw materials
locally & internationally • Unavailability of high-end raw cotton
• Rising population works as a catalyst for fabric needs locally
• GSP plus status for Pakistan • Stiff competition from textile-based
• Export re-finance scheme and provision of long-term countries
finances at reduced mark-up rates • High incidence of taxes
• Reuse treated effluent • Increase in international fuel prices
• Devaluation of Pak. Rupee. • Effect of devaluation of Pak. Rupee on
imports.
• Unstable political situation

SOURCES OF INFORMATION AND ASSUMPTIONS

The preparation of financial statements requires management and the Board of Directors to make estimates
and judgments that affect reported amounts of assets, liabilities, revenues and expenses and related disclosure
of contingencies. These estimates are based on historical experience and various other assumptions that
management and the Board believe are reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Estimating useful life of assets

The useful lives are estimated having regard to the factors as asset usage, maintenance, rate of technical and
commercial obsolescence. The useful lives of assets are reviewed annually.

Investment properties

Investment properties are valued at fair value determined by an independent valuer having relevant professional
qualifications. The fair value is determined on the basis of professional assessment of the current prices in an
active market for similar properties in the same location and condition.

Taxation

Determining income tax provisions involves judgment on the tax treatment of certain transactions. Deferred
ANNUAL REPORT 2018

tax is recognized on tax losses not yet used and on temporary differences where it is probable that there

91
 will be taxable revenue against which these can
be offset. Management has made judgments
as to the probability of future taxable revenues
being generated against which tax losses will be
available for offset.

Employee benefit scheme

The defined benefit obligations are based on

actuarial assumptions such as discount rate,
expected rate of return on plan assets, expected
rate of growth in salaries and expected average
remaining working life of employees which are
extensively detailed in relevant notes to the
financial statements.

STATUS OF CURRENT AND

PREVIOUS PROJECTS
The Company’s initial of 1-MW solar installation
has been a great success and we are currently on
track to expand our renewable energy footprint
in working towards becoming a truly “green”
manufacturer. Now company is planning to
undertake a 2-MW solar power plant and will
hopefully be a success in the coming year. This
project, in combination with recently installed
1-MW solar power plant, will help reduce average
power generation cost.

ANALYSIS OF PRIOR YEAR

FORWARD LOOKING
DISCLOSURE
The Company’s actual performance in terms
of profit from operations for the year 2017-18
exceeded the forward-looking disclosures made
in the last year annual report.

Net profits improved significantly due to exceeded

divided income from subsidiary company. Sales
dropped mainly due to exports but local sales
made significantly high contribution as compared
with the projections. Gross profits dropped mainly
due increased prices of local as well as imported
raw material and increased operating costs
which mainly include the costs of fuel and power.
Finance cost also increased significantly during
the year due to borrowing availed to meet the
KOHINOOR TEXTILE MILLS LIMITED

increased working capital requirements that varies

with the level of business activates. Dividend
income significantly increased as compared with
the projections which mainly helped increase
the bottom line of the Company’s financial
performance.

92
 ANNUAL REPORT 2018

93
 KOHINOOR TEXTILE MILLS LIMITED

94
AND POSITION
PERFORMANCE
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.

Financial statements for the year 2017-18 have been prepared in accordance with the accounting and
reporting standards issued by International Accounting Standards Board as are applicable in Pakistan.
IFRS adoption status in detail is explained in note 2.1 (a) of annexed standalone and consolidated financial
statements.

INTEGRATED REPORTING
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 is in the process of adoption of IR Framework to continuously
improve the quality of information produced, and communicate its operations and financial structure to the
stakeholders and be prepared to manage any risk that may affect the long-term sustainability of the business.
The Company has incorporated in this report the following Content Elements of IR Framework: -

• Organizational overview and external environment

• Strategy and resource allocation
• Risks and opportunities
• Governance
• Outlook
• Position and Performance

IR framework is in its initial stages of adoption in the Company. Moving ahead with the tradition of providing
information to its stakeholders that goes beyond the traditional requirements of financial reporting frameworks
and other legal requirements, by doing so we believe the stakeholders gain a better understanding of the
Company, nature of its business, strategies, opportunities and risks, business model, governance and
performance which itself is a form of value creation for its stakeholders.
ANNUAL REPORT 2018

95
 FINANCIAL REVIEW
FINANCIALRESULTS: purchase right-shares issued by the subsidiary
CURRENT VS PREVIOUS YEAR company.

Financial highlights of key operating results for the • Net profit to sales ratio has been decreased from
year 2017-18 are as follows: 13.51% to 9.33% due to decrease in dividend
income from subsidiary company and increase in
Description 2018 2017 finance cost.
(Rs. In Million) • Cash flow from operating activities has been
Equity 15,821 13,923 decreased by Rs 776 million mainly due to
Capital Employed 17,671 15,699 increase in stocks.
Revenue 17,834 17,405
• Net outflow in investing activities is due to capital
Gross Profit 2,478 2,581
Profit from Operations 2,516 3,170 expenditure on property, plant & equipment and
Net Profit before Tax 2,154 2,903 investment in subsidiary company.
Operating Cash Flows 395 1,172 • Financing activities are showing net inflow due to
Investing Cash Flows (2,203) (197) increase in borrowings to finance the increased
Financing Cash Flows 1,815 (1,049) working capital requirements.
Comments on favourable / unfavourable variances in
financial results:
FINANCIAL RESULTS:
ACTUAL VS BUDGET
• Equity increased by 14% from previous year, from
Sales and profitability of the company for the year
Rs. 13,923 million (2017) to Rs 15,821 million
ended 30 June 2018 compared with the projections
(2018). The Company has issued 16,941,308
/ budget is as under.
right shares at Rs 60 per share at a premium of
Rs 50 per share; and, increase in retained profits
Description Actual Budget
of Rs 867 million.
2018 2018
• Borrowing increased to finance the purchase of (Rs. In Million)
right-shares issued by subsidiary company and
for investment in property, plant and equipment. Revenue 17,834 18,622
Increase in short-term borrowing utilized for Gross Profit 2,478 2,752
purchase of stocks to meet working capital Profit from Operations 2,516 1,724
requirements.
• Sales revenue has been increased by 2.5%, Profits improved significantly due to exceeded
from Rs. 17,405 million (2017) to Rs 17,834 divided income from subsidiary company.
million. Increase in sales is mainly attributable
to outstanding performance of spinning division Sales dropped mainly due to exports whereas local
where 24% increase have been witnessed during sales made significantly high contribution as compared
the year under review. Weaving division 4%, and with the projections. Gross profits dropped mainly
Processing & Home textile division has recorded due to increased prices of local as well as imported
decrease of 18% in sales revenue during the year raw materials and increased operating cost, which
due to stiff competition in export market. mainly include the costs of fuel and power. Finance
• Cost to revenue ratio has been increased from cost also increased due to borrowing availed to meet
85.17% to 86.11% during the year. Major the increased working capital requirements. Dividend
reasons contributing such increase are hike in income significantly increased as compared with the
raw material prices, fuel & power cost and stores, projections which mainly helped increase the bottom
spare & loose tools consumed. line of the Company’s financial performance.
KOHINOOR TEXTILE MILLS LIMITED

• Gross Profit has been decreased from 14.83%

to 13.89% in current financial year mainly due to SEGMENTAL REVIEW OF
reduced profit margins. BUSINESS PERFORMANCE
• Finance cost has been increased by Rs 95 Segment wise profits before taxation and unallocated
million due to increase in weighted average cost income and expenses for the year ended 30 June
of capital (WACC) and increase in borrowings to 2018 are as under:

96
Operating profit of spinning business segments Description 2018 2017
improved during the year due to sales volume (Rs. in Million)
increase and moderately better selling margins.
Spinning 1,142 989
Weaving and Home Textile business segments Weaving 64 76
preformed comparatively low mainly because of Processing and Home
reduced sales volume and increased raw material Textile 282 517
and operating costs.

FREE CASH FLOWS

Description 2018 2017
Rs. ‘000 Rs. ‘000

Net cash generated from operating activities 891,663 1,914,450

Capital expenditures (851,614) (1,236,491)
Net borrowings 148,943 602,169
Free Cash Flows 188,992 1,280,128

ECONOMIC
VALUE ADDED

Description 2018 2017
Rs. ‘000 Rs. ‘000

Net Operating Profit after Tax 1,958,362 2,568,598
Less: Cost of Capital (830,990) (1,438,310)
Economic Value Added 1,127,372 1,130,288

COMPOSITION OF LOCAL VERSUS IMPORTED

MATERIAL AND SENSITIVITY ANALYSIS
2018 2017
Rs. ‘000 % Rs. ‘000 %
Local Materials:

Raw materials 7,332,491 56% 7,372,628 59%
Stores and spares 1,048,346 8% 933,615 7%
Fuel and power 2,003,884 15% 1,988,356 16%
10,384,721 79% 10,294,599 82%
Imported Materials:

Raw materials 2,618,032 20% 2,148,151 17%
Stores and spares 92,592 1% 157,067 1%
2,710,624 21% 2,305,218 18%

13,095,345 100% 12,599,817 100%

Sensitivity analysis
For each percent change in value of foreign currency, cost of imported materials will change by Rs 27.106
million (2017: 23.052 million).

2018 2017

Appreciation of PKR (27.106) (23.052)

Depreciation of PKR 27.106 23.052
ANNUAL REPORT 2018

Percentage of COS 0.18% 0.16%

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.

97
 RECONCILIATION OF WEIGHTED AVERAGE NUMBER OF
SHARES FOR EPS
Description 2018 2017
Number of shares

Weighted average number of shares outstanding at beginning of the year 285,178,699 282,355,148
Bonus element in right issue - weighted average number of ordinary share - 2,823,551
Weighted average number of shares outstanding at beginning of
the year - restated 285,178,699 285,178,699
Right issue - weighted average number of ordinary share 9,901,770 -
Weighted average number of shares outstanding at end of the year 295,080,469 285,178,699

FAIR VALUE OF PROPERTY, PLANT optimal quality of cotton with reasonable prices.
Availability of quality cotton on cheaper rates
AND EQUIPMENT supports to generate higher profit margins for
producing various types of yarn which in turn
Market value of the Company’s property, plant and
affect positively the share price of the Company.
equipment is around Rs. 13.66 billion. The Company’s
property, plant and equipment except freehold land
b. Demand Factor
and capital work in progress are stated at cost
less accumulated depreciation and accumulated
Increase in demand of yarn / fabric & home
impairment loss in its financial statements. Freehold
textile products may result in increase in market
land is stated at revalued amount at the date of
price which will contribute towards better
revaluation less any identified impairment loss and
profitability and earnings per share (EPS) which
capital work-in-progress is stated at cost.
will ultimately increase the share price.
SIGNIFICANT / MATERIAL ASSETS c. Increase in Cost of Production
OR IMMOVABLE PROPERTY
Any increase in variable cost (raw materials,
The Company’s material assets comprise of land, power & utilities cost) may badly affect the
building, ring spinning machinery, open-end spinning gross margins and will resultantly fall in the
machinery, wider width weaving looms, high definition profitability and fall in EPS. This may badly
digital printing machine, printing rotaries, dyeing and affect the market price of the share downward.
finishing machines, Jenbacher, Wartsila and Nigatta
engines, and solar power plant installation.
d. Political Unrest (Strikes, protests)
SHARE PRICE SENSITIVITY Volatile political situation often creates
ANALYSIS disruption in the business processes. Strikes,
protests create hindrance in production
Company’s share price is directly linked with the operations which may adversely affect the
operational and financial performance of Company. Company to meet deadlines of National /
In the current situation, Management considers the International customers. This factor although
following factors to which the performance and share not very much material at the moment, but may
price of the Company may be sensitive. affect share price of the Company adversely.

a. Agriculture e. Change in Government Policies

Performance in textile sector is mainly Any change in Government policies related

KOHINOOR TEXTILE MILLS LIMITED

dependent on better results of agriculture to textile sector may affect the share price of
sector for supply of quality cotton on cheaper the Company. If policy change is positive than
rates. Good environmental conditions for share price will increase, otherwise vice versa.
cotton crop, having required rain falls, results in

98
STATEMENT OF CASH FLOWS
(DIRECT METHOD)
FOR THE YEAR ENDED JUNE 30, 2018
2018 2017
(Rupees in thousand)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 17,432,561 17,145,269
Cash paid to suppliers and employees 16,540,898 15,233,488

Cash generated from operations 891,663 1,911,781

Finance cost paid (343,077) (274,506)
Income tax paid (160,757) (471,668)
Net decrease in long term deposits 7,055 3,363


Net cash generated from operating activities 394,884 1,168,970

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure on property, plant and equipment (851,614) (1,236,491)
Proceeds from sale of property, plant and equipment 19,529 47,251
Purchase of long term investments (2,367,710) (1,500,000)
Purchase of short term investments (2,663,941) (717,072)
Proceeds from sale of short term investments 2,646,341 1,860,779
Interest received 12,037 9,079
Dividends received 1,002,415 1,342,553

Net cash used in investing activities (2,202,943) (193,901)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term financing 441,988 791,624
Repayment of long term financing (272,328) (163,380)
Repayment of liabilities against assets subject to finance lease (20,717) (26,075)
Proceeds from issue of right shares 1,010,571 -
Short term borrowings - net 1,447,518 (246,528)
Dividend paid (792,003) (1,404,787)

Net cash from / (used in) financing activities 1,815,029 (1,049,146)

Net increase / (decrease) in cash and cash equivalents 6,970 (74,077)

Cash and cash equivalents at the beginning of the year 154,935 229,012

Cash and cash equivalents at the end of the year 161,905 154,935
ANNUAL REPORT 2018

99
 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 30-09-2017 Ended 31-12-2017 Ended 31-03-2018 30-06-2018
Rupees ‘000 % Rupees ‘000 % Rupees ‘000 % Rupees ‘000 %
Net Turnover 4,317,393 8,787,874 13,167,519 17,833,540
Gross Profit 571,846 13.25% 1,185,558 13.49% 1,894,473 14.39% 2,477,752 13.89%
Operating Profit 336,128 7.79% 1,214,222 13.82% 2,130,147 16.18% 2,516,291 14.11%
Net Profit before tax 269,975 6.25% 1,056,253 12.02% 1,857,351 14.11% 2,154,091 12.08%
Net Profit after tax 187,091 4.33% 760,076 8.65% 1,347,680 10.23% 1,664,322 9.33%
Equity 14,130,478 15,296,408 15,489,300 15,820,626
Current ratio (in time) 1.05 0.92 0.92 0.93

GRAPHICAL PRESENTATION

1ST QUARTER 3RD QUARTER

2ND QUARTER 4TH QUARTER

KOHINOOR TEXTILE MILLS LIMITED

100
ANALYSIS OF VARIATION IN RESULTS REPORTED IN INTERIM FINANCIAL
STATEMENTS WITH THE FINAL ACCOUNTS
3 Months Ended 30 September 2017

Gross profit was 13.25% as compared with annual GP of 13.89% due to slight drop in selling margins during
1st quarter of this financial year.

Operating profit was 7.79% as compared with annual operating profit of 14.11% due to receipt of dividend
income from the subsidiary Company during 2nd and 3rd quarters of the financial year.

Net profit before tax was 6.25% as compared with annual net profit before tax of 12.08% due to aforementioned
reasons.

Shareholders’ equity was Rs 14,130 million as compared with annual equity of Rs 15,821 million due to the
issuance of right shares, operating profits and dividend income in the following quarters of the financial year.

Current ratio was 1.05 times as compared with annual current ratio of 0.93 times due to lesser borrowing
in first quarter which increased afterward for subscribing right shares and buying of stock in subsequent
quarters.

6 Months Ended 31 December 2017

Gross Profit was 13.49% as compared with annual GP of 13.89% due to better profit margins in first half of
Operating profit for the first half year was 13.82% as compared with annual operating profit of 14.11% due to
dividend income from subsidiary Company in 2nd quarter.

Net profit before tax was 12.02% as compared with annual net profit before tax of 12.08% due to aforementioned
reasons.

Shareholders’ equity was Rs 15,296 million as compared with annual equity of Rs 15,821 million due to the
issuance of right shares, operating profits and dividend income in the following quarters of the financial year.

Current ratio almost remained same.

9 Months Ended 31 March 2018

Gross profit was 14.39% as compared with annual GP of 13.89% due to better utilizations & selling margins
in 2nd and 3rd quarters as compared to the 1st and 4th quarters of the financial year. Hence, accumulated
GP of nine month’s remained better as compared with annual.

Operating profit for the first 9 months was 16.18% as compared with annual operating profit of 14.11% due
to dividend income from subsidiary Company in 3rd quarter.
the year.
ANNUAL REPORT 2018

101
 KOHINOOR TEXTILE MILLS LIMITED

102
VALUE ADDED AND HOW DISTRIBUTED
2018 2017 2016 2015 2014 2013
Rs “000” % age Rs “000” % age Rs “000” % age Rs “000” % age Rs “000” % age Rs “000” % age

Wealth Generated

Net Sales 17,833,540 93.78% 17,404,708 90.98% 16,088,302 93.78% 15,776,611 92.30% 15,302,242 94.61% 14,250,439 99.63%
Other operating income 1,183,527 6.22% 1,725,445 9.02% 1,067,529 6.22% 1,315,992 7.70% 871,815 5.39% 52,455 0.37%

19,017,067 100.00% 19,130,153 100.00% 17,155,831 100.00% 17,092,603 100.00% 16,174,057 100.00% 14,302,894 100.00%

Distribution of Wealth

Cost of Sales (excluding
employees’ remuneration) 13,874,754 72.96% 13,365,225 69.86% 11,716,169 68.29% 11,938,725 69.85% 12,344,449 76.32% 11,255,864 78.70%
Distribution, administration &
Other expenses 798,627 4.20% 821,843 4.30% 869,714 5.07% 834,508 4.88% 735,069 4.54% 584,383 4.09%
Employees Remuneration 1,827,395 9.61% 1,772,981 9.27% 1,604,413 9.35% 1,422,147 8.32% 1,240,563 7.67% 1,023,669 7.16%
Financial charges 362,200 1.90% 267,593 1.40% 337,357 1.97% 490,917 2.87% 565,384 3.50% 640,543 4.48%
Government taxes (includes
income tax) 489,769 2.58% 550,732 2.88% 495,963 2.89% 319,473 1.87% 118,940 0.74% 313,903 2.19%
Dividend to shareholders 797,654 4.19% 1,411,775 7.38% 1,350,393 7.87% 245,526 1.44% - 0.00% - 0.00%
Retained within the business 866,668 4.56% 940,004 4.91% 781,822 4.56% 1,841,307 10.77% 1,169,652 7.23% 484,532 3.39%

19,017,067 100.00% 19,130,153 100.00% 17,155,831 100.00% 17,092,603 100.00% 16,174,057 100.00% 14,302,894 100.00%
 HORIZONTAL ANALYSIS OF FINANCIAL STATEMENT
2018 Change 2017 Change 2016 Change 2015 Change 2014 Change 2013 Changes
18 vs 17 17 vs 16 16 vs 15 15 vs 14 14 vs 13 13 vs 12
Rs “000” % Rs “000” % Rs “000” % Rs “000” % Rs “000” % Rs “000” %
Balance Sheet
Total Equity 15,820,626 13.63 13,922,796 7.43 12,959,673 10.92 11,684,053 18.71 9,842,746 13.49 8,673,094 92.11
Total non-current liabilities 1,850,676 4.20 1,776,007 47.37 1,205,135 62.03 743,794 81.24 410,396 5.36 389,507 (42.70)
Total current liabilities 7,200,654 42.70 5,046,039 1.10 4,990,909 (3.76) 5,185,753 (11.64) 5,868,566 (6.22) 6,257,996 (1.13)

Total equity and liabilities 24,871,956 19.89 20,744,842 8.30 19,155,717 8.76 17,613,600 9.25 16,121,708 5.23 15,320,597 0.81

Total non-current assets 18,155,891 17.53 15,447,434 17.40 13,158,134 7.19 12,275,578 14.06 10,762,190 (1.99) 10,981,023 (1.92)
Total current assets 6,716,065 26.78 5,297,408 (11.67) 5,997,583 12.36 5,338,022 (0.40) 5,359,518 23.50 4,339,574 8.43

Total assets 24,871,956 19.89 20,744,842 8.30 19,155,717 8.76 17,613,600 9.25 16,121,708 5.23 15,320,597 0.81

Profit and Loss Account

Net sales 17,833,540 2.46 17,404,708 8.18 16,088,302 1.98 15,776,611 3.10 15,302,242 7.38 14,250,439 27.84
Cost of sales 15,355,788 3.59 14,823,393 13.60 13,048,866 (0.64) 13,132,754 (1.96) 13,395,079 10.56 12,116,187 30.14
Gross profit 2,477,752 (4.01) 2,581,315 (15.07) 3,039,436 14.96 2,643,857 38.63 1,907,163 (10.64) 2,134,252 16.20
Selling and distribution expenses 495,766 (7.90) 538,294 (6.26) 574,226 (7.42) 620,281 8.14 573,592 30.78 438,598 8.96
Administrative expenses 494,532 7.35 460,681 14.85 401,099 9.36 366,754 16.01 316,152 22.35 258,398 22.84
Other operating expenses 154,690 12.35 137,681 (17.11) 166,105 119.74 75,591 114.39 35,258 (30.50) 50,733 (56.27)
Other operating income 1,183,527 (31.41) 1,725,445 61.63 1,067,529 (18.88) 1,315,992 50.95 871,815 1,562.02 52,455 (22.03)
Profit from operations 2,516,291 (20.62) 3,170,104 6.90 2,965,535 2.36 2,897,223 56.27 1,853,976 28.84 1,438,978 22.46
Finance cost 362,200 35.35 267,593 (20.68) 337,357 (31.28) 490,917 (13.17) 565,384 (11.73) 640,543 (26.44)
Profit/(Loss) before taxation 2,154,091 (25.79) 2,902,511 10.44 2,628,178 9.22 2,406,306 86.74 1,288,592 61.39 798,435 162.39
Provision for taxation 489,769 (11.07) 550,732 11.04 495,963 55.24 319,473 168.60 118,940 (62.11) 313,903 67.09

Profit / (Loss) after taxation 1,664,322 (29.23) 2,351,779 10.30 2,132,215 2.17 2,086,833 78.41 1,169,652 141.40 484,532 316.16

ANNUAL REPORT 2018

103
 COMMENTS ON THE 6 YEARS HORIZONTAL ANALYSIS OF BALANCE
SHEET AND PROFIT & LOSS ACCOUNT
Balance Sheet

Equity component has been amplified by 82% from 2013 to 2018. Increase in shareholder’s equity is primarily
because of profitable operations of the Company.

Non-current assets of the Company have been increased by 18% in 2018 because of addition of 1MW solar
power plant, new digital printing machine in home textile division and necessary balancing / modernization /
replacement of plant & machinery in spinning, processing and home textile divisions.

Current assets of the Company are showing upward trend of 27% mainly because of increased stocks.

Profit & Loss Account:

Company’s sales are being increased by 25% since 2013.

Gross profit has been decreased by 4% from 2017 to 2018. Major components of such decrease are squeezed
profit margins and increasing costs of input and other production overheads.
KOHINOOR TEXTILE MILLS LIMITED

In 6 years, period from 2013 to 2018, Finance cost has been decreased by 43% which is because of repayment
of long-term loans and decrease in WACC.

104
 VERTICAL ANALYSIS OF FINANCIAL STATEMENT
2018 % 2017 % 2016 % 2015 % 2014 % 2013 %

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

Balance Sheet
Total Equity 15,820,626 63.61 13,922,796 67.11 12,959,673 67.65 11,684,053 66.34 9,842,746 61.05 8,673,094 56.61
Total non-current liabilities 1,850,676 7.44 1,776,007 8.56 1,205,135 6.29 743,794 4.22 410,396 2.55 389,507 2.54
Total current liabilities 7,200,654 28.95 5,046,039 24.32 4,990,909 26.05 5,185,753 29.44 5,868,566 36.40 6,257,996 40.85

Total equity and liabilities 24,871,956 100.00 20,744,842 100.00 19,155,717 100.00 17,613,600 100.00 16,121,708 100.00 15,320,597.00 100

Total non-current assets 18,155,891 73.00 15,447,434 74.46 13,158,134 68.69 12,275,578 69.69 10,762,190 66.76 10,981,023 71.67
Total current assets 6,716,065 27.00 5,297,408 25.54 5,997,583 31.31 5,338,022 30.31 5,359,518 33.24 4,339,574 28.33

Total assets 24,871,956 100.00 20,744,842 100.00 19,155,717 100.00 17,613,600 100.00 16,121,708 100.00 15,320,597 100.00

Profit and Loss Account

Net sales 17,833,540 100.00 17,404,708 100.00 16,088,302 100.00 15,776,611 100.00 15,302,242 100.00 14,250,439 100.00
Cost of sales 15,355,788 86.11 14,823,393 85.17 13,048,866 81.11 13,132,754 83.24 13,395,079 87.54 12,116,187 85.02

Gross profit 2,477,752 13.89 2,581,315 14.83 3,039,436 18.89 2,643,857 16.76 1,907,163 12.46 2,134,252 14.98
Selling and distribution expenses 495,766 2.78 538,294 3.09 574,226 3.57 620,281 3.93 573,592 3.75 438,598 3.08
Administrative expenses 494,532 2.77 460,681 2.65 401,099 2.49 366,754 2.32 316,152 2.07 258,398 1.81
Other operating expenses 154,690 0.87 137,681 0.79 166,105 1.03 75,591 0.48 35,258 0.23 50,733 0.36
Other operating income 1,183,527 6.64 1,725,445 9.91 1,067,529 6.64 1,315,992 8.34 871,815 5.70 52,455 0.37

Profit from operations 2,516,291 14.11 3,170,104 18.21 2,965,535 18.43 2,897,223 18.36 1,853,976 12.12 1,438,978 10.10
Finance cost 362,200 2.03 267,593 1.54 337,357 2.10 490,917 3.11 565,384 3.69 640,543 4.49

Profit / (Loss) before taxation 2,154,091 12.08 2,902,511 16.68 2,628,178 16.34 2,406,306 15.25 1,288,592 8.42 798,435 5.60
Provision for taxation 489,769 2.75 550,732 3.16 495,963 3.08 319,473 2.02 118,940 0.78 313,903 2.20

Profit / (Loss) after taxation 1,664,322 9.33 2,351,779 13.51 2,132,215 13.25 2,086,833 13.23 1,169,652 7.64 484,532 3.40

ANNUAL REPORT 2018

105
 KOHINOOR TEXTILE MILLS LIMITED

106
COMMENTS ON VERTICAL
ANALYSIS OF BALANCE SHEET
AND PROFIT & LOSS ACCOUNT

Balance Sheet

Equity and total liabilities form 64% & 36% of

balance sheet total as compared to 67% and 33%
previous year, respectively. Equity component
increased by 14% from previous year, because the
Company has issued 16,941,308 right shares at
Rs 60 per share at a premium of Rs 50 per share;
and, increase in retained profits of Rs 867 million.
A major factor for such tremendous increase is
profitable operations of the Company and steering
the financial resources of the Company with acute
responsibility to enhance debt servicing to external
sources of finance providers.

During current year, non- current liabilities are

7.44% of the balance sheet footing as compared to
8.56% for the preceding year. Current liabilities form
29% of balance sheet total as compared to 24%
previous year, mainly because of increased short-
term borrowings to purchase raw material stocks.

Non-current assets have been increased from

Rs 15,447 Million in 2017 to Rs 18,156 Million in
2018. Such increase is due to capital expenditure
for production facilities and long term investment in
subsidiary company.

Profit & Loss Account

Cost of sales has been increased from 85.17% in

2017 to 86.11% in 2018 due to increase in raw
material cost & production overheads.

Finance cost has been increased by Rs 95 Million in

2018. This is mainly attributed to the financing that
Company acquired to subscribe the right issue of
subsidiary company.

Other operating income decreased by 31% mainly

due to decrease in dividend from subsidiary
company.
ANNUAL REPORT 2018

107
 KEY OPERATING AND FINANCIAL DATA
Six Years Summary

Particulars 2018 2017 2016 2015 2014 2013

FINANCIAL PERFORMANCE (RS.000)

Net sale (Rs. 000) 17,833,540 17,404,708 16,088,302 15,776,611 15,302,242 14,250,439

Gross Profit 2,477,752 2,581,315 3,039,436 2,643,857 1,907,163 2,134,252
Operating profit 2,516,291 3,170,104 2,965,535 2,897,223 1,853,976 1,438,978
Profit / (Loss) before tax 2,154,091 2,902,511 2,628,178 2,406,306 1,288,592 798,435
Provision for income tax 489,769 550,732 495,963 319,473 118,940 313,903

Profit / (Loss) after tax 1,664,322 2,351,779 2,132,215 2,086,833 1,169,652 484,532

FINANCIAL POSITION (RS.000)

Tangible fixed assets-net 8,578,713 8,222,022 7,437,640 6,565,198 5,919,751 5,959,112
Intangible assets - 11,974 9,305 - - 3,006
Investment & Other assets 9,577,178 7,213,438 5,711,189 5,710,380 4,842,439 5,018,905

18,155,891 15,447,434 13,158,134 12,275,578 10,762,190 10,981,023

Current assets 6,716,065 5,297,408 5,997,583 5,338,022 5,359,518 4,339,574
Current liabilities 7,200,654 5,046,039 4,990,909 5,185,753 5,868,566 6,257,996

Net working capital (484,589) 251,369 1,006,674 152,269 (509,048) (1,918,422)

Capital employed 17,671,302 15,698,803 14,164,808 12,427,847 10,253,142 9,062,601
Less: Redeemable Capital, long term loan
& other liabilities 1,850,676 1,776,007 1,205,135 743,794 410,396 389,507

Share holders Equity 15,820,626 13,922,796 12,959,673 11,684,053 9,842,746 8,673,094

Represented By:
Share capital 2,992,964 2,823,551 2,823,551 2,455,262 2,455,262 2,455,262
Reserves & unappropriated profit 12,827,662 11,099,245 10,136,122 9,228,791 7,387,484 6,217,832

15,820,626 13,922,796 12,959,673 11,684,053 9,842,746 8,673,094

RATIOS:

Profitability Ratio’s:
Gross Profit to sales (%age) 13.89 14.83 18.89 16.76 12.46 14.98
Net Profit to sales (%age) 9.33 13.51 13.25 13.23 7.64 3.40
EBITDA (%age) 16.92 20.76 20.70 20.45 14.22 12.41
Operating leverage ratio (10.50) 0.88 1.00 18.67 4.14 0.79
Return on equity (%age) 10.52 16.89 16.45 17.86 11.88 5.59
Return on capital employed (%age) 9.42 14.98 15.05 16.79 11.41 5.35
Profit before tax ratio (%age) 12.08 16.68 16.34 15.25 8.42 5.60
Effective tax rate (%age) 22.74 18.97 18.87 13.28 9.23 39.31
Cost / Revenue ratio (%age) 86.11 85.17 81.11 83.24 87.54 85.02

Liquidity Ratios:
Current ratio 0.93 1.05 1.20 1.03 0.91 0.69
Acid test ratio 0.50 0.54 0.66 0.56 0.52 0.35
Cash to current liabilities 0.02 0.03 0.05 0.02 0.02 0.05
Cash flow from operations to sales % 2.21 6.73 6.23 8.31 1.49 4.30

Activity / Turnover Ratios:
Inventory turn over 6.70 7.04 6.23 6.78 7.33 7.35
No. of days in Inventory 54 52 59 54 50 50
Debtors turn over ratio 11.90 14.89 14.83 15.52 15.53 13.88
No. of days in receiveables 31 25 25 24 23 26
Creditors turnover ratio 9.26 10.39 9.47 10.23 11.25 10.05
No. of days in creditors 39 35 39 36 32 36
Operating cycle 46 41 45 42 41 40
Total assets turn over / return on
KOHINOOR TEXTILE MILLS LIMITED

investment ratio 0.78 0.87 0.88 0.94 0.97 0.93

Fixed assets turn over ratio 1.75 1.81 1.83 1.97 1.99 1.83

108
Particulars 2018 2017 2016 2015 2014 2013
Investment / Market Ratio’s:
Earning per share - Basic - (Rupees) 5.64 8.25 7.48 7.32 4.10 1.70
Earning per share - Diluted - (Rupees) 5.64 8.25 7.48 7.32 4.10 1.70
Price earning ratio 9.75 12.75 10.70 8.88 5.79 9.89
Price to book ratio 54.99 : 52.86 105.13 : 49.31 80.03 : 45.90 64.96 : 47.59 23.74 : 40.09 16.8 : 35.32
Dividend yield ratio 28% 50% 40% 10% - -
Dividend payout ratio (%age) 48.76 60.63 53.50 13.67 - -
Dividend cover ratio - (Times) 2.05 1.65 1.87 7.32 -
Cash dividend per share - (Rupees) 2.75 5 4 1 - -
Stock dividend per share - - 15% - - -
Breakup value per share - (Rupees):
- without revaluation surplus 40.02 35.77 32.44 32.62 25.13 20.36
- with revaluation surplus 52.86 49.31 45.90 47.59 40.09 35.32
- with revaluation surplus and
investments at fair value 95.83 158.50 145.35 129.61 65.31 52.50
Market value per share at the end
of the year - (Rupees) 54.99 105.13 80.03 64.96 23.74 16.80
Share Price - High during the year - (Rupees) 106.00 128.50 82.34 68.28 30.70 19.5
Share Price - Low during the year - (Rupees) 54.99 78.95 60.94 21.68 16.80 3.7
Earning assets to total assets ratio (%age) 72.8 74.19 68.38 69.35 66.47 71.41

Capital Structure Ratios:
Financial leverage ratio 0.57 0.49 0.48 0.51 0.64 0.77
Weighted average cost of debt (%age) 4.94 4.16 5.35 9.87 11.11 11.35
Debt to equity ratio (as per book) 10 : 90 10 : 90 7 : 93 4 : 96 7 : 93 11 : 89
Debt to equity ratio (as per market value) 9 : 91 5 : 95 4 : 96 3 : 97 3 : 97 11 : 89
Interest cover ratio 6.95 11.85 8.79 5.90 3.28 2.25
Average operating working capital to
sales ratio 0.22 0.20 0.20 0.19 0.19 0.17
Net borrowing to EBITDA ratio 2.05 1.28 1.25 1.23 2.13 2.61

SUMMARY OF CASH FLOWS
Net cash flow from operating activities 394,884 1,171,639 1,002,347 1,310,771 228,105 612,206
Net cash flow from investing activities (2,202,943) (196,570) (247,653) (314,592) (228,826) (99,537)
Net cash flow from financing activities 1,815,029 (1,049,146) (640,497) (982,301) (219,194) (577,320)

Net change in cash and cash equivalents 6,970 (74,077) 114,197 13,878 (219,915) (64,651)

QUANTITATIVE DATA
Yarn (Kgs “000”) :
Production (cont. into 20s)
KTM Division 41,331 39,574 38,473 38,270 32,415 33,038
KGM Division 36,603 34,816 33,299 30,524 25,726 30,243

77,934 74,390 71,772 68,794 58,141 63,281

Sales / [Link] wvg.(actual count)
KTM Division 16,483 12,356 11,017 9,597 10,267 8,105
KGM Division 5,724 5,284 5,106 4,533 5,367 3,857

22,207 17,640 16,123 14,130 15,634 11,962

Cloth (Linear meters “000”) :
Processing (Rawalpindi Division)
Production 14,613 17,986 19,168 19,747 19,235 16,221
Sales 13,809 17,641 18,355 18,890 17,994 15,055
Weaving (Raiwind Division)
Production 29,857 27,533 26,204 21,280 18,883 19,122
Sales 29,817 27,021 26,614 20,501 18,968 19,069
ANNUAL REPORT 2018

109
 GRAPHICAL PRESENTATION
HORIZONTAL AND VERTICAL ANALYSIS

Horizontal Analysis - Pro it & Loss Account Horizontal Analysis - Balance Sheet

Vercal Analysis P&L-2018 Vercal Analysis P&L-2017

Vercal Analysis Equity Vercal Analysis Equity

and liabilies-2018 and liabilies-2017

Vercal Analysis Vercal Analysis

Assets-2018 Assets-2017
KOHINOOR TEXTILE MILLS LIMITED

110
GRAPHICAL PRESENTATION
RATIO ANALYSIS

Summary of Cash Flows

ANNUAL REPORT 2018

111
 DUPONT ANALYSIS
Return on Profit Margin = Total Assets Equity Multiplier =
Year Equity (ROE) Pre tax profit Turnover = Avg. Assets /
/ Net Sales Net Sales / Assets Avg. Equity
D=A*B*C A B C

2013 9.43% 0.06 0.93 1.81

2014 13.57% 0.08 0.95 1.70

2015 21.29% 0.15 0.90 1.57

2016 20.47% 0.16 0.84 1.49

2017 20.77% 0.17 0.84 1.48

2018 13.28% 0.12 0.72 1.53

Comments:

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

2 Profit margin decreased because of decrease in other income. It includes mainly dividend from
subsidiary company which decreased by 24% (Rs 310 million) from previous year.

3 During the year ended 30 Jun 2018, the Company subscribed the right-shares issued by subsidiary
company which increased it investment in subsidiary by Rs 2.4 billion. The Company also invested
Rs 0.35 billion in operating fixed assets for BMR of plant and machinery. This increase in average
assets without any significant increase in sales resulted the low asset turnover for the year.


KOHINOOR TEXTILE MILLS LIMITED

112
HOW THE INDICATORS AND Financial performance
PERFORMANCE MEASURES HAVE • Maintaining high local sales retention
CHANGED OVER THE PERIOD • Monitoring key components of variable cost to
be amongst top cost effective players
Kohinoor Textile Mills Limited has an established • Initiating and maintaining techniques for optimal
mechanism of performance appraisal. Key fixed cost absorption and appropriate mix of
Performance Indictors (KPIs), for both financial and operational leverage
non-financial economic activities, are set for each
objective or project and then its progress is monitored Liquidity Position
and evaluated by the management against those
KPIs. • Keeping an eye on funds used in / generated
from operating, investing and financial cash
Financial Review section of this report enlists and flow activities
elaborates major KPIs that management of the • Reviewing funds used in working capital
Company prefers to review on regular basis to management
access the ‘Operational’ and ‘Financial’ performance • Effectively segregating cash and noncash items
of the Company’s economic affairs. Key variances
indicated by the KPIs are also explained briefly to help All the indicators are devised in the light of these
understand the performance of business activities. basic assumptions and are periodically reviewed
and monitored. Furthermore, Company performance
Since, there isn’t any change in the Company’s variance analysis from corresponding figures of
principal business activities and related industry from comparative periods and from budgeted figures
previous year, except some expansion in fabric digital as comparability over time provides good basis of
print and solar power installation, the management Corporate Reporting. These indicators are finally
believes the set KPIs sufficiently indicates the project used to report financial information to all users of the
performance and didn’t required any change. financial statements in the form of annual financial
statements.

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
ANNUAL REPORT 2018

113
 DEFINITIONS AND GLOSSARY OF higher the margin, the better. Trends in margin can
be attributed to rising/falling production costs or
TERMS rising / falling price of the goods sold.

Gross Profit ratio Return on Equity (ROE)

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

Operating Profit Ratio Return on Investment (ROI)

The Operating profit ratio indicates the ratio of Also Known as return on invested capital (ROIC). ROI
company’s profit before interest and taxes to net is a measure of how well management has used the
sales. Company’s resources. ROI is calculated by dividing
earnings by total assets. It is a broader measure
Current Ratio than return on equity (ROE) because assets include
debt as well as equity. It is a useful to compare a
A company’s current assets divided by its current company’s ROI with others in the same industry.
liabilities. This ratio gives you a sense of a company’s
ability to meet short-term liabilities, and is a measure DuPont Analysis:
of financial strength in the short term. A ratio of 1
implies adequate current assets to cover current A type of analysis that examines a company’s
liabilities: the higher above 1, the better. Return on Equity (ROE) by splitting it into three main
components; profit margin, total asset turnover and
Debt-Equity Ratio equity multiplier. This analysis highlight the main
driving factor of ROE and the factor which needs to
The ratio of a company’s liabilities to its equity. The be addressed to improve the ROE.
higher the level of debt, the more important it is for a
company to have positive earnings and steady cash Free Cash Flow (FCF)
flow. For Comparative purposes, debt-equity is most
useful for companies within the same industry. FCF represents the cash a company can generate
after required investment to maintain or expand
Earnings Per Share (EPS) its asset base. It depicts the cash left over after a
company pays for its operating expenses and capital
The portion of a company’s profit allocated to each expenditures or CAPEX
outstanding share of common stock. Earnings
per share serve as an indicator of a company’s Economic Value Added (EVA)
profitability.
EVA is an estimate of a company’s economic profit,
Profit Margin or the value created in excess of the required return
KOHINOOR TEXTILE MILLS LIMITED

of the Company’s shareholders. EVA is the net

Determined by dividing net income by net sales during operating profit less the equity cost of the Company’s
a time period and is expressed as a percentage. capital.
Net profit margin is a measure of efficiency and the

114
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 2018

115
 Financial Statements
for the Year Ended June 30, 2018
KOHINOOR TEXTILE MILLS LIMITED

116
INDEPENDENT AUDITORS’ REPORT
To the members of KOHINOOR TEXTILE MILLS LIMITED

Report on the Audit of the Financial Statements

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 2018, 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 2018 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 2018

117
 Following are the key audit matters:

Sr. Key audit matters How the matter was addressed in our audit
No.

1 Inventory existence and valuation:

Inventory as at 30 June 2018 amounted Our procedures over existence and valuation of
to Rupees 3,106 million and represented a inventory included, but were not limited to:
material position in the statement of financial
position, break up of which is as follows: • To test the quantity of inventories at all
locations, we assessed the corresponding
- Stores, spare parts and loose tools inventory observation instructions and
Rupees 531 million participated in inventory counts on sites.
- Stock - in - trade Rupees 2,575 Based on samples, we performed test
million counts and compared the quantities
counted by us with the results of the counts
The business is characterized by high of the management.
volume serial production and the valuation • For a sample of inventory items, re-
and existence of inventories are significant performed the weighted average cost
to the business. Therefore, considered as calculation and compared the weighted
one of the key audit matters. average cost appearing on valuation sheets.
• We tested that the ageing report used by
Inventories are stated at lower of cost and management correctly aged inventory items
net realizable value. Cost is determined as by agreeing a sample of aged inventory
per accounting policy disclosed in Note 2.8 items to the last recorded invoice.
to the financial statements. • On a sample basis, we tested the net
realizable value of inventory items to
At year end, the valuation of inventory is recent selling prices and re-performed the
reviewed by management and the cost calculation of the inventory write down, if
of inventory is reduced where inventory is any.
forecast to be sold below cost. • We assessed the percentage write down
Useable stores, spares parts and loose applied to older inventory with reference
tools are valued at moving average cost, to historic inventory write downs and
raw materials are valued at annual average recoveries on slow moving inventory.
cost whereas, costing of work-in-process • In the context of our testing of the calculation,
and finished goods is considered to carry we analysed individual cost components
more significant risk as the cost of material, and traced them back to the corresponding
labor and manufacturing overheads is underlying documents. We furthermore
allocated on the basis of complex formulae challenged changes in unit costs.
and involves management judgment. • We also made enquiries of management,
including those outside of the finance
The determination of whether inventory will function, and considered the results of our
be realized for a value less than cost requires testing above to determine whether any
management to exercise judgement and specific write downs were required.
apply assumptions. Management undertake
the following procedures for determining the
level of write down required:
• Use inventory ageing reports
together with historical trends to
estimate the likely future saleability
of slow moving and older inventory
items.
• Perform a line-by-line analysis of
remaining inventory to ensure it is
KOHINOOR TEXTILE MILLS LIMITED

stated at the lower of cost and net

realizable value and a specific write
down is recognized, if required.

118
 For further information on inventory, refer to
the following:

- Summary of significant accounting

policies, Inventories note 2.8 to the
financial statements.
- Stores, spares and loose tools note
18 and Stock-in-trade note 19 to the
financial statements.
2 Capital expenditures

The Company is investing significant Our procedures included, but were not limited
amounts in their operations and there are to:
a number of areas where man-agement
judgement impacts the carrying value of • We tested operating effectiveness of
property, plant and equipment and its controls in place over the property, plant
respective depreciation profile. These and equipment cycle including the controls
include among other the decision to over whether costs incurred on activities is
capitalize or expense costs; and review of capital or operating in nature.
useful life 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.
position of the Company and there is • We verified the accuracy of management’s
significant management judgment required calculation used for the impairment testing.
that has significant impact on the reporting
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 deprecation note 2.5 to the
financial statements.
- Property, plant and equipment note
13 to the financial statements.
3 Preparation of financial statements under
the Companies Act, 2017
Our procedures included, but were not limited to:
The Companies Act 2017 (the Act)
became applicable for the first time for • We assessed the procedures applied by
the preparation of the Company’s annual the management for identification of the
financial statements for the year ended 30 changes required in the financial statements
June 2018. due to the application of the Act.
• We considered the adequacy and
The Act forms an integral part of the appropriateness of the additional disclosures
statutory financial reporting framework as and changes to the previous disclosures
applicable to the Company and amongst based on the new requirements.
others, prescribes the nature and content of • We verified on test basis the supporting
disclosures in relation to various elements of evidences for the additional disclosures and
the financial statements. ensured appropriateness of the disclosures
made.
In case of the Company, specific additional
disclosures and changes to the existing
disclosures have been included in the
financial statements.

The above changes and enhancements

in the financial statements are considered
important and a key audit matter because of
the volume and significance of the changes
ANNUAL REPORT 2018

in the financial statements resulting from the

transition to the new reporting requirements
under the Act.

For further information, refer to note 2.1(b)

to the financial statements.
119
 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 of the Company 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.
KOHINOOR TEXTILE MILLS LIMITED

• 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

120
 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
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 Mubashar Mehmood.

RIAZ AHMAD & COMPANY

Chartered Accountants

DATE: 18 September 2018

ANNUAL REPORT 2018

Islamabad

121
 STATEMENT OF FINANCIAL POSITION
As at June 30, 2018
2018 2017 2016
Restated Restated
Note (Rupees in thousand)
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital
370,000,000 (2017: 370,000,000)
ordinary shares of Rupees 10 each 3,700,000 3,700,000 3,700,000
30,000,000 (2017: 30,000,000) preference
shares of Rupees 10 each 300,000 300,000 300,000
4,000,000 4,000,000 4,000,000

Issued, subscribed and paid-up share capital 3 2,992,964 2,823,551 2,823,551
Reserves 4
Capital reserves
Share premium 986,077 144,919 144,919
Surplus on revaluation of freehold land and
investment properties 3,843,044 3,822,453 3,799,334
4,829,121 3,967,372 3,944,253
Revenue reserves
General reserve 1,450,491 1,450,491 1,450,491
Unappropriated profit 6,548,050 5,681,382 4,741,378
7,998,541 7,131,873 6,191,869
Total equity 15,820,626 13,922,796 12,959,673
LIABILITIES
Long term financing 5 1,335,099 1,295,884 765,027
Liabilities against assets subject to finance lease 6 - - 22,370
Deferred income tax liability 7 515,577 480,123 417,738
1,850,676 1,776,007 1,205,135
CURRENT LIABILITIES
Trade and other payables 8 1,797,734 1,518,697 1,312,365
Accrued mark-up 9 63,351 44,228 51,141
Short term borrowings 10 4,635,384 3,187,866 3,434,394
Current portion of non-current liabilities 11 388,301 278,573 184,891
Unclaimed dividend 20,757 15,106 8,118
Taxation - net 295,127 1,569 -
7,200,654 5,046,039 4,990,909
TOTAL LIABILITIES 9,051,330 6,822,046 6,196,044
CONTINGENCIES AND COMMITMENTS 12
TOTAL EQUITY AND LIABILITIES 24,871,956 20,744,842 19,155,717
KOHINOOR TEXTILE MILLS LIMITED

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

122
 2018 2017 2016
Note (Rupees in thousand)

ASSETS

NON - CURRENT ASSETS

Property, plant and equipment 13 8,578,713 8,222,022 7,437,640
Intangible asset under development 14 - 11,974 9,305
Investment properties 15 1,792,755 1,789,670 1,784,058
Long term investments 16 7,734,799 5,367,089 3,867,089
Long term deposits 17 49,624 56,679 60,042

18,155,891 15,447,434 13,158,134

CURRENT ASSETS

Stores, spare parts and loose tools 18 530,567 552,564 518,242
Stock-in-trade 19 2,574,838 2,009,579 2,203,655
Trade debts 20 1,699,015 1,298,968 1,039,529
Advances 21 718,354 145,480 196,419
Security deposits and short term prepayments 22 9,564 34,946 27,517
Accrued interest 725 - -
Other receivables 23 1,013,055 1,094,438 929,343
Short term investments 24 8,042 6,498 838,756
Taxation - net - - 15,110
Cash and bank balances 25 161,905 154,935 229,012

6,716,065 5,297,408 5,997,583

TOTAL ASSETS 24,871,956 20,744,842 19,155,717
ANNUAL REPORT 2018

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

123
 STATEMENT OF PROFIT OR LOSS
For the year ended June 30, 2018
2018 2017
Note (Rupees in thousand)

REVENUE 26 17,833,540 17,404,708
COST OF SALES 27 (15,355,788) (14,823,393)

GROSS PROFIT 2,477,752 2,581,315

DISTRIBUTION COST 28 (495,766) (538,294)
ADMINISTRATIVE EXPENSES 29 (494,532) (460,681)
OTHER EXPENSES 30 (154,690) (137,681)

(1,144,988) (1,136,656)

1,332,764 1,444,659
OTHER INCOME 31 1,183,527 1,725,445

PROFIT FROM OPERATIONS 2,516,291 3,170,104

FINANCE COST 32 (362,200) (267,593)

PROFIT BEFORE TAXATION 2,154,091 2,902,511

TAXATION 33 (489,769) (550,732)

PROFIT AFTER TAXATION 1,664,322 2,351,779

2018 2017
Restated
--------------Rupees--------------

EARNINGS PER SHARE - BASIC AND DILUTED 34 5.64 8.25

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

KOHINOOR TEXTILE MILLS LIMITED

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

124
STATEMENT OF COMPREHENSIVE INCOME
For the year ended June 30, 2018
2018 2017
(Rupees in thousand)

PROFIT AFTER TAXATION 1,664,322 2,351,779

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to profit or loss

Gain on revaluation of freehold land 20,591 23,119

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

Other comprehensive income for the year - net of tax 20,591 23,119


TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,684,913 2,374,898

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

ANNUAL REPORT 2018

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

125
 STATEMENT OF CASH FLOWS
For the year ended June 30, 2018
2018 2017
Note (Rupees in thousand)
CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 35 891,663 1,914,450
Finance cost paid (343,077) (274,506)
Income tax paid (160,757) (471,668)
Net decrease in long term deposits 7,055 3,363

Net cash generated from operating activities 394,884 1,171,639

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure on property, plant and equipment (851,614) (1,236,491)
Proceeds from sale of property, plant and equipment 19,529 47,251
Intangible assets under development - (2,669)
Long term investment made (2,367,710) (1,500,000)
Short term investments made (2,663,941) (717,072)
Proceeds from sale of short term investments 2,646,341 1,860,779
Interest received 12,037 9,079
Dividends received 1,002,415 1,342,553

Net cash used in investing activities (2,202,943) (196,570)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing 441,988 791,624
Repayment of long term financing (272,328) (163,380)
Proceeds from issue of right shares 1,010,571 -
Repayment of liabilities against assets subject to finance lease (20,717) (26,075)
Short term borrowings - net 1,447,518 (246,528)
Dividends paid (792,003) (1,404,787)

Net cash from / (used in) financing activities 1,815,029 (1,049,146)

Net increase / (decrease) in cash and cash equivalents 6,970 (74,077)

Cash and cash equivalents at the beginning of the year 154,935 229,012

Cash and cash equivalents at the end of the year 161,905 154,935

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

KOHINOOR TEXTILE MILLS LIMITED

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

126
 STATEMENT OF CHANGES IN EQUITY
For the year ended June 30, 2018
Reserves
Capital Reserves Revenue Reserves

Share Surplue on Unappro- Total Total
Capital Share revaluation of Sub - General priated Sub - reserves Equity
premium freehold land Total reserves profit Total
and investment
properties
….………………...…..…… ( Rupees in thousand ) ….………………...…..……

Balance as at 30 June 2016 - as previously reported 2,823,551 144,919 - 144,919 1,450,491 4,741,378 6,191,869 6,336,788 9,160,339
Impact of restatement (Note 2.24) - - 3,799,334 3,799,334 - - - 3,799,334 3,799,334
Balance as at 30 June 2016 - restated 2,823,551 144,919 3,799,334 3,944,253 1,450,491 4,741,378 6,191,869 10,136,122 12,959,673
Transactions with owners:
- final dividend for the year ended 30 June 2016
@ Rupees 3.00 per share - - - - - (847,065) (847,065) (847,065) (847,065)
- interim dividend for the year ended 30 June
2017 @ Rupees 2.00 per share - - - - - (564,710) (564,710) (564,710) (564,710)
- - - - - (1,411,775) (1,411,775) (1,411,775) (1,411,775)
Profit for the year - - - - - 2,351,779 2,351,779 2,351,779 2,351,779
Other comprehensive income for the year - - 23,119 23,119 - - - 23,119 23,119
Total comprehensive income for the year - - 23,119 23,119 - 2,351,779 2,351,779 2,374,898 2,374,898
Balance as at 30 June 2017 - restated 2,823,551 144,919 3,822,453 3,967,372 1,450,491 5,681,382 7,131,873 11,099,245 13,922,796
Transactions with owners:
- final dividend for the year ended 30 June 2017
@ Rupees 1.50 per share - - - - - (423,533) (423,533) (423,533) (423,533)
- interim dividend for the year ended 30 June 2018
@ Rupees 1.25 per share - - - - - (374,121) (374,121) (374,121) (374,121)
- issuance of right shares 169,413 841,158 - 841,158 - - - 841,158 1,010,571
169,413 841,158 - 841,158 - (797,654) (797,654) 43,504 212,917
Profit for the year - - - - - 1,664,322 1,664,322 1,664,322 1,664,322
Other comprehensive income for the year - - 20,591 20,591 - - - 20,591 20,591
Total comprehensive income for the year - - 20,591 20,591 - 1,664,322 1,664,322 1,684,913 1,684,913
Balance as at 30 June 2018 2,992,964 986,077 3,843,044 4,829,121 1,450,491 6,548,050 7,998,541 12,827,662 15,820,626

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2018

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 NOTES TO THE FINANCIAL STATEMENTS
For the year ended June 30, 2018

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 Summary of significant transactions and events affecting the Company’s financial position and
performance

a) The exchange rate of United States Dollar to Pak Rupees has increased from Pak Rupees
104.80 as at 30 June 2017 to Pak Rupees 121.40 as at 30 June 2018.

b) For a detailed discussion about the Company’s performance, please refer to the Directors’
report.

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.
KOHINOOR TEXTILE MILLS LIMITED

b) Preparation of financial statements under the Companies Act, 2017

The Fourth Schedule to the Companies Act, 2017 became applicable to the Company for the
first time for the preparation of these financial statements. The Companies Act, 2017 (including its

128
 Fourth Schedule) forms an integral part of the statutory financial reporting framework applicable
to the Company and amongst others, prescribes the nature and content of disclosures in relation
to various elements of the financial statements. Additional disclosures include but are not limited
to, particulars of immovable assets of the Company (refer note 13.1.5 and 15.3), management
assessment of sufficiency of tax provision in the financial statements (refer note 33.2), change
in threshold for identification of executives (refer note 36), additional disclosure requirements for
related parties (refer note 37) etc.

c) Accounting convention

These financial statements have been prepared under the historical cost convention, except for
certain financial instruments, investment properties and freehold land which are carried at their
fair values. These financial statements represent separate financial statements of the Company.
The consolidated financial statements of the Group are being issued separately.

d) 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
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 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 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

Net realizable value of inventories is determined with reference to currently prevailing selling
prices less estimated expenditure to make sales.

Taxation

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.

Provisions for doubtful debts

The Company reviews its receivable against any provision required for any doubtful balances on
an ongoing basis. The provision is made while taking into consideration expected recoveries, if
any.

Impairment of investment in subsidiary companies
ANNUAL REPORT 2018

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

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

The following amendments to published approved accounting standards are mandatory for the
Company’s accounting periods beginning on or after 01 July 2017:

IAS 7 (Amendments), ‘Statement of Cash Flows’ (effective for annual periods beginning on
or after 01 January 2017). Amendments have been made to clarify that entities shall provide
disclosures that enable users of financial statements to evaluate changes in liabilities arising from
financing activities. The aforesaid amendments have resulted in certain additional disclosures in
the Company’s financial statements.

IAS 12 (Amendments), ‘Income Taxes’ (effective for annual periods beginning on or after 01
January 2017). The amendments clarify that the existence of a deductible temporary difference
depends solely on a comparison of the carrying amount of an asset and its tax base at the end
of the reporting period, and is not affected by possible future changes in the carrying amount or
expected manner of recovery of the asset. The amendments further clarify that when calculating
deferred tax asset in respect of insufficient taxable temporary differences, the future taxable profit
excludes tax deductions resulting from the reversal of those deductible temporary differences.
The amendments have no significant impact on Company’s financial statements.

On 8 December 2016, IASB issued Annual Improvements to IFRSs: 2014 – 2016 Cycle,
incorporating amendments to three IFRSs more specifically in IFRS 12 ‘Disclosure of Interests
in Other Entities’ (effective for annual periods beginning on or after 01 January 2017). IFRS
12 states that an entity need not provide summarized financial information for interests in
subsidiaries, associates or joint ventures that are classified, or included in a disposal group that
is classified, as held for sale (in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations). The amendments clarify that this is the only concession from the
disclosure requirements of IFRS 12 for such interests. The amendments have no impact on the
Company’s financial statements.

The application of the above amendments does not result in any impact on profit or loss, other
comprehensive income and total comprehensive income.

f) Standards, interpretations and amendments to published approved accounting standards that

are not yet effective but relevant to the Company

Following standards, interpretations and amendments to published standards that are mandatory
for accounting periods beginning on or after 01 July 2018 or later periods:

IFRS 9 ‘Financial Instruments’ (effective for annual periods beginning on or after 01 July 2018).
A finalized version of IFRS 9 which contains accounting requirements for financial instruments,
replacing IAS 39 ‘Financial Instruments: Recognition and Measurement’. Financial assets are
classified by reference to the business model within which they are held and their contractual cash
flow characteristics. The 2014 version of IFRS 9 introduces a ‘fair value through comprehensive
income’ category for certain debt instruments. Financial liabilities are classified in a similar
manner to under IAS 39, however there are differences in the requirements applying to the
measurement of an entity’s own credit risk. The 2014 version of IFRS 9 introduces an ‘expected
credit loss’ model for the measurement of the impairment of financial assets, so it is no longer
KOHINOOR TEXTILE MILLS LIMITED

necessary for a credit event to have occurred before a credit loss is recognized. It introduces
a new hedge accounting model that is designed to be more closely aligned with how entities
undertake risk management activities when hedging financial and non-financial risk exposures.
The requirements for the derecognition of financial assets and liabilities are carried forward from
IAS 39. The management of the Company is in the process of evaluating the impacts of the
aforesaid standard on the Company’s financial statements.

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 IFRS 15 ‘Revenue from Contracts with Customers’ (effective for annual periods beginning on or
after 01 July 2018). IFRS 15 provides a single, principles based five-step model to be applied
to all contracts with customers. The five steps in the model are: identify the contract with the
customer; identify the performance obligations in the contract; determine the transaction price;
allocate the transaction price to the performance obligations in the contracts; and recognize
revenue when (or as) the entity satisfies a performance obligation. Guidance is provided on
topics such as the point in which revenue is recognized, accounting for variable consideration,
costs of fulfilling and obtaining a contract and various related matters. New disclosures about
revenue are also introduced. The aforesaid standard is not expected to have a material impact
on the Company’s financial statements.

IFRS 16 ‘Lease’ (effective for annual periods beginning on or after 01 January 2019). IFRS 16
specifies how an entity will recognize, measure, present and disclose leases. The standard
provides a single lessee accounting model, requiring lessees to recognize assets and liabilities
for all leases unless the lease term is 12 months or less or the underlying asset has a low value.
Lessors continue to classify leases as operating or finance, with IFRS 16 approach to lessor
accounting substantially unchanged from its predecessor, IAS 17 ‘Leases’. IFRS 16 replaces
IAS 17, IFRIC 4 ‘Determining Whether an Arrangement Contains a Lease’, SIC-15 ‘Operating
Leases–Incentives’ and SIC-27 ‘Evaluating the Substance of Transactions Involving the Legal
Form of a Lease’. The management of the Company is in the process of evaluating the impacts
of the aforesaid standard on the Company’s financial statements.

Amendments to IFRS 9 (effective for annual periods beginning on or after 01 January 2019) clarify
that for the purpose of assessing whether a prepayment feature meets the solely payments
of principal and interest (‘SPPI’) condition, the party exercising the option may pay or receive
reasonable compensation for the prepayment irrespective of the reason for prepayment. In other
words, prepayment features with negative compensation do not automatically fail SPPI. The
amendments are not likely to have significant impact on the Company’s financial statements.

IFRS 15 (Amendments), ‘Revenue from Contracts with Customers’ (effective for annual
periods beginning on or after 01 July 2018). Amendments clarify three aspects of the standard
(identifying performance obligations, principal versus agent considerations, and licensing) and
to provide some transition relief for modified contracts and completed contracts. The aforesaid
amendments are not expected to have a material impact on the Company’s financial statements.

IAS 28 (Amendments) ‘Investments in Associates and Joint Ventures’ (effective for annual
periods beginning on or after 01 January 2019). The IASB has clarified that IFRS 9, including
its impairment requirements, applies to long-term interests. Furthermore, in applying IFRS 9 to
long-term interests, an entity does not take into account adjustments to their carrying amount
required by IAS 28 (i.e., adjustments to the carrying amount of long-term interests arising from
the allocation of losses of the investee or assessment of impairment in accordance with IAS 28).
The amendments are not likely to have significant impact on the Company’s financial statements.

IAS 40 (Amendments), ‘Investment Property’ (effective for annual periods beginning on or after
01 January 2018). The amendments clarify that an entity shall transfer a property to, or from,
investment property when, and only when there is a change in use. A change in use occurs
when the property meets, or ceases to meet, the definition of investment property and there is
evidence of the change in use. In isolation, a change in management’s intentions for the use of a
property does not provide evidence of a change in use. The amendments are not likely to have
a significant impact on the Company’s financial statements.

IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’ (effective for annual
ANNUAL REPORT 2018

periods beginning on or after 01 January 2018). IFRIC 22 clarifies which date should be used
for translation when a foreign currency transaction involves payment or receipt in advance of the

131
 item it relates to. The related item is translated using the exchange rate on the date the advance
foreign currency is received or paid and the prepayment or deferred income is recognized.
The date of the transaction for the purpose of determining the exchange rate to use on initial
recognition of the related asset, expense or income (or part of it) would remain the date on which
receipt of payment from advance consideration was recognized. If there are multiple payments
or receipts in advance, the entity shall determine a date of the transaction for each payment or
receipt of advance consideration. The interpretation is not expected to have a material impact
on the Company’s financial statements.

IFRIC 23 ‘Uncertainty over Income Tax Treatments’ (effective for annual periods beginning on
or after 01 January 2019). The interpretation addresses the determination of taxable profit (tax
loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty
over income tax treatments under IAS 12 ‘Income Taxes’. It specifically considers: whether tax
treatments should be considered collectively; assumptions for taxation authorities’ examinations;
the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits
and tax rates; and the effect of changes in facts and circumstances. The interpretation is not
expected to have a material impact on the Company’s financial statements.

Amendments to IFRS 10 ‘Consolidated Financial Statements’ and IAS 28 (deferred indefinitely)
to clarify the treatment of the sale or contribution of assets from an investor to its associates or
joint venture, as follows: require full recognition in the investor’s financial statements of gains and
losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS
3 ‘Business Combinations’); require the partial recognition of gains and losses where the assets
do not constitute a business, i.e. a gain or loss is recognized only to the extent of the unrelated
investors’ interests in that associate or joint venture. These requirements apply regardless of
the legal form of the transaction, e.g. whether the sale or contribution of assets occur by an
investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the
subsidiary), or by the direct sale of the assets themselves. The management of the Company
is in the process of evaluating the impacts of the aforesaid amendments on the Company’s
financial statements.

On 8 December 2016, IASB issued Annual Improvements to IFRSs: 2014 – 2016 Cycle,
incorporating amendments to three IFRSs more specifically in IAS 28. These amendments are
effective for annual periods beginning on or after 01 January 2018. These amendments have no
significant impact on the Company’s financial statements and have therefore not been analyzed
in detail.

On 12 December 2017, IASB issued Annual Improvements to IFRSs: 2015 – 2017 Cycle,
incorporating amendments to four IFRSs more specifically in IFRS 3 ‘Business Combinations’,
IFRS 11 ‘Joint Arrangements’, IAS 12 ‘Income Taxes’ and IAS 23 ‘Borrowing Costs’. The
amendments are effective for annual periods beginning on or after 01 January 2019. The
amendments have no significant impact on the Company’s financial statements and have
therefore not been analyzed in detail.

On 29 March 2018, the International Accounting Standards Board (the IASB) has issued
a revised Conceptual Framework. The new Framework: reintroduces the terms stewardship
and prudence; introduces a new asset definition that focuses on rights and a new liability
definition that is likely to be broader than the definition it replaces, but does not change the
distinction between a liability and an equity instrument; removes from the asset and liability
KOHINOOR TEXTILE MILLS LIMITED

definitions references to the expected flow of economic benefits–this lowers the hurdle for
identifying the existence of an asset or liability and puts more emphasis on reflecting uncertainty
in measurement; discusses historical cost and current value measures, and provides some
guidance on how the IASB would go about selecting a measurement basis for a particular
asset or liability; states that the primary measure of financial performance is profit or loss, and
that only in exceptional circumstances will the IASB use statement of comprehensive income

132
 and only for income or expenses that arise from a change in the current value of an asset
or liability; and discusses uncertainty, derecognition, unit of account, the reporting entity and
combined financial statements. The Framework is not an IFRS standard and does not override
any standard, so nothing will change in the short term. The revised Framework will be used in
future standard-setting decisions, but no changes will be made to current IFRS. Preparers might
also use the Framework to assist them in developing accounting policies where an issue is not
addressed by an IFRS. It is effective for annual periods beginning on or after 1 January 2020 for
preparers that develop an accounting policy based on the Framework.

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 2018 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.

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   Provisions

ANNUAL REPORT 2018

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.

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 2.5   Property, plant, equipment and depreciation

Owned

Property, plant and equipment except freehold land and capital work-in-progress are stated
at cost less accumulated depreciation and accumulated impairment losses (if any). Cost of
property, plant and equipment 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 recognised impairment loss.

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

Leased

Leases where the Company has substantially all the risks and rewards of ownership are classified
as finance lease. Assets subject to finance lease are capitalized at the commencement of the
lease term at the lower of present value of minimum lease payments under the lease agreements
and the fair value of the leased assets, each determined at the inception of the lease.

The related rental obligation net of finance cost, is included in liabilities against assets subject to
finance lease. The liabilities are classified as current and long term depending upon the timing of
payments.

Each lease payment is allocated between the liability and finance cost so as to achieve a constant
rate on the balance outstanding. The finance cost is charged to statement of profit or loss over
the lease term.

Depreciation of assets subject to finance lease is recognised in the same manner as for owned
assets. Depreciation of the leased assets is charged to statement of profit or loss.

Depreciation

Depreciation on property, plant and equipment is charged to 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 13.1. Depreciation on additions is charged
from the month the assets are available for use while no depreciation is charged in the month in
KOHINOOR TEXTILE MILLS LIMITED

which the assets are disposed off. 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.

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 De-recognition

An item of property, plant and equipment is derecognised 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.

2.6   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 recognised in the
statement of profit or loss for the year in which it arises.

2.7   Investments

Classification of an investment is made on the basis of intended purpose for holding such
investment. Management determines the appropriate classification of its investments at the time
of purchase and re-evaluates such designation on regular basis.

Investments are initially measured at fair value plus transaction costs directly attributable to
acquisition, except for “investment at fair value through profit or loss” which is initially measured
at fair value.

The Company assesses at the end of each reporting period whether there is any objective
evidence that investments are impaired. If any such evidence exists, the Company applies the
provisions of IAS 39 ‘Financial Instruments: Recognition and Measurement’ to all investments,
except investment in subsidiary companies, which are tested for impairment in accordance with
the provisions of IAS 36 ‘Impairment of Assets’.

a)      Investment at fair value through profit or loss

Investments classified as held-for-trading and those designated as such are included in this
category. Investments are classified as held-for-trading if these are acquired for the purpose
of selling in the short term. Gains or losses on investments held-for-trading are recognised in
statement of profit or loss.

b)     Held-to-maturity

Investments with fixed or determinable payments and fixed maturity are classified as held-to-
maturity when the Company has the positive intention and ability to hold to maturity. Investments
intended to be held for an undefined period are not included in this classification. Other long term
investments that are intended to be held to maturity are subsequently measured at amortized
cost. This cost is computed as the amount initially recognised minus principal repayments,
plus or minus the cumulative amortization, using the effective interest method, of any difference
between the initially recognised amount and the maturity amount. For investments carried
at amortized cost, gains and losses are recognised in statement of profit or loss when the
investments are derecognised or impaired, as well as through the amortization process.

ANNUAL REPORT 2018

c)        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’.

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 d)     Available-for-sale

Investments intended to be held for an indefinite period of time, which may be sold in response
to need for liquidity, or changes to interest rates or equity prices are classified as available-for-
sale. After initial recognition, investments which are classified as available-for-sale are measured
at fair value. Gains or losses on available-for-sale investments are recognised directly in other
comprehensive income until the investment is sold, de-recognised or is determined to be
impaired, at which time the cumulative gain or loss previously reported in other comprehensive
income is included in statement of profit or loss. These are sub-categorized as under:

Quoted

For investments that are actively traded in organized capital markets, fair value is determined by
reference to stock exchange quoted market bids at the close of business on the reporting date.
Fair value of investments in open-end mutual funds is determined using redemption price.

Unquoted

Fair value of unquoted investments is determined on the basis of appropriate valuation techniques
as allowed by IAS 39 “Financial Instruments: Recognition and Measurement”.

2.8   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 material, 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.

2.9   Trade and other receivables

Trade debts and other receivables are carried at original invoice value less an estimate made
KOHINOOR TEXTILE MILLS LIMITED

for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are
written off when identified.

2.10 Borrowings

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

136
 2.11 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.

2.12 Trade and other payables

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

2.13 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.

2.14  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.

2.15 Revenue recognition

Revenue from different sources is recognised as under:

a) Revenue from local sales is recognised on dispatch of goods to customers while in case of
export sales it is recognised on the date of bill of lading.

b) Dividend on equity investments is recognised when right to receive the dividend is established.

c) Profit on deposits with banks is recognised on time proportion basis taking into account the
amounts outstanding and rates applicable thereon.

2.16  Foreign currencies

These financial statements are presented in Pak Rupees, which is the Company’s functional
currency. All monetary assets and liabilities denominated in foreign currencies are translated
into Pak Rupees at the rates of exchange prevailing at the reporting date, while the transactions
in foreign currencies during the year are initially recorded in functional currency at the rates of
exchange prevailing at the transaction date. All non-monetary items are translated into Pak
Rupees at exchange rates prevailing on the date of transaction or on the date when fair values
are determined. Exchange gains and losses are recorded in the statement of profit or loss.

2.17 Financial instruments

Financial instruments carried on the statement of financial position include investments, deposits,
trade debts, advances, accrued interest, other receivables, cash and bank balances, long-term
financing, liabilities against assets subject to finance lease, short-term borrowings, accrued
mark-up and trade and other payables etc. Financial assets and liabilities are recognised when
the Company becomes a party to the contractual provisions of instrument. Initial recognition is
made at fair value plus transaction costs directly attributable to acquisition, except for “financial
instrument at fair value through profit or loss” which are initially measured at fair value.
ANNUAL REPORT 2018

Financial assets are derecognised when the Company loses control of the contractual rights
that comprise the financial asset. The Company loses such control if it realizes the rights to

137
 benefits specified in contract, the rights expire or the Company surrenders those rights. Financial
liabilities are derecognised when the obligation specified in the contract is discharged, cancelled
or expired. Any gain or loss on subsequent measurement (except available for sale investments)
and derecognition is charged to the profit or loss currently. The particular measurement methods
adopted are disclosed in the individual policy statements associated with each item.

2.18 Impairment

a)      Financial assets

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

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

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

b)     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 recognised 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.

2.19 Derivative financial instruments

Derivatives that do not qualify for hedge accounting are recognized in the statement of financial
position at estimated fair value with corresponding effect to statement of profit or loss. Derivative
financial instruments are carried as assets when fair value is positive and liabilities when fair value
is negative.

2.20 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,
KOHINOOR TEXTILE MILLS LIMITED

expenses, assets, liabilities and other balances which can not 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).

138
 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.

2.21 Dividend and other appropriations

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

2.22  Off setting

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.

2.23  Government grants

Government grants are recognized when there is reasonable assurance that entity will comply
with the conditions attached to it and grant will be received.

2.24 Change in accounting policies

The specific provision / section in the repealed Companies Ordinance, 1984 relating to the
surplus on revaluation of fixed assets has not been carried forward in the Companies Act,
2017. Previously, section 235 of the repealed Companies Ordinance, 1984 specified the
accounting treatment and presentation of the surplus on revaluation of fixed assets, which was
not in accordance with the IFRS requirements. Accordingly, in accordance with the requirements
of International Accounting Standard (IAS) 16, Property, Plant and Equipment, surplus on
revaluation of fixed assets would now be presented under equity.

Following the application of IAS 16, the Company’s accounting policy for surplus on revaluation
of freehold land and investment properties stands amended as follows:

Freehold land

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.

Investment properties

Surplus on revaluation of investment properties has now been included in shareholders equity.

These changes in accounting policies have been accounted for retrospectively in accordance
with the requirements of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and
Errors’ and comparative figures have been restated.

ANNUAL REPORT 2018

139
 The effect of change in accounting policy is summarized below:

30-Jun-17 30-Jun-16
As previously As Restatement As previously As Restatement
reported re-stated reported re-stated

(Rupees in thousand)
Effect on statement of financial position

Surplus on revaluation of Land and
investment property 3,822,453 - (3,822,453) 3,799,334 - (3,799,334)
Capital reserve - 3,822,453 3,822,453 - 3,799,334 3,799,334

Effect on statement of changes in equity

Surplus on revaluation of Land and
investment property - 3,822,453 3,822,453 - 3,799,334 3,799,334

For the year ended 30 June 2017

As As Restatement
previously re-stated
reported

(Rupees in thousand)
Effect on statement of comprehensive income

Surplus on revaluation of Land and investment property - 23,119 23,119

There was no cash flow impact as a result of the retrospective application of change in accounting
policy.

3. ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL

2018 2017 2018 2017
(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 Kohinoor 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

169,182,327 152,241,019 Ordinary shares of Rupees 10 each issued
as fully paid in cash 1,691,823 1,522,410

KOHINOOR TEXTILE MILLS LIMITED

299,296,456 282,355,148 2,992,964 2,823,551

3.1 During the year ended 30 June 2018, the Company has issued 16,941,308 right shares at
Rupees 60 per share at a premium of Rupees 50 per share. The Company utilised the proceeds
to finance the subscription of 12.50% right shares of Maple Leaf Cement Factory Limited, a
subsidiary company.

140
 2018 2017
Note (Rupees in thousand)
4. RESERVES

Composition of reserves is as follows:

Capital reserves

Share premium 4.1 986,077 144,919

Surplus on revaluation of freehold land and
investment properties:

Freehold land
As at 01 July 2,558,861 2,535,742
Increase due to revaluation to fair value 13.1 20,591 23,119

As at 30 June 2,579,452 2,558,861

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

3,843,044 3,822,453

4,829,121 3,967,372
Revenue reserves

General reserve 1,450,491 1,450,491
Unappropriated profit 6,548,050 5,681,382

7,998,541 7,131,873

12,827,662 11,099,245

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

2018 2017
Note (Rupees in thousand)

5. LONG TERM FINANCING

From banking companies and other financial
institutions - secured

Long term loans 5.1 1,723,400 1,553,740

Less: Current portion shown under current liabilities 11 388,301 257,856

1,335,099 1,295,884

ANNUAL REPORT 2018

141
 RATE OF
TOTAL INTEREST PER NUMBER OF INTEREST INTEREST
LENDER 2018 2017 SECURITY
FACILITY ANNUM INSTALLMENTS REPRICING PAYABLE

.....Rupees in thousand.....
5.1 Long term loans
Askari Bank 75,000 125,000 150,000 3 Month Twelve equal Quarterly Quarterly First pari passu
Limited KIBOR + quarterly installments hypothecation charge
1.50% commenced from of Rupees 200 million
28 February 2017 on all present and
and ending on 30 future fixed assets
November 2019. (excluding land and
building) of Raiwind
Division and personal
guarantees of the
sponsor directors.

The Bank of 426,380 557,262 600,000 SBP LTFF Sixteen equal - Quarterly First pari passu
Punjab rate + quarterly installments mortgage charge
2.50% commenced from amounting to Rupees
09 September 2016 934 million (inclusive
and ending on 09 of 25% margin) on
November 2021. the Company’s land
measuring 43 Acres
07 Kanals and 12
Marlas situated at
Peshawar Road,
Rawalpindi.

The Bank of 142,605 - 400,000 SBP LTFF Thirty six equal - Quarterly First pari passu
Punjab (Note rate + 1% quarterly installments charge of Rupees
5.2) after expiry of grace 534 million (inclusive
period of one year for of 25% margin) over
every tranche from fixed assets (plant
date of disbursement. and machinery) of the
Company.

MCB Bank 184,875 237,647 350,000 SBP LTFF Twenty four equal - Quarterly First pari passu charge
Limited rate + 2.5% quarterly installments over fixed assets
(Formerly NIB after expiry of grace amounting to Rupees
Bank Limited) period of one year 467 million of Raiwind
commenced from 17 Division and personal
November 2015 and guarantees of the
ending on 17 August sponsor directors.
2021.

National Bank of 417,989 179,704 500,000 SBP LTFF Twelve equal half - Half yearly First pari passu charge
Pakistan rate + yearly installments over fixed assets of the
1.25% after expiry of grace Company (plant and
period of one and a machinery) amounting
half year commenced to Rupees 667 million.
from 30 June 2018
and ending on 08
June 2024.

PAIR Investment 209,859 171,746 300,000 SBP LTFF Twenty four equal - Quarterly First pari passu charge
Company rate + 1.5% quarterly installments over fixed assets
Limited after expiry of grace (excluding land and
period of sixteen building) amounting to
months commencing Rupees 400 million of
from 17 July 2018 Rawalpindi and Gujar
and ending on 12 Khan Divisions and
April 2024. personal guarantees
of the sponsor
directors.

Askari Bank 266,692 282,381 350,000 SBP LTFF Thirty six equal - Quarterly First pari passu
KOHINOOR TEXTILE MILLS LIMITED

Limited rate + quarterly installments charge of Rupees 467

1.25% commenced from 28 million on all present
January 2018 and and future fixed assets
ending 31 October (land, building, plant
2026. and machinery) of
1,723,400 1,553,740 2,650,000 Raiwind Division.

5.2 As per financing document the Company is required to comply with certain conditions imposed by the provider of finance to
make dividend.

142
 2018 2017
Note (Rupees in thousand)

6. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

Future minimum lease payments - 20,966
Less: Un-amortized finance charges - 249
Present value of future minimum lease payments - 20,717
Less: Current portion shown under current liabilities 11 - 20,717

- -

7. DEFERRED INCOME TAX LIABILITY
This comprises of following:
Deferred tax liability on taxable temporary differences
in respect of:
Accelerated tax depreciation 517,229 479,866
Surplus on revaluation of investments 203 257

517,432 480,123
Deferred tax asset on deductible temporary differences
in respect of:
Provision for doubtful debts (271) -
Provision for doubtful advances (1,230) -
Provision for slow moving against stores and spares (354) -

(1,855) -

515,577 480,123

7.1 Movement in deferred tax balances is as follows:

At beginning of the year 480,123 417,738
Recognized in statement of profit or loss:
- accelerated tax depreciation on operating fixed assets 37,363 84,118
- surplus on revaluation of investments (54) (21,947)
- provision for doubtful debts (271) -
- provision for doubtful advances (1,230) -
- provision for slow moving against stores and spares (354) 214

33 35,454 62,385

515,577 480,123
8. TRADE AND OTHER PAYABLES

Creditors 859,849 734,594
Accrued liabilities 518,246 394,168
Advances from customers - unsecured 125,443 81,504
Workers’ profit participation fund 8.1 183,593 192,514
Workers’ welfare fund 41,479 29,172
Payable to subsidiary company - Maple Leaf Cement
Factory Limited - 32,179
Withholding tax payable 6,063 12,533
Payable to employees’ provident fund trust 7,903 7,099
Others 55,158 34,934
ANNUAL REPORT 2018

1,797,734 1,518,697

143
 2018 2017
Note (Rupees in thousand)

8.1 Workers’ profits participation fund

Balance as on 01 July 192,514 200,832
Interest for the period 32 27,132 14,958
Provision for the year 30 104,202 127,216

323,848 343,006
Less: Payments during the year (140,255) (150,492)

183,593 192,514

8.1.1 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.

2018 2017
Note (Rupees in thousand)

9. ACCRUED MARK-UP

Long term loans 18,853 19,363

Liabilities against assets subject to finance lease - 20
Short term borrowings:
From banking companies 34,793 24,845
From Maple Leaf Capital Limited - subsidiary company 9,705 -

44,498 24,845

63,351 44,228


10. SHORT TERM BORROWINGS

From banking companies - secured
Short term running finances 10.1 & 10.2 803,676 623,625
Other short term finances 10.1 & 10.3 825,178 147,241
State Bank of Pakistan (SBP) refinances 10.1 & 10.4 2,575,000 2,417,000

4,203,854 3,187,866
From subsidiary company - unsecured
Maple Leaf Capital Limited 10.5 431,530 -

4,635,384 3,187,866

10.1 These finances are obtained from banking companies under mark up arrangements and
are secured by pledge of raw material, charge on current assets of the Company including
KOHINOOR TEXTILE MILLS LIMITED

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 8,065 million (2017: Rupees 6,895
million).

144
 10.2 The rates of mark-up range from 7.09% to 8.92% (2017: 1.90% to 7.87% ) per annum on
balance outstanding.

10.3 The rates of mark-up range from 2.50 % to 8.26% (2017: 2.50 % to 8.55%) per annum on
balance outstanding.

10.4 The rate of mark-up is 3.0% (2017: 3.0%) per annum on balance outstanding.

10.5 This represents unsecured loan obtained from Maple Leaf Capital Limited carrying mark-
up @ 1% above the three months KIBOR and is repayable within one year from the date of
disbursement. The maximum aggregate amount outstanding at the end of any month during
the year was Rupees 1,250 million (2017: Rupees Nil). The Company has utilised the proceeds
to finance the subscription of 12.50% right shares of Maple Leaf Cement Factory Limited, a
subsidiary company.

2018 2017
Note (Rupees in thousand)

11. CURRENT PORTION OF NON-CURRENT LIABILITIES

Long term financing 5 388,301 257,856

Liabilities against assets subject to finance lease 6 - 20,717

388,301 278,573

12. CONTINGENCIES AND COMMITMENTS

12.1 Contingencies

a) The Company filed an appeal before Appellate Tribunal Inland Revenue, Lahore for 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 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. No
provision has been made in these financial statements as the Company is hopeful of favorable
outcome of these cases.

b) The Company filed an appeal before Appellate Tribunal Inland Revenue, Lahore for tax year
2004. The loss for the tax year 2004 was assessed at Rupees 255.684 million reducing refund
to Rupees 7.499 million vide order dated 22 May 2009. The matter was decided in favor of the
Company. However, department filed an appeal in The Honorable Lahore High Court, Lahore
against the decision. No provision has been made in these financial statements since the
Company is confident about favorable outcome of the case.

c) Tax department filed an appeal before Appellate Tribunal Inland Revenue against the order of
Commissioner Inland Revenue (Appeals) dated 13 May 2015, by which the demand amounting
to Rupees 54.010 million created by assessing officer under section 122(5A) of the Income Tax
Ordinance, 2001 for tax year 2009 was annulled. No provision has been made in these financial
statements as the Company is hopeful of a favorable outcome.
ANNUAL REPORT 2018

145
 d) Tax department filed an appeal before Appellate Tribunal Inland Revenue against the order
of Commissioner Inland Revenue (Appeals) dated 06 September 2014, by which the demand
amounting to Rupees 22.110 million created by assessing officer under section 122(5A) of the
Income Tax Ordinance, 2001 for tax year 2010 was annulled. No provision has been made in
these financial statements as the Company is hopeful of a favorable outcome.

e) The Company filed income tax return for Tax Year 2011 having tax loss amounting to Rupees
957.623 million and creating a refund of Rupees 107.808 million. An assessment dated 12 May
2017 under section 122(5A) of the Income Tax Ordinance, 2001 has been finalized by restricting
loss to Rupees 435.435 million and reducing refund to Rupees Nil. The Company has filed an
appeal before Commissioner Inland Revenue (Appeals) which is pending for hearing.

f) The Company filed income tax return for Tax Year 2016 having taxable income amounting to
Rupees 762.669 million and creating a refund of Rupees 30.721 million. An assessment under
section 122(5A) of the Income Tax Ordinance, 2001 dated 31 May 2018 has been finalized and
taxable income has been assessed at Rupees 1,167.832 million by creating demand of Rupees
231.109 million. The Company has filed an appeal before Commissioner Inland Revenue
(Appeals) which is pending for hearing.

g) The Company and the 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 87.996 million (2017: Rupees
87.996 million), since the Company has strong grounds against the assessments framed by the
relevant authorities.

h) The Company filed recovery suits in Civil Courts amounting to Rupees 15.164 million (2017:
Rupees 15.203 million) against various suppliers and customers for goods supplied by / to them.
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.

i) 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 (2017: Rupees 72.811 million). No provision has been made in these financial statements,
since the Company is confident about favorable outcome.

j) 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.

k) The Company challenged, before Honorable Lahore High Court, Lahore, the vires of first
proviso to sub-clause (x) of clause (4) of SRO 491(1)/2016 dated 30 June 2016 issued under
sections 3 and 4 read with sections 8 and 71 of the Sales Tax Act, 1990 whereby through
amendment in the earlier SRO 1125(I)/2011 dated 31 December 2011 adjustment of input sales
tax on packing material of all sorts has been disallowed. The Honorable Lahore High Court
has issued stay order in favor of the Company. Consequently, the Company has claimed input
sales tax amounting to Rupees 131.010 million (2017: Rupees 62.376 million) paid on packing
KOHINOOR TEXTILE MILLS LIMITED

material in its respective monthly sales tax returns. The management, based on advice of the
legal counsel, is confident of favorable outcome of its appeal.

146
 l) 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 279.257 million (2017: Rupees 264.912 million).

12.2 Commitments in respect of:

a) Letters of credit for capital expenditure amounting to Rupees 111.231 million (2017:
Rupees 55.454 million).

b) Letters of credit other than for capital expenditure amounting to Rupees 156.753 million
(2017: Rupees 245.281 million).

c) Contracts for capital expenditure amounting to Rupees 6.661 million (2017: Rupees 52.575
million).

d) Future contarcts - shares in respect of which the settlement is outstanding amounting to
Rupees 181.745 million (2017: Rupees Nil).

2018 2017
(Rupees in thousand)


13. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets (Note 13.1)
- Owned assets 8,367,262 8,050,453
- Leased assets - 58,681
Capital work in progress (Note 13.2) 211,451 112,888

8,578,713 8,222,022

ANNUAL REPORT 2018

147
 KOHINOOR TEXTILE MILLS LIMITED

148
13.1 Operating Fixed Assets
Owned Assets Leased Assets

Factory and Residential Services Computer Furniture
Freehold Office other and other Plant and and other and IT and Office Plant and Vehicles Total
Land building machinery Vehicles
equipment Total machinery
Building building equipment installations fixture

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

At 30 June 2016
Cost / revalued amount 2,695,847 14,176 1,215,743 115,069 7,418,717 46,310 86,138 75,023 45,350 189,146 11,901,519 83,912 2,644 86,556
Accumulated depreciation - (7,922) (633,685) (60,839) (3,803,960) (31,549) (69,130) (51,498) (25,907) (91,850) (4,776,340) (11,714) (889) (12,603)
Net book value 2,695,847 6,254 582,058 54,230 3,614,757 14,761 17,008 23,525 19,443 97,296 7,125,179 72,198 1,755 73,953

Year ended 30 June 2016
Opening net book value 2,695,847 6,254 582,058 54,230 3,614,757 14,761 17,008 23,525 19,443 97,296 7,125,179 72,198 1,755 73,953
Additions - 847 184,640 1,101 1,101,839 1,690 23,175 3,050 1,072 44,697 1,362,111 - - -
Revaluation surplus (Note 4) 23,119 - - - - - - - - - 23,119 - - -
Assets transferred from lease
assets to owned assets:
Cost - - - - 9,471 - - - - 2,644 12,115 (9,471) (2,644) (12,115)
Accumulated depreciation - - - - (2,316) - - - - (1,055) (3,371) 2,316 1,055 3,371
- - - - 7,155 - - - - 1,589 8,744 (7,155) (1,589) (8,744)
Disposals:
Cost - - - - (82,973) - (793) (586) (124) (21,795) (106,271) - - -
Accumulated depreciation - - - - 60,346 - 396 462 96 12,295 73,595 - - -
- - - - (22,627) - (397) (124) (28) (9,500) (32,676) - - -
Depreciation charge - (369) (48,789) (3,059) (350,214) (1,793) (7,931) (2,478) (2,000) (19,391) (436,024) (6,362) (166) (6,528)
Closing net book value 2,718,966 6,732 717,909 52,272 4,350,910 14,658 31,855 23,973 18,487 114,691 8,050,453 58,681 - 58,681

At 30 June 2017
Cost / revalued amount 2,718,966 15,023 1,400,383 116,170 8,447,054 48,000 108,520 77,487 46,298 214,692 13,192,593 74,441 - 74,441
Accumulated depreciation - (8,291) (682,474) (63,898) (4,096,144) (33,342) (76,665) (53,514) (27,811) (100,001) (5,142,140) (15,760) - (15,760)
Net book value 2,718,966 6,732 717,909 52,272 4,350,910 14,658 31,855 23,973 18,487 114,691 8,050,453 58,681 - 58,681

Year ended 30 June 2018
Opening net book value 2,718,966 6,732 717,909 52,272 4,350,910 14,658 31,855 23,973 18,487 114,691 8,050,453 58,681 - 58,681
Additions - - 40,532 3,400 683,778 509 3,849 1,409 2,867 16,707 753,051 - - -
Revaluation surplus (Note 4) 20,591 - - - - - - - - - 20,591 - - -
Assets transferred from lease
assets to owned assets:
Cost - - - - 74,441 - - - - - 74,441 (74,441) - (74,441)
Accumulated depreciation - - - - (17,711) - - - - - (17,711) 17,711 - 17,711
- - - - 56,730 - - - - - 56,730 (56,730) - (56,730)
Disposals:
Cost - - - - (36,095) - (1,005) - (188) (12,449) (49,737) - - -
Accumulated depreciation - - - - 27,667 - 688 - 107 6,362 34,824 - - -
- - - - (8,428) - (317) - (81) (6,087) (14,913) - - -
Depreciation charge - (358) (54,987) (2,955) (406,200) (1,521) (9,603) (2,427) (1,975) (18,624) (498,650) (1,951) (1,951)
Closing net book value 2,739,557 6,374 703,454 52,717 4,676,790 13,646 25,784 22,955 19,298 106,687 8,367,262 - - -

At 30 June 2018
Cost / revalued amount 2,739,557 15,023 1,440,915 119,570 9,169,178 48,509 111,364 78,896 48,977 218,950 13,990,939 - - -
Accumulated depreciation - (8,649) (737,461) (66,853) (4,492,388) (34,863) (85,580) (55,941) (29,679) (112,263) (5,623,677) - - -
Net book value 2,739,557 6,374 703,454 52,717 4,676,790 13,646 25,784 22,955 19,298 106,687 8,367,262 - - -

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

13.1.1 Freehold land was revalued by an independent valuer Anderson Consulting (Private) Limited (Evaluators, Surveyors, Stock Inspectors, Architects & Engineers) as at 30 June 2018. Book value of land on cost basis is Rupees
160.105 million (2017: Rupees 160.105 million) as on 30 June 2018. Had there been no revaluation, the value of land would have been lower by Rupees 2,579.452 million (2017: Rupees 2,558.861 million). Forced sale value
of land is Rupees 2,328.623 million (2017: Rupees 2,311.121 million).

13.1.2 Borrowing cost of Rupees 1.347 million (2017: Rupees 2.029 million) was capitalized during the year using the capitalization rates ranging from 4.50% to 8.00% (2017: 1.90% to 7.87%) per annum.
 13.1.3 Detail of operating fixed assets, exceeding the book value of Rupees 500,000 disposed off 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

Boge compressor 1,803 1,121 682 565 (117) Negotiation Matco (Private) Limited, Islamabad
Boge compressor 1,803 1,131 672 565 (107) Negotiation Matco (Private) Limited, Islamabad
Autocone Winder 10,789 8,111 2,678 2,943 265 Negotiation Gulf Worldwide Logistics, United Arab
Emirates
Autocone Winder 11,608 8,113 3,495 2,943 (552) Negotiation Gulf Worldwide Logistics, United Arab
Emirates

26,003 18,476 7,527 7,016 (511)

Vehicles

Toyota Corolla 1,954 338 1,616 1,800 184 Negotiation Mr. Liaquat Ali, Fazal Park, Lahore
Honda Civic 2,549 1,295 1,254 1,254 - Negotiation Maple Leaf Capital Limited, subsidiary
company
Toyota Corolla 1,960 538 1,422 1,800 378 Negotiation Mr. Sarmad Tanveer (employee), Lahore
Toyota Corolla 1,763 1,045 718 750 32 Negotiation Mr. Shahid Rehman (employee), Lahore

8,226 3,216 5,010 5,604 594
Aggregate of other items of
property, plant and equipment
with individual book values not
exceeding Rupees 500,000 15,508 13,132 2,376 6,909 4,533 Various Various


49,737 34,824 14,913 19,529 4,616

ANNUAL REPORT 2018

149
 2018 2017
Note (Rupees in thousand)
13.1.4 Depreciation charged during the year has been
allocated as follows:

Cost of sales 27 463,099 405,546
Administrative expenses 29 37,502 37,006

500,601 442,552

13.1.5 Particulars of immovable property (i.e land & building)
are as follows:

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

Peshawar Road, Rawalpindi Manufacturing facilities 64.68 1,142.35
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 -

2018 2017
(Rupees in thousand)
13.2 Capital work in progress

Civil works and buildings 14,309 199
Plant and machinery 98,519 103,453
Advances for capital expenditure 29,067 6,899
Letters of credit 69,556 2,337

211,451 112,888

14. INTANGIBLE ASSET UNDER DEVELOPMENT

This represented advances given for implementation of Enterprise Resource Planning (ERP) system.
This has been written off during the year as the management expected no future economic benefits
from the use of ERP system.
2018 2017
Note (Rupees in thousand)
15. INVESTMENT PROPERTIES
Year ended 30 June
Opening net book value 1,789,670 1,784,058
Fair value gain 31 3,085 5,612

Closing net book value 1,792,755 1,789,670

KOHINOOR TEXTILE MILLS LIMITED

15.1 The fair value of investment properties comprising land situated at Lahore and Rawalpindi have
been determined by an independent valuer Anderson Consulting (Private) Limited (Evaluators,
Surveyors, Stock Inspectors, Architects & Engineers) as at 30 June 2018.

15.2 Forced sale value of these properties as at 30 June 2018 was Rupees 1,523.843 million (2017:
Rupees 1,512.220 million).

150
 15.3 Particulars of investment properties are as follows:

Description Address Total Area

(Acres)

Land Peshawar Road, Rawalpindi 43.95
Land 42, Lawrence Road, Lahore 4.95

2018 2017
Note (Rupees in thousand)

16. LONG TERM INVESTMENTS

Subsidiary companies

Maple Leaf Cement Factory Limited - Quoted 16.1 5,234,799 2,867,089
Maple Leaf Capital Limited - Un-quoted 16.2 2,500,000 2,500,000

7,734,799 5,367,089

16.1 The Company holds 327,836,728 (2017: 291,410,425) ordinary shares of Rupees 10 each of its
subsidiary company, Maple Leaf Cement Factory Limited. Equity held 55.22% (2017: 55.22%).

16.2 The Company holds 250,000,000 (2017: 250,000,000) ordinary shares of Rupees 10 each of its
subsidiary company, Maple Leaf Capital Limited. Equity held 82.92% (2017: 82.92%).

16.3 Investments made in associated companies are in accordance with the requirements of the
Companies Act, 2017.

2018 2017
Note (Rupees in thousand)

17. LONG TERM DEPOSITS

Security deposits 49,695 63,851
Less: Current portion shown under current assets 22 (71) (7,172)

49,624 56,679

18. STORES, SPARE PARTS AND LOOSE TOOLS

Stores 353,323 352,846
Spare parts and loose tools 181,016 202,270

534,339 555,116
Less: Provision against slow moving items 18.1 (3,772) (2,552)

530,567 552,564

18.1 Provision against slow moving items

As at 01 July 2,552 2,552

Add: Provision for the year 30 1,220 -

As at 30 June 3,772 2,552

ANNUAL REPORT 2018

151
 2018 2017
Note (Rupees in thousand)

19. STOCK-IN-TRADE

Raw materials 19.1 1,430,755 841,118
Work-in-process 597,872 575,961
Finished goods 546,211 592,500

2,574,838 2,009,579

19.1 Raw materials include stock in transit of Rupees 270.613 million (2017: Rupees 91.508
million).

19.2 Stock in trade of Rupees 45.678 million (2017: Rupees 51.599 million) is being carried at net
realizable value.

19.3 Stock in trade includes stock of Rupees 41.245 million (2017: Rupees 50.971 million) with
external parties for processing.

2018 2017
Note (Rupees in thousand)

20. TRADE DEBTS

Considered good:

Secured (against letters of credit) 513,156 515,301
Unsecured 1,185,859 783,667

1,699,015 1,298,968
Considered doubtful 932 -

1,699,947 1,298,968
Provision for doubtful debts 20.1 932 -

1,699,015 1,298,968

20.1 Movement in provision for doubtful debts

As at 01 July - -
Add: Provision for the year 30 932 -

As at 30 June 932 -

20.2 As at 30 June 2018, trade debts of Rupees 1,226.847 million (2017: Rupees 779.935 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:

2018 2017
(Rupees in thousand)

Up to 1 month 815,924 582,808

KOHINOOR TEXTILE MILLS LIMITED

1 to 6 months 364,682 132,169

More than 6 months 46,241 64,958

1,226,847 779,935

152
20.3 Disclosures in respect of outstanding export debtors along with type of arrangements are as follows:

Jurisdiction and relationship 2018 2017

with the Company Letters of Cash Letters of Cash
(related party or other) credit against Contracts Total credit against Contracts Total
documents document
Jurisdiction Relationship
--------------------------------- (Rupees in thousand) -------------------------------------------

America Other 22,315 188,854 23,343 234,512 38,267 226,093 20,460 284,820
Asia Other 1,176 666 - 1,842 44,403 - - 44,403
Australia Other - 3,425 9,577 13,002 - - 14,720 14,720
Europe Other 209,691 75,696 14,689 300,076 177,171 176,932 15,922 370,025

233,182 268,641 47,609 549,432 259,841 403,025 51,102 713,968

2018 2017
Note (Rupees in thousand)

21. ADVANCES

Considered good:
Employees - interest free
- Executives 74 1,577
- Other employees 1,809 6,001
1,883 7,578
Advances to suppliers 180,706 105,647
Letters of credit 540,008 32,255
722,597 145,480
Less: Provision for doubtful advances 30 4,243 -
718,354 145,480

22. SECURITY DEPOSITS AND SHORT TERM PREPAYMENTS

Current portion of long term deposits 17 71 7,172
Short term prepayments 9,493 27,774
9,564 34,946

23. OTHER RECEIVABLES
Considered good:
Sales tax refundable 453,877 780,911
Custom duty receivable 15,993 15,993
Mark up rate support receivable from financial institutions 3,633 3,633
Export rebate 74,863 95,045
Insurance claims 941 4,171
Duty draw back receivable 198,034 189,377
Due from subsidiary company - Maple Leaf
Cement Factory Limited 23.1 259,192 -
Due from subsidiary company - Maple Leaf Capital Limited 23.2 694 -
Others 5,828 5,308
1,013,055 1,094,438

23.1 This represents advance to Maple Leaf Cement Factory Limited carrying interest @ 1% above
the average borrowing cost of the Company and is repayable / adjustable within one year from
the date of disbursement. The maximum aggregate amount outstanding at the end of any
ANNUAL REPORT 2018

month during the year was Rupees 290.00 million.

23.2 This represents receivable against sale of property, plant and equipment. The maximum
aggregate amount outstanding at the end of any month during the year was Rupees 0.694
million.

153
 24. SHORT TERM INVESTMENTS
2018 2017
Carrying Unrealized Market Carrying Unrealized Market
value gain / (loss) value value gain / (loss) value
- - - - - - - - - - - - (Rupees in thousand) - - - - - - - - - - - -

Investments at fair value through profit or loss

Shares in listed companies

Pakistan Reinsurance Company Limited
25,000 (2017: 25,000) fully paid ordinary shares of Rupees 10 each 1,220 (398) 822 757 463 1,220

Samin Textiles Limited
30,000 (2017: 30,000) fully paid ordinary shares of Rupees 10 each 206 (80) 126 216 (10) 206

D. S. Industries Limited
20,000 (2017: 20,000) fully paid ordinary shares of Rupees 10 each 77 15 92 56 21 77

Pervez Ahmed Securities Limited
25,000 (2017: 25,000) fully paid ordinary shares of Rupees 10 each 49 (25) 24 42 8 50

Bank AL Habib Limited
400 (2017: 400) fully paid ordinary shares of Rupees 10 each 23 9 32 17 6 23

Kohinoor Energy Limited
200 (2017: 200) fully paid ordinary shares of Rupees 10 each 9 (1) 8 8 - 8

Shifa International Hospitals Limited
700 (2017: 700) fully paid ordinary shares of Rupees 10 each 231 (42) 189 210 21 231

The Hub Power Company Limited
5 (2017: 5) fully paid ordinary shares of Rupees 10 each 1 - 1 1 - 1

Honda Atlas Cars (Pakistan) Limited
55 (2017: 55) fully paid ordinary shares of Rupees 10 each 48 (30) 18 20 28 48

Pak Suzuki Motor Company Limited
13 (2017: 13) fully paid ordinary shares of Rupees 10 each 10 (5) 5 5 5 10

Shell Pakistan Limited
55 (2017: 55) fully paid ordinary shares of Rupees 10 each 32 (14) 18 16 15 31

Baifo Industries Limited
304 (2017: 304) fully paid ordinary shares of Rupees 10 each 76 21 97 84 (8) 76

Thal Limited
450 (2017: 450) fully paid ordinary shares of Rupees 10 each 273 (58) 215 139 134 273

Abbot Laboratories (Pakistan) Limited
92 (2017: 92) fully paid ordinary shares of Rupees 10 each 86 (23) 63 75 11 86

Blessed Textile Limited
17,300 (2017: 17,300) fully paid ordinary shares of Rupees 10 each 4,158 1,988 6,146 3,141 1,017 4,158

The Bank of Punjab
4,500 (2017: Nil) fully paid ordinary shares of Rupees 10 each 56 (2) 54 - - -

Engro Foods Limited
1,500 (2017: Nil) fully paid ordinary shares of Rupees 10 each 134 (2) 132 - - -

6,689 1,353 8,042 4,787 1,711 6,498
KOHINOOR TEXTILE MILLS LIMITED

154
 2018 2017
Note (Rupees in thousand)
25. CASH AND BANK BALANCES

Cash in hand 1,898 6,129

Cash at bank:
- On current accounts 85,145 116,304
- On saving accounts 25.1 74,862 32,502

160,007 148,806

161,905 154,935

25.1 The balances in saving accounts carry rate of profit ranging from 0.16% to 5.75 % (2017: 0.15%
to 5.25 %) per annum.

25.2 The balances in current and saving accounts include US $ 57,087 (2017: US $ 30,131).

2018 2017
Note (Rupees in thousand)
26. REVENUE

Export sales 6,334,385 7,663,545
Local sales 26.1 11,285,473 9,542,256
Export rebate 40,074 51,216
Duty draw back 173,608 147,691

17,833,540 17,404,708

26.1 Local sales 11,332,294 9,623,286

Less: Sales tax 46,821 81,030

11,285,473 9,542,256

27. COST OF SALES

Raw materials consumed 27.1 9,452,232 9,019,710
Salaries, wages and other benefits 27.2 1,481,034 1,458,168
Processing charges 26,232 14,495
Stores, spare parts and loose tools consumed 1,140,938 1,090,682
Packing materials consumed 498,291 501,069
Fuel and power 2,003,884 1,988,356
Repair and maintenance 175,235 293,670
Insurance 31,756 32,874
Other factory overheads 58,709 78,984
Depreciation 13.1.4 463,099 405,546

15,331,410 14,883,554
Work-in-process
Opening stock 575,961 620,336
Closing stock (597,872) (575,961)

(21,911) 44,375

Cost of goods manufactured 15,309,499 14,927,929

Finished goods
Opening stock 592,500 487,964
ANNUAL REPORT 2018

Closing stock (546,211) (592,500)

46,289 (104,536)

Cost of sales 15,355,788 14,823,393

155
 2018 2017
(Rupees in thousand)
27.1 Raw materials consumed

Opening stock 841,118 1,095,355
Add: Purchased during the year 10,041,869 8,765,473
10,882,987 9,860,828
Less: Closing stock (1,430,755) (841,118)

9,452,232 9,019,710

27.2 Salaries, wages and other benefits include provident fund contribution of Rupees 38.455 million
(2017: Rupees 35.483 million) by the Company.

2018 2017
Note (Rupees in thousand)
28. DISTRIBUTION COST
Salaries and other benefits 28.1 65,813 58,450
Outward freight and handling 25,959 29,820
Clearing and forwarding 255,806 259,266
Commission to selling agents 101,888 149,835
Travelling and conveyance 12,144 14,020
Insurance 191 283
Vehicles’ running 2,518 1,890
Electricity, gas and water 2,639 933
Postage, telephone and fax 2,297 2,063
Sales promotion and advertisement 22,093 16,404
Miscellaneous 4,418 5,330

495,766 538,294

28.1 Salaries and other benefits include provident fund contribution of Rupees 2.683 million
(2017: Rupees 2.382 million) by the Company.

2018 2017
Note (Rupees in thousand)
29. ADMINISTRATIVE EXPENSES

Salaries and other benefits 29.1 280,548 256,363
Travelling and conveyance 22,935 20,575
Repair and maintenance 14,396 22,918
Rent, rates and taxes 5,563 4,286
Insurance 13,680 12,988
Vehicles’ running 15,998 13,724
Printing, stationery and periodicals 4,265 4,615
Electricity, gas and water 5,227 486
Postage, telephone and fax 7,853 6,521
Legal and professional 29,036 25,164
KOHINOOR TEXTILE MILLS LIMITED

Security, gardening and sanitation 35,216 36,020

Depreciation 13.1.4 37,502 37,006
Miscellaneous 22,313 20,015

494,532 460,681

156
 29.1 Salaries and other benefits include provident fund contribution of Rupees 9.356 million
(2017: Rupees 7.739 million) by the Company.

29.2 The Company has shared expenses aggregating to Rupees 15.179 million (2017: Rupees 13.956
million) on account of combined offices with the subsidiary company. These expenses have
been recorded in respective accounts.

2018 2017
Note (Rupees in thousand)

30. OTHER EXPENSES

Auditors’ remuneration 30.1 2,157 2,135
Donations 30.2 246 20
Loss on disposal of short term investments - net 10,413 -
Unrealized loss on remeasurement of future contracts - shares 6,996 -
Intagible asset under development written off 11,974 -
Provision for doubtful trade debts 20.1 932 -
Provision for doubtful advances 21 4,243 -
Provision for slow moving items 18.1 1,220 -
Workers’ profits participation fund 8.1 104,202 127,216
Workers’ welfare fund 12,307 8,281
Loss on sale of stores and spares - 29

154,690 137,681

30.1 Auditors’ remuneration

Audit fee 1,750 1,750

Reimbursable expenses 300 280
Certifications 107 105

2,157 2,135

30.2 None of the directors and their spouses have any interest in the donee’s fund.

ANNUAL REPORT 2018

157
 2018 2017
Note (Rupees in thousand)
31. OTHER INCOME

Income from financial assets:
Exchange gain - net 112,755 13,450
Gain on remeasurement of short term investments - net 24 1,353 1,711
Gain on disposal of short term investments - net - 309,738
Return on bank deposits 12,762 9,079
Interst income on loan and advances to Maple Leaf
Cement Factory Limited 4,592 -
Dividend income from Maple Leaf Cement Factory Limited 1,001,724 1,311,347
Dividend income from others 691 25,705

1,133,877 1,671,030
Income from non-financial assets:
Scrap sales 41,949 34,228
Gain on disposal of property, plant and equipment 13.1.3 4,616 14,575
Gain on remeasurement of fair value of investment
properties 15 3,085 5,612
49,650 54,415

1,183,527 1,725,445

32. FINANCE COST

Mark-up / finance charges / interest on:
Long term financing 80,800 76,855
Short term borrowings 191,981 141,494
Liabilities against assets subject to finance lease 230 2,214
Workers’ profit participation fund 8.1 27,132 14,958
Advance from Maple Leaf Capital Limited 37,604 -
Advance from Maple Leaf Cement Factory Limited - 2,847

337,747 238,368
Bank charges and commission 24,453 29,225

362,200 267,593

33. TAXATION

For the year
Current tax 454,315 488,347
Deferred tax 7.1 35,454 62,385

33.1 489,769 550,732

33.1 Reconciliation of tax charge for the year

Profit before tax 2,154,091 2,902,511
KOHINOOR TEXTILE MILLS LIMITED

Tax on profit @ 30% (2017: 31%) 646,227 899,778

Tax effect of lower rate on certain income / expenses (205,881) (428,437)
Tax effect of super tax 54,869 69,609
Others (5,446) 9,782

489,769 550,732


158
 33.2 Management assessment of sufficiency of current income tax provision

A comparison of provision on account of income taxes with most recent tax assessment for last
three years is as follows:

Year ended 30 June
2017 2016 2015
---- (Rupees in thousand) ----

Provision for taxation in financial statements 488,347 439,827 273,831
*Tax assessed as per most recent tax assessment 254,632 234,693 260,150

Various appeals are pending at different appellate forums on various issues. The Company
computes tax based on the generally accepted interpretations of the tax laws and considering
views followed by tax authorities to ensure that the sufficient provision for the purpose of taxation
is available. According to management, the tax provision made in the financial statements is
sufficient.

*This represents income tax payable per return of income filed by the Company. As per section
120 of the Income Tax Ordinance, 2001, the return is taken to be an assessment order issued
to the tax payer by the Commissioner on the day return was filed.

34. EARNINGS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic earnings per share which is based on:

2018 2017
Restated

Profit attributable to ordinary shares Rupees in thousand 1,664,322 2,351,779

Weighted average number of ordinary shares Numbers 295,080,469 285,178,699

Earnings per share Rupees 5.64 8.25

ANNUAL REPORT 2018

159
 2018 2017
Note (Rupees in thousand)
35. CASH GENERATED FROM OPERATIONS

Profit before taxation 2,154,091 2,902,511
Adjustment for non-cash charges and other items:
Depreciation 500,601 442,552
Intangible asset under development written off 11,974 -
Finance cost 362,200 267,593
Gain on sale of property, plant and equipment (4,616) (14,575)
Loss / (gain) on disposal of short term investments 10,413 (309,738)
Unrealized loss on remeasurement of future
contracts - shares 6,996 -
Gain on remeasurement of short term investments (1,353) (1,711)
Gain on remeasurement of fair value of investment properties (3,085) (5,612)
Dividend income from Maple Leaf Cement Factory Limited (1,001,724) (1,311,347)
Dividend income from others (691) (25,705)
Return on bank deposits (12,762) (9,079)
Provision for doubtful trade debts 932 -
Provision for doubtful advances 4,243 -
Provision for slow moving items 1,220 -
Working capital changes 35.1 (1,136,776) (20,439)

891,663 1,914,450

35.1 Working capital changes

(Increase) / decrease in current assets:
Stores, spare parts and loose tools 20,777 (34,322)
Stock-in-trade (565,259) 194,076
Trade debts (400,979) (259,439)
Advances (577,117) 50,939
Security deposits and short term prepayments 25,382 (7,429)
Other receivables 81,383 (170,596)

(1,415,813) (226,771)

Increase in trade and other payables 279,037 206,332

(1,136,776) (20,439)
KOHINOOR TEXTILE MILLS LIMITED

160
35.2 Reconciliation of movement of liabilities to cash flows arising from financing activities

Liabilities from financing activities

Issued, Liabilities
subscribed Share Long term against Short term Unclaimed
and paid- premium financing assets borrowings dividend Total
up capital subject
to finance
lease

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


Balance as at 01 July 2017 2,823,551 144,919 1,553,740 20,717 3,187,866 15,106 7,745,899
Proceeds from long term financing - - 441,988 - - - 441,988
Repayment of long term financing - - (272,328) - - - (272,328)
Proceeds from issuance of right shares 169,413 841,158 - - - - 1,010,571
Repayment of liabilities against assets
subject to finance lease - - - -20,717 - - (20,717)
Short term borrowings - net - - - - 1,447,518 - 1,447,518
Dividend declared - - - - - 797,654 797,654
Dividend paid - - - - - (792,003) (792,003)

Balance as at 30 June 2018 2,992,964 986,077 1,723,400 - 4,635,384 20,757 10,358,582

36. 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

2018 2017 2018 2017 2018 2017

-----------------( Rupees in Thousand )----------------

Managerial remuneration 18,920 10,780 9,460 11,730 69,161 56,797

Allowances

House rent 1,320 - 660 532 12,598 11,154
Medical - - - 526 6,774 5,555
Utilities 2,960 660 1,415 323 17,489 14,576
Special allowance 5,660 3,220 2,890 3,562 19,385 15,879
Contribution to provident fund 1,576 898 788 539 5,765 4,732

30,436 15,558 15,213 17,212 131,172 108,693

Number of persons 1 1 2 3 32 28

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 policy.

The aggregate amount charged in these financial statements in respect of directors’ meeting fee paid
ANNUAL REPORT 2018

to 1 (2017: 1) non-executive director was Rupees 116,666 (2017: Rupees 86,000).

No remuneration was paid to non-executive directors of the Company.

161
 37. TRANSACTIONS WITH RELATED PARTIES

37.1 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:

2018 2017
(Rupees in thousand)

Subsidiary companies

Maple Leaf Cement Factory Limited

Purchase of goods and services 50,361 42,618
Purchase of property, plant and equipment 1,785 -
Dividend income 1,001,724 1,311,347
Investment made 2,367,710 -
Loan and advances paid 290,000 -
Interst income on loan and advances 4,592 (2,847)

Maple Leaf Capital Limited

Purchase of property, plant and equipment 665 -
Sale of property, plant and equipment 1,359 -
Investment made - 1,500,000
Loan obtained 1,250,000 -
Loan repaid 818,470 -
Mark-up on loan 37,604 -

Post employment benefit plan
Contribution to provident fund 50,494 45,604

37.2 The related party status of outstanding balances as at 30 June 2018 are included in short term
borrowings (note 10), Long term investments (note 16) and other receivables (note 23). The
receivables and payables are primarily unsecured in nature.

37.3 Following are the related parties with whom the Company had entered into transactions or have
arrangements / agreements in place.

Aggregate % of
Company name Basis of relationship
shareholding

Maple Leaf Capital Limited Subsidiary 82.92%
Maple Leaf Cement Factory Limited Subsidiary 55.22%
Maple Leaf Power Limited Sub - subsidiary 55.22%
KOHINOOR TEXTILE MILLS LIMITED

162
 2018 2017
38. PLANT CAPACITY AND ACTUAL PRODUCTION

SPINNING:
(Numbers)
- Rawalpindi Division
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 (2017: 1,095 shifts) 45,811 42,446
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 41,331 39,574

(Numbers)

Rotors (average) installed / worked 1,848 1848

(Kilograms in thousand)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 3,548 3,108
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 3,075 2,680


(Numbers)

- Gujar Khan Division
Spindles (average) installed / worked 71,808 71,808

(Kilograms in thousand)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts ) 40,821 38,978
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 36,603 34,816

WEAVING:
(Numbers)
- Raiwind Division
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 (2017: 1,095 shifts) 104,909 104,909

Actual production converted to 60 picks based on
ANNUAL REPORT 2018

3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 95,710 93,764

163
 2018 2017
PROCESSING OF CLOTH :

- Rawalpindi Division (Meters in thousand)

Capacity at 3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 42,090 42,090
Actual production at 3 shifts per day for 1,095 shifts
(2017: 1,095 shifts) 14,613 17,986

POWER PLANT:

- Rawalpindi Division (Mega watts)

Annual rated capacity based on 365 days (2017: 365 days) 163,987 163,987
Actual generation
Main engines 30,595 48,527
Gas engines 27,763 20,307

- Raiwind Division

Annual rated capacity based on 365 days (2017: 365 days) 96,360 96,096
Actual generation 38,098 40,341


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 and
interruption in gas and electricity supply.

- Cloth processing units working capacity was limited to actual export / local orders in hand.

- The generation of power was limited to actual demand.

KOHINOOR TEXTILE MILLS LIMITED

164
 39. SEGMENT INFORMATION Processing and Elimination of inter-
Spinning Weaving home textile segment transaction Company
39.1 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

----------------------------------------------- ( R u p e e s in t h o u s a n d ) -------------------------------------------------
REVENUE:
EXTERNAL 9,018,757 7,252,725 3,461,876 3,610,176 5,352,907 6,541,807 - - 17,833,540 17,404,708
INTER-SEGMENT 500,504 734,408 1,242,489 1,198,788 - - (1,742,993) (1,933,196) - -
9,519,261 7,987,133 4,704,365 4,808,964 5,352,907 6,541,807 (1,742,993) (1,933,196) 17,833,540 17,404,708
COST OF SALES (8,153,853) (6,816,046) (4,415,830) (4,499,718) (4,529,098) (5,440,825) 1,742,993 1,933,196 (15,355,788) (14,823,393)
GROSS PROFIT 1,365,408 1,171,087 288,535 309,246 823,809 1,100,982 - - 2,477,752 2,581,315

DISTRIBUTION COST (39,553) (29,615) (74,152) (77,851) (382,061) (430,828) - - (495,766) (538,294)
ADMINISTRATIVE EXPENSES (184,137) (152,289) (150,741) (155,372) (159,654) (153,020) - - (494,532) (460,681)
(223,690) (181,904) (224,893) (233,223) (541,715) (583,848) - - (990,298) (998,975)
PROFIT BEFORE TAX AND UNALLOCATED
INCOME AND EXPENSES 1,141,718 989,183 63,642 76,023 282,094 517,134 - - 1,487,454 1,582,340
UNALLOCATED INCOME AND EXPENSES
OTHER EXPENSES (154,690) (137,681)
OTHER INCOME 1,183,527 1,725,445
FINANCE COST (362,200) (267,593)
TAXATION (489,769) (550,732)
176,868 769,439

PROFIT AFTER TAXATION 1,664,322 2,351,779

39.2 Reconciliation of reportable segment assets and liabilities
Processing and
Spinning
Weaving home textile Company

2018 2017 2018 2017 2018 2017 2018 2017

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

TOTAL ASSETS FOR REPORTABLE SEGMENT 5,910,038 4,665,385 3,404,394 3,313,886 3,112,506 2,912,971 12,426,938 10,892,242

UNALLOCATED ASSETS 12,445,018 9,852,600

TOTAL ASSETS AS PER STATEMENT OF FINANCIAL POSITION 24,871,956 20,744,842

All segment assets are allocated to reportable segments other than those directly relating to corporate and tax assets.

TOTAL LIABILITIES FOR REPORTABLE SEGMENT 1,194,478 932,919 1,387,908 1,283,415 4,177,132 2,590,431 6,759,518 4,806,765

UNALLOCATED LIABILITIES 2,291,812 2,015,281

TOTAL LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION 9,051,330 6,822,046

All segment liabilities are allocated to reportable segments other than trade and other payables and deferred tax liabilities.

ANNUAL REPORT 2018

165
 39.3 Geographical Information

39.3.1 The Company’s revenue from external customers by geographical location is detailed below:

2018 2017
(Rupees in thousand)

Europe 2,664,714 3,431,167

United States of America and Canada 3,423,634 3,983,128
Asia, Africa, Australia 459,719 448,157
Pakistan 11,285,473 9,542,256

17,833,540 17,404,708

39.3.2 All non-current assets as at reporting date are located and operated in Pakistan.

39.4 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 361 million (2017: Rupees 679 million ) whereas in
the Processing and Home Textile segment was Rupees 2,190 million (2017: Rupees 4,524
million).

39.5 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.

40. PROVIDENT FUND

As at the reporting date, the provident fund trusts are in the process of regularizing investments in
accordance with section 218 of the Companies Act, 2017 and the rules formulated for this purpose
in terms of SRO 731(1)/2018 issued by Securities and Exchange Commission of Pakistan on 06
June 2018 which allows transition period of one year for bringing the trusts in conformity with the
requirements of rules.

2018 2017
41. NUMBER OF EMPLOYEES

Number of employees as on 30 June 4,824 4,572

This includes 3,870 (2017: 3,675) number of factory employees

Average number of employees during the year 4,781 4,987

42 FINANCIAL RISK MANAGEMENT

42.1 Financial risk factors
KOHINOOR TEXTILE MILLS LIMITED

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.

166
 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.

(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). 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:

2018 2017

Cash at banks - USD 57,087 30,131
Trade debts - USD 4,525,798 6,812,670
Trade and other payables - USD 12,000 7,000
Net exposure - USD 4,570,885 6,835,801

The following significant exchange rates were
applied during the year:

Rupees per US Dollar
Average rate 109.40 104.46
Reporting date rate 121.40 104.80

Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD
with all other variables held constant, the impact on profit after taxation for the year would have
been Rupees 26.083 million (2017: Rupees 19.025 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 Company is not exposed to commodity price risk.
ANNUAL REPORT 2018

167
 Sensitivity analysis

The table below summarizes the impact of increase / decrease in the Pakistan Stock Exchange
(PSX) Index on the Company’s profit after taxation for the year and on equity (fair value reserve).
The analysis is based on the assumption that the equity index had increased / decreased by 5%
with all other variables held constant and all the Company’s equity instruments moved according
to the historical correlation with the index:

Index Impact on profit Impact on statement of other

after taxation comprehensive income
2018 2017 2018 2017
----------- (Rupees in thousand) -------------

PSX 100 (5% increase) 402 325 - -

PSX 100 (5% decrease) (402) (325) - -

(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 has no significant long-term interest-bearing assets. The Company’s interest rate
risk arises from long term financing and short term borrowings. 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 statement of financial position date the interest rate profile of the Company’s interest
bearing financial instruments was:
2018 2017
(Rupees in thousand)

Fixed rate instruments

Financial liabilities
Long term financing 1,648,400 1,428,740
Short term borrowings 2,575,000 2,562,936

Floating rate instruments

Financial assets
Bank balances - saving accounts 74,862 32,502

Financial liabilities
Long term financing 75,000 125,000
Liabilities against assets subject to finance lease - 20,717
Short term borrowings 2,060,384 619,317

Fair value sensitivity analysis for fixed rate instruments

KOHINOOR TEXTILE MILLS LIMITED

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 the statement of financial position
date would not affect profit or loss of the Company.

168
 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 15.304 million (2017:
Rupees 4.524 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 statement of financial position 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:
2018 2017
(Rupees in thousand)

Investments 8,042 6,498

Deposits 49,695 63,851
Trade debts 1,699,015 1,298,968
Advances 1,883 7,578
Other receivables 266,655 9,479
Bank balances 160,007 148,806
2,185,297 1,535,180

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 2018 2017

Short term Long term Agency (Rupees in thousand)

Banks
Al-Baraka Bank (Pakistan) Limited A1 A PACRA 13,547 14,044
Allied Bank Limited A1+ AA+ PACRA 370 2,440
Askari Bank Limited A1+ AA+ PACRA 6,711 1,496
Bank Alfalah Limited A-1+ AA+ PACRA 3,228 670
Bank Al-Habib Limited A1+ AA+ PACRA 11,990 33,695
Bank Islami Pakistan Limited A1 A+ PACRA 29 29
Faysal Bank Limited A1+ AA PACRA 888 4,253
First Women Bank Limited A2 A- PACRA - 18
Habib Bank Limited A-1+ AAA JCR-VIS 5,066 5,185
MCB Bank Limited A1+ AAA PACRA 40,590 7,994
Meezan Bank Limited A-1+ AA+ JCR-VIS 9,789 29,712
National Bank of Pakistan A1+ AAA PACRA 10,255 1,191
MCB Islamic Bank Limited A1+ AA- PACRA 8,263 20,852
Silkbank Limited A-2 A- JCR-VIS 51 53
Standard Chartered Bank (Pakistan) Limited A1+ AAA PACRA 10 10
The Bank of Punjab A1+ AA PACRA 8,747 2,966
United Bank Limited A-1+ AAA JCR-VIS 40,473 24,198

160,007 148,806

The Company’s exposure to credit risk and impairment losses related to trade debts is disclosed in
Note 20.2
ANNUAL REPORT 2018

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.

169
 (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 2018, the Company had Rupees 3,861
million (2017: Rupees 3,707 million) available borrowing limits from financial institutions and Rupees
161.905 million (2017: Rupees 154.935 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 2018.

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 1,723,400 1,850,043 216,172 214,318 412,230 1,007,323
Trade and other payables 1,433,253 1,433,253 1,433,253 - - -
Accrued mark-up 63,351 63,351 63,351 - - -
Short term borrowings 4,635,384 4,282,507 4,282,507 - - -
Unclaimed dividend 20,757 20,757 20,757 - - -

7,876,145 7,649,911 6,016,040 214,318 412,230 1,007,323

Contractual maturities of financial liabilities as at 30 June 2017

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 1,553,740 1,754,713 142,319 193,371 394,995 1,024,028
Liabilities against assets subject
to finance lease 20,717 20,966 20,966 - - -
Trade and other payables 1,195,875 1,195,875 1,195,875 - - -
Accrued mark-up 44,228 44,228 44,228 - - -
Short term borrowings 3,187,866 3,231,994 3,231,994 - - -
Unclaimed dividend 15,106 15,106 15,106 - - -

6,017,532 6,262,882 4,650,488 193,371 394,995 1,024,028

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 5 and note 10 to these financial statements.
KOHINOOR TEXTILE MILLS LIMITED

170
 42.2 Financial instruments by categories
At fair value
Loans and Through profit Total
receivables or loss

-------------(Rupees in thousand)-------------
As at 30 June 2018
Assets as per statement of financial position
Investments - 8,042 8,042
Deposits 49,695 - 49,695
Trade debts 1,699,015 - 1,699,015
Advances 1,883 - 1,883
Other receivables 266,655 - 266,655
Cash and bank balances 161,905 - 161,905

2,179,153 8,042 2,187,195

Financial liabilities at
amortized cost
(Rupees in thousand)
Liabilities as per statement of financial position
Long term financing 1,723,400
Liabilities against assets subject to finance lease -
Trade and other payables 1,433,253
Accrued mark-up 63,351
Short term borrowings 4,635,384
Unclaimed dividend 20,757
7,876,145

At fair value
Loans and Through profit Total
receivables or loss

-------------(Rupees in thousand)-------------
As at 30 June 2017

Assets as per statement of financial position
Investments - 6,498 6,498
Deposits 63,851 - 63,851
Trade debts 1,298,968 - 1,298,968
Advances 7,578 - 7,578
Other receivables 9,479 - 9,479
Cash and bank balances 154,935 - 154,935

1,534,811 6,498 1,541,309
ANNUAL REPORT 2018

171
 Financial liabilities at
amortized cost
(Rupees in thousand)
Liabilities as per statement of financial position

Long term financing 1,553,740
Liabilities against assets subject to finance lease 20,717
Trade and other payables 1,195,875
Accrued mark-up 44,228
Short term borrowings 3,187,866
Unclaimed dividend 15,106

6,017,532

42.3 Offsetting financial assets and liabilities

As on reporting date, recognized financial instruments are not subject to offsetting as there are
no enforcable master netting arrangements and similar agreements.

42.4 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
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 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, liabilities against assets subject
to finance lease and short term borrowings obtained by the Company as referred to in note 5,
note 6 and note 10 respectively. Total capital employed includes ‘total equity’ as shown in the
statement of financial position plus ‘borrowings’. The gearing ratio as at year ended 30 June
2018 and 30 June 2017 is as follows:

2018 2017
(Rupees in thousand)

Borrowings 6,358,784 4,762,323

Total equity 15,820,626 13,922,796

Total capital employed 22,179,410 18,685,119

Gearing ratio 29% 25%




KOHINOOR TEXTILE MILLS LIMITED

172
43. RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS

(i) Fair value hierarchy

Judgments 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 has classified its financial
instruments into the following three levels. An explanation of each level follows underneath the table.

30 June 2018
Recurring fair value measurements Level 1 Level 2 Level 3 Total

--------- ( Rupees in thousand ) --------
Financial assets

Financial assets at fair value through profit or loss 8,042 - - 8,042

Total financial assets 8,042 - - 8,042

30 June 2017
Level 1 Level 2 Level 3 Total

--------- ( Rupees in thousand ) --------
Financial assets

Financial assets at fair value through profit or loss 6,498 - - 6,498

Total financial assets 6,498 - - 6,498

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 value.

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 Company has no investments
which are classified under level 3 of fair value hierarchy table.

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.

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 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 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.
ANNUAL REPORT 2018

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.

173
 (ii) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include the use of quoted market
prices.

44. RECOGNIZED FAIR VALUE MEASUREMENTS - NON-FINANCIAL ASSETS

(i) Fair value hierarchy

The judgements 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 Company has classified its non-financial
assets into the following three levels.

At 30 June 2018 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

At 30 June 2017 Level 1 Level 2 Level 3 Total

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

Investment properties - 1,789,670 - 1,789,670
Freehold land - 2,718,966 - 2,718,966

Total non-financial assets - 4,508,636 - 4,508,636

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 at least annually and for its
freehold land (classified as property, plant and equipment) at least every three years. The management
updates the assessment of the fair value of each property, taking into account the most recent
independent valuations. The management determine 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.
KOHINOOR TEXTILE MILLS LIMITED

174
 Valuation processes

The Company engages external, independent and qualified valuers to determine the fair value of the
Company’s investment properties at the end of every financial year and for freehold land at least every
three years. As at 30 June 2018, the fair values of the investment properties and freehold land have
been determined by Anderson Consulting (Private) Limited.

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.

45. DISCLOSURES BY COMPANY LISTED ON ISLAMIC INDEX

2018 2017
Description Note (Rupees in thousand)

Loans / advances obtained as per Islamic mode:

Advances 8 125,443 81,504
Shariah compliant bank deposits / bank balances
Bank balances 25 21,839 34,925

Profit earned from shariah compliant bank deposits /
bank balances - -

Revenue earned from shariah compliant business 26 17,833,540 17,404,708

Gain / (loss) or dividend earned from shariah
compliant investments
Dividend income 31 1,002,415 1,337,052
Realized (loss) / gain on disposal of short term investments 30 (10,413) 258,589
Unrealized gain on investments at fair value 31 1,353 1,711

Exchange gain earned 31 112,755 13,450

Mark-up paid on islamic mode of financing - -

Profits earned or interest paid on any conventional
loan / advance - -

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

ANNUAL REPORT 2018

175
 46. DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue on 18 September 2018 by the Board of Directors
of the Company.

47. NON-ADJUSTING EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE

The Board of Directors of the Company in their meeting held on 18 September 2018 has proposed a
final cash dividend of Rupee 1 per share (10%) amounting to Rupees 299,296 million (2017: Rupees
423.533 million) for the year ended 30 June 2018 for approval of the members at the Annual General
Meeting to be held on 27 October 2018. The financial statements for the year ended 30 June 2018
do not include the effect of the proposed final cash dividend which will be accounted for in the period
ending 30 June 2019.

48. CORRESPONDING FIGURES

Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. To
comply with the requirements of the Companies Act, 2017, unclaimed dividend has been reclassified
from trade and other payables and presented on the face of the statement of financial position.
Restatement due to change in accounting policy relating to surplus on revaluation of freehold land and
investment properties described in the note 2.24. Except for these, no significant rearrangements have
been made.

49. GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.
KOHINOOR TEXTILE MILLS LIMITED

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

176
PATTERN OF SHAREHOLDING
1. CUIN (Incorporation Number) 0002805

2. Name of the Company KOHINOOR TEXTILE MILLS LIMITED

3. Pattern of holding of the shares 30.06.2018
held by the shareholders as at

4.
No. of S i z e o f H o l d i n g Total
Shareholders From To Shares Held

2,589 1 100 68,905

933 101 500 258,547
367 501 1000 255,533
476 1001 5000 1,153,682
102 5001 10000 695,118
44 10001 15000 540,197
20 15001 20000 350,976
12 20001 25000 275,796
8 25001 30000 212,996
8 30001 35000 261,361
7 35001 40000 260,075
6 40001 45000 251,282
2 45001 50000 97,789
5 50001 55000 259,688
5 55001 60000 290,141
3 60001 65000 186,749
5 65001 70000 337,620
5 70001 75000 361,213
3 80001 85000 250,465
3 85001 90000 262,200
2 90001 95000 181,801
5 95001 100000 396,000
1 100001 105000 101,760
2 105001 110000 211,470
1 110001 115000 111,380
1 120001 125000 124,000
1 125001 130000 129,850
1 145001 150000 146,670
1 150001 155000 153,700
1 155001 160000 155,851
2 160001 165000 323,744
1 165001 170000 167,279
1 185001 190000 189,231
1 190001 195000 190,800
1 195001 200000 200,000
2 210001 215000 428,723
1 230001 235000 235,000
1 240001 245000 240,974
2 245001 250000 499,065
1 250001 255000 253,400
1 270001 275000 275,000
1 295001 300000 300,000
ANNUAL REPORT 2018

1 315001 320000 316,743

177


No. of S i z e o f H o l d i n g Total
Shareholders From To Shares Held

1 335001 340000 337,673

1 385001 390000 385,016
1 395001 400000 400,000
1 450001 455000 450,300
1 460001 465000 464,846
1 510001 515000 512,135
1 565001 570000 565,890
1 595001 600000 599,163
1 650001 655000 652,280
1 660001 665000 661,665
1 665001 670000 667,189
1 670001 675000 672,000
2 745001 750000 1,493,785
1 765001 770000 766,749
1 825001 830000 828,500
1 860001 865000 864,760
1 880001 885000 881,311
1 935001 940000 939,238
1 955001 960000 958,978
1 995001 1000000 1,000,000
1 1120001 1125000 1,123,100
1 1130001 1135000 1,130,824
1 1360001 1365000 1,361,665
1 1425001 1430000 1,429,710
1 1605001 1610000 1,608,221
1 1615001 1620000 1,617,223
1 1685001 1690000 1,686,500
1 1710001 1715000 1,710,030
2 1895001 1900000 3,796,133
1 2065001 2070000 2,066,470
1 2395001 2400000 2,397,525
1 2585001 2590000 2,586,718
1 2745001 2750000 2,745,400
1 2930001 2935000 2,931,342
1 3165001 3170000 3,169,989
1 4700001 4775000 4,773,355
1 5530001 5535000 5,534,172
1 10685001 10690000 10,686,990
1 11395001 11400000 11,395,425
1 12645001 12650000 12,648,322
1 30375001 30380000 30,377,143
1 43425001 43430000 43,425,059
1 49635001 49640000 49,639,992
1 73390001 73395000 73,390,896

4,681 299,296,456
KOHINOOR TEXTILE MILLS LIMITED

Note : The Slabs not applicable above have not been shown.

178
5. Categories of Shares Percentage
Shareholders Held of Capital

5.1 Directors, Chief Executive Officer and their spouses & 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
MR. SHAFIQ AHMED KHAN 3,046 0.001
MR. ARIF IJAZ 3,027 0.001
MRS. SHEHLA TARIQ SAIGOL, SPOUSE OF
MR. TARIQ SAYEED SAIGOL 30,377,143 10.150
86,878,130 29.028
5.2 Associated Companies, undertakings and related parties - -
5.3 NIT and ICP
National Bank Of Pakistan, Trustee Deptt. 10,670 0.004
Industrial Development Bank of Pakistan (IDBP) 13,914 0.005
24,584 0.009
5.4 Banks, Development Financial Institutions,
Non-Banking Financial Institutions 8,334,639 2.785
5.5 Insurance Companies 1,133,399 0.379
5.6 Modarabas and Leasing 20,372 0.007
5.6 a Mutual Funds
AGP (PVT) LTD STAFF PROVIDENT FUND 26,500
CDC - TRUSTEE ABL STOCK FUND 300,000
CDC - TRUSTEE AKD INDEX TRACKER FUND 49,695
CDC - TRUSTEE AL AMEEN ISLAMIC DEDICATED EQUITY FUND 1,898,900
CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 1,123,100
CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND 464
CDC - TRUSTEE ALFALAH GHP VALUE FUND 42
CDC - TRUSTEE ALHAMRA ISLAMIC STOCK FUND 747,300
CDC - TRUSTEE APF-EQUITY SUB FUND 40,500
CDC - TRUSTEE APIF - EQUITY SUB FUND 63,000
CDC - TRUSTEE ATLAS ISLAMIC STOCK FUND 400,000
CDC - TRUSTEE ATLAS STOCK MARKET FUND 450,300
CDC - TRUSTEE MCB PAKISTAN ASSET ALLOCATION FUND 652,280
CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 2,586,718
CDC - TRUSTEE MEEZAN ISLAMIC FUND 259
CDC - TRUSTEE NAFA ISLAMIC ACTIVE ALLOCATION
EQUITY FUND 512,135
CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND 2,397,525
CDC - TRUSTEE NAFA ISLAMIC STOCK FUND 1,608,221
CDC - TRUSTEE NAFA MULTI ASSET FUND 240,974
CDC - TRUSTEE NAFA STOCK FUND 3,169,989
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 1,361,665
CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 153,700
CDC-TRUSTEE AL-AMEEN ISLAMIC RET. SAV.
FUND-EQUITY SUB FUND 275,000
CDC-TRUSTEE ALHAMRA ISLAMIC ASSET ALLOCATION FUND 214,650
CDC-TRUSTEE NAFA ASSET ALLOCATION FUND 464,846
MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 100,000
MCBFSL TRUSTEE ABL ISLAMIC DEDICATED STOCK FUND 100,000
ANNUAL REPORT 2018

MCBFSL TRUSTEE MCB PAKISTAN FREQUENT PAYOUT FUND 2,400

18,940,163 6.327

179
 Categories of Shares Percentage
Shareholders Held of Capital

5.7
Share holders holding Five Percent or more voting
interest in the Company
refer 5.8 b

5.8 General Public

A) Individuals 33,112,550 11.063
B) Foreign Investor(S) 147,090,473 49.145

5.9 Joint Stock Companies 1,256,853 0.420

5.10 Public Sector Companies and Corporations 154 0.000

5.11 Executive(s) 8 0.000

5.12 Others

AKHUWAT 2,396
ARTAL RESTAURANT INT LTD EMP P.F 2,073
BPS GROUP COMPANIES EMPLOYEES PROVIDENT FUND 10,000
CDC - TRUSTEE NAFA ISLAMIC PENSION FUND
EQUITY ACCOUNT 214,073
CDC - TRUSTEE NAFA PENSION FUND EQUITY
SUB-FUND ACCOUNT 167,279
CDC - TRUSTEE PAKISTAN PENSION FUND
- EQUITY SUB FUND 190,800
CDC-TRUSTEE ALHAMRA ISLAMIC PENSION FUND
- EQUITY SUB FUND 105,470
FEDERAL BOARD OF REVENUE 161,269
FIKREE DEVELOPMENT CORP. (PVT.) LIMITED 50
HAJIANI HANIFA BAI MEMORIAL SOCIETY 766,749
HUSSAIN TRUSTEES LIMITED. 297
PAKISTAN CENTRE FOR PHILANTHROPY 1,970
PAKISTAN STOCK EXCHANGE LIMITED-FUTURE CONTRACTS 70,178
THE DEPUTY ADMINISTRATOR. ABONDONED PROPERTIES 193
THE IDA RIEU POOR WELFARE ASSOCIATION 405
THE OKHAI MEMON MADRESSAH ASSOCIATION 1
TRUSTEE NATIONAL BANK OF PAKISTAN EMP
BENEVOLENT FUND TRUST 11,848
TRUSTEE NATIONAL BANK OF PAKISTAN EMPLOYEES
PENSION FUND 337,673
TRUSTEE-MILLAT TRACTORS LTD. EMPLOYEES PENSION FUND 15,486
TRUSTEES BRISTOL-MYERS SQUIBB PAK (PVT)
LTD EMP PROV FUND 3,000
TRUSTEES DESCON OXYCHEM LTD. EMPLOYEES
PROVIDENT FUND 560
TRUSTEES DESCON POWER SOLUTIONS PVT LTD
STAFF PROV FUND TRUST 2,000
TRUSTEES INSPECTEST (PVT.) LIMITED EMPLOYEES
PROVIDENT FUND 560
KOHINOOR TEXTILE MILLS LIMITED

TRUSTEES MAPLE LEAF CEMENT FACTORY LTD

EMPLOYEES PROV FUND 2,770
TRUSTEES MOOSA LAWAI FOUNDATION 4,285
TRUSTEES OF SULAIMANIYAH TRUST 90,401
TRUSTEES OF FFC EMPLOYEES PROVIDENT FUND 26,500

180
 Categories of Shares Percentage
Shareholders Held of Capital

TRUSTEES OF GREEN STAR SOCIAL MKT. PAK.(G) LTD.

[Link]. FUND 11,000
TRUSTEES OF GREEN STAR SOCIAL MKT. PAK.(G) LTD.
[Link] 9,500
TRUSTEES OF PAKISTAN HUMAN DEVELOPMENT FUND 124,000
TRUSTEES OF SERVICE SALES CORPORATION EMP.
GRAT. FUND TRUST 11,500
TRUSTEES OF SERVICE SALES CORPORATION
PROVIDENT FUND TRUST 23,000
TRUSTEES THALL LIMITED- EMPLOYEES PROVIDENT FUND 23,320
TRUSTEES THALL LIMITED- EMPLOYEES RETIREMENT
BENEFIT FUND 3,176
TRUSTEES WELLCOME PAKISTAN LIMITED PROVIDENT FUND 58,500
TRUSTEES OF TELENOR PAKISTAN PVT LTD EMPLOYEES
PROVIDENT FUND 25,500
TRUSTEE-THE KOT ADDU POWER CO. LTD. EMPLOYEES
PENSION FUND 21,305
TRUSTEE-THE KOT ADDU POWER CO. LTD. EMPLOYEES
PROVIDENT FUND 5,200
UNITED EXECUTERS & TRUSTEE COMPANY LIMITED 164
UNIVERSTY OF SINDH 680

2,505,131 0.837

Grand Total : 299,296,456 100.000

ANNUAL REPORT 2018

181
 KOHINOOR TEXTILE MILLS LIMITED

182
 Consolidated
Financial Statements
for the Year Ended June 30, 2018
ANNUAL REPORT 2018

183
 DIRECTORS’ 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 (55.22%), Maple leaf Power Limited (55.22%) and Maple Leaf Capital Limited (82.92%) (together
referred to as Group) for the year ended 30 June 2018.

GROUP RESULTS
The Group has earned gross profit of Rupees 11,300 million as compared to Rupees 12,255 million of
corresponding year. The group made pre‐tax profit of Rupees 7,101 million this year as compared to
Rupees 10,270 million during the last year.

The overall group financial results are as follows:

2018 2017
(Rupees in million)

Gross sales 43,467 41,248

Gross profit 11,300 12,255
Profit from operations 8,269 10,712
Financial charges 1,167 442
Net profit after taxation 5,717 7,252

---------- (Rupees) ----------

Restated

Earnings per share - Basic and diluted 11.95 16.38

SUBSIDIARY COMPANIES
Maple Leaf Cement Factory Limited (MLCFL)
It has recorded an increase of 7.11% in its sales over previous year and has shown gross profit of 29.25% (30
June 2017: 39.52%) amounting Rupees 7,516 million (30 June 2017: 9,482 million).

It has earned after tax profit of Rupees 3,632 million (30 June 2017: Rupees 4,777 million).

MLCFL is in the process of installation of an additional cement line having cement manufacturing capacity of
7,300 tons per day at its existing manufacturing premises. This will significantly affect the business volume
and profitability of the company.

Maple Leaf Power Limited (MLPL)

MLPL has earned after tax profit of Rupees 758 million against Rupees 7 million loss after tax in 2017.

Maple Leaf Capital Limited (MLCL)

MLCL has earned after tax profit of Rupees 258 million (2017: Rupees 1,201 million).

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.
KOHINOOR TEXTILE MILLS LIMITED

For and on behalf of the Board

Lahore Taufique Sayeed Saigol Syed Mohsin Raza Naqvi

18 September 2018 Chief Executive Officer Director

184
INDEPENDENT AUDITORS’ 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
2018, 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 2018, 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. ANNUAL REPORT 2018

185
 Following are the key audit matters:

Sr. Key audit matters How the matter was 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 2018 represented a material
position in the consolidated statement of inventory included, but were not limited to:
financial position.
• To test the quantity of inventories at all locations,
The textile business is characterized by high we assessed the corresponding inventory
volume serial production and the valuation observation instructions and participated in
and existence of inventories are significant
to the Group. Therefore, considered as one inventory counts on sites. Based on samples,
of the key audit matters. we performed test counts and compared the
quantities counted by us with the results of the
Inventories are stated at lower of cost and counts of the management.
net realizable value. Cost is determined as • For a sample of inventory items, re-performed
per accounting policy disclosed in note 2.12
to the consolidated financial statements. the weighted average cost calculation and
compared the weighted average cost appearing
At year end, the valuation of inventory is on valuation sheets.
reviewed by management and the cost • Tested that the ageing report used by
of inventory is reduced where inventory is management correctly aged inventory items by
forecast to be sold below cost.
agreeing a sample of aged inventory items to the
Useable stores, spares parts and loose last recorded invoice.
tools are valued at moving average cost, • On a sample basis, we tested the net realizable
raw materials are valued at annual average value of inventory items to recent selling prices
cost whereas, costing of work-in-process and re-performed the calculation of the inventory
and finished goods is considered to carry
more significant risk as the cost of material, write down, if any.
labor and manufacturing overheads is • Assessed the percentage write down applied
allocated on the basis of complex formulae to older inventory with reference to historic
and involves management judgment. inventory write downs and recoveries on slow
moving inventory.
The determination of whether inventory will
be realized for a value less than cost requires • In the context of our testing of the calculation, we
management to exercise judgement analyzed individual cost components and traced
and apply assumptions. Management them back to the corresponding underlying
undertakes the following procedures for documents. We furthermore challenged changes
determining the level of write down required: in unit costs.
• Use inventory ageing reports • Made enquiries of management, including those
together with historical trends to outside of the finance function, and considered
estimate the likely future saleability the results of our testing above to determine
of slow moving and older inventory whether any specific write downs were required.
items.
• Perform a line-by-line analysis of
remaining inventory to ensure it is
stated at the lower of cost and net
realizable value and a specific write
down is recognized, if required.

For further information on inventory, refer to

the following:

- Summary of significant accounting

policies, Inventories note 2.12 to the
consolidated financial statements.
KOHINOOR TEXTILE MILLS LIMITED

186
 - Stores, spare parts and loose tools
note 22 and Stock-in-trade note
23 to the consolidated financial
statements.
2 Capital expenditures

The Group is investing significant amounts Our procedures included, but were not limited to:
in its operations and there are a number
of areas where man¬agement judgement • We tested operating effectiveness of controls
impacts the carrying value of property, in place over the property, plant and equipment
plant and equipment and its respective cycle including the controls over whether costs
depreciation profile. These include among incurred on activities is capital or operating in
other the decision to capitalize or expense nature.
costs; and review of useful life of the assets • We evaluated the appropriateness of
including the impact of changes in the capitalization policies and depreciation rates.
Group’s strategy. • We performed tests of details on costs
We focused on this area since the amounts capitalized.
have a significant impact on the financial • We verified the accuracy of management’s
position of the Group and there is significant calculation used for the impairment testing.
management judgment required that has
significant impact on the reporting of the
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 2.6 to the
consolidated financial statements.
- Property, plant and equipment note
17 to the consolidated financial
statements.

3 Revenue recognition Our procedures to assess recognition of revenue,

amongst others, included the following:
The Group generates revenue from sale
of cement to domestic as well as export • We obtained an understanding of the process
customers. relating to recording of revenue and testing
the design, implementation and operating
We identified recognition of revenue as effectiveness of key internal controls over
a key audit matter as it is one of the key recording of revenue.
performance indicators of the Group and • We assessed the appropriateness of the Group’s
gives rise to an inherent risk of misstatement accounting policies for revenue recognition and
to meet expectations or targets. compliance of those policies with applicable
accounting standards.
For further information, refer to the following: • We compared a sample of revenue transactions
recorded during the year with sales orders, sales
- Summary of significant accounting invoices, delivery challans and other relevant
policies, Revenue recognition note
2.19 to the consolidated financial underlying documents.
statements.
- Revenue note 30 to the consolidated
financial statements.
ANNUAL REPORT 2018

187
 • We compared, on a sample basis, specific
revenue transactions recorded just before and
just after the financial year end date to determine
whether the revenue had been recognized in the
appropriate financial period.
• We scanned for any manual journal entries
relating to revenue recognized during the year
which were considered to be material or met
other specific risk based criteria for inspecting
underlying documentation.
4 Borrowings and finance costs
Our audit procedures included the following:
The cement and power segments of the
Group have obtained range of financing • We assessed the design and operating
facilities from different financial institutions effectiveness of the Group’s internal controls
with varying terms and tenors. over recording the terms and conditions of
borrowings from financial institutions, including
This was considered to be a key audit their classification as either current or non-
matter as these affects Group’s gearing, current and associated costs.
liquidity and solvency. • We obtained confirmations of borrowings as
at 30 June 2018 directly from the financial
Further, compliance with debt covenants institutions.
is a key requirement of these financing • We tested the calculation of markup recognized
arrangements. as an expense and markup capitalized during the
year to assess whether these were accounted
For further information, refer to the following: for in accordance with approved accounting
standards as applicable in Pakistan.
- Summary of significant accounting • We assessed whether loans maturing within
policies, Borrowings note 2.14 and twelve months were classified as current
Borrowing cost note 2.15 to the
consolidated financial statements. liabilities.
- Long term financing note 6 finance • We assessed the adequacy of the Group’s
cost note 36 to the consolidated compliance with the loan covenants and
financial statements. the disclosure in the consolidated financial
statements.
5 Preparation of consolidated financial
statements under the Companies Act, 2017

The Companies Act, 2017 (the Act) Our procedures included, but were not limited to:
became applicable for the first time for the
preparation of the Group’s annual financial • We assessed the procedures applied by the
statements for the year ended 30 June management for identification of the changes
2018. required in the consolidated financial statements
due to the application of the Act.
The Act forms an integral part of the • We considered the adequacy and
statutory financial reporting framework appropriateness of the additional disclosures
as applicable to the Group and amongst and changes to the previous disclosures based
others, prescribes the nature and content of on the new requirements.
disclosures in relation to various elements of • We verified on test basis the supporting
the consolidated financial statements. evidences for the additional disclosures and
ensured appropriateness of the disclosures
In case of the Group, specific additional made.
KOHINOOR TEXTILE MILLS LIMITED

disclosures and changes to the existing

disclosures have been included in the
consolidated financial statements.

188
 The above changes and enhancements in
the consolidated financial statements are
considered important and a key audit matter
because of the volume and significance of
the changes in the consolidated financial
statements resulting from the transition to
the new reporting requirements under the
Act.

For further information, refer to note 2.1(b)

to the consolidated financial statements.

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 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 the 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
ANNUAL REPORT 2018

189
 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
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.
KOHINOOR TEXTILE MILLS LIMITED

190
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 Mubashar Mehmood.

RIAZ AHMAD & COMPANY

Chartered Accountants

DATE: 18 September 2018

Islamabad

ANNUAL REPORT 2018

191
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at June 30, 2018
2018 2017 2016
Restated Restated
Note (Rupees in thousand)
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital
370,000,000 (2017: 370,000,000)
ordinary shares of Rupees 10 each 3,700,000 3,700,000 3,700,000
30,000,000 (2017: 30,000,000) preference
shares of Rupees 10 each 300,000 300,000 300,000
4,000,000 4,000,000 4,000,000

Issued, subscribed and paid-up share capital 3 2,992,964 2,823,551 2,823,551
Reserves 4
Capital reserves
Share premium 986,077 144,919 144,919
Surplus on revaluation of freehold land and
investment properties 4,036,717 4,016,126 4,005,463
5,022,794 4,161,045 4,150,382
Revenue reserves
General reserve 1,450,491 1,450,491 1,450,491
Unappropriated profit 17,480,368 14,743,113 11,301,678
18,930,859 16,193,604 12,752,169
Equity attributable to equity holders of the
Holding Company 26,946,617 23,178,200 19,726,102
Non-controlling interest 5 12,869,953 9,600,270 8,267,192
Total equity 39,816,570 32,778,470 27,993,294
LIABILITIES
NON-CURRENT LIABILITIES
Long term financing 6 14,277,179 4,186,110 1,692,325
Liabilities against assets subject to finance lease 7 - 270,615 501,613
Long term deposits 8 8,715 8,699 6,499
Retirement benefits 9 183,764 150,778 119,783
Retention money payable 10 310,735 - -
Deferred income tax liability 11 2,850,450 3,167,039 3,155,036
17,630,843 7,783,241 5,475,256
CURRENT LIABILITIES
Trade and other payables 12 7,079,339 5,509,142 4,447,251
Accrued mark-up 13 339,808 145,693 89,143
Unclaimed Dividend 131,500 116,325 120,622
Short term borrowings 14 9,988,756 6,326,025 4,958,320
Current portion of non-current liabilities 15 1,198,917 702,107 352,410
Taxation - net - 476,711 187,811
18,738,320 13,276,003 10,155,557
TOTAL LIABILITIES 36,369,163 21,059,244 15,630,813
KOHINOOR TEXTILE MILLS LIMITED

CONTINGENCIES AND COMMITMENTS 16

TOTAL EQUITY AND LIABILITIES 76,185,733 53,837,714 43,624,107

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

192
 2018 2017 2016
Note (Rupees in thousand)

ASSETS

NON - CURRENT ASSETS

Property, plant and equipment 17 50,049,675 31,222,866 25,448,930
Investment properties 18 1,792,755 1,789,670 1,784,058
Intangibles 19 16,811 37,180 9,305
Long term loans to employees 20 9,472 5,799 5,628
Long term deposits 21 106,178 113,153 115,909

51,974,891 33,168,668 27,363,830

CURRENT ASSETS

Stores, spare parts and loose tools 22 7,554,693 7,303,150 5,901,992
Stock-in-trade 23 3,768,345 3,310,815 3,076,475
Trade debts 24 2,977,474 2,239,776 1,606,862
Loans and advances 25 3,253,082 963,596 1,005,586
Security deposits and short term prepayments 26 133,919 123,134 99,248
Accrued interest 2,454 2,628 1,857
Other receivables 27 970,407 1,693,947 1,099,546
Taxation - net 564,605 - -
Short term investments 28 3,881,120 3,214,826 2,622,627
Cash and bank balances 29 1,104,743 1,817,174 846,084

24,210,842 20,669,046 16,260,277

TOTAL ASSETS 76,185,733 53,837,714 43,624,107
ANNUAL REPORT 2018

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

193
 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended June 30, 2018
2018 2017
Note (Rupees in thousand)

REVENUE 30 43,467,343 41,247,500
COST OF SALES 31 (32,167,468) (28,992,301)

GROSS PROFIT 11,299,875 12,255,199

DISTRIBUTION COST 32 (1,725,281) (1,813,476)
ADMINISTRATIVE EXPENSES 33 (1,335,943) (1,305,956)
OTHER EXPENSES 34 (591,850) (700,974)

(3,653,074) (3,820,406)

7,646,801 8,434,793
OTHER INCOME 35 621,734 2,277,360

PROFIT FROM OPERATIONS 8,268,535 10,712,153

FINANCE COST 36 (1,167,391) (441,964)

PROFIT BEFORE TAXATION 7,101,144 10,270,189

TAXATION 37 (1,384,635) (3,018,385)

PROFIT AFTER TAXATION 5,716,509 7,251,804

SHARE OF PROFIT ATTRIBUTABLE TO:
EQUITY HOLDERS OF HOLDING COMPANY 3,524,928 4,672,586

NON-CONTROLLING INTEREST 2,191,581 2,579,218

5,716,509 7,251,804


--------------Rupees--------------
Restated

EARNINGS PER SHARE - BASIC AND DILUTED 38 11.95 16.38

The annexed notes form an integral part of these consolidated financial statements.
KOHINOOR TEXTILE MILLS LIMITED

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

194
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the year ended June 30, 2018

2018 2017
(Rupees in thousand)

PROFIT AFTER TAXATION 5,716,509 7,251,804

OTHER COMPREHENSIVE INCOME / (LOSS)

Items that will not be reclassified to profit or loss

Remeasurement of defined benefit liability (27,012) (19,408)
Related deferred income tax 6,737 4,892

(20,275) (14,516)

Gain on revaluation of land 20,591 23,119

316 8,603
Items that may be reclassified subsequently to profit or loss
- -

Other comprehensive income for the year - net of tax 316 8,603

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 5,716,825 7,260,407

SHARE OF TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:

EQUITY HOLDERS OF HOLDING COMPANY 3,534,323 4,687,689

NON-CONTROLLING INTEREST 2,182,502 2,572,718

5,716,825 7,260,407

The annexed notes form an integral part of these consolidated financial statements. ANNUAL REPORT 2018

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

195
 CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended June 30, 2018
2018 2017
Note (Rupees in thousand)
CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 39 8,735,608 10,318,410

Finance cost paid (973,276) (389,794)
Employee benefits paid (40,084) (27,256)
Income tax paid (2,735,805) (2,875,242)
Increase in retention money payable 310,735 -
Net increase in long term loans to employees (3,673) (171)
Net decrease in long term deposits 6,975 2,756
Net cash generated from operating activities 5,300,480 7,028,703
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure on property, plant and equipment (21,438,841) (8,007,663)
Intangibles - (31,701)
Interest received 52,859 32,161
Proceeds from sale of property, plant and equipment 70,800 242,442
Dividends received 7,007 132,932
Net cash used in investing activities (21,308,175) (7,631,829)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term financing 11,090,924 2,968,086
Repayment of long term financing (272,328) (163,380)
Decrease in long term deposits 16 2,200
Short term borrowings - net 3,662,731 1,367,705
Issue of right shares 2,910,093 -
Repayment of liabilities against assets subject to finance lease (501,332) (190,689)
Redemption of preference shares - (478)
Dividend paid (1,594,840) (2,409,228)
Net cash from financing activities 15,295,264 1,574,216
Net (decrese) / increase in cash and cash equivalents (712,431) 971,090
Cash and cash equivalents at the beginning of the year 1,817,174 846,084

Cash and cash equivalents at the end of the year 1,104,743 1,817,174

The annexed notes form an integral part of these consolidated financial statements.
KOHINOOR TEXTILE MILLS LIMITED

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

196
 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended June 30, 2018
ATTRIBUTABLE TO EQUITY HOLDERS OF THE HOLDING COMPANY
Reserves
Capital Reserves Revenue Reserves
Non-
Share Surplue on Unappro- Total Total controlling Total
Capital Share revaluation of Sub - General priated Sub - reserves interest Equity
premium freehold land Total reserves profit Total
and investment
properties
….……………….……...…..………….……...…..…..…..…… ( Rupees in thousand ) ….………………...….………...…..……….……...…..….……

Balance as at 30 June 2016 2,823,551 144,919 - 144,919 1,450,491 11,301,678 12,752,169 12,897,088 15,720,639 8,100,035 23,820,674
Impact of restatement (Note 2.28) - - 4,005,463 4,005,463 - - - 4,005,463 4,005,463 167,157 4,172,620
As at 30 June 2016 - restated 2,823,551 144,919 4,005,463 4,150,382 1,450,491 11,301,678 12,752,169 16,902,551 19,726,102 8,267,192 27,993,294
Transactions with owners:
- Final dividend for the year ended 30 June 2016
@ Rupees 3.00 per share - - - - - (847,065) (847,065) (847,065) (847,065) - (847,065)
- Interim dividend for the year ended 30 June 2016
@ Rupees 1.50 per share - - - - - (564,710) (564,710) (564,710) (564,710) - (564,710)
- Change in equity holders’ interest due to
further investment - - - - - 181,762 181,762 181,762 181,762 (181,762) -
- Dividend paid to non-controlling interest holders - - - - - - - - - (1,063,456) (1,063,456)
Total transactions with owners - - - - - (1,230,013) (1,230,013) (1,230,013) (1,230,013) (1,245,218) (2,475,231)
Reversal of revaluation surplus on disposal
of freehold land - - (12,456) (12,456) - 6,878 6,878 (5,578) (5,578) 5,578 -
Profit for the year - - - - - 4,672,586 4,672,586 4,672,586 4,672,586 2,579,218 7,251,804
Other comprehensive income / (loss) for the year - - 23,119 23,119 - (8,016) (8,016) 15,103 15,103 (6,500) 8,603
Total comprehensive income for the year - - 23,119 23,119 - 4,664,570 4,664,570 4,687,689 4,687,689 2,572,718 7,260,407
Balance as at 30 June 2017 - restated 2,823,551 144,919 4,016,126 4,161,045 1,450,491 14,743,113 16,193,604 20,354,649 23,178,200 9,600,270 32,778,470
Transactions with owners:
- Final dividend for the year ended 30 June 2017
@ Rupees 1.50 per share - - - - - (423,533) (423,533) (423,533) (423,533) - (423,533)
- Interim dividend for the year ended 30 June 2018
@ Rupees 1.25 per share - - - - - (352,944) (352,944) (352,944) (352,944) - (352,944)
- Issuance of right shares 169,413 841,158 - 841,158 - - - 841,158 1,010,571 1,899,522 2,910,093
- Dividend paid to non-controlling interest holders - - - - - - - - - (812,341) (812,341)
Total transactions with owners 169,413 841,158 - 841,158 - (776,477) (776,477) 64,681 234,094 1,087,181 1,321,275
Profit for the year - - - - - 3,524,928 3,524,928 3,524,928 3,524,928 2,191,581 5,716,509
Other comprehensive income for the year - - 20,591 20,591 - (11,196) (11,196) 9,395 9,395 (9,079) 316
Total comprehensive income for the year - - 20,591 20,591 - 3,513,732 3,513,732 3,534,323 3,534,323 2,182,502 5,716,825
Balance as at 30 June 2018 2,992,964 986,077 4,036,717 5,022,794 1,450,491 17,480,368 18,930,859 23,953,653 26,946,617 12,869,953 39,816,570

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

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

ANNUAL REPORT 2018

197
 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
For the year ended June 30, 2018

1..       THE GROUP AND ITS OPERATIONS

1.1 Holding Company

Kohinoor Textile Mills Limited (“the Holding Company”) 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. 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”) 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 and was listed on stock exchanges in Pakistan on 17 August 1994. 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”) was incorporated in Pakistan on 25 April 2014
under the Companies Ordinance, 1984 (now the Companies Act, 2017) as public company.
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.

1.2.3 Maple Leaf Power Limited (MLPL)

Maple Leaf Power Limited (“the Subsidiary”) was incorporated in Pakistan on 15 October 2015
as a public limited company under the Companies Ordinance, 1984 (now the Companies Act,
2017). MLPL has been established to set up and operate a 40-megawatt 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 objective 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.

The Holding and Subsidiary companies are collectively referred to as “the Group” in these
consolidated financial statements.

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

Sr. No. Manufacturing units and office Address

KOHINOOR TEXTILE MILLS LIMITED

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.

198
1.2.5 Summary of significant transactions and events affecting the Group’s financial position and
performance

a) The exchange rate of United States Dollar to Pak Rupees has increased from Pak Rupees 104.8
as at 30 June 2017 to Pak Rupees 121.40 as at 30 June 2018.

b) MLCFL is in the process of installation of an additional Cement Line having cement manufacturing
capacity of 7,300/- tons per day at its existing manufacturing premises, which will significantly
affect the business volume and profitability of MLCFL. In this regard, MLCFL has arranged long
term financing facilities aggregating Rupees 14,250 million.

c) MLCFL started purchasing coal – based electricity from MLPL which commenced its commercial
operations on 01 October 2017.

d) Due to first time application of financial reporting requirements under the Companies Act, 2017,
including disclosure and presentation requirements of the fourth schedule of the Companies
Act, 2017, some of the amounts reported for the previous period have been reclassified.

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)  
Preparation of consolidated financial statements under the Companies Act, 2017

The Fourth Schedule to the Companies Act, 2017 became applicable to the Group for the first
time for the preparation of these consolidated financial statements. The Companies Act, 2017
(including its Fourth Schedule) forms an integral part of the statutory financial reporting framework
applicable to the Group and amongst others, prescribes the nature and content of disclosures
in relation to various elements of the consolidated financial statements. Additional disclosures
include but are not limited to, particulars of immovable assets of the Group, management
assessment of sufficiency of tax provision in the consolidated financial statements, change in
threshold for identification of executives, additional disclosure requirements for related parties
etc.

ANNUAL REPORT 2018

199
 c)    Accounting convention

These consolidated financial statements have been prepared under the historical cost convention,
except for the certain financial instruments, investment properties and freehold land which are
carried at their fair values and certain employee retirement benefits which are carried at their
present values.

d)   Functional and presentation currency

These consolidated financial statements have been prepared in Pak Rupees which is the Group’s
functional currency.

e)   Critical accounting estimates and judgments

The preparation of these 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 consolidated 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

Net realizable value of inventories is determined with reference to currently prevailing selling
prices less estimated expenditure to make sales.

Taxation

In making the estimates for income tax currently receivable 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.

Financial instruments

The fair value of financial instruments that are not traded in an active market is determined by
using valuation techniques based on assumptions that are dependent on conditions existing at
consolidated statement of financial position date.

Classification of investments
KOHINOOR TEXTILE MILLS LIMITED

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 at fair value through
profit or loss, available for sale and held to maturity. The classification depends on the purpose
for which the investments were acquired.

200
 Employee benefits

The Subsidiary Companies Maple Leaf Cement Factory Limited (MLCFL) and Maple Leaf Power
Limited (MLPL) operate approved funded gratuity schemes covering all its employees 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.

Provisions for doubtful debts

The Group reviews its receivable against any provision required for any doubtful balances on
an ongoing basis. The provision is made while taking into consideration expected recoveries, if
any.

Property, plant and equipment

The Group reviews the useful lives and residual values of property, plant and equipment on
regular basis. Any change in estimates in future years might affect the carrying amounts of the
respective items of property, plant and equipment with a corresponding effect on the depreciation
charge and impairment.

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 and 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.

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

The following amendments to published approved accounting standards are mandatory for the
Group’s accounting periods beginning on or after 01 July 2017:

IAS 7 (Amendments), ‘Statement of Cash Flows’ (effective for annual periods beginning on
or after 01 January 2017). Amendments have been made to clarify that entities shall provide
ANNUAL REPORT 2018

disclosures that enable users of financial statements to evaluate changes in liabilities arising from
financing activities. The aforesaid amendments have resulted in certain additional disclosures in
the Group’s consolidated financial statements.

201
 IAS 12 (Amendments), ‘Income Taxes’ (effective for annual periods beginning on or after 01
January 2017). The amendments clarify that the existence of a deductible temporary difference
depends solely on a comparison of the carrying amount of an asset and its tax base at the end
of the reporting period, and is not affected by possible future changes in the carrying amount or
expected manner of recovery of the asset. The amendments further clarify that when calculating
deferred tax asset in respect of insufficient taxable temporary differences, the future taxable profit
excludes tax deductions resulting from the reversal of those deductible temporary differences.
The amendments have no significant impact on Group’s consolidated financial statements.

On 8 December 2016, IASB issued Annual Improvements to IFRSs: 2014 – 2016 Cycle,
incorporating amendments to three IFRSs more specifically in IFRS 12 ‘Disclosure of Interests
in Other Entities’ (effective for annual periods beginning on or after 01 January 2017). IFRS
12 states that an entity need not provide summarized financial information for interests in
subsidiaries, associates or joint ventures that are classified, or included in a disposal group that
is classified, as held for sale (in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations). The amendments clarify that this is the only concession from the
disclosure requirements of IFRS 12 for such interests. The amendments have no impact on the
Group’s consolidated financial statements.

The application of the above amendments does not result in any impact on profit or loss, other
comprehensive income and total comprehensive income.

g)   Standards, interpretations and amendments to published approved accounting standards that
are not yet effective but relevant to the Group

Following standards, interpretations and amendments to published standards that are mandatory
for accounting periods beginning on or after 01 July 2018 or later:

IFRS 9 ‘Financial Instruments’ (effective for annual periods beginning on or after 01 July 2018).
A finalized version of IFRS 9 which contains accounting requirements for financial instruments,
replacing IAS 39 ‘Financial Instruments: Recognition and Measurement’. Financial assets are
classified by reference to the business model within which they are held and their contractual cash
flow characteristics. The 2014 version of IFRS 9 introduces a ‘fair value through comprehensive
income’ category for certain debt instruments. Financial liabilities are classified in a similar
manner to under IAS 39, however there are differences in the requirements applying to the
measurement of an entity’s own credit risk. The 2014 version of IFRS 9 introduces an ‘expected
credit loss’ model for the measurement of the impairment of financial assets, so it is no longer
necessary for a credit event to have occurred before a credit loss is recognized. It introduces
a new hedge accounting model that is designed to be more closely aligned with how entities
undertake risk management activities when hedging financial and non-financial risk exposures.
The requirements for de-recognition of financial assets and liabilities are carried forward from IAS
39. The management of the Group is in the process of evaluating the impacts of the aforesaid
standard on the Group’s consolidated financial statements.

IFRS 15 ‘Revenue from Contracts with Customers’ (effective for annual periods beginning on or
after 01 July 2018). IFRS 15 provides a single, principles based five-step model to be applied
to all contracts with customers. The five steps in the model are: identify the contract with the
customer; identify the performance obligations in the contract; determine the transaction price;
allocate the transaction price to the performance obligations in the contracts; and recognize
KOHINOOR TEXTILE MILLS LIMITED

revenue when (or as) the entity satisfies a performance obligation. Guidance is provided on
topics such as the point in which revenue is recognized, accounting for variable consideration,
costs of fulfilling and obtaining a contract and various related matters. New disclosures about
revenue are also introduced. The aforesaid standard is not expected to have a material impact
on the Group’s consolidated financial statements.

202
 IFRS 16 ‘Lease’ (effective for annual periods beginning on or after 01 January 2019). IFRS 16
specifies how an entity will recognize, measure, present and disclose leases. The standard
provides a single lessee accounting model, requiring lessees to recognize assets and liabilities
for all leases unless the lease term is 12 months or less or the underlying asset has a low value.
Lessors continue to classify leases as operating or finance, with IFRS 16 approach to lessor
accounting substantially unchanged from its predecessor, IAS 17 ‘Leases’. IFRS 16 replaces
IAS 17, IFRIC 4 ‘Determining Whether an Arrangement Contains a Lease’, SIC-15 ‘Operating
Leases–Incentives’ and SIC-27 ‘Evaluating the Substance of Transactions Involving the Legal
Form of a Lease’. The management of the Group is in the process of evaluating the impacts of
the aforesaid standard on the Group’s consolidated financial statements.

Amendments to IFRS 9 (effective for annual periods beginning on or after 01 January 2019)
clarify that for the purpose of assessing whether a prepayment feature meets the solely
payments of principal and interest (‘SPPI’) condition, the party exercising the option may pay or
receive reasonable compensation for the prepayment irrespective of the reason for prepayment.
In other words, prepayment features with negative compensation do not automatically fail SPPI.
The amendments are not likely to have significant impact on the Group’s consolidated financial
statements.

IFRS 15 (Amendments), ‘Revenue from Contracts with Customers’ (effective for annual
periods beginning on or after 01 July 2018). Amendments clarify three aspects of the standard
(identifying performance obligations, principal versus agent considerations, and licensing) and
to provide some transition relief for modified contracts and completed contracts. The aforesaid
amendments are not expected to have a material impact on the Group’s consolidated financial
statements.

IAS 28 (Amendments) ‘Investments in Associates and Joint Ventures’ (effective for annual
periods beginning on or after 01 January 2019). The IASB has clarified that IFRS 9, including
its impairment requirements, applies to long-term interests. Furthermore, in applying IFRS 9 to
long-term interests, an entity does not take into account adjustments to their carrying amount
required by IAS 28 (i.e., adjustments to the carrying amount of long-term interests arising from
the allocation of losses of the investee or assessment of impairment in accordance with IAS 28).
The amendments are not likely to have significant impact on the Group’s consolidated financial
statements.

IAS 40 (Amendments), ‘Investment Property’ (effective for annual periods beginning on or after
01 January 2018). The amendments clarify that an entity shall transfer a property to, or from,
investment property when, and only when there is a change in use. A change in use occurs
when the property meets, or ceases to meet, the definition of investment property and there is
evidence of the change in use. In isolation, a change in management’s intentions for the use of a
property does not provide evidence of a change in use. The amendments are not likely to have
a significant impact on the Group’s consolidated financial statements.

IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’ (effective for annual
periods beginning on or after 01 January 2018). IFRIC 22 clarifies which date should be used
for translation when a foreign currency transaction involves payment or receipt in advance of the
item it relates to. The related item is translated using the exchange rate on the date the advance
foreign currency is received or paid and the prepayment or deferred income is recognized.
The date of the transaction for the purpose of determining the exchange rate to use on initial
recognition of the related asset, expense or income (or part of it) would remain the date on which
receipt of payment from advance consideration was recognized. If there are multiple payments
or receipts in advance, the entity shall determine a date of the transaction for each payment or
ANNUAL REPORT 2018

receipt of advance consideration. The interpretation is not expected to have a material impact
on the Group’s consolidated financial statements.

203
 IFRIC 23 ‘Uncertainty over Income Tax Treatments’ (effective for annual periods beginning on
or after 01 January 2019). The interpretation addresses the determination of taxable profit (tax
loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty
over income tax treatments under IAS 12 ‘Income Taxes’. It specifically considers: whether tax
treatments should be considered collectively; assumptions for taxation authorities’ examinations;
the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits
and tax rates; and the effect of changes in facts and circumstances. The interpretation is not
expected to have a material impact on the Group’s consolidated financial statements.

Amendments to IFRS 10 ‘Consolidated Financial Statements’ and IAS 28 (deferred indefinitely)
to clarify the treatment of the sale or contribution of assets from an investor to its associates or
joint venture, as follows: require full recognition in the investor’s financial statements of gains and
losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS
3 ‘Business Combinations’); require the partial recognition of gains and losses where the assets
do not constitute a business, i.e. a gain or loss is recognized only to the extent of the unrelated
investors’ interests in that associate or joint venture. These requirements apply regardless of
the legal form of the transaction, e.g. whether the sale or contribution of assets occur by an
investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the
subsidiary), or by the direct sale of the assets themselves. The management of the Group is in
the process of evaluating the impacts of the aforesaid amendments on the Group’s consolidated
financial statements.

On 8 December 2016, IASB issued Annual Improvements to IFRSs: 2014 – 2016 Cycle,
incorporating amendments to three IFRSs more specifically in IAS 28. These amendments are
effective for annual periods beginning on or after 01 January 2018. These amendments have no
significant impact on the Group’s consolidated financial statements and have therefore not been
analyzed in detail.

On 12 December 2017, IASB issued Annual Improvements to IFRSs: 2015 – 2017 Cycle,
incorporating amendments to four IFRSs more specifically in IFRS 3 ‘Business Combinations’,
IFRS 11 ‘Joint Arrangements’, IAS 12 ‘Income Taxes’ and IAS 23 ‘Borrowing Costs’. The
amendments are effective for annual periods beginning on or after 01 January 2019. The
amendments have no significant impact on the Group’s consolidated financial statements and
have therefore not been analyzed in detail.

On 29 March 2018, the International Accounting Standards Board (the IASB) has issued
a revised Conceptual Framework. The new Framework: reintroduces the terms stewardship
and prudence; introduces a new asset definition that focuses on rights and a new liability
definition that is likely to be broader than the definition it replaces, but does not change the
distinction between a liability and an equity instrument; removes from the asset and liability
definitions references to the expected flow of economic benefits–this lowers the hurdle for
identifying the existence of an asset or liability and puts more emphasis on reflecting uncertainty
in measurement; discusses historical cost and current value measures, and provides some
guidance on how the IASB would go about selecting a measurement basis for a particular
asset or liability; states that the primary measure of financial performance is profit or loss, and
that only in exceptional circumstances will the IASB use statement of comprehensive income
and only for income or expenses that arise from a change in the current value of an asset
or liability; and discusses uncertainty, de-recognition, unit of account, the reporting entity and
combined financial statements. The Framework is not an IFRS standard and does not override
KOHINOOR TEXTILE MILLS LIMITED

any standard, so nothing will change in the short term. The revised Framework will be used in
future standard-setting decisions, but no changes will be made to current IFRS. Preparers might
also use the Framework to assist them in developing accounting policies where an issue is not
addressed by an IFRS. It is effective for annual periods beginning on or after 1 January 2020 for
preparers that develop an accounting policy based on the Framework.

204
 h)   Standards, interpretations 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 2018 but are considered not to be relevant
or do not have any significant impact on the Group’s consolidated financial statements and are
therefore not detailed in these consolidated financial statements.

2.2   Basis of consolidation

Subsidiary Company is that entity in which Holding Company directly or indirectly controls,
beneficially owns or holds more than 50% of the voting securities or otherwise has power to
elect and appoint more than 50% of its directors. The financial statements of the Subsidiary
Companies are included in the consolidated financial statements from the date control
commences until the date that control ceases.

The assets and liabilities of the Subsidiary Companies have been consolidated on a line by
line basis and carrying value of investment held by the Holding Company is eliminated against
Holding Company’s share in paid up capital of the Subsidiary Companies.

Intra-group balances and transactions have been eliminated.

Non-controlling interest is that part of net results of the operations and of net assets of
Subsidiary Companies attributable to interest which are not owned by the Holding Company.
Non-controlling interest is presented as separate item in the consolidated financial statements.

2.3   Employee benefit

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.

ii) Defined benefit plan

The MLCFL operate approved funded gratuity scheme for all its employees 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.

MLCFL 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 for the MLCFL,
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.
ANNUAL REPORT 2018

205
 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.
MLCFL determine the 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. MLCFL recognize gains and losses on the settlement
of a defined benefit plan when the settlement occurs.

Details of the scheme are given in note 9 to the consolidated financial statements.

iii) Liability for employees’ compensated absences

The 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.

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 statement of financial position liability method in respect
of all temporary differences arising from differences between the carrying amount of the 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 recognised 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.

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 consolidated
statement of financial position date. Deferred tax is charged or credited in the consolidated
statement of profit or loss, except to the extent that it relates to items recognised in the consolidated
statement of comprehensive income or directly in equity. In this case the tax is also recognised in
the consolidated statement of comprehensive income or directly in equity, respectively.
KOHINOOR TEXTILE MILLS LIMITED

2.5   Provisions

Provisions are recognised 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.

206
 2.6   Property, plant, equipment and depreciation

Owned

Property, plant and equipment except freehold land and capital work-in-progress are stated
at cost less accumulated depreciation and accumulated impairment losses (if any). Cost of
property, plant and equipment 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 recognised impairment loss.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the 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 statement of 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 statement of 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.

Leased

Leases where the Group has substantially all the risks and rewards of ownership are classified as
finance lease. Assets subject to finance lease are capitalized at the commencement of the lease
term at the lower of present value of minimum lease payments under the lease agreements and
the fair value of the leased assets, each determined at the inception of the lease.

The related rental obligation net of finance cost, is included in liabilities against assets subject to
finance lease. The liabilities are classified as current and long term depending upon the timing of
payments.

Each lease payment is allocated between the liability and finance cost so as to achieve a constant
rate on the balance outstanding. The finance cost is charged to consolidated statement of profit
or loss over the lease term.

Depreciation of assets subject to finance lease is recognised in the same manner as for owned
assets. Depreciation of the leased assets is charged to the consolidated statement of profit or
loss.

Depreciation

Depreciation on property, plant and equipment 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 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 17.1. Depreciation on additions is charged from the month
ANNUAL REPORT 2018

the assets are available for use while no depreciation is charged in the month in which the assets
are disposed off. 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.

207
 De-recognition

An item of property, plant and equipment is de-recognised 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-recognised.

2.7   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 recognised in the
consolidated statement of profit or loss for the year in which it arises.

2.8   Intangible assets

Intangible assets, which are non-monetary assets without physical substance, are recognised
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.

2.9   Leases

Leases are classified as finance lease whenever terms of the lease transfer substantially all risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.

The liability to the lessor is included in the consolidated statement of financial position as liabilities
against assets subject to finance lease. The liabilities are classified as current and non-current
depending upon the timing of payment. Lease payments are apportioned between finance charges
and reduction of the liabilities against assets subject to finance lease so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are charged to consolidated
statement of profit or loss, unless they are directly attributable to qualifying assets, in which case they
are capitalized in accordance with the Group’s general policy on borrowing costs.

Rentals payable under operating leases are charged to consolidated statement of profit or loss
on a straight line basis over the term of the relevant lease. Benefits received and receivable as an
incentive to enter into an operating lease are also spread on a straight line basis over the lease
term.

2.10 Investments

KOHINOOR TEXTILE MILLS LIMITED

Classification of investment is made on the basis of intended purpose for holding such investment.
Management determines the appropriate classification of its investments at the time of purchase
and re-evaluates such designation on regular basis.

Investments are initially measured at fair value plus transaction costs directly attributable to
acquisition, except for “investment at fair value through profit or loss” which is initially measured
at fair value.

208
 The Group assesses at the end of each reporting period whether there is any objective evidence
that investments are impaired. If any such evidence exists, the Group applies the provisions of
IAS 39 ‘Financial Instruments: Recognition and Measurement’ to all investments.

a)      Investment at fair value through profit or loss

Investments classified as held-for-trading and those designated as such are included in this
category. Investments are classified as held-for-trading if these are acquired for the purpose of
selling in the short term. Gains or losses on investments held-for-trading are recognised in the
consolidated statement of profit or loss.

b)      Held-to-maturity

Investments with fixed or determinable payments and fixed maturity are classified as held-to-
maturity when the Group has the positive intention and ability to hold to maturity. Investments
intended to be held for an undefined period are not included in this classification. Other long term
investments that are intended to be held to maturity are subsequently measured at amortized
cost. This cost is computed as the amount initially recognised minus principal repayments,
plus or minus the cumulative amortization, using the effective interest method, of any difference
between the initially recognised amount and the maturity amount. For investments carried at
amortized cost, gains and losses are recognised in the consolidated statement of profit or
loss when the investments are de-recognised or impaired, as well as through the amortization
process.

Held to maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity that the Group has positive intention to hold to maturity. Investments
classified as held to maturity are recognized initially at fair value, plus attributable transaction
costs. Subsequent to initial recognition, held to maturity financial assets are measured at
amortized cost using the effective interest method, less any impairment loss, if any.

c)      Available-for-sale

Investments intended to be held for an indefinite period of time, which may be sold in response
to need for liquidity, or changes to interest rates or equity prices are classified as available-
for-sale. After initial recognition, investments which are classified as available-for-sale are
measured at fair value. Gains or losses on available-for-sale investments are recognised directly
in the consolidated statement of other comprehensive income until the investment is sold, de-
recognised or is determined to be impaired, at which time the cumulative gain or loss previously
reported in the consolidated statement of other comprehensive income is included in the
consolidated statement of profit or loss. These are sub-categorized as under:

Quoted

For investments that are actively traded in organized capital markets, fair value is determined by
reference to stock exchange quoted market bids at the close of business on the consolidated
statement of financial position date.

Unquoted

Fair value of unquoted investments is determined on the basis of appropriate valuation techniques
as allowed by IAS 39 “Financial Instruments: Recognition and Measurement”.

ANNUAL REPORT 2018

209
 2.11 Loans and receivables

Loans and receivables are recognized initially at fair value, plus attributable transaction costs.
Subsequent to initial recognition, loans and receivables are stated at amortized cost with any
difference between cost and redemption value being recognized in the consolidated statement
of profit and loss over the period of the investments on an effective yield method less impairment
loss, if any.

2.12 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 material, work-in-process and finished goods are 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.

2.13 Trade and other receivables

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

2.14 Borrowings

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

2.15 Borrowing cost

Interest, markup and other charges on long-term finances are capitalized up to the date of
KOHINOOR TEXTILE MILLS LIMITED

commissioning of respective qualifying assets acquired out of the proceeds of such long -
term finances. All other interest, markup and other charges are recognised in the consolidated
statement of profit or loss.

210
 2.16 Trade and other payables

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

2.17 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.

2.18 Share capital

Ordinary shares of the Holding Company are classified as share capital.

2.19 Revenue recognition

Revenue from different sources is recognised as under:

a) Revenue from local sales is recognised on dispatch of goods to customers while in case of
export sales it is recognised on the date of bill of lading.

b) Dividend on equity investments is recognised when right to receive the dividend is
established.

c)  Profit on deposits with banks is recognised on time proportion basis taking into account the
amounts outstanding and rates applicable thereon.

d)   Realized capital gain / (losses) arising on sale of investments are included in the profit or loss
on the date at which the transaction takes place.

e)    Unrealized capital gains / (losses) arising on making to market of investments classified as
‘Financial assets at fair value through profit or loss’ are included in the profit or loss in the
period in which they arise.

f) Income on long term loans, bank deposits and placements is recognized on accrual basis.

2.20 Foreign currencies

These consolidated financial statements are presented in Pak Rupees, which is the Group’s
functional currency. All monetary assets and liabilities denominated in foreign currencies are
translated into Pak Rupees at the rates of exchange prevailing at the consolidated statement
of financial position date, while the transactions in foreign currency during the year are initially
recorded in functional currency at the rates of exchange prevailing at the transaction date. All
non-monetary items are translated into Pak Rupees at exchange rates prevailing on the date
of transaction or on the date when fair values are determined. Exchange gains and losses are
recorded in the consolidated statement of profit or loss.

2.21 Financial instruments

Financial instruments carried on the consolidated statement of financial position include
investments, deposits, trade debts, advances, accrued interest, other receivables, cash and
bank balances, long-term financing, liabilities against assets subject to finance lease, short-term
ANNUAL REPORT 2018

borrowings, accrued mark up and trade and other payables etc. Financial assets and liabilities

211
 are recognised when the Group becomes a party to the contractual provisions of instrument.
Initial recognition is made at fair value plus transaction costs directly attributable to acquisition,
except for “financial instrument at fair value through profit or loss” which are initially measured at
fair value.

Financial assets are derecognized when the Group loses control of the contractual rights that
comprise the financial asset. The Group loses such control if it realizes the rights to benefits
specified in contract, the rights expire or the Group surrenders those rights. Financial liabilities
are de-recognized when the obligation specified in the contract is discharged, cancelled or
expired. Any gain or loss on subsequent measurement (except available for sale investments)
and derecognition is charged to the consolidated statement of profit or loss currently. The
particular measurement methods adopted are disclosed in the individual policy statements
associated with each item.

The fair value of financial instruments that are not traded in an open market is determined by
using valuation techniques based on assumptions that are depended on conditions existing at
the consolidated statement of financial position date.

2.22 Impairment

a)      Financial assets

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

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

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

b)      Non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at each consolidated
statement of financial position date to determine whether there is any indication of impairment.
If such indication exists, the recoverable amount of such assets is estimated. An impairment
loss is recognised wherever the carrying amount of the asset exceeds its recoverable amount.
Impairment losses are recognised in consolidated statement of profit or loss except for
impairment loss on revalued asset, 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.

The Group reviews the useful lives and residual values of Property, plant and equipment on
regular basis. Any change in estimates in future years might affect the carrying amounts of
the respective items of Property, plant and equipment with a corresponding effect on the
depreciation charge and impairment.

KOHINOOR TEXTILE MILLS LIMITED

2.23 Derivative financial instruments

Derivatives that do not qualify for hedge accounting are recognised in the consolidated statement
of financial position at estimated fair value with corresponding effect to consolidated statement
of profit or loss. Derivative financial instruments are carried as assets when fair value is positive
and liabilities when fair value is negative.

212
 2.24 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 Group’s chief operating decision makers 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 income,
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.

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.

2.25 Dividend and other appropriations

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

2.26 Off setting

Financial assets and financial liabilities are set off and the net amount is reported in the
consolidated financial statements when there is a legally 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.

2.27 Government Grants

Government grants are recognized when there is reasonable assurance that entity will comply
with the conditions attached to it and grant will be received.

2.28 Change in accounting policies

The specific provision / section in the repealed Companies Ordinance, 1984 relating to the
surplus on revaluation of fixed assets has not been carried forward in the Companies Act,
2017. Previously, section 235 of the repealed Companies Ordinance, 1984 specified the
accounting treatment and presentation of the surplus on revaluation of fixed assets, which was
not in accordance with the IFRS requirements. Accordingly, in accordance with the requirements
of International Accounting Standard (IAS) 16, Property, Plant and Equipment, surplus on
revaluation of fixed assets would now be presented under equity.
ANNUAL REPORT 2018

213
 Following the application of IAS 16, the Group’s accounting policy for surplus on revaluation of
freehold land and investment properties stands amended as follows:

Freehold land

Increases in the carrying amounts arising on revaluation of freehold land are recognized, in
consolidated statement of 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 statement of 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.

Investment properties

Surplus on revaluation of investment properties has now been included in shareholders equity.

These changes in accounting policies have been accounted for retrospectively in accordance
with the requirements of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and
Errors’ and comparative figures have been restated.

The effect of change in accounting policy is summarized below:

30-Jun-17 30-Jun-16
As previously As Restatement As previously As Restatement
reported re-stated reported re-stated

(Rupees in thousand)

Effect on consolidated statement of
financial position

Surplus on revaluation of freehold land and
investment properties 4,183,283 - (4,183,283) 4,172,620 - (4,172,620)
Capital reserve - 4,016,126 4,016,126 - 4,005,463 4,005,463
Non-controlling interest - - - - 167,157 167,157

Effect on consolidated statement of
changes in equity

Surplus on revaluation of freehold land and
investment properties - 4,016,126 4,016,126 - 4,005,463 4,005,463

For the year ended 30 June 2017

As As Restatement
previously re-stated
reported

(Rupees in thousand)
Effect on consolidated statement of comprehensive income

Surplus on revaluation of freehold land and investment properties - 23,119 23,119
KOHINOOR TEXTILE MILLS LIMITED

There was no impact on consolidated statement of cash flows as a result of the retrospective application
of change in accounting policy.

214
3. ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL

2018 2017 2018 2017
(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 Kohinoor 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

169,182,327 152,241,019 Ordinary shares of Rupees 10 each issued
as fully paid in cash 1,691,823 1,522,410

299,296,456 282,355,148 2,992,964 2,823,551

3.1 During the year ended 30 June 2018, the Holding Company issued 16,941,308 right shares
at Rupees 60 per share at a premium of Rupees 50 per share. The Holding Company utilised
the proceeds to finance the subscription of 12.50% right shares of Maple Leaf Cement Factory
Limited, a subsidiary company.
2018 2017
Note (Rupees in thousand)
4. RESERVES

Composition of reserves is as follows:

Capital reserves
Share premium 4.1 986,077 144,919

Surplus on revaluation of freehold land and
investment properties

Freehold land
As at 01 July 2,752,534 2,741,871
Less: Surplus on disposal of land during the year - (12,456)
Increase due to revaluation to fair value 17.1 20,591 23,119
As at 30 June 2,773,125 2,752,534
Investment properties 1,263,592 1,263,592
4,036,717 4,016,126
5,022,794 4,161,045
Revenue reserves
General reserve 1,450,491 1,450,491
Unappropriated profit 17,480,368 14,743,113

18,930,859 16,193,604
ANNUAL REPORT 2018

23,953,653 20,354,649

215
 4.1
This reserve can be utilized by the Group only for the purposes specified in section (81) of the
Companies Act, 2017.

2018 2017
Note (Rupees in thousand)

5. NON-CONTROLLING INTEREST

Opening balance 9,600,270 8,100,035
Impact of restatement (Note 2.28) - 167,157

9,600,270 8,267,192
Add / (less): Share during the year:

Reversal of revaluation surplus on disposal of land - 5,578
Share in right issue 1,899,522 -
Change in equity holders’ interest due to further investment - (181,762)
Other comprehensive loss for the year (9,079) (6,500)
Profit for the year 2,191,581 2,579,218

4,082,024 2,396,534
Less : Dividend paid (812,341) (1,063,456)

12,869,953 9,600,270

6. LONG TERM FINANCING

From banking companies and other financial
institutions - secured

Holding Company 6.1 1,723,400 1,553,740

Subsidiary Company - MLCFL 6.2 13,752,696 3,103,760

15,476,096 4,657,500
Less: Current portion shown under current liabilities 15 1,198,917 471,390

14,277,179 4,186,110

KOHINOOR TEXTILE MILLS LIMITED

216
 RATE OF
TOTAL INTEREST PER NUMBER OF INTEREST INTEREST
LENDER 2018 2017 SECURITY
FACILITY ANNUM INSTALLMENTS REPRICING PAYABLE

.....Rupees in thousand.....
6.1 Holding Company
Askari Bank 75,000 125,000 150,000 3 Month Twelve equal Quarterly Quarterly First pari passu
Limited KIBOR + quarterly installments hypothecation charge
1.50% commenced from of Rupees 200 million
28 February 2017 on all present and
and ending on 30 future fixed assets
November 2019. (excluding land and
building) of Raiwind
Division and personal
guarantees of the
sponsor directors.

The Bank of 426,380 557,262 600,000 SBP LTFF Sixteen equal - Quarterly First pari passu
Punjab rate + quarterly installments mortgage charge
2.50% commenced from amounting to Rupees
09 September 2016 934 million (inclusive
and ending on 09 of 25% margin) on
November 2021. the Company’s land
measuring 43 Acres
07 Kanals and 12
Marlas situated at
Peshawar Road,
Rawalpindi.

The Bank of 142,605 - 400,000 SBP LTFF Thirty six equal - Quarterly First pari passu
Punjab rate + 1% quarterly installments charge of Rupees
after expiry of grace 534 million (inclusive
period of one year for of 25% margin) over
every tranche from fixed assets (plant
date of disbursement. and machinery) of the
Company.

MCB Bank 184,875 237,647 350,000 SBP LTFF Twenty four equal - Quarterly First pari passu charge
Limited rate + 2.5% quarterly installments over fixed assets
(Formerly NIB after expiry of grace amounting to Rupees
Bank Limited) period of one year 467 million of Raiwind
commenced from 17 Division and personal
November 2015 and guarantees of the
ending on 17 August sponsor directors.
2021.

National Bank of 417,989 179,704 500,000 SBP LTFF Twelve equal half - Half yearly First pari passu charge
Pakistan rate + yearly installments over fixed assets of the
1.25% after expiry of grace Company (plant and
period of one and a machinery) amounting
half year commenced to Rupees 667 million.
from 30 June 2018
and ending on 08
June 2024.

PAIR Investment 209,859 171,746 300,000 SBP LTFF Twenty four equal - Quarterly First pari passu charge
Company rate + 1.5% quarterly installments over fixed assets
Limited after expiry of grace (excluding land and
period of sixteen building) amounting to
months commencing Rupees 400 million of
from 17 July 2018 Rawalpindi and Gujar
and ending on 12 Khan Divisions and
April 2024. personal guarantees
of the sponsor
directors.

Askari Bank 266,692 282,381 350,000 SBP LTFF Thirty six equal - Quarterly First pari passu
ANNUAL REPORT 2018

Limited rate + quarterly installments charge of Rupees 467

1.25% commenced from 28 million on all present
January 2018 and and future fixed assets
ending 31 October (land, building, plant
2026. and machinery) of
1,723,400 1,553,740 2,650,000 Raiwind Division.

217
 RATE OF
TOTAL INTEREST PER NUMBER OF INTEREST INTEREST
LENDER 2018 2017 SECURITY
FACILITY ANNUM INSTALLMENTS REPRICING PAYABLE

.....Rupees in thousand.....
6.2 Subsidiary Company (MLCFL)
Askari Bank 475,000 500,000 500,000 3 Month Twenty (20) equal, Quarterly Quarterly Joint pari passu
Limited KIBOR + consecutive, in arrears h y p o t h e c a t i o n
1.25% q u a r t e r l y charge and equitable
installments of mortgage charge of
Rupees 25 million Rupees 667 million
commencing from over all present
04 June 2018 to 04 and future plant
March 2023. and machinery and
land and building
respectively of cement
unit-2. Disbursement
has been made in
tranches against
ranking charge on all
present and future
plant and machinery
of MLCFL that shall be
upgraded / replaced
by aforesaid charge
within 180 days
from Ist draw down.
Personal guarantees
also provided by Mr.
Tariq Sayeed Saigol
and Mr. Sayeed Tariq
Saigol (sponsoring
directors) duly
supported by net
worth statements.

The Bank of 1,268,590 1,252,580 1,500,000 3 Month Twenty (20) equal, Quarterly Quarterly 1st joint pari passu
Punjab KIBOR + consecutive, hypothecation
1.25% quarterly installments charge and equitable
of Rupees 75 million mortgage charge
each starting from over all present and
31 March 2018 to future fixed assets
25 March 2023. of MLCFL with 25%
Prepayment can be margin. It is also
made after two (2) secured by lien over
years of completion import documents.
of draw down, with a A floating charge on
30 days prior notice fixed assets of MLPL
to the lenders without shall be registered
early payment with 25% margin,
penalty. before establishment
of’ LCs, which shall be
upgraded to 1st joint
pari passu, once all
the assets are reached
at project site and
ready for installation.
Personal guarantees
by Mr. Tariq Sayeed
Saigol and Mr.
Sayeed Tariq Saigol
(sponsoring directors)
duly supported by
net worth statements
KOHINOOR TEXTILE MILLS LIMITED

and cross corporate

guarantee of MLCFL
and MLPL has also
been provided.

218
 RATE OF
TOTAL INTEREST PER NUMBER OF INTEREST INTEREST
LENDER 2018 2017 SECURITY
FACILITY ANNUM INSTALLMENTS REPRICING PAYABLE

.....Rupees in thousand.....
6.2 Subsidiary Company (MLCFL)
National Bank of 876,497 675,590 1,000,000 3 Month Twenty (20) equal Quarterly Quarterly 1st joint pari passu
Pakistan KIBOR + quarterly installments in arrears hypothecation
1.25% of Rupees 50 million charge and equitable
each starting from mortgage charge over
30 April 2018 to 30 all present and future
January 2023. fixed assets of the
MLCFL amounting to
Rupees 1,334 million.
Disbursement is being
made in tranches
against ranking
charge of Rupees
1334 million over all
present and future
fixed assets of the
MLCFL that shall be
upgraded / replaced
by aforesaid charge
within 120 days from
1st draw down.
Personal guarantees
also provided by Mr.
Tariq Sayeed Saigol
and Mr. Sayeed Tariq
Saigol (sponsoring
directors).

Askari Bank 939,981 - 1,000,000 3 Month 28 equal quarterly Quarterly Quarterly Joint pari passu
Limited KIBOR installments with first charge over fixed
+ 75bps installment beginning assets and all present
payable on 27 March 2020 and future plant and
quaterly in machinery of the
arrears to Company.
be set on
day of first
draw down
and then on
1st working
day of each
quarter

The Bank of 1,415,704 - 2,000,000 3 Month 28 equal quaterly Quarterly Quarterly Joint pari passu
Punjab KIBOR installments charge over fixed
+ 75bps beginning on 31 assets and all present
payable December 2019 and future plant and
quaterly in machinery of the
arrears to Company.
be reset on
1st working
day of each
calender
quarter

MCB Bank 1,322,699 - 2,000,000 3 Month 22 equal quaterly Quarterly Quarterly Joint pari passu
Limited KIBOR installments charge over all present
+ 75bps beginning on 01 May and future fixed assets
payable 2019 of the Company with
quaterly in 25% margin.
arrears to
be reset on
1st working
day of each
ANNUAL REPORT 2018

calender
quarter

219
 RATE OF
TOTAL INTEREST PER NUMBER OF INTEREST INTEREST
LENDER 2018 2017 SECURITY
FACILITY ANNUM INSTALLMENTS REPRICING PAYABLE

.....Rupees in thousand.....
Samba Bank 750,000 - 750,000 3 Month 20 equal quaterly Quarterly Quarterly Joint pari passu
Limited - Term KIBOR installments charge over fixed
Finance + 75bps beginning on 20 assets and all present
payable March 2020 and future plant and
quaterly in machinery of the
arrears to be Company.
reset on 1st
working day of
each calender
quarter

MCB Bank 984,505 - 2,000,000 3 Month 28 equal quaterly Quarterly Quarterly Joint pari passu
Limited KIBOR installments charge over fixed
(Formerly NIB + 0.75% beginning on 15 assets and all present
Bnak Limited) - payable August 2020 and future plant and
Term Finance quaterly in machinery of the
arrears to be Company.
set on the
date of first
disbursement
and
sunsequently
last 7 days avg
of 3MK during
last quarter
to be reset
on quarterly
basis.

MCB Islamic 900,000 - 1,500,000 3 Month 24 equal quaterly Quarterly Quarterly Joint pari passu
Bank Limited KIBOR + installments charge over fixed
- Diminishing 0.7% payable beginning on 01 June assets and all present
Musharikah quaterly in 2020 and future plant and
arrears to be machinery of the
set on the Company.
date of first
working day of
disbursement
and to be
reset on 1st
working day
of calender
quarter.

Habib Bank 500,000 - 1,000,000 3 Month 28 equal quaterly Quarterly Quarterly Joint pari passu
Limted - Term KIBOR installments charge over fixed
Finance + 75bps beginning on 01 assets and all present
payable March 2020 and future plant and
quaterly in machinery of the
arrears to be Company.
set on last
business day
before first
draw down
and then on
immediately
preceeding
day of each
quarter

National Bank 3,079,138 - 4,000,000 3 Month 28 equal quaterly Quarterly Quarterly Joint pari passu
of Pakistan KIBOR installments charge over fixed
KOHINOOR TEXTILE MILLS LIMITED

- Demand + 75bps beginning on 30 June assets and all present

Finance payable 2020 and future plant and
quaterly in machinery of the
arrears to be Company.
set on last
business day
befor first draw
down and then
on immediately
preceeding
day of each
quarter
220
-
 RATE OF
TOTAL INTEREST PER NUMBER OF INTEREST INTEREST
LENDER 2018 2017 SECURITY
FACILITY ANNUM INSTALLMENTS REPRICING PAYABLE

.....Rupees in thousand.....
6.2 Subsidiary Company (MLCFL)
MCB Islamic 500,000 - 500,000 3 Month 24 equal quaterly Quarterly Quarterly 1st joint pari passu
Bank Limited KIBOR + installments hypothecation
- Diminishing 0.7% payable beginning on 13 charge and equitable
Musharikah quaterly in December 2018 mortgage charge over
arrears to be all present and future
set on the fixed assets of the
date of first Company amounting
disbursement to Rs. 667 million; and
and personal guarantees
subsequently also provided by Mr.
at the Tariq Sayeed Saigol
beginning of and Mr. Sayeed Tariq
each Calander Saigol (sponsoring
quarter. directors).

MCB Bank 740,582 675,590 1,000,000 3 Month Twenty two (22) Quarterly Quarterly 1st joint pari passu
Limited KIBOR + equal, consecutive, hypothecation
1.15% quarterly installments charge and equitable
of Rupees 45.45 mortgage charge
million each starting over all present and
from 14 October future fixed assets of
2017 to 14 Jan 2023. the MLCFL with 25%
Prepayment can be margin.
made after two (2) Personal guarantees
years with a 30 days also provided by Mr.
prior notice. Tariq Sayeed Saigol
and Mr. Sayeed Tariq
Saigol.(sponsoring
directors) duly
supported by net
worth statements.

Total 13,752,696 3,103,760 18,750,000

6.3 As per the financing document the Group is required to comply with certain financial covenants which mainly include mininmum
current ratio, minimum debt service coverage ratio, minimum interest coverage ratio, gearing ratio and maximum leverage ratio.
Further, the Group is required to comply with certain conditions imposed by the providers of finance to make dividend payment.

6.4 The MLCFL has un-availed long term facilities amounting to Rupees 4,997.30 million (2017: Rupees 11,000 million).
ANNUAL REPORT 2018

221
 2018 2017
Note (Rupees in thousand)

7. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

Future minimum lease payments - 521,591
Less: Un-amortized finance charges - 20,259

Present value of future minimum lease payments - 501,332

Less: Current portion shown under current liabilities 15 - 230,717
- 270,615

7.1 During the current year MLCFL has made early repayment of six outstanding quarterly repayments
amounting to Rupees 479.69 million (US Dollars 4.57 million) that was originally due to be repaid
by December 2018.

8. 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.

2018 2017
Note (Rupees in thousand)

9. RETIREMENT BENEFITS

Subsidiary - MLCFL

Accumulated compensated absences 9.1 102,396 76,360
Gratuity 9.2 81,368 74,418

183,764 150,778

9.1 Accumulated compensated absences

Balance at the beginning of the year 76,360 57,059
Provision made during the year 35,607 29,825
Payments made during the year (9,571) (10,524)

Balance at the end of the year 102,396 76,360

9.2 Gratuity

The latest actuarial valuation of the Subsidiary Company’s (MLCFL) defined benefit plan, was
conducted on 30 June 2018 using projected unit credit method. Detail of obligation for defined
benefit plan is as follows:

KOHINOOR TEXTILE MILLS LIMITED

222
 2018 2017
Note (Rupees in thousand)

The amounts recognized in the statement of

financial position are as follows:

Present value of defined benefit obligation 9.2.1 146,800 153,921
Fair value of plan assets 9.2.2 (65,432) (79,503)

Deficit in the plan 81,368 74,418

Net liability at beginning of the year 74,418 62,724

Charge to statement of profit or loss for the year 9.2.3 10,451 9,018
Charge to other comprehensive income for the year 9.2.3 27,012 19,408
Contributions made during the year (30,513) (16,732)

Net liability at end of the year 81,368 74,418

9.2.1 Movement in the present value of defined benefit
obligation is as follows:

Present value of defined benefit obligation at
beginning of the year 153,921 131,316
Current service cost 5,866 5,076
Interest cost 10,746 8,914
Benefits paid (30,513) (16,732)
Actuarial loss on present value of defined benefit obligation 6,780 25,347

Present value of defined benefit obligation 146,800 153,921

9.2.2 Movement in the fair value of plan assets is as follows:

Fair value of plan assets at beginning of the year 79,503 68,592

Expected return on plan assets 6,161 4,972
Contributions made during the year 30,513 16,732
Benefits paid during the year (30,513) (16,732)
Actuarial loss / (gain) on plan assets (20,232) 5,939

Fair value of plan assets at end of the year 65,432 79,503

Plan assets comprise of:
MCB Bank Limited (previously NIB Bank Limited)
including accrued interest - 37,000
NAFA Government Securities Liquid Fund 18,525 19,435
Trust Investment Bank including accrued interest - 15,000
Habib Metropolitan Bank Limited 44,000 -
Cash at bank 2,907 8,068

65,432 79,503

ANNUAL REPORT 2018

223
 2018 2017

Plan assets comprise of:

Equity 28.31% 24.45%
Cash at bank 71.69% 75.55%

100.00% 100.00%

2018 2017
(Rupees in thousand)

9.2.3 Charge for the year:

In statement of profit or loss
Current service cost 5,866 5,076
Interest cost 10,746 8,914
Expected return on plan assets (6,161) (4,972)

10,451 9,018

In statement of comprehensive income
Actuarial loss on retirement benefits - net 27,012 19,408

37,463 28,426

9.2.4 Movement in actuarial gain is as follows:

As at beginning of the year - -
Actuarial gain on plan assets (20,232) (5,939)
Remeasurement of loss on defined benefit obligation 6,780 25,347
Unrecognized actuarial loss / (gain) on defined benefit
obligation recognized in other comprehensive income 13,452 (19,408)

As at end of the year - -

2018 2017
Actuarial assumptions:
The following are the principal actuarial assumptions
at 30 June:
Discount rate used for year end obligation 9.00% 7.25%
Expected return on plan assets 7.75% 7.25%
Expected rate of growth per annum in future salaries 8.00% 6.75%
Expected mortality rate SLIC 2001- SLIC 2001-
2005 2005
Setback Setback
1 Year 1 Year
Retirement assumptions 60 years 60 years

9.2.5 MLCFL expects to charge Rupees 10.28 million to consolidated statement of profit or loss on
KOHINOOR TEXTILE MILLS LIMITED

account of defined benefit plan in the year ending 30 June 2019.

224
 9.2.6 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 2018 would have been as follows:

Gratuity Impact on present value

of defined benefit obligation

Increase Decrease
(Rupees in thousand)

Discount rate + 100 bps 140,003 154,146

Future salary increase + 100 bps 154,146 139,883

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.

As at 30 June 2018, the weighted average duration of the defined benefit obligation is six years
(2017: six years).

10. RETENTION MONEY PAYABLE

This amount represents retention money payable by MLCFL to M/s FLS Smidth amounting to Euro
3.43 million (equivalent to Rupees 380.66 million at the exchange rate prevailing on the date of signing
of contract, i.e. 16 January 2017) on purchase of plant and machinery. The amount is payable after
two years from the date of commencement of commercial production of new cement plant under
construction at Iskandrabad, District Mianwali and has been accounted for at present value using
discount rate of 7% per annum with the corresponding adjustment amounting to Rupees 69.92 million
in cost of respective asset.

ANNUAL REPORT 2018

225
 2018 2017
Note (Rupees in thousand)

11. DEFERRED INCOME TAX LIABILITY

This comprises of following:

Deferred tax liability on taxable temporary differences
in respect of:

Accelerated tax depreciation 2,894,120 3,223,876
Short term investments 16,008 -
Unrealised gain on remeasurement of futures contracts - gold 507 -

2,910,635 3,223,876
Deferred tax asset on deductible temporary differences
in respect of:

Short term investments - (2,034)
Lease finances - (16,807)
Provision for slow moving stores and spares (354) -
Provision for doubtful debts and advances (9,251) -
Unrealised loss on re-measurement of futures contracts - shares (1,902) -
Employees’ retirement benefits (48,678) (37,996)

(60,185) (56,837)

2,850,450 3,167,039
Movement in deferred tax balances is as follows:

At beginning of the year
Recognized in statement of profit or loss account: 3,167,039 3,155,036

Accelerated tax depreciation on fixed assets (329,756) 18,277
Short term investments 18,042 (34,037)
Liabilities against assets subject to finance lease 16,807 35,719
Employees’ retirement benefits (3,947) (3,278)
Provision for slow moving stores and spares (354) 214
Provision for doubtful debts and advances (9,251) -
Unrealised gain on remeasurement of futures contracts-gold 507 -
Unrealised loss on re-measurement of futures contracts - shares (1,902) -

37 (309,854) 16,895
Recognized in other comprehensive income:
Employees’ retirement benefits (6,735) (4,892)

2,850,450 3,167,039
KOHINOOR TEXTILE MILLS LIMITED

226
 2018 2017
Note (Rupees in thousand)

12. TRADE AND OTHER PAYABLES

Creditors 2,916,205 1,667,575
Bills payable - secured 12.1 691,727 3,955
Accrued liabilities 12.2 1,109,233 1,076,052
Security deposits, repayable on demand 12.3 57,836 55,976
Advances from customers 340,977 335,283
Contractors’ retention money 250,504 133,524
Royalty and excise duty payable 31,783 33,569
Workers’ profit participation fund 12.4 1,423,082 1,332,987
Workers’ welfare fund 133,485 186,382
Excise duty payable - 203,091
Withholding tax payable 54,162 120,622
Payable to employees’ provident fund trust 20,171 17,584
Sales tax payable - 234,507
Others 50,174 108,035

7,079,339 5,509,142

12.1 These facilities have been obtained from various banking companies for working capital
requirement and are secured by charge over current and future assets of MLCFL, personal
guarantees of the directors, pledge of stock, lien over import documents and title of ownership
of goods imported under letters of credit. These facilities will be expiring on various dates by 30
June 2019.

12.2 This includes Rupees 281.720 million booked on account of Gas Infrastructure Development
Cess (GIDC) for the period from September 2014 to June 2018. The MLCFL, along with
various other companies has challenged the legality and validity of levy and demand of GIDC in
Honorable Lahore High Court which is pending adjudication. However, on a prudent basis, the
Group has recorded the GIDC amount for the mentioned period. Further, due to non payment,
default surcharge of Rupees 202.170 million has been imposed on MLCFL, which has not been
recorded in these consolidated financial statements based on the opinion of legal advisor. The
management is hopeful that MLCFL will not be required to pay the default surcharge.

12.3 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.
2018 2017
Note (Rupees in thousand)

12.4 Workers’ profits participation fund

Balance as on 01 July 1,332,987 967,132
Allocation for the year 34 379,134 501,390
Interest for the year 36 27,132 14,958

1,739,253 1,483,480
Less: Payments during the year (316,171) (150,493)
ANNUAL REPORT 2018

1,423,082 1,332,987

227
 12.4.1 The outstanding WPPF liability of MLCFL includes Rupees 964.56 million being the left over
amount out of the total WPPF liability of Rupees 1,140.47 million pertaining to the financial
year ended 30 June 2012 to 30 June 2017. The WPPF liability represents leftover amount
payable to Workers Welfare Fund in terms of Companies Profits Worker’s Participation Act,
1968. According to the 18th amendment to the Constitution of Pakistan in 2010, all labour
/ labour welfare laws have become provincial subject, and accordingly the left over amount
is no more payable to the Federal Treasury. Major strength of MLCFL’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 Honourable 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. Accordingly the amount has been withheld by the MLCFL.
Further, based on MLCFL’s legal advisor, management is of the view that no mark up is due on
this unpaid amount.
2018 2017
Note (Rupees in thousand)

13. ACCRUED MARK-UP

Long term financing 209,467 69,037

Short term borrowings 130,341 75,738
Liabilities against assets subject to finance lease - 918

339,808 145,693

14. SHORT TERM BORROWINGS

From banking companies - secured
Short term running finances 14.1 & 14.2 & 14.6 5,149,335 3,443,858
Other short term finances 14.1 & 14.3 2,094,825 403,131
State Bank of Pakistan (SBP) refinances 14.1 & 14.4 2,575,000 2,417,000

9,819,160 6,263,989
Temporary bank overdraft - unsecured 14.5 169,596 62,036

9,988,756 6,326,025

14.1 These finances are obtained from banking companies under mark-up arrangements and are
secured by pledge of raw material, charge on current assets of the Group including hypothecation
of work-in-process, stores and spares, letters of credit, firm contracts, book debts and personal
guarantees of the sponsor directors. These form part of total credit facilities of Rupees 12,568
million (2017: Rupees 10,060 million).

14.2 The rates of mark-up range from 2.75% to 21% (2017: 1.90% to 16.78%) per annum on
balance outstanding.

14.3 The rates of mark-up range from 2.5% to 8.26% (2017: 2.5% to 8.55% ) per annum on balance
outstanding.
KOHINOOR TEXTILE MILLS LIMITED

14.4 The rate of mark-up was 3% (2017: 3% ) per annum on balance outstanding.

14.5 This represents temporary overdraft due to cheques issued in excess of balance with banks
which will be presented for payment in subsequent period.

228
 14.6 This includes a facility which has been obtained by MLPL as finance against trust receipt
from a commercial bank for working capital requirements amounting to Rupees 500 million
and is secured by charge over fixed assets of the MLPL, corporate guarantee of the MLCFL,
assignment of receivables from the MLCFL and personal guarantees of directors. This facility
carries mark-up at the rate of 3 months KIBOR plus 1.50% per annum and will expire on 30
November 2018.

2018 2017
Note (Rupees in thousand)

15. CURRENT PORTION OF NON-CURRENT LIABILITIES

Long term financing 6 1,198,917 471,390

Liabilities against assets subject to finance lease 7 - 230,717

1,198,917 702,107

16. CONTINGENCIES AND COMMITMENTS

16.1 Contingencies

Holding Company

a) The Company filed an appeal before Appellate Tribunal Inland Revenue, Lahore for 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 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. No
provision has been made in these consolidated financial statements as the Company is hopeful
of favorable outcome of these cases.

b) The Company filed an appeal before Appellate Tribunal Inland Revenue, Lahore for tax year
2004. The loss for the tax year 2004 was assessed at Rupees 255.684 million reducing refund
to Rupees 7.499 million vide order dated 22 May 2009. The matter was decided in favor of the
Company. However, department filed an appeal in The Honorable Lahore High Court, Lahore
against the decision. No provision has been made in these consolidated financial statements
since the Company is confident about favorable outcome of the case.

c) Tax department filed an appeal before Appellate Tribunal Inland Revenue against the order of
Commissioner Inland Revenue (Appeals) dated 13 May 2015, by which the demand amounting
to Rupees 54.010 million created by assessing officer under section 122(5A) of the Income
Tax Ordinance, 2001 for tax year 2009 was annulled. No provision has been made in these
consolidated financial statements as the Company is hopeful of a favorable outcome.

d) Tax department filed an appeal before Appellate Tribunal Inland Revenue against the order
of Commissioner Inland Revenue (Appeals) dated 06 September 2014, by which the demand
amounting to Rupees 22.110 million created by assessing officer under section 122(5A) of the
Income Tax Ordinance, 2001 for tax year 2010 was annulled. No provision has been made in
these consolidated financial statements as the Company is hopeful of a favorable outcome.
ANNUAL REPORT 2018

229
 e) The Company filed income tax return for Tax Year 2011 having tax loss amounting to Rupees
957.623 million and creating a refund of Rupees 107.808 million. An assessment dated 12 May
2017 under section 122(5A) of the Income Tax Ordinance, 2001 has been finalized by restricting
loss to Rupees 435.435 million and reducing refund to Rupees Nil. The Company has filed an
appeal before Commissioner Inland Revenue (Appeals) which is pending for hearing.

f) The Company filed income tax return for Tax Year 2016 having taxable income amounting to
Rupees 762.669 million and creating a refund of Rupees 30.721 million. An assessment under
section 122(5A) of the Income Tax Ordinance, 2001 dated 31 May 2018 has been finalized and
taxable income has been assessed at Rupees 1,167.832 million by creating demand of Rupees
231.109 million. The Company has filed an appeal before Commissioner Inland Revenue
(Appeals) which is pending for hearing.

g) The Company and the 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 87.996
million (2017: Rupees 87.996 million), since the Company has strong grounds against the
assessments framed by the relevant authorities.

h) The Company filed recovery suits in Civil Courts amounting to Rupees 15.164 million (2017:
Rupees 15.203 million) against various suppliers and customers for goods supplied by / to
them. 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.

i) 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
(2017: Rupees 72.811 million). No provision has been made in these consolidated financial
statements, since the Company is confident about favorable outcome.

j) 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.

k) The Company challenged, before Honorable Lahore High Court, Lahore, the vires of first
proviso to sub-clause (x) of clause (4) of SRO 491(1)/2016 dated 30 June 2016 issued under
sections 3 and 4 read with sections 8 and 71 of the Sales Tax Act, 1990 whereby through
amendment in the earlier SRO 1125(I)/2011 dated 31 December 2011 adjustment of input sales
tax on packing material of all sorts has been disallowed. The Honorable Lahore High Court
has issued stay order in favor of the Company. Consequently, the Company has claimed input
sales tax amounting to Rupees 131.010 million (2017: Rupees 62.376 million) paid on packing
material in its respective monthly sales tax returns. The management, based on advice of the
legal counsel, is confident of favorable outcome of its appeal.

l) 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
279.257 million (2017: Rupees 264.912 million).
KOHINOOR TEXTILE MILLS LIMITED

Subsidiary Company - Maple Leaf Cement Factory Limited

a) Through Order-in-Original No.18/2009 dated 24 December 2009, the tax department finalized
the adjudication proceeding in respect of audit conducted by the department auditors for tax

230
 year 2009 and raised a demand of principal sales tax and FED aggregating to Rupees 336.74
million along with applicable default surcharges and penalties. The Company preferred appeal
against such order under the applicable provisions of Sales Tax Act, 1990 and Federal Excise
Act, 2005 before the Commissioner of Inland Revenue (appeals).

It is, however, appropriate to highlight that the Company has also filed a writ petition with
the Honorable Lahore High Court against the above referred Order-In-Original demand. The
Honorable Lahore High Court has ordered that the tax department be restrained from taking any
measures against the Company. Based on the opinion of MLCFL’s legal counsel, management
is confident of favourable outcome, hence no provision has been made in these consolidated
financial statements.

b) Assistant Commissioner Inland Revenue through order dated 31 May 2018 raised a demand
of Rupees 44.58 million under section 122(5A) for the tax year 2012 on the disallowance of
adjustment of tax credit under section 65B and withholding of tax under section 154 of the
Income Tax Ordinance, 2001. The Company has contested the order in appeal before the CIR(A)
which is pending adjudication. Based on the opinion of MLCFL’s legal counsel, management
is confident of favourable outcome, hence no provision has been made in these consolidated
financial statements.

c) 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 2011of the Income Tax Ordinance,
2001. The Company has preferrred and appeal before CIR(A) which is pending adjudication.
Based on the opinion of MLCFL’s legal counsel, management is confident of favourable outcome,
hence no provision has been made in these consolidated financial statements.

d) The Company has 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 Rupees10.01 million. No 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.

e) 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. No provision has been made in these consolidated financial statements in respect
of the above stated amount 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.

f) The Federal Board of Revenue (FBR) has filed an appeal before the Honorable Supreme Court
of Pakistan against the judgment delivered by the Honorable Lahore High Court in favor of the
Company in a writ petition. The Company, through the said writ petition, had challenged the
ANNUAL REPORT 2018

demand raised by the FBR 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 dated 14 May

231
 1992. The FBR, however, alleged that the said plant & machinery could be locally manufactured
and duties and taxes were therefore not exempted. A total demand of Rupees 1,386.72 million
was raised by the FBR out of which an amount of Rupees 269.33 million was deposited by the
Company as undisputed liability. No provision has been made in these consolidated financial
statements in respect of the above stated amount 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.

g) The Company has 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, has 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 appeal has been filed against the declaration that
after 28 December 2006, the Excise Department has collected the infrastructure cess / fee
in accordance with law. The Province of Sindh and Excise and Taxation Department has also
preferred an appeal against the judgment decided against them. The Honorable Supreme
Court consolidated both the appeals and were set aside. Thereafter, law has been challenged
in constitution petition in the Honorable Sindh High Court Karachi. Stay has been granted by
the Honorable 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 petition is
pending for hearing and stay is continuing.

The management and the Company’s legal advisor are confident that the ultimate outcome of
this case will be in favor of the Company.

h) The Company has 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 has been granted by the Honorable High Court on 27 November 2017
in line with earlier petitions explained in ( f ) 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. The petition
is pending for hearing and stay is continuing.

i) Competition Commission of Pakistan, vide order dated 27 August 2009, has imposed penalty
on twenty cement factories of Pakistan at the rate of 7.5% of the turnover value. The Commission
has imposed penalty amounting to Rupees 586.19 million on the Company. The Commission
has 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. No provision has been made in these consolidated financial
statements 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.

j) The Additional Collector, Karachi has 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 has 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
KOHINOOR TEXTILE MILLS LIMITED

the Company’s legal advisor are confident that the ultimate outcome of this case will be in favor
of the Company.

232
 k) The customs department has 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 Company’s
legal advisor are confident that the ultimate outcome of this case will be in favor of the Company.

l) Surcharge of Rupees 154 million has been imposed by Mines and Minerals Department,
Government of the Punjab under Rule 68(2) of Punjab Mining Concession Rules, 2002 (“Rules”)
against which the Company has filed writ petition against Government of Punjab via writ petition
No. 1008/2014 to challenge the basis of Rules. The Honorable Lahore High Court dismissed
the petition since the matter was being reviewed by the relevant authority. Management and the
Company’s legal advisor are confident that the ultimate outcome of this case will be in favor of
the Company.

m) Guarantees given by banks on behalf of the Company are of Rupees 602.994 million
(2017: Rupees 483.387 million) in favor of Sui Northern Gas Pipeline Limited and Government
Institutions.

16.2 Commitments in respect of:

a) Letters of credit for capital expenditure amount to Rupees 5,284.011 million (2017: Rupees
15,438.845 million).

b) Letters of credit other than for capital expenditure amounting to Rupees 1,549.443 million
(2017: Rupees 1,093.746 million).

c) Contracts for capital expenditure amounting to Rupees 747.312 million (2017: Rupees
211.037 million).

d) Future contarcts - shares in respect of which the settlement is outstanding amounting to

Rupees 593.208 million (2017: Rupees Nil)

e) Future contarcts - gold in respect of which the settlement is outstanding amounting to Rupees
328.888 million (2017: Rupees Nil).

2018 2017
Note (Rupees in thousand)

17 . PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 17.1
Owned 31,760,197 24,580,786
Leased - 418,292
Capital work in progress 17.1.5 17,085,181 6,057,697
Stores held for capitalization 1,204,297 166,091

50,049,675 31,222,866
ANNUAL REPORT 2018

233
 KOHINOOR TEXTILE MILLS LIMITED

234
17.1 Operating Fixed Assets
Owned Assets Leased Assets
Factory and Residential Services Computer Furniture
Freehold Office other and other Plant and and other and IT and Office Quarry Share of Plant and
Vehicles Total Vehicles Total
land building machinery equipment equipment joint assets machinery
building building equipment installations fixture

(Rupees in thousand)
At 30 June 2016
Cost / revalued amount 3,125,943 33,668 6,046,213 116,413 32,589,326 50,274 87,888 448,988 45,657 407,825 185,023 6,000 43,143,218 682,524 2,644 685,168
Accumulated depreciation - (7,922) (2,694,955) (65,643) (16,113,576) (30,599) (69,496) (240,656) (26,080) (187,599) (156,480) (4,534) (19,597,540) (228,820) (889) (229,709)
Net book value 3,125,943 25,746 3,351,258 50,770 16,475,750 19,675 18,392 208,332 19,577 220,226 28,543 1,466 23,545,678 453,704 1,755 455,459

Year ended 30 June 2017
Opening net book value 3,125,943 25,746 3,351,258 50,770 16,475,750 19,675 18,392 208,332 19,577 220,226 28,543 1,466 23,545,678 453,704 1,755 455,459
Additions - - 620,349 4,974 2,402,132 10,830 23,233 71,768 1,072 97,309 - - 3,231,667 - - -
Revaluation surplus (Note 4) 23,119 - - - - - - - - - - - 23,119 - - -

Assets transferred from lease
assets to owned assets:
Cost - - - - 9,471 - - - - 2,644 - - 12,115 (9,471) (2,644) (12,115)
Accumulated depreciation - - - - (2,316) - - - - (1,055) - - (3,371) 2,316 1,055 3,371
- - - - 7,155 - - - - 1,589 - - 8,744 (7,155) (1,589) (8,744)
Disposals:
Cost / revalued amount (14,248) - (120,411) - (322,575) - (793) (35,214) (124) (43,587) - - (536,952) - - -
Accumulated depreciation - - 48,149 - 209,477 - 396 32,243 96 30,532 - - 320,893 - - -
(14,248) - (72,262) - (113,098) - (397) (2,971) (28) (13,055) - - (216,059) - - -
Depreciation charge - (369) (261,854) (5,372) (1,639,506) (2,402) (8,375) (39,079) (2,021) (49,376) (3,882) (127) (2,012,363) (28,257) (166) (28,423)

Closing net book value 3,134,814 25,377 3,637,491 50,372 17,132,433 28,103 32,853 238,050 18,600 256,693 24,661 1,339 24,580,786 418,292 - 418,292

At 30 June 2017
Cost / revalued amount 3,134,814 33,668 6,546,151 121,387 34,678,354 61,104 110,328 485,542 46,605 464,191 185,023 6,000 45,873,167 673,053 - 673,053
Accumulated depreciation - (8,291) (2,908,660) (71,015) (17,545,921) (33,001) (77,475) (247,492) (28,005) (207,498) (160,362) (4,661) (21,292,381) (254,761) - (254,761)

Net book value 3,134,814 25,377 3,637,491 50,372 17,132,433 28,103 32,853 238,050 18,600 256,693 24,661 1,339 24,580,786 418,292 - 418,292

Year ended 30 June 2018
Opening net book value 3,134,814 25,377 3,637,491 50,372 17,132,433 28,103 32,853 238,050 18,600 256,693 24,661 1,339 24,580,786 418,292 - 418,292
Additions - - 2,117,983 41,537 7,003,992 509 4,882 61,782 2,867 139,599 - - 9,373,151 - - -
Revaluation surplus (Note 4) 20,591 - - - - - - - - - - - 20,591 - - -

Assets transferred from lease
assets to owned assets:
Cost - - - - 673,053 - - - - - - 673,053 (673,053) - (673,053)
Accumulated depreciation - - - - (272,325) - - - - - - (272,325) 272,325 - 272,325
- - - - 400,728 - - - - - - - 400,728 (400,728) - (400,728)
Disposals:
Cost / revalued amount - (645) (107,716) (1,071) (91) (188) (55,883) (14,712) - (180,306) - - -
Accumulated depreciation - 245 58,883 710 56 107 36,578 14,510 - 111,089 - - -
- - (400) - (48,833) - (361) (35) (81) (19,305) (202) - (69,217) - - -
Depreciation charge - (358) (350,692) (7,294) (1,997,572) (3,227) (10,063) (114,409) (1,994) (55,998) (3,090) (1,145) (2,545,842) (17,564) (17,564)
Closing net book value 3,155,405 25,019 5,404,382 84,615 22,490,748 25,385 27,311 185,388 19,392 320,989 21,369 194 31,760,197 - - -

At 30 June 2018
Cost / revalued amount 3,155,405 33,668 8,663,489 162,924 42,247,683 61,613 114,139 547,233 49,284 547,907 170,311 6,000 55,759,656 - - -
Accumulated depreciation - (8,649) (3,259,107) (78,309) (19,756,935) (36,228) (86,828) (361,845) (29,892) (226,918) (148,942) (5,806) (23,999,459) - - -

Net book value 3,155,405 25,019 5,404,382 84,615 22,490,748 25,385 27,311 185,388 19,392 320,989 21,369 194 31,760,197 - - -

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

17.1.1 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 2018. Book value of
land on cost basis is Rupees 160.105 million (2017: Rupees 160.105 million) as on 30 June 2018. Had there been no revaluation, the value of land would have been lower by Rupees 2,579.452 million (2017: Rupees
2,558.861 million). Freehold land of MLCFL was revalued by Arif Evaluators as at 30 June 2015, forced sale value at 30 June 2015 was Rupees 344.077 million.
17.1.2 Borrowing cost of Rupees 1.347 million (2017: Rupees 2.029 million) was capitalized during the year using the capitalization rate ranging from 4.5% to 8% (2017: 1.90% to 7.87%) per annum.
 2018 2017
Note (Rupees in thousand)

17.1.3 Depreciation charged during the year has been

allocated as follows:

Cost of sales 31 2,449,963 1,956,646
Distribution expenses 32 4,041 -
Administrative expenses 33 109,402 81,062
Capital work in progress 17.1.5 - 3,078

2,563,406 2,040,786

17.1.4 Ownership of the housing colony’s assets included in the operating fixed assets is shared by the
MLCFL jointly with Agritech Limited (formerly Pak American Fertilizer Limited) in ratio of 101:245
since the time when both the companies were managed by Pakistan Industrial Development
Corporation (PIDC). These assets are in possession of the housing colony establishment for
mutual benefits.
2018 2017
(Rupees in thousand)

17.1.5 Capital work in progress

Plant and machinery 11,015,292 2,573,936
Civil Works 4,319,448 1,462,427
Mechanical works - 442,293
Electrical works - 174,030
Depreciation 17.1.3 - 3,078
Letters of credit 69,556 2,337
Un-allocated capital expenditure [Link] 477,072 414,916
Advances to suppliers against:
Plant and machinery 108,343 314,591
Civil works 322,626 101,584
Mechanical & electrical works 4,615 11,144
Purchase of land 736,048 550,918
Vehicles 3,114 2,822
Others 29,067 3,621

17,085,181 6,057,697

[Link] Un-allocated capital expenditure

Salaries and wages 163,500 100,153
Traveling - 9,719
Fee and subscription 49,590 84,154
Legal and professional expenses 74,028 8,379
Finance cost 153,813 146,342
Rent, rates & taxes - 65,670
Insurance 10,451 452
Energy expense 25,690 47

477,072 414,916

17.1.6 Particulars of freehold land are as follows:

Total Area
Location
(Acres)
ANNUAL REPORT 2018

Peshawar Road, Rawalpindi 121.26
8 KM, Manga Raiwind Road, District Kasur 32.57
Gulyana Road, Gujar Khan, District Rawalpindi 50.68
Iskandrabad, District Mianwali 1,268.13
235
 KOHINOOR TEXTILE MILLS LIMITED

236
17.2 Detail of operating fixed assets, exceeding the book value of Rupees 500,000 disposed off 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
Boge compressor 1,803 1,121 682 565 (117) Negotiation Matco (Private) Limited, Islamabad
Boge compressor 1,803 1,131 672 565 (107) Negotiation Matco (Private) Limited, Islamabad
Autocone Winder 10,789 8,111 2,678 2,943 265 Negotiation Gulf Worldwide Logistics, United Arab Emirates
Autocone Winder 11,608 8,113 3,495 2,943 (552) Negotiation Gulf Worldwide Logistics, United Arab Emirates
Flow Divider Assembly 5,130 985 4,145 307 (3,838) Auction Muhammad Hayat
Wear Segment of Special Cast Iron 3,693 2,183 1,510 108 (1,402) Auction Muhammad Hayat
Furnace Oil Pump 1,979 705 1,274 93 (1,181) Auction Muhammad Hayat
Side Liner Mill Roller Segment 3,795 1,359 2,436 177 (2,259) Auction Muhammad Hayat
Wear Segment of Special Cast Iron 2,897 1,597 1,300 460 (840) Insurance Claim EFU General Insrunce
Roller Tire 32,143 15,488 16,655 5,949 (10,706) Insurance Claim EFU General Insrunce
Normal Capple Element 13,185 7,585 5,600 1,973 (3,627) Insurance Claim EFU General Insrunce
Roller Solid 7,100 357 6,743 11,664 4,921 Claim M/s. Brother Engineering

95,925 48,735 47,190 27,747 (19,443)
Vehicles
Toyota Corolla 1,954 338 1,616 1,800 184 Negotiation Mr. Liaquat Ali, Fazal Park, Lahore
Toyota Corolla 1,960 538 1,422 1,800 378 Negotiation Mr. Sarmad Tanveer (employee), Lahore
Toyota Corolla 1,763 1,045 718 750 32 Negotiation Mr. Shahid Rehman (employee), Lahore
Honda - Civic 2,256 1,555 701 1,377 676 Auction M/s Golden Traders
Honda - Civic 1,821 1,245 576 800 224 Auction Shazia Tabassum
Toyota Corolla 1,746 1,200 546 1,200 654 Auction Sh. Adeel Ahmad
Toyota Corolla 1,746 1,211 535 1,200 665 Auction Abdul Hanan Khan
Toyota Corolla 1,746 1,188 558 1,200 642 Sale Muhammad Sajjad
Suzuki Cultus 1,063 455 608 859 251 Auction Muhammad Qasim
Suzuki Cultus 1,063 418 645 805 160 Auction M. Mashroof Lone
Suzuki Cultus 1,063 456 607 853 246 Auction Muhammad Qasim
Suzuki Cultus 1,078 526 552 755 203 Auction Ahmad Hassan, Multan
Suzuki Cultus 1,098 565 533 685 152 Auction Naeem Iqbal
Suzuki Cultus 1,058 505 553 826 273 Auction Naeem Iqbal
Suzuki Cultus 1,119 269 850 350 (500) Auction Muhammad Kausar

22,534 11,514 11,020 15,260 4,240

118,459 60,249 58,210 43,007 (15,203)
Aggregate of other items of
property, plant and equipment
with individual book values not
exceeding Rupees 500,000 61,847 50,840 11,007 27,793 16,786

180,306 111,089 69,217 70,800 1,583

 2018 2017
Note (Rupees in thousand)

18. INVESTMENT PROPERTIES

Opening net book value 1,789,670 1,784,058
Fair value gain 35 3,085 5,612

Closing net book value 1,792,755 1,789,670

18.1 The fair value of investment properties comprising land situated at Lahore and Rawalpindi have
been determined by an independent valuer Anderson Consulting (Private) Limited (Evaluators,
Surveyors, Stock Inspectors, Architects & Engineers) as at 30 June 2018.

18.2 Forced sale value of these properties as at 30 June 2018 was Rupees 1,523.843 million (2017:
Rupees 1,512.220 million)

18.3 Particulars of freehold land are as follows:

Total Area
Location
(Acres)

Peshawar Road, Rawalpindi 43.95
8 KM, Manga Raiwind Road, District Kasur 4.95

2018 2017
Note (Rupees in thousand)

19. INTANGIBLES

Intangible assets 19.1 16,811 25,206
Intangible asset under development 19.2 - 11,974

16,811 37,180

19.1 Intangible assets

At beginning of the year 78,666 49,634
Additions during the year - 29,032
At end of the year 78,666 78,666

Accumulated amortization
At beginning of the year 53,460 49,634
Amortization for the year 8,395 3,826

At end of the year 61,855 53,460

Net book value 16,811 25,206

ANNUAL REPORT 2018

237
 19.2 This represented advances given for implementation of Enterprise Resource Planning (ERP)
system. This has been written off during the year as the management expected no future
economic benefits from the use of ERP system.

2018 2017
Note (Rupees in thousand)

20. LONG TERM LOANS TO EMPLOYEES - Secured

Subsidiary Company - MLCFL
House building 2,713 2,956
Vehicles 2,169 2,388
Others 9,938 4,949

14,820 10,293
Less: Current portion shown under current assets 25 5,348 4,494

9,472 5,799

20.1 These loans are secured against employees’ retirement benefits of Subsidiary Company (MLCFL)
and carry interest at the rates ranging from 6.00% to 12.00% (2017: 6.00% to 12.00% ) per
annum. These loans are recoverable in 30 to 120 monthly installments.

20.2 These include loans to executives amounting to Rupees 1.450 million (2017: Rupees 2.420
million). Further, no amount was due from directors and chief executive officer at the year end
(2017: Rupees Nil).

2018 2017
Note (Rupees in thousand)

21. LONG TERM DEPOSITS

Security deposits 106,249 120,325
Less: Current portion shown under current assets 26 (71) (7,172)

106,178 113,153

22. STORES, SPARE PARTS AND LOOSE TOOLS

Stores 22.1 3,543,722 3,464,130
Spare parts 3,899,461 3,751,379
Loose tools 115,282 90,193

7,558,465 7,305,702
Less: Provision against slow moving items (3,772) (2,552)

7,554,693 7,303,150

22.1 This includes stores in transit of Rupees 409.84 million (2017: Rupees 720.60 million).
KOHINOOR TEXTILE MILLS LIMITED

238
 2018 2017
Note (Rupees in thousand)

23. STOCK-IN-TRADE

Raw materials 23.1 1,502,953 946,124
Packing materials 152,114 169,129
Work-in-process 1,263,478 1,395,315
Finished goods 849,800 800,247

3,768,345 3,310,815

23.1 Raw materials include stock in transit of Rupees 270.613 million (2017: Rupees 91.508
million).

23.2 Stock in trade of Rupees 45.678 million (2017: Rupees 51.599 million) is being carried at net
realizable value.

23.3 Stock in trade includes stock of Rupees 41.245 million (2017: Rupees 50.971 million) with
external parties for processing.
2018 2017
Note (Rupees in thousand)

24. TRADE DEBTS

Considered good:
Secured (against letters of credit) 520,598 550,150
Unsecured 2,456,876 1,689,626

2,977,474 2,239,776
Considered doubtful:
Others - unsecured 24.1 25,932 -

3,003,406 2,239,776
Provision for doubtful debts (25,932) -

2,977,474 2,239,776

24.1 Movement in provision for doubtful debts

As at 01 July - -
Add: Provision for the year (25,932) -

As at 30 June (25,932) -

24.2 As at 30 June 2018, trade debts of Rupees 2,178.432 million (2017: Rupees 1,239.674 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:

2018 2017
(Rupees in thousand)

Upto 1 month 1,340,040 862,488

1 to 6 months 635,426 202,562
More than 6 months 202,966 174,624

ANNUAL REPORT 2018

2,178,432 1,239,674

239
 24.3 Disclosures in respect of outstanding export debtors along with type of arrangements are as follows:

Jurisdiction and relationship 2018 2017

with the Company Letters of Cash Letters of Cash
(related party or other) credit against Contracts Total credit against Contracts Total
documents documents
Jurisdiction Relationship
--------------------------------- (Rupees in thousand) -------------------------------------------

America Other 22,315 188,854 23,343 234,512 38,267 226,093 20,460 284,820
Asia. Africa Other 8,618 666 - 9,284 79,252 - - 79,252
Australia Other - 3,425 9,577 13,002 - - 14,720 14,720
Europe Other 209,691 75,696 14,689 300,076 177,171 176,932 15,922 370,025

240,624 268,641 47,609 556,874 294,690 403,025 51,102 748,817

2018 2017
Note (Rupees in thousand)
25. LOANS AND ADVANCES - Unsecured, considered good

Loans and advances to employees:
- Executives 74 10,866
- Other employees 24,677 12,304
- Current portion of long term loans to employees 20 5,348 4,494

30,099 27,664
Advances to Government:
- Sales tax 1,271,086 4,494
- Excise duty 269,211 -
- Collector of customs 25.1 41,911 -
- Refunds from Government 25.2 16,797 -

1,599,005 4,494
Advances to suppliers 25.3 1,088,213 899,183
Letters of credit 540,008 32,255
Provision for doubtful advances 34 4,243 -

3,253,082 963,596

25.1 It pertains to advance given for clearance of import shipments

25.2 This represents amount paid to Government under protest for various cases which have been
decided in favour of MLCFL.

25.3 This includes an amount of Rupees 679.128 million (2017: Rupees 502.414 million) advanced
to Ministry of Railways for transportation of coal and cement.

2018 2017
Note (Rupees in thousand)

26. SECURITY DEPOSITS AND SHORT

TERM PREPAYMENTS

Current portion of long term deposits 21 71 7,172
KOHINOOR TEXTILE MILLS LIMITED

Short term deposit

Margin against:
- Letters of credit 9,634 85,158
- Bank guarantees 98,014 -
Prepayments 26,200 30,804

133,919 123,134

240
 2018 2017
Note (Rupees in thousand)

27. OTHER RECEIVABLES

Considered good:

Sales tax refundable 453,877 1,018,613
Custom duty receivable 15,993 32,786
Mark up rate support receivable from financial institutions 3,633 3,633
Export rebate 74,863 95,045
Insurance claims 941 4,171
Duty draw back receivable 198,034 189,377
Margin deposits with brokers 158,410 121,300
Advance income tax - MLPL - 162,649
Dividend receivable 5,149 -
Others 59,507 66,373

970,407 1,693,947

28. SHORT TERM INVESTMENTS

Held-to-maturity investment 28.1 - 1,498,549
Investments at fair value through profit or loss 28.2 3,480,826 1,621,721
Advance against purchase of shares 28.3 - 94,556
Investment in gold 28.4 400,294 -

3,881,120 3,214,826

28.1 Held-to-maturity investments - other than related parties

Subsidiary Company - MLCL

Treasury bills
Opening balance 1,498,549 323,955
Add: Investments made during the year 2,471,593 1,481,136
Amortized during the year 29,858 23,458

4,000,000 1,828,549
Less: Investments matured during the year (4,000,000) (330,000)

- 1,498,549

28.1.1 This represents investment in treasury bills for the period of six months. These treasury bills carry
profit at the rate from 5.96% to 6.06% (2017: from 5.96% to 6.18%) per annum.
ANNUAL REPORT 2018

241
 28.2 Short term investments
2018 2017
Carrying Unrealized Market Carrying Unrealized Market
value gain / (loss) value value gain / (loss) value
- - - - - - - - - - - - (Rupees in thousand) - - - - - - - - - - - -
Holding Company

Shares in listed companies

Pakistan Reinsurance Company Limited
25,000 (2017: 25,000) fully paid ordinary shares of Rupees 10 each 1,220 (398) 822 757 463 1,220
Samin Textiles Limited
30,000 (2017: 30,000) fully paid ordinary shares of Rupees 10 each 206 (80) 126 216 (10) 206
D. S. Industries Limited
20,000 (2017: 20,000) fully paid ordinary shares of Rupees 10 each 77 15 92 56 21 77
Pervez Ahmed Securities Limited
25,000 (2017: 25,000) fully paid ordinary shares of Rupees 10 each 49 (25) 24 42 8 50
Bank AL Habib Limited
400 (2017: 400) fully paid ordinary shares of Rupees 10 each 23 9 32 17 6 23
Kohinoor Energy Limited
200 (2017: 200) fully paid ordinary shares of Rupees 10 each 9 (1) 8 8 - 8
Shifa International Hospitals Limited
700 (2017: 700) fully paid ordinary shares of Rupees 10 each 231 (42) 189 210 21 231
The Hub Power Company Limited
5 (2017: 5) fully paid ordinary shares of Rupees 10 each 1 - 1 1 - 1
Honda Atlas Cars (Pakistan) Limited
55 (2017: 55) fully paid ordinary shares of Rupees 10 each 48 (30) 18 20 28 48
Pak Suzuki Motor Company Limited
13 (2017: 13) fully paid ordinary shares of Rupees 10 each 10 (5) 5 5 5 10
Shell Pakistan Limited
55 (2017: 55) fully paid ordinary shares of Rupees 10 each 32 (14) 18 16 15 31
Biafo Industries Limited
304 (2017: 304) fully paid ordinary shares of Rupees 10 each 76 21 97 84 (8) 76
Thal Limited
450 (2017: 450) fully paid ordinary shares of Rupees 10 each 273 (58) 215 139 134 273
Abbot Laboratories (Pakistan) Limited
92 (2017: 92) fully paid ordinary shares of Rupees 10 each 86 (23) 63 75 11 86
Blessed Textile Limited
17,300 (2017: 17,300) fully paid ordinary shares of Rupees 10 each 4,158 1,988 6,146 3,141 1,017 4,158
The Bank of Punjab
4,500 (2017: Nil) fully paid ordinary shares of Rupees 10 each 56 (2) 54 - - -
Engro Foods Limited
1,500 (2017: Nil) fully paid ordinary shares of Rupees 10 each 134 (2) 132 - - -

6,689 1,353 8,042 4,787 1,711 6,498
Subsidiary Company - MLCL

Mutual funds

ABL Cash Fund 3,550,685 (2017: 20,143,908) units 36,811 814 37,625 203,411 200 203,611
Askari Sovereign Cash Fund 994,976 (2017: 2,003,894) units 100,000 72 100,072 201,057 1 201,058
Alfalah GHP Severeign Fund 1,003 (2017: 1,003) units 106 5 111 106 - 106
Faysal Money Market Fund 511,798 (2017: 5,198) units 51,948 2,615 54,563 530 (4) 526
NAFA Money Market Fund 127,172,665 (2017: 1,347,366) units 1,298,558 24,673 1,323,231 13,262 21 13,283
HBL Government Securities Fund 1,010 (2017: 1,010) units 106 - 106 106 - 106
HBL Cash Fund 11,423,931 (2017: 8,991,001) units 1,177,657 32,862 1,210,519 902,585 832 903,417
HBL Money Market Fund 52 (2017: nil) units 5 - 5 - - -
Primus Income Fund 996 (2017: 996) units 105 6 111 102 2 104
Larkson Money Market Fund 4,770,700 (2017: nil) units 500,871 2,856 503,727 - - -
UBL Liquidity Plus Fund 47,530 (2017: nil) units 4,992 56 5,048 - - -
UBL Money Market Fund 1,044 (2017: 1,044) units 105 5 110 108 (3) 105

3,171,264 63,964 3,235,228 1,321,267 1,049 1,322,316

Shares in listed companies

Askari General Insurance Company Limited 288 (2017: 760,788)
fully paid ordinary shares of Rupees 10 each) 9 (1) 8 22,967 (258) 22,709
Bhanero Textile Mills Limited 6,501 (2017: 6,501) fully paid
ordinary shares of Rupees 10 each) 5,851 (601) 5,250 5,337 514 5,851
Engro Corporation Limited 1,001 (2017: 1) fully paid ordinary
shares of Rupees 10 each) 310 4 314 - - -
Faisal Spinning Mills Limited 20,701 (2017: 20,701) fully paid
KOHINOOR TEXTILE MILLS LIMITED

ordinary shares of Rupees 10 each) 5,985 225 6,210 4,341 1,644 5,985
Fauji Cement Company Limited 274,001 (2017: 1) fully paid
ordinary shares of Rupees 10 each) 6,898 (637) 6,261 - - -
Fauji Fertilizer Bin Qasim Limited 26,501 (2017: 1) fully paid
ordinary shares of Rupees 10 each) 1,204 (181) 1,023 - - -

242
 2018 2017
Carrying Unrealized Market Carrying Unrealized Market
value gain / (loss) value value gain / (loss) value
- - - - - - - - - - - - (Rupees in thousand) - - - - - - - - - - - -

International Steels Limited 101 (2017: 1) fully paid ordinary

shares of Rupees 10 each) 10 - 10 - - -
Lotte Chemical Pakistan Limited 3,001,001 (2017: 1) fully paid
ordinary shares of Rupees 10 each) 37,011 (1,119) 35,892 - - -
Orix Leasing Pakistan Limited 353 (2017: 497,853) fully paid
ordinary shares of Rupees 10 each) 14 1 15 25,266 (5,227) 20,039
Pakistan Petroleum Limited 700,001 (2017: 1) fully paid ordinary
shares of Rupees 10 each) 150,853 (423) 150,430 - - -
The Bank of Punjab 1,501 (2017: 1) fully paid ordinary shares
of Rupees 10 each) 18 - 18 - - -
Other Listed companies 385 (2017: 6,597,983) fully paid
ordinary shares of Rupees 10 each 75 (12) 63 173,586 (12,922) 160,664

208,238 (2,744) 205,494 231,497 (16,249) 215,248
Subsidiary Company - MLCFL

Shares in listed company

Next Capital Limited 1,500,000 (2017: 1,500,000) fully paid
ordinary shares of Rupees 10 each & 1,875,000
(2017: 1,875,000) fully paid right shares of Rupees 8 each 30,000 2,062 32,062 30,000 47,659 77,659

238,238 (682) 237,556 261,497 31,410 292,907

3,416,191 64,635 3,480,826 1,587,551 34,170 1,621,721

28.3 This advance was given by MLCL against book building portion of initial public offer of Ittefaq Iron Industries Limited. MLCL purchased 3,131,000
ordinary shares at strike price of Rupees 30.2 per share. During the current year, these shares have been disposed off.

2018 2017
Carrying Unrealized Market Carrying Unrealized Market
value gain / (loss) value value gain / (loss) value
- - - - - - - - - - - - (Rupees in thousand) - - - - - - - - - - - -

28.4 Investment in gold

Subsidiary Company - MLCL

Gold - 6,656 Tola 377,460 22,834 400,294 - - -

28.4.1 This gold is under the custody of Pakistan Mercantile Exchange Limited (PMEX).

ANNUAL REPORT 2018

243
 2018 2017
Note (Rupees in thousand)

29. CASH AND BANK BALANCES

Cash in hand 7,891 13,097

Cash at bank:
- On current accounts 29.1 431,118 333,851
- On saving accounts 29.1& 29.2 665,734 1,470,226

1,096,852 1,804,077

1,104,743 1,817,174

29.1 The balances in current and deposit accounts include US $ 87,087 (2017: US $ 48,681 )

29.2 The balances in saving accounts carry interest ranging from 0.16% to 6.50% (2017: 0.15% to
5.60%) per annum.
2018 2017
Note (Rupees in thousand)

30. REVENUE

Export sales 8,023,857 10,117,511
Local sales 30.1 35,229,804 30,931,082
Export rebate 40,074 51,216
Duty draw back 173,608 147,691

43,467,343 41,247,500

30.1 Local sales 45,896,297 39,100,398

Less:
Sales tax 5,757,487 4,845,851
Federal excise duty 4,433,636 2,931,708
Commission 141,565 110,471
Discount 333,805 281,286

35,229,804 30,931,082

KOHINOOR TEXTILE MILLS LIMITED

244
 2018 2017
Note (Rupees in thousand)

31. COST OF SALES

Raw materials consumed 31.1 10,496,415 9,941,693
Salaries, wages and other benefits 31.2 2,489,812 2,313,617
Processing charges 26,232 14,495
Stores, spare parts and loose tools consumed 2,455,761 2,277,625
Packing materials consumed 2,029,024 1,799,522
Fuel and power 11,114,047 9,916,121
Repair and maintenance 565,362 758,245
Insurance 85,574 90,687
Other factory overheads 31.3 370,988 345,475
Amortization 2,006 -
Depreciation 17.1.3 2,449,963 1,956,646

32,085,184 29,414,126

Work-in-process

Opening stock 1,395,315 1,015,593
Closing stock (1,263,478) (1,395,315)

131,837 (379,722)

Cost of goods manufactured 32,217,021 29,034,404

Finished goods

Opening stock 800,247 758,144
Closing stock (849,800) (800,247)

(49,553) (42,103)

Cost of sales 32,167,468 28,992,301

31.1 Raw materials consumed

Opening stock 945,845 1,134,148
Add: Purchased during the year 11,053,523 9,753,669

11,999,368 10,887,817
Less: Closing stock (1,502,953) (946,124)

10,496,415 9,941,693

31.2 Salaries, wages and other benefits include provident fund contribution of Rupees 86.745 million
(2017: Rupees 67.913 million), gratuity and compensated absences amounting to Rupees
35.22 million (2017: Rupees 30.02 million).

31.3 Other expenses include housing colony expenses aggregating to Rupees 71.32 million (2017:
Rupees 73.23 million).
ANNUAL REPORT 2018

245
 2018 2017
Note (Rupees in thousand)

32. DISTRIBUTION COST

Salaries and other benefits 32.1 224,216 181,583
Outward freight and handling 25,959 29,820
Clearing and forwarding 749,179 928,243
Commission to selling agents 101,888 149,835
Travelling and conveyance 101,705 94,369
Insurance 191 283
Vehicles’ running 20,422 15,879
Electricity, gas and water 2,639 933
Postage, telephone and fax 9,899 9,486
Sales promotion and advertisement 391,837 354,475
Depreciation 17.1.3 4,041 -
Miscellaneous 93,305 48,570

1,725,281 1,813,476

32.1 Salaries and other benefits include provident fund contribution of Rupees 8.273 million (2017:
7.332 million), gratuity and compensated absences amounting to Rupees 4.21 million (2017:
Rupees 4.53 million).
2018 2017
Note (Rupees in thousand)

33. ADMINISTRATIVE EXPENSES

Salaries and other benefits 33.1 595,603 657,266
Travelling and conveyance 100,837 102,568
Repair and maintenance 40,734 68,879
Rent, rates and taxes 11,487 10,611
Insurance 14,193 13,569
Vehicles’ running 36,476 33,831
Printing, stationery and periodicals 50,794 32,784
Electricity, gas and water 5,227 486
Postage, telephone and fax 25,239 23,777
Legal and professional 82,832 60,161
Security, gardening and sanitation 35,216 36,020
Amortization 6,389 -
Depreciation 17.1.3 109,402 81,062
Miscellaneous 221,514 184,942

1,335,943 1,305,956

33.1 Salaries and other benefits include provident fund contribution of Rupees 19.696 million (2017:
Rupees 17.429 million), gratuity and compensated absences amounting to Rupees 6.460
million (2017: Rupees 4.290 million).
KOHINOOR TEXTILE MILLS LIMITED

246
 2018 2017
Note (Rupees in thousand)
34.
OTHER EXPENSES
Auditors’ remuneration 34.1 5,910 5,468
Donations 34.2 15,025 31,074
Intangible assets under development written off 11,974 -
Loss on disposal of investment 78,007 15,200
Provision for doubtful debts 932 -
Workers’ profit participation fund 12.4 379,134 501,390
Workers Welfare Fund 82,738 146,574
Provision for slow moving stores and spares 1,220 -
Provision for doubtful advances 25 4,243 -
Unrealized loss on remeasurements of forward
contracts - shares 6,996 -
Miscellaneous 5,671 1,268
591,850 700,974

34.1 Auditors’ remuneration

Riaz Ahmad and Company
Audit fee 2,250 1,750
Certifications 107 105
Reimbursable expenses 336 280
2,693 2,135
KPMG Taseer Hadi and Company
Audit fee 1,668 1,450
Interim review 460 400
Interim audit and other certification 600 1,058
Reimbursable expenses 489 425
3,217 3,333
5,910 5,468

34.2 Donations for the year have been given to:
Gulab Devi Hospital, Lahore 216 12,088
Miscellaneous donations in the form of cement 1,010 1,457
Bushra Shaheen 300 300
Jamia Masjaid, Iskindarabad 2,135 -
Founder Group 30 -
Police Welfare Middle School 2,500 8,150
DHQ Hospital, Mianwali - 3,832
District Public School, Sargodha - 2,334
Daud Khel Health Care Centre 6,518 1,124
Jahanara Memorial Trust 1,000 1,000
Beachon House National University 562 -
Icare Foundation 500 -
Police station, Daud Khel 216 -
Labor Office, Mianwali 38 -
Aitchison College - 500
Tariq Niazi Hockey Stadium - 169
Starfall Foundation - 100
ANNUAL REPORT 2018

LCCI Founder Group - 20

15,025 31,074

34.3.1 None of the directors and their spouses have any interest in the donee’s fund.

247
 2018 2017
Note (Rupees in thousand)

35. OTHER INCOME

Income from financial assets:
Exchange gain - net 112,755 40,812
Gain on disposal of investments at fair value through
profit or loss - net 252,499 1,919,530
Gain on remeasurement of fair value of investments at
fair value through profit or loss 49,893 52,370
Amortization of held-to-maturity investment 29,858 23,458
Return on bank deposits 52,685 32,932
Interest on loans to employees - 522
Dividend income 12,156 126,742
509,846 2,196,366
Income from non-financial assets:
Scrap sales 70,520 42,897
Gain on disposal of property, plant and equipment 17.2 1,583 26,383
Gain on remeasurement of investment property 18 3,085 5,612
Unrealized gain on remeasurement of future contracts - gold 10,145 -
Unrealized gain on remeasurement of gold at fair value
less cost to sell 22,834 -
Miscellaneous 3,721 6,102

111,888 80,994

621,734 2,277,360
36. FINANCE COST

Mark up / finance charges / interest on:
Long term financing 297,412 80,044
Short term borrowings 520,328 259,638
Liabilities against assets subject to finance lease 3,071 24,142
Workers’ profit participation fund 12.4 27,132 14,958

847,943 378,782

Exchange loss - net 257,372 -

Bank charges and commission 62,076 63,182

319,448 63,182

1,167,391 441,964
37. TAXATION

Current
Current year 1,730,539 2,984,200
KOHINOOR TEXTILE MILLS LIMITED

Prior year (36,050) 17,290

1,694,489 3,001,490

Deferred tax 11 (309,854) 16,895

1,384,635 3,018,385

248
 2018 2017
Note (Rupees in thousand)

37.1 Reconciliation of tax charge for the year

Profit before tax 7,101,144 10,270,189

Tax on profit @ 30% (2017: 31%) 2,130,343 3,183,759

Tax effect of lower rate on certain income / expenses (604,388) (523,410)
Tax effect of exempt income / permanent differences (95,156) 4,712
Tax effect of super tax 184,854 326,252
Tax effect on prior year adjustment (36,050) 17,290
Tax effect final tax regime (61,170) -
Tax effect under section 65D (202,183) -
Tax effect - others 68,385 9,782

1,384,635 3,018,385

37.2 Management assessment of sufficiency of current income tax provision

A comparison of provision on account of income taxes with most recent tax assessment for last
three years is as follows:
Year ended 30 June
2017 2016 2015

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

Provision for taxation 2,955,637 1,137,143 941,286

*Tax assessed as per most recent tax assessment 2,714,436 932,010 824,334

Various appeals are pending at different appellate forums on various issues. The Group
computes tax based on the generally accepted interpretations of the tax laws and considering
views followed by tax authorities to ensure that the sufficient provision for the purpose of taxation
is available. According to management, the tax provision made in the consolidated financial
statements is sufficient.

*This represents consolidated income tax payable per returns of income filed by the Group
companies. As per section 120 of the Income Tax Ordinance, 2001, the return is taken to be an
assessment order issued to the tax payer by the Commissioner on the day return was filed.

38. EARNINGS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic earnings per share which is based on:
2018 2017
Restated
Profit attributable to ordinary shareholders of
the Holding Company (Rupees in thousand) 3,524,928 4,672,586

Weighted average number of ordinary shares (Numbers) 295,080,469 285,178,699

Earnings per share (Rupees) 11.95 16.38

ANNUAL REPORT 2018

249
 2018 2017
Note (Rupees in thousand)

39. CASH GENERATED FROM OPERATIONS

Profit before taxation 7,101,144 10,270,189
Adjustment for non-cash charges and other items:
Depreciation 2,563,406 2,040,786
Amortization 8,395 3,826
Intangible assets under development written off 11,974 -
Finance cost 1,167,394 441,964
Gain on sale of property, plant and equipment (1,583) (26,383)
Gain on remeasurement of investment properties (3,085) (5,612)
Dividend income (12,156) (126,742)
Provision for doubtful debts 932 (23,458)
Unrealized loss on remeasurements of forward
contracts - shares 6,996 -
Advances written off 4,243 -
Provision for slow moving stores and spares 1,220 -
Employees’ retirement benefits 46,058 38,843
Return on bank deposits (52,685) (32,933)
Working capital changes 39.1 (2,106,642) (2,285,528)

8,375,608 10,318,410

39.1 Working capital changes

(Increase) / decrease in current assets:
Stores, spare parts and loose tools (251,543) (1,401,158)
Stock-in-trade (457,530) (234,339)
Trade debts (737,698) (375,866)
Loans and advances (2,289,486) 37,990
Security deposits and short term prepayments (10,785) (141,186)
Short term investments - net (666,294) (592,199)
Other receivables 718,391 (581,708)

(3,694,945) (3,288,466)
Increase in trade and other payables 1,588,303 1,002,938

(2,106,642) (2,285,528)
KOHINOOR TEXTILE MILLS LIMITED

250
39.2 Reconciliation of movement of liabilities to cash flows arising from financing activities

Liabilities from financing activities

Issued, Share Long term Liabilities Short term Unclaimed
subscribed premium financing against borrowings dividend Total
and paid- assets
up capital subject
to finance
lease

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


Balance as at 01 July 2017 2,823,551 144,919 4,657,500 501,332 6,326,025 116,325 14,569,652
Proceeds from long term financing - - 11,090,924 - - - 11,090,924
Repayment of long term financing - - (272,328) - - - (272,328)
Proceeds from issuance of right shares 169,413 841,158 - - - - 1,010,571
Repayment of liabilities against assets
subject to finance lease - - - (501,332) - - (501,332)
Short term borrowings - net - - - - 3,662,731 - 3,662,731
Dividend declared - - - - - 1,610,015 1,610,015
Dividend paid - - - - - (1,594,840) (1,594,840)

Balance as at 30 June 2018 2,992,964 986,077 15,476,096 - 9,988,756 131,500 29,575,393

40. 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 Officer Directors Executives

2018 2017 2018 2017 2018 2017 2018 2017

--------------------------( Rupees in Thousand )------------------------
Managerial remuneration 26,273 20,412 47,704 33,865 44,317 40,884 187,805 159,064
Allowances
House rent 4,641 3,024 5,816 1,135 4,889 4,513 46,105 49,021
Conveyance - - 2,303 2,018 1,500 1,248 10,999 8,278
Medical - - 794 905 409 848 9,804 7,510
Utilities 1,456 1,764 4,400 1,556 3,758 2,313 28,104 30,571
Special allowance - - 8,106 5,539 2,890 3,562 20,272 16,721
Bonus - - - - - - - 70,000
Contribution to provident fund 2,109 1,688 3,372 2,176 3,521 2,818 15,872 12,911
34,479 26,888 72,495 47,194 61,284 56,186 318,961 354,076

Number of persons 1 1 3 4 6 6 89 79

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 4 (2017: 4) non-executive directors was Rupees 496,666 (2017: Rupees 396,000).
ANNUAL REPORT 2018

No remuneration was paid to non-executive directors of the Group.

251
 41. TRANSACTIONS WITH RELATED PARTIES

The related parties comprise of subsidiaries, associated undertakings, directors of the Group 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 consolidated
financial statements are as follows:
2018 2017
(Rupees in thousand)

Post employment benefit plan

Contribution to provident fund 187,441 154,455
Contribution to gratuity fund 30,513 16,732

2018 2017
42. PLANT CAPACITY AND ACTUAL PRODUCTION

Holding Company

SPINNING:
(Numbers)
- Rawalpindi Division
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 (2017: 1,095 shifts) 45,811 42,446
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 41,331 39,574

(Numbers)

Rotors (average) installed / worked 1,848 1848

(Kilograms in thousand)

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 3,548 3,108
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 3,075 2,680


(Numbers)

- Gujar Khan Division
Spindles (average) installed / worked 71,808 71,808

(Kilograms in thousand)
KOHINOOR TEXTILE MILLS LIMITED

100% plant capacity converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts ) 40,821 38,978
Actual production converted into 20s count based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 36,603 34,816

252
 2018 2017
WEAVING:
(Numbers)
- Raiwind Division
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 (2017: 1,095 shifts) 104,909 104,909

Actual production converted to 60 picks based on
3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 95,710 93,764

PROCESSING OF CLOTH :

- Rawalpindi Division (Meters in thousand)

Capacity at 3 shifts per day for 1,095 shifts (2017: 1,095 shifts) 42,090 42,090
Actual production at 3 shifts per day for 1,095 shifts
(2017: 1,095 shifts) 14,613 17,986

POWER PLANT:

- Rawalpindi Division (Mega watts)

Annual rated capacity based on 365 days (2017: 365 days) 163,987 163,987
Actual generation
Main engines 30,595 48,527
Gas engines 27,763 20,307

- Raiwind Division

Annual rated capacity based on 365 days (2017: 365 days) 96,360 96,096
Actual generation 38,098 40,341

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 and
interruption in gas and electricity supply.

- Cloth processing units working capacity was limited to actual export / local orders in hand.

- The generation of power was limited to actual demand.

Subsidiary Company - MLCFL

CEMENT: (Metric Tons in thousand)

Clinker:
Annual rated capacity (Based on 300 days) 3,360 3,360
ANNUAL REPORT 2018

Annual production for the year 3,530 3,299

253
 KOHINOOR TEXTILE MILLS LIMITED

254
43. SEGMENT INFORMATION
Processing and Elimination of inter-
Spinning Weaving Cement Investment Power Group

43.1 home textile segment transactions
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
( R u p e e s in t h o u s a n d )

SALES:
EXTERNAL 9,018,757 7,252,725 3,461,876 3,610,176 5,352,907 6,541,807 25,633,803 23,842,792 - - - - - 43,467,343 41,247,500
INTER-SEGMENT 500,504 734,408 1,242,489 1,198,788 - - 50,361 42,618 - - - - (1,793,354) (1,975,814) - -
9,519,261 7,987,133 4,704,365 4,808,964 5,352,907 6,541,807 25,684,164 23,885,410 - - - - (1,793,354) (1,975,814) 43,467,343 41,247,500
COST OF SALES (8,153,123) (6,816,046) (4,415,966) (4,499,718) (4,529,692) (5,440,825) (16,862,041) (14,211,526) - - - - 1,793,354 1,975,814 (32,167,468) (28,992,301)
GROSS PROFIT 1,366,138 1,171,087 288,399 309,246 823,215 1,100,982 8,822,123 9,673,884 - - - - - - 11,299,875 12,255,199

DISTRIBUTION COST (39,553) (29,615) (74,152) (77,851) (382,061) (430,828) (1,229,515) (1,275,182) - - - - - - (1,725,281) (1,813,476)
ADMINISTRATIVE EXPENSES (184,136) (152,289) (150,741) (155,372) (159,654) (153,020) (727,334) (606,505) (105,365) (223,676) (8,713) (15,094) - - (1,335,943) (1,305,956)
(223,689) (181,904) (224,893) (233,223) (541,715) (583,848) (1,956,849) (1,881,687) (105,365) (223,676) (8,713) (15,094) - - (3,061,224) (3,119,432)
PROFIT BEFORE TAX AND UNALLOCATED
INCOME AND EXPENSES 1,142,449 989,183 63,506 76,023 281,500 517,134 6,865,274 7,792,197 (105,365) (223,676) (8,713) (15,094) - - 8,238,651 9,135,767
UNALLOCATED INCOME AND EXPENSES
FINANCE COST (1,167,391) (441,964)
OTHER EXPENSES (591,850) (700,974)
OTHER INCOME 621,734 2,277,360
TAXATION (1,384,635) (3,018,385)

(2,522,142) (1,883,963)

PROFIT AFTER TAXATION 5,716,509 7,251,804

43.2 Reconciliation of reportable segment assets and liabilities

Processing and
Spinning Weaving Cement Investment Power Group
home textile

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
( R u p e e s in t h o u s a n d )

TOTAL ASSETS FOR REPORTABLE SEGMENT 5,910,038 4,665,385 3,404,394 3,313,886 3,112,506 2,912,971 48,707,078 28,848,538 4,908,669 4,983,230 6,912,962 5,110,832 72,955,647 49,834,842

UNALLOCATED ASSETS 3,230,086 4,002,872

TOTAL ASSETS AS PER BALANCE SHEET 76,185,733 53,837,714

All segment assets are allocated to reportable segments other than those directly relating to corporate and tax assets.

TOTAL LIABILITIES FOR REPORTABLE

SEGMENT 1,194,478 932,919 1,387,908 1,283,415 4,177,132 2,590,431 11,593,092 7,404,003 - - - - 18,352,610 12,210,768

UNALLOCATED LIABILITIES 18,016,553 8,848,476

TOTAL LIABILITIES AS PER BALANCE SHEET 36,369,163 21,059,244

All segment liabilities are allocated to reportable segments other than trade and other payables, current and deferred tax liabilities.
 43.3 Geographical Information

43.3.1 The Group’s revenue from external customers by geographical location is detailed below:

2018 2017
(Rupees in thousand)

Europe 2,664,714 3,431,167

America 3,423,634 3,983,128
Asia, Africa, Australia 2,149,191 2,902,123
Pakistan 35,229,804 30,931,082

43,467,343 41,247,500

43.3.2 All non-current assets as at reporting date are located and operated in Pakistan.

43.4 Revenue from major customers

Revenue from major customers whose revenue accounts for more than 10% of the segment’s
revenue in the Weaving segment was Rupees 361 million (2017: Rupees 679 million ) whereas in the
Processing and Home Textile segment was Rupees 2,190 million (2017: Rupees 4,524 million).

43.5 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.

44. PROVIDENT FUND RELATED DISCLOSURES

As at the reporting date, the provident fund trusts are in the process of regularizing investments in
accordance with section 218 of the Companies Act, 2017 and the rules formulated for this purpose
in terms of SRO 731(1)/2018 issued by Securities and Exchange Commission of Pakistan on 06
June 2018 which allows transition period of one year for bringing the trusts in conformity with the
requirements of rules.

2018 2017
(Number of employees)

45. NUMBER OF EMPLOYEES

Number of employees as on 30 June 6,357 5,952

This includes 5,015 (2017: 4,715) number of factory employees

Average number of employees during the year 6,253 6,301

46. FINANCIAL RISK MANAGEMENT

46.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency
ANNUAL REPORT 2018

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.

255
 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.

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:

2018 2017
(Amounts in thousand)

Cash at banks - USD 87 55

Cash at banks - GBP 2 2
Trade debts - USD 4,587 7,146
Trade and other payables - USD 6,600 -
Trade and other payables - Euro - 23
Finance lease liability - USD - 4,577
Outstanding letters of credit - USD 9,964 5,735
Outstanding letters of credit - Euro 18,991 82,117
Outstanding letters of credit - CHF 18 -
Outstanding letters of credit - Yen - 10,486
Net exposure - USD (11,890) (3,111)
Net exposure - Euro (18,991) (82,140)
Net exposure - CHF (18) -
Net exposure - Yen - (10,486)
Net exposure - GBP 2 2

The following significant exchange rates were applied during the year:

2018 2017
Rupees per US Dollar
Average rate 110.01 104.61
Reporting date rate 121.60 104.80

Rupees per Euro
Average rate 132.06 114.37
KOHINOOR TEXTILE MILLS LIMITED

Reporting date rate 141.57 120.14

Rupees per Yen
Average rate 1.01 0.96
Reporting date rate 1.10 0.94

256
 2018 2017

Rupees per CHF

Average rate 113.88 105.83
Reporting date rate 122.32 109.75
Rupees per GBP
Average rate 149.12 133.05
Reporting date rate 159.14 136.42

Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5% against the
USD, Euro, Yen ,CHF and GBP with all other variables held constant, the impact on profit after
taxation for the year would have been Rupees 11.405 million, Rupees Nil, Rupees Nil, Rupees
Nil and Rupees 0.01 million (2017: Rupees 12.687 million, Rupees 0.468 million, Rupees Nil,
Rupees Nil and Rupees 0.01 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
(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 Impact on statement of other

after taxation comprehensive income
2018 2017 2018 2017
----------- (RUPEES IN THOUSAND) -------------

PSX 100 (5% increase) 10,438 12,725 - -

PSX 100 (5% decrease) (10,438) (12,725) - -


PMEX (5% increase) 482 - - -
PMEX (5% decrease) (482) - - -
ANNUAL REPORT 2018

257
 The Group’s investment in mutual fund amounting to Rupees 3,235.229 million (2017: Rupees
1,322.317 million) is exposed to price risk due to change in Net Asset Value (NAV) of such fund.

As at 30 June 2018, if fair value (NAV) had been 1% higher / lower with all other variables held
constant, profit before tax for the year would have been higher / lower by Rupees 27.499 million
(2017: Rupees 10.909 million).

(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, liabilities against assets subject to finance lease 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.

At the balance sheet date the interest rate profile of the Group’s interest bearing financial
instruments was:
2018 2017
(Rupees in thousand)

Fixed rate instruments

Financial Assets

Short term investments - 1,498,549
Bank balances at PLS account 333,001 224,984

Financial liabilities

Long term financing 1,648,400 1,428,740
Short term borrowings 6,496,178 5,383,169

Floating rate instruments

Financial assets

Bank balances - saving accounts 332,733 1,245,242

Financial liabilities

Long term financing 13,827,696 3,228,760
Liabilities against assets subject to finance lease - 501,332
Short term borrowings 3,754,512 875,207

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
KOHINOOR TEXTILE MILLS LIMITED

statement of profit or loss. Therefore, a change in interest rate at the balance sheet date would
not affect statement of profit or loss of the Group.

258
 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 125.522 million (2017:
Rupees 22.742 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 balance sheet 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:
2018 2017
(Rupees in thousand)

Investments 3,480,826 3,214,826

Deposits 213,897 205,483
Trade debts 2,977,474 2,239,776
Accrued interest 2,454 2,628
Other receivables 224,007 191,844
Loans and advances 39,571 33,463
Bank balances 1,096,852 1,804,077

8,035,081 7,692,097

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 2018 2017

Short term Long term Agency (Rupees in thousand)

Banks
Allied Bank Limited A1+ AA+ PACRA 632 2,589
Askari Bank Limited A1+ AA+ PACRA 133,639 508,892
Bank Al-Habib Limited A1+ AA+ PACRA 133,982 114,650
Bank Alfalah Limited A1+ AA+ PACRA 6,276 7,248
Bank Islami Pakistan Limited A1 A+ PACRA 214,161 124,267
The Bank of Punjab A1+ AA PACRA 33,665 3,929
Burj Bank Limited A1 A PACRA 9 9
Dubai Islamic Bank Pakistan Limited A-1 AA- JCR-VIS 2,669 741
Faysal Bank Limited A1+ AA PACRA 25,018 5,011
Habib Bank Limited A-1+ AAA JCR-VIS 44,097 16,572
Habib Metropolitan Bank Limited A1+ AA+ PACRA 59,546 65,968
Meezan Bank Limited A-1+ AA JCR-VIS 10,452 30,384
MCB Bank Limited A1+ AAA PACRA 230,961 799,582
National Bank of Pakistan A1+ AAA PACRA 21,420 24,014
MCB Islamic Bank Limited A1+ AA- PACRA 33,392 49,619
Samba Bank Limited A-1+ AA JCR-VIS 10,149 -
Silk Bank Limited A-2 A- JCR-VIS 61 63
Soneri Bank Limited A1+ AA- PACRA 127 1,263
Standard Chartered Bank (Pakistan) Limited A1+ AAA PACRA 2,515 2,515
Summit Bank Limited A-1 A- JCR-VIS - 25
United Bank Limited A-1+ AAA JCR-VIS 119,635 31,775
ANNUAL REPORT 2018

U Micro finance Bank Limited A-2 A JCR-VIS 899 899

Al-Baraka Bank (Pakistan) Limited A1 A PACRA 13,547 14,044
First Women Bank Limited A2 A- PACRA - 18

1,096,852 1,804,077

259
 The Group’s exposure to credit risk and impairment losses related to trade debts is disclosed in Note
24 to these consolidated financial statements.

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.

(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 2018, the Group had Rupees 8,364
million (2017: Rupees 3,734 million) available borrowing limits from financial institutions and Rupees
1,104.743 million (2017: Rupees 1,817.174 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 2018.

Holding Company

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 1,723,400 1,850,043 216,172 214,318 412,230 1,007,323
Trade and other payables 1,433,253 1,433,253 1,433,253 - - -
Accrued mark-up 53,646 53,646 53,646 - - -
Short term borrowings 4,203,854 4,282,507 4,282,507 - - -
Unclaimed dividend 20,757 20,757 20,757 - - -

7,434,910 7,649,911 6,016,040 214,318 412,230 1,007,323

Subsidiary Company Carrying Contractual Less than Between 1 5 years

amount cash flows 1 year to 5 years and above
---------------- (Rupees in thousand) -----------------
Non-derivative financial liabilities:

Long term loans from banking 13,752,696 20,391,834 1,934,266 11,792,200 6,665,369
Long term deposits 8,714 8,714 - 8,714 -
Retention money payable 310,735 388,660 - 388,660 -
Trade and other payables 3,642,426 3,642,426 3,642,426 - -
Unclaimed dividend 110,743 110,743 110,743 - -
Accrued mark-up 286,162 286,162 286,162 - -
Short term borrowings 5,784,902 5,784,902 5,784,902 - -

23,896,378 30,613,441 11,758,499 12,189,574 6,665,369

KOHINOOR TEXTILE MILLS LIMITED

Derivative financial liabilities:

Unrealised loss on re-measurement of futures
contracts - shares 12,680 12,680 12,680 - -

260
 Contractual maturities of financial liabilities as at 30 June 2017.

Holding Company

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 1,553,740 1,754,713 142,319 193,371 394,995 1,024,028
Liabilities against assets subject
to finance lease 20,717 20,966 20,966 - - -
Trade and other payables 1,195,875 1,195,875 1,195,875 - - -
Accrued mark-up 44,228 44,228 44,228 - - -
Short term borrowings 3,187,866 3,231,994 3,231,994 - - -
Unclaimed dividend 15,106 15,106 15,106 - - -

6,017,532 6,262,882 4,650,488 193,371 394,995 1,024,028

Subsidiary Company Carrying Contractual Less than Between 1 5 years

amount cash flows 1 year to 5 years and above
---------------- (Rupees in thousand) -----------------
Non-derivative financial liabilities:

Long term loans from banking 3,103,760 3,623,846 473,133 2,879,224 271,489
Liabilities against assets subject to finance lease 480,615 484,974 188,196 296,778 -
Long term deposits 8,699 8,699 - 8,699 -
Trade and other payables 1,892,921 1,892,921 1,892,921 - -
Accrued mark-up 101,465 101,465 101,465 - -
Unclaimed dividend 101,219 101,219 101,219 - -
Short term borrowings 3,138,159 3,138,159 3,138,159 - -

8,826,838 9,351,283 5,895,093 3,184,701 271,489

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, note 7,
note 13 and note 14 to these financial statements.

ANNUAL REPORT 2018

261
 46.2 Financial instruments by categories
Loans and Through Held to Total
receivables profit or loss maturity

-------------(Rupees in thousand)-------------
As at 30 June 2018
Assets as per consolidated statement of financial position

Investments - 3,480,826 - 3,480,826

Deposits 213,897 - - 213,897
Trade debts 2,977,474 - - 2,977,474
Accrued interest 2,454 - - 2,454
Other receivables 213,862 10,145 - 224,007
Loans and advances 39,571 - - 39,571
Cash and bank balances 1,104,743 - - 1,104,743
4,552,001 3,490,971 - 8,042,972

Financial liabilities at fair Financial liabilities

value through profit or loss at amortized cost
-------------(Rupees in thousand)-------------

Liabilities as per consolidated statement
of financial position

Long term financing - 15,476,096
Long term deposits - 8,714
Retention money payable - 310,735
Short term borrowings - 9,988,756
Trade and other payables - 5,075,679
Accrued mark-up - 339,808
Unclaimed dividend - 131,500
Unrealised loss on re-measurement of
futures contracts - shares 12,680 -

12,680 31,331,288
KOHINOOR TEXTILE MILLS LIMITED

262
 Loans and Through Held to Total
receivables profit or loss maturity

-------------(Rupees in thousand)-------------
As at 30 June 2017
Assets as per consolidated statement of financial position

Investments - 1,716,277 1,498,549 3,214,826

Deposits 205,483 - - 205,483
Trade debts 2,239,776 - - 2,239,776
Accrued interest 2,628 - - 2,628
Other receivables 191,844 - - 191,844
Loans and advances 33,463 - - 33,463
Cash and bank balances 1,817,174 - - 1,817,174
4,490,368 1,716,277 1,498,549 7,705,194

Financial liabilities at
amortized cost
(Rupees in thousand)
Liabilities as per consolidated statement of financial position
Long term financing 4,657,500
Long term deposits 8,699
Liabilities against assets subject to finance lease 501,332
Short term borrowings 6,326,025
Trade and other payables 3,088,796
Accrued mark-up 145,693
Unclaimed dividend 116,325

14,844,370

46.3 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, laibilties against assets subject to finance lease and
short term borrowings obtained by the Group as referred to in Note 6, Note 7 and Note 14
respectively. Total capital employed includes ‘total equity’ as shown in the statement of financial
position plus ‘borrowings’. The gearing ratio as at year ended 30 June 2018 and 30 June 2017
is as follows:
2018 2017
Restated
(Rupees in thousand)

Borrowings 25,464,852 11,484,857

Total equity 39,816,570 32,778,470
ANNUAL REPORT 2018

Total capital employed 65,281,422 44,263,327

Gearing ratio 39.01% 25.95%

263
 47. RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS

(i) Fair value hierarchy

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.

30 June 2018
Recurring fair value measurements Level 1 Level 2 Level 3 Total

--------- ( Rupees in thousand ) --------
Financial assets

Financial assets at fair value through profit or loss 3,480,826 - - 3,480,826
Unrealised gain on re-measurement of
futures contracts - gold 10,145 - - 10,145

Total financial assets 3,490,971 - - 3,490,971

Financial liabilities
Unrealised loss on re-measurement of futures
contracts - shares 12,680 - - 12,680

Total financial liabilities 12,680 - - 12,680

30 June 2017
Level 1 Level 2 Level 3 Total

--------- ( Rupees in thousand ) --------
Financial assets

Financial assets at fair value through profit or loss 3,214,826 - - 3,214,826

Total financial assets 3,214,826 - - 3,214,826

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.
KOHINOOR TEXTILE MILLS LIMITED

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.

264
(ii) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include the use of quoted market
prices.

48. RECOGNIZED FAIR VALUE MEASUREMENTS - NON-FINANCIAL ASSETS

(i) Fair value hierarchy

The 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.

At 30 June 2018 Level 1 Level 2 Level 3 Total

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

Investment properties - 1,792,755 - 1,792,755
Freehold land - 2,725,309 430,096 3,155,405
Investment in gold 400,294 - - 400,294

Total non-financial assets 400,294 4,518,064 430,096 5,348,454

At 30 June 2017 Level 1 Level 2 Level 3 Total

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

Investment properties - 1,789,670 - 1,789,670
Freehold land - 2,704,718 430,096 3,134,814

Total non-financial assets - 4,494,388 430,096 4,924,484

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 at least annually and for its
freehold land (classified as property, plant and equipment) at least every three years. The management
updates the assessment of the fair value of each property, taking into account the most recent
independent valuations. The management determine 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.
ANNUAL REPORT 2018

265
 Valuation processes

The Group engages external, independent and qualified valuers to determine the fair value of the
Group’s investment properties at the end of every financial year and for freehold land at least every
three years. As at 30 June 2018, the fair values of the investment properties and free hold land have
been determined by Anderson Consulting (Private) Limited. MLCFL’s freehold land was revalued by
Arif Evaluators, an independent valuer approved by Pakistan Banks’ Association (PBA) in “any amount”
category, at 22 June 2015.

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.

49. INTEREST IN OTHER ENTITIES

The Group’s principal subsidiaries as at 30 June 2018 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 held interest held by
Name of the entity Principal Activities
country of by the Group non-controlling
incorporation interests

2018 2017 2018 2017

Maple Leaf Cement Factory Limited Pakistan 55.22% 55.22% 44.78% 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 55.22% 55.22% 44.78% 44.78% Generation, sale and
supply of electricity
49.1Non 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.
KOHINOOR TEXTILE MILLS LIMITED

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 Maple Leaf Cement Maple Leaf Capital Maple Leaf Power
Factory Limited Limited Limited

2018 2017 2018 2017 2018 2017

------------------------------ Rupees in thousand ---------------------------------
Summarized statement of
financial position

Current assets 12,731,681 10,411,631 4,904,755 4,977,985 1,507,513 448,845
Current liabilities 11,953,924 7,764,031 130,852 463,753 1,164,110 470,020

Current net assets 777,757 2,647,600 4,773,903 4,514,232 343,403 (21,175)

Non-current assets 45,996,847 28,405,142 3,915 5,245 5,405,449 4,661,987
Non-current liabilities 16,863,465 7,344,681 - - - -

Non-current net assets 29,133,382 21,060,461 3,915 5,245 5,405,449 4,661,987

Net assets 29,911,139 23,708,061 4,777,818 4,519,477 5,748,852 4,640,812

Summarized statement of
comprehensive income

Revenue 25,699,113 23,992,079 340,608 1,738,377 2,591,719 -

Profit / (loss) for the year 3,632,201 4,777,081 258,341 1,201,003 758,040 (7,307)

Other comprehensive (loss) / income (20,275) (14,517) - - - -

Profit / (loss) allocated to NCI 1,626,500 2,139,177 44,125 205,131 339,450 (3,272)

Dividend paid to NCI 812,341 1,063,456 - - - -

Summarized statement of
cash flows

Cash from / (used in) operating activities 5,771,557 5,623,810 (990,225) (367,455) 356,097 (178,594)
Cash (used in) / from investing activities (19,736,988) (6,760,132) 35,353 3,882 (1,113,810) (3,843,136)
Cash from / (used in) financing activities 13,170,378 909,623 - 1,400,985 774,481 4,010,000

Net (decrease) / increase in cash
and cash equivalents (795,053) (226,699) (954,872) 1,037,412 16,768 (11,730)

50. DATE OF AUTHORIZATION FOR ISSUE

These consolidated financial statements were authorized for issue on 18 September 2018 by the
Board of Directors of the Holding Company.

51. NON ADJUSTING EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION

51.1 The Board of Directors of the Holding Company in their meeting held on 18 September 2018
has proposed a final cash dividend of Rupee 1 per share (10%) amounting to Rupees 299.296
million (2017: Rupees 423.533 million) for the year ended 30 June 2018.

The Board of Directors of the Subsidiary Company (MLCFL) in their meeting held on 17 September
2018 has proposed a final cash dividend of Rupee 1 per share ( 10%) amounting to Rupees
593.701 million (2017: Rupee 923.534 million) for the year ended 30 June 2018.
ANNUAL REPORT 2018

267
 Approval of the Members of both the Companies for the final dividend shall be obtained at
Annual General Meetings to be held on 27 October 2018. The consolidated financial statements
for the year ended 30 June 2018 do not include the effect of the proposed final cash dividend
which shall be accounted for in the period ending 30 June 2019.

52. CORRESPONDING FIGURES

Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. To
comply with the requirements of the Companies Act, 2017, unclaimed dividend has been reclassified
from trade and other payables and presented on the face of the consolidated statement of financial
position. Restatement due to change in accounting policy relating to surplus on revaluation of
freehold land and investment properties described in the note 2.28. Except for these, no significant
rearrangements have been made.

53. GENERAL

Figures have been rounded off to the nearest thousand of Rupees unless stated otherwise.
KOHINOOR TEXTILE MILLS LIMITED

CHIEF EXECUTIVE OFFICER DIRECTOR CHIEF FINANCIAL OFFICER

268
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 50th Annual General Meeting
of the Company to be held at its Registered Office, 42-Lawrence Road, Lahore, on Saturday, October 27,
2018 at 12:00 Noon and/or any adjournment thereof.

As witnessed given under my/our hand(s) _________________ day of October, 2018.

1. Witness: 2. Witness:
Signature : _______________________ Signature : _______________________
Name : _______________________ Name : _______________________
CNIC : _______________________ CNIC : _______________________
Address : _______________________ Address : _______________________
: _______________________ : _______________________

Affix
Revenue
Stamp of Rs. 5/-

Signature of Member / Attorney

Notes:
1. Proxies, in order to be effective, must be received

at the Company’s Registered Office not later than Shares Held: __________________________
48 hours before the time for holding the meeting
and must be duly stamped, signed and witnessed.

2. CDC Shareholders, entitled to attend, speak and

vote at this meeting, must bring with them their
Computerized National Identity Cards (CNIC) / Folio No. CDC Account No.
Passports in original to prove his/her identity, and
Participant Account
in case of Proxy, must enclose an attested copy of
I.D. No.
his/her CNIC or Passport.

3. In case of corporate entity, the Board of Directors’

ANNUAL REPORT 2018

resolution / power of attorney with specimen

signature of the nominee should be attached with CNIC No.
the proxy form.

269
 AFFIX
CORRECT
POSTAGE

The Company Secretary

KOHINOOR TEXTILE MILLS LIMITED

42-LAWRENCE ROAD, LAHORE
Tel: 042-36302261-62
KOHINOOR TEXTILE MILLS LIMITED

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 .2
.1

ANNUAL REPORT 2018

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 AFFIX
CORRECT
POSTAGE

The Company Secretary

KOHINOOR TEXTILE MILLS LIMITED

42-LAWRENCE ROAD, LAHORE
Tel: 042-36302261-62
KOHINOOR TEXTILE MILLS LIMITED

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