KOHINOOR

MILLS LIMITED

ANNUAL RE PORT 2022

TABLE OF
CONTENTS
P.2 P.3 P.4

Company Information Core Values Mission & Vision Statement,

Business Activities

P.5 P.13 P.14

Company Profile Financial Highlights Chairman’s Profile

P.14 P.14 P.16

Chief Executive’s Profile Directors’ Profile Notice of Annual General

Meeting

P.24 P.25 P.36

Chairman’s Review Report Directors’ Report Pattern of Shareholding

P.38 P.39 P.40

Strategic Business Environment and Terms of Reference of

Objectives Climate Roadmap 2021-25 Audit Committee

P.41 P.42 P.44

Terms of Reference of Code of Conduct Whistleblower Policy

Human Resource and and Ethical Principles
Remuniration Committee

P.45 P.47 P.51

Harassment Policy Six Years’ Performance Statement of Compliance

with the Code of Corporate
Governance

P.55 P.58 P.63

Independent Auditor’s Auditors’ Report to the Financial Statements

Review Report Members

P.131 P.133 P.135

Proxy Form Proxy Form (Urdu) Directors’ Report (Urdu)

Annual Report 2022 01

 COMPANY
INFORMATION
Board of Directors Bankers
Mr. Rashid Ahmed Chairman Allied Bank Limited
Mr. Aamir Fayyaz Sheikh Chief Executive Al Baraka Bank (Pakistan) Limited
Askari Bank Limited
Mr. Ismail Aamir Fayyaz Director Bank Alfalah Limited
Ms. Imrat Aamir Fayyaz Director Faysal Bank Limited
Mrs. Hajra Arham Director Habib Bank Limited
Mr. Muhammad Anwarul Haq Siddiqui Director Habib Metropolitan Bank Limited
Mr. Matiuddin Siddiqui Director (NIT Nominee) MCB Bank Limited
MCB Islamic Bank Limited
Meezan Bank Limited
Audit Committee National Bank of Pakistan
Mrs. Hajra Arham Chairman Samba Bank Limited
Mr. Rashid Ahmed Member Silk Bank Limited
Mr. Muhammad Anwarul Haq Siddiqui Member Standard Chartered Bank (Pakistan) Ltd
The Bank of Punjab
United Bank Limited
Human Resource & Registered Office & Mills
Remuneration Committee 8 K.M. Manga Raiwind Road,
Mr. Muhammad Anwarul Haq Siddiqui Chairman District Kasur, Pakistan
Mr. Rashid Ahmed Member UAN: (92-42 ) 111-941-941
Cell Lines: (92-333) 4998801-6
Mrs. Hajra Arham Member
Land Lines: (92-42) 36369340
Fax: (92-42) 36369340 Ext: 444
Chief Financial Officer Email: [email protected]
Mr. Kamran Shahid Website: www.kohinoormills.com

Head of Internal Audit Shares Registrar

M/s. Hameed Majeed Associates (Pvt.) Ltd,
Mr. Naveed Ahmed Zafar HM House, 7 Bank Square, Lahore.
Land Lines: (92-42) 37235081 & 82, 37310466
Legal Advisors Fax: (92-42) 37358817
Raja Mohammad Akram & Co.,
Advocate & Legal Consultants, Other Corporate Information
Lahore. • Kohinoor Mills Limited is registered in Pakistan
with Securities and Exchange Commission
Company Secretary of Pakistan. The Registration Number of the
Company is 0017194
Mr. Muhammad Rizwan Khan
• Kohinoor Mills Limited is listed on Pakistan
Auditors Stock Exchange Limited as a Public Limited
M/s. Riaz Ahmad & Co., Company and its shares are traded under
Chartered Accountants textile composite sector. Shares trading symbol
is KML

• The National Tax Number of the Company is

0658184-6

• Financial statements are available on website of

the Company i.e., www.kohinoormills.com

02 Kohinoor Mills Limited

 CORE VALUES

INTEGRITY GOALS INNOVATION QUALITY EXCELLENCE

 VISION
To become a globally recognised
company that creates value and
sustainable growth for all our
stakeholders, as well as society.

MISSION
To produce innovative, high
quality, and cost effective textile
products for our customers, in an
environmentally sustainable and
socially conscious manner.

BUSINESS
ACTIVITIES
Kohinoor Mills is principally engaged
in three major components of
textile manufacturing; Dyeing &
Finishing, Weaving and Energy.
The company exports grey, white
and dyed fabrics to leading fashion
brands, manufacturers and trading
companies around the world.
The company also operates an
independent power plant to supply
uninterrupted energy to its textile
operations.

04 Kohinoor Mills Limited

 COMPANY
PROFILE
From its incorporation in 1987 as a small weaving mill, over the last 35
years Kohinoor Mills has evolved into one of Pakistan’s largest vertically
integrated textile operations with approximately 1,950 employees and
annual turnover of PKR 21.45 Billion. The company is involved in three
major businesses; Weaving, Dyeing & Finishing and Energy. Spread on
about 152 acre state of the art facility near Lahore, we supply over 70
million meters of world-class grey, white and dyed fabrics to leading
fashion brands and retailers around the globe.

Annual Report 2022 05

06 Kohinoor Mills Limited
 WEAVING
DIVISION
Kohinoor Weaving (KW) is the flagship division of the company.
Set up as a small 48 looms project on a green field site in 1988, it
has now grown into a state of the art facility with 272 high speed
air jet looms from Picanol.

The division produces over 40 million meter of grey fabric per

annum, which is partially consumed downstream by the dyeing
division, while the rest is exported to customers in Europe, Asia
and nontraditional markets like Asia and Africa. KW has also
diversified its operations into jacquard and dobby fabrics for the
local fashion industry and fashion brands in the US and Europe.

Annual Report 2022 07

08 Kohinoor Mills Limited
 DYEING &
FINISHING
DIVISION
Kohinoor Dyeing (KD) was set up in 2002 after a strategic decision
by the company to move up the apparel value chain and compete
with processing mills in Europe where manufacturing costs were
becoming uncompetitive. After 20 years of operations KD is now
a market leader in cotton stretch fabrics for the fashion industry.

Through our R&D facility we have developed innovative fabrics

and hand-feel finishes which have enabled us to become key
suppliers for leading global brands like Zara, Levi’s, American
Eagle and Next.

The division has capacity to produce 4 million meters of dyed,

white and print fabric every month using cutting edge European
machinery from Benninger and Monforts.

Annual Report 2022 09

10 Kohinoor Mills Limited
 GENERTEK
DIVISION
Pakistan is a developing country that faces energy shortages
and outages that are detrimental to industrial production. In
2003 Kohinoor Genertek was set up as an independent power
plant to supply uninterrupted electricity to the other divisions of
the company.

The division has an installed capacity of about 30 Mega-Watts of

electricity and 30 ton per hour of steam, which can be produced
on a variety of fuels such as gas, furnace oil and biomass
depending on price and seasonal availability.

Annual Report 2022 11

 BUSINESS PROCESS
FLOW CHART

WEAVING

DYEING

FIN
IS H I N G GARMENT
MANUFACTURING

12 Kohinoor Mills Limited

 FINANCIAL
HIGHLIGHTS 2022

02
02

Gross Profit
Gross
RUPEESProfit
IN BILLION

PKR 3.45
RUPEES IN BILLION

PKR 3.45
07
07 0303
Shareholders’
Shareholders’
Total
TotalEquity
Equity
Gross
Gross Profit
Profit RatioRatio
RUPEES ININMILLION
RUPEES MILLION 16%16%
PKR
PKR6,004
6,004 Sales
Sales
RUPEES IN BILLION
RUPEES IN BILLION
PKR
PKR21.45
21.45

01
01
Earning per share – Profit
Earning perDiluted
Basic and share – beforeProfit
Tax
Basic and Diluted before Tax
PKR 18.24 RUPEES IN MILLION

PKR 18.24 PKR RUPEES

1,222.24
IN MILLION

06 04
PKR 1,222.24
06 04
Profit after Tax
RUPEES IN MILLION
Profit after Tax
PKR 928.37
RUPEES IN MILLION

PKR 928.37
05
05

Annual Report 2022 13

 BOARD OF
DIRECTORS

Rashid Aamir Fayyaz Ismail

Ahmed Sheikh Aamir Fayyaz
Chairman Chief Executive Director

Mr. Rashid Ahmed is a retired Mr. Aamir Fayyaz Sheikh is Mr. Ismail Aamir Fayyaz is
senior investment and a Pakistani entrepreneur, the son of Mr. Aamir Fayyaz
development banker. He served philanthropist, economic advisor Sheikh. He joined the company
the banking and financial and keen golfer. He has been on in 2016 after studying Physics
services industry for over 40 the board of directors and has and Philosophy at McGill
years in senior positions like served as CEO of the company University, Canada. For the
Group Chief and CEO. He served since its inception in 1987. After past 6 years he has been
Board of Directors of large studying Economics at the heavily involved in sales
corporate sector companies University of Texas, he returned and marketing, travelling
including telecommunication, to Pakistan in the early eighties extensively to new markets in
fertilizer, cement, textile etc., and joined his family business; order to grow KML’s customer
and investment banks, leasing The Kohinoor Group. After 35 base. After the new expansion
companies and modarabas. years under his stewardship in 2018, he has been heading
the company has grown from the Weaving division as
He is currently Chairman of a small 48-loom weaving mill to Chief Operating Officer and
the Board of Directors and one of Pakistan’s largest vertically has been instrumental in
Member of Human Resource integrated textile operations. revamping the organizational
& Remuneration and Audit structure and efficiency of
Committees. He also served Mr. Aamir Fayyaz Sheikh is the Weaving division. He
as the Chairman of Audit actively involved in promoting is the driving force behind
Committee of Kohinoor Mills Pakistan’s textile industry, Balancing, Modernisation
Limited. Mr. Rashid Ahmed and has represented the and Rebalancing initiative at
is a member of Board of Pakistan business community Kohinoor Weaving, which has
Governors of Lahore University at numerous shows and seen the gradual replacement
of Management Sciences government trade missions. He of older loom sheds with
(LUMS) and as a visiting served as the Chairman of All the newest, cutting edge
faculty member at Quaid e Pakistan Textiles Mills Association, technology. Mr. Ismail is also
Azam University, Islamabad, and was instrumental in a Chartered Financial Analyst,
University of The Punjab and negotiating the export incentive a Certified Director and enjoys
University of Engineering and package in 2017 and Pakistan’s learning new languages.
Technology, Lahore. Visulaising GSP+ status with the EU in 2014,
Mr. Rashid qualification and amongst other contributions.
vast professional experience Mr. Aamir Fayyaz Sheikh also
the Securities and Exchange held the position of Chairman
Commission of Pakistan of Punjab Social Security
awarded exemption to him from Health Management Company
Director’s Training Programme. with a vision to transform the
medical facilities to the industrial
Mr. Rashid is an MBA from IBA, workers to an excellent level. In
Karachi and holds a Master’s recognition of his qualification
degree in Economics from the and vast professional experience,
University of Punjab. the Securities and Exchange
Commission of Pakistan awarded
him exemption from Director’s
Training Programme.

14 Kohinoor Mills Limited

Imrat Hajira Muhammad Matiuddin
Aamir Fyyaz Arham Anwarul Haq Siddiqui Siddiqui
Director Director Director Director

Ms. Imrat Aamir Fayyaz Mrs. Hajra Arham is Mr. Muhammad Anwarul Mr. Matiuddin Siddiqui
after completing her a qualified Chartered Haq Siddiqui is a dynamic, is serving the board of
Bachelor’s and Master’s Accountant from The multifaceted and directors’ of Kohinoor Mills
in Engineering from the Institute of Chartered performance focused Limited as a nominee
University of Cambridge, Accountants of Pakistan. professional offering director of National
UK , started her career She has over 25 years’ extensive experience Investment Trust Limited
in the infrastructure post qualification work in human resource (NITL) - the largest and
sector of Pakistan with experience with public operations, administrative oldest asset management
a focus on business and private sectors at functions and general company in Pakistan.
development, transaction advisory and management management and is known Mr. Matiuddin holds
structuring, acquisitions, board positions. She has for strong work ethics, Masters degree in
debt arrangement, private worked at projects funded exercising independent commerce from University
equity and financial by Govt. of Pakistan, judgment in dealing of Karachi and is a Certified
modelling relating to power, Punjab Govt., World Bank, with wide ranging HR Director from Institute of
energy, infrastructure and Asian Development responsibilities. Cost and Management
manufacturing sectors. Bank, Department for Accountants of Pakistan. He
In 2019 after clearing all International Development He holds Master’s degree upholds over two decades
three levels of Chartered UK Govt. and Japan in Human Resource of professional experience
Financial Analyst program, International Cooperation Management and Bachelor in the field of Accountancy
she joined the family textile Agency. Her work exposure in Laws from University and Finance and is serving
business as Chief Operating relates to Information of the Punjab, Lahore, NITL as an Executive Vice
Officer of the Dyeing Technology, Water Sector, Pakistan. His professional President - Finance.
and Finishing Division at Power/ Energy Sector and experience of over three
Kohinoor Mills. Like her widely diversified clientele decades embraced key
father and brother, she is of CA firm from Textile management and HR
playing an instrumental and Sugar Industry to positions with leading
role in the growth of the Financial Institutions and national and multinational
company. Ms. Imrat is also Development Authorities. entities covering footwear
a certified director from She is also currently serving and FMCGs businesses.
LUMS and enjoys travelling as Independent Director
and experiencing new and member of Audit
cultures. Committee of Lalpir Power
Limited, a power generation
and distribution public
limited listed company
owned by Pakistan-based
multinational business
conglomerate “The Nishat
Group”.

Annual Report 2022 15

 NOTICE OF THE ANNUAL GENERAL
MEETING
Notice is hereby given that the 35th Annual General Meeting of the Company will be
held at 8 Kilometer, Manga Raiwind Road, District Kasur on Thursday, October 27,
2022 at 2:00 p.m., to transact the following business:

Ordinary Business:

1. To confirm the minutes of Extraordinary General Meeting held on March 31, 2022.

2. To receive, consider and adopt the Annual Audited Accounts of the Company for the year ended June
30, 2022, together with Directors’ and Auditors’ Reports thereon.

3. To approve final cash dividend for the year ended June 30, 2022 at Rs. 2.00 per ordinary share of Rs. 10/-
each i.e., 20.00% as recommended by the Board of Directors.

4. To appoint auditors for the year ending June 30, 2023 and fix their remuneration.

Special Business:

5. To consider and, if deemed fit, to pass the following resolutions as special resolutions for increase in
authorized share capital of the Company and consequent alteration in the Memorandum of Association
of the Company with or without modification, addition(s) or deletion(s) as recommended by the Board of
Directors:

“RESOLVED that approval of members of the Company is hereby accorded to increase the authorized
share capital of the Company PKR 1,100,000,000/- (Rupees One Billion One Hundred Million only) divided
into 80,000,000 (Eighty Million) ordinary shares of Rs.10/- each (Rupees Ten only) and 30,000,000
(Thirty Million) preference shares of Rs.10/- each (Rupees Ten only), to PKR 2,500,000,000/- (Rupees
Two Billion Five Hundred Million only) divided into 220,000,000 (Two Hundred Twenty Million) ordinary
shares of Rs.10/- each (Rupees Ten only) and 30,000,000 (Thirty Million) preference shares of Rs.10/- each
(Rupees Ten only).”

“FURTHER RESOLVED that in consequence of the aforesaid increase in the authorized share capital of
the Company, the existing clause V of the Memorandum of Association of the Company be and is hereby
substituted accordingly, to read as follows:

Clause V of Memorandum of Association

The authorized share capital of the Company is Rs. 2,500,000,000/- (Rupees Two Billion Five Hundred
Million only) divided into 220,000,000 (Two Hundred Twenty Million) ordinary shares of Rs.10/- each
(Rupees Ten only) and 30,000,000 (Thirty Million) preference shares of Rs.10/- each (Rupees Ten only)
with the power to increase or reduce the capital and to divide the shares in the capital for the time
being into several classes in accordance with the provisions of the Companies Act, 2017 and any rules
made thereunder, and to attach thereto respectively such preferential, deferred, qualified or special rights
privileges or condition as may be determined by or in accordance with the Articles of Association or the
regulations of the Company for the time being, and to vary, modify or abrogate any such rights, privileges
or conditions in such manner as may for the time being be provided by the Articles of Association or
regulations of the Company.

16 Kohinoor Mills Limited

 FURTHER RESOLVED that the Chief Executive and/or any Director and/or the Company Secretary of the
company be and are hereby authorized singly or jointly to do all acts, deeds, things and to take any or
all necessary actions ancillary and incidental including filing of requisite documents and returns as may
be required with the Registrar of the Companies, Securities and Exchange Commission of Pakistan and
complying with all other regulatory requirements to effectuate and implement this resolution.

6. To transact any other business of the Company with permission of the Chair.

Statement under Section 134(3) of the Companies Act, 2017, pertaining to the special business
referred above is annexed to this notice of Annual General Meeting.

By Order of the Board

Kasur: (MUHAMMAD RIZWAN KHAN)

Thursday, October 6, 2022 Company Secretary

NOTES

1. Closure of Share Transfer Books

The share transfer books of the Company for Ordinary Shares will remain closed from October 20, 2022
to October 27, 2022 (both days inclusive) for determination of above entitlement and to attend and vote
at the Annual General Meeting. Physical transfers and deposit requests under Central Depository System
received at the close of business hours on Wednesday, October 19, 2022, by the Company’s Shares
Registrar M/s Hameed Majeed Associates (Pvt.) Ltd, HM House, 7 Bank Square, Lahore, will be considered
in time for the purpose of above entitlement and to determine voting rights of the shareholders for
attending the meeting.

2. Shareholders are advised to follow the under mentioned guidelines for attending the meeting:

For Attending the Meeting

a. In case of individuals/joint-account holders, as per registration details available with the Company, shall
authenticate his / her/their identity by presenting his / her/their original CNIC or original Passport at the
time of attending the meeting.

b. In case of corporate entity, the board’s resolution / power of attorney with specimen signature of the
nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

Annual Report 2022 17

 For Appointing Proxies

a. A shareholder entitled to attend and vote at this meeting may appoint any other shareholder as proxy
to attend the meeting and a proxy so appointed shall have the same rights of attending, speaking and
voting at the general meeting as are available to the shareholders. A proxy must be a shareholder of the
Company.

b. If a shareholder appoints more than one proxy and more than one instruments of proxy are deposited
by a shareholder with the Company, all such instruments of proxy shall be rendered invalid.

c. In case of individual/joint-holders, shareholders as per registration details available with the Company
shall attach an attested copy of his/her/their Computerized National Identity Card (CNIC) / Passport with
the Proxy Form. The proxy shall produce his/her/their original CNIC or original passport at the time of the
meeting.

d. In case of corporate entity, as per registration details available with the Company the board of directors’
resolution / power of attorney with specimen signature of the nominee should be attached with the
proxy form. The nominee shall also produce his/her original CNIC or original passport at the time of the
meeting.

e. The instrument of appointing a proxy must be deposited at the Registered Office of the Company at
least 48 hours before the time of the meeting and must be duly stamped, signed and witnessed by two
persons, whose names, addresses and CNIC numbers shall be mentioned on the form.

f. The form of proxy is attached with this notice and is also available on investor page of website of the
Company i.e., www.kohinoormills.com

Consent Form for Video Conference facility

I/We ……………..of ……………….being a member of Kohinoor Mills Limited, holder of ……………………………………….…. Ordinary
shares as per Registered Folio number/CDC A/c # ……………………………………………….…………………… hereby opt for video
conference facility at ……………………………………………………………………………………………….……………………………………......................................................................…..

___________________________
Signature of Member

Through Video conference

Shareholders individually or collectively holding 10% or more shareholding can provide their consent
to participate in the meeting through video conference at least seven days prior to date of the meeting.
Considering the geographical dispersal of the shareholder, the Company shall arrange video conference
facility subject to the availability of such facility in that city. The Company will intimate members regarding
venue of the video-link facility at least five days before the date of the general meeting along with complete
information necessary to enable them to access the facility.

In this regard, shareholders are requested to fill the following form and submit to the Registered Office of
the Company seven days before the date of holding of the general meeting:

18 Kohinoor Mills Limited

3. Audited Financial Statements and Notice of Meeting

a) The audited financial statements for the year ended June 30, 2022 have been made available on
website of the Company (www.kohinoormills.com).

b) In light of SECP notification Number SRO No. 470(I)/2016 dated May 31, 2016 Annual Audited
Accounts and Notice of AGM instead of hard copies are being sent to all shareholders through
courier in soft form i.e., CD/DVD/USB.

c) Members’ can also opt to obtain the Annual Audited Financial Statements and Notice of AGM
through e-mail. In this regard, shareholders are requested to send a written consent by post/courier
on a standard request form available on the above mentioned website of the company to Company’s
Shares Registrar M/s. Hameed Majeed Associates (Pvt) Limited, HM House, 7 Bank Square, Lahore,
or by sending a scanned copy of duly filled and signed form by email to Company Secretary at
[email protected]

4. Shareholders are requested to notify/submit the undermentioned information and documents, if not
earlier provided / notified within 10 days before the entitlement date i.e., October 19, 2022, in the following
manner:

• CDC Investor Account Holders’ to CDC Investor Account Services (IAS)

• CDC Sub-Account Holders to their respective Participant (broker)
• Physical Shareholders to Company’s Shares Registrar (viz CDC)

a) Mandatory submission of CNIC / NTN: Pursuant to the directives of the Securities and Exchange
Commission of Pakistan (SECP), CNIC numbers of shareholders are mandatory required to be
mentioned on dividend warrants. Shareholders are therefore requested to submit a copy of their
valid CNIC (if not provided earlier) to Company’s Shares Registrar M/s. Hameed Majeed Associates
(Pvt) Limited, HM House, 7 Bank Square, Lahore. Corporate entities are required to send valid and
legible copies of their National Tax number (NTN) or NTN certificate(s) and must quote the name of
the company and respective folio numbers thereon while sending the copies.

In case of non-submission of valid and legible copy of CNIC/NTN, the Company will be constrained
to withhold the disbursement of dividend till such time the CNIC/NTN copy is provided to the Shares
Registrar of the Company.

b) Dividend Mandate: In terms of Section 242 of the Companies Act, 2017, listed companies are required
to pay cash dividend only through electronic mode directly into the bank account designated by the
entitled shareholders. In order to comply with this requirement, shareholders are therefore requested
to immediately provide the dividend mandate i.e., name, folio number, bank account number (IBAN),
title of account, complete mailing address of the bank, branch address, branch code, email and
contact numbers to the Shares Registrar of the company in case of physical shares and to the CDC
in case of shares are held electronically.

c) Deduction of Withholding Tax on Dividend: Government of Pakistan through Finance Act, 2019, has
made certain amendments in withholding tax provision by substituting the definition of “Filers” with
“Active Taxpayer List” (ATL) of Federal Board of Revenue (FBR), whereby the company is required to
collect tax on dividend under Section 150 of the Income Tax Ordinance, 2001 from the person not
appearing in the ATL at the rates specified in the Ordinance which has increased by 100%. These tax
rates are as under:

Annual Report 2022 19

 a. Rate of tax deduction for persons appearing in FBR ATL 15%
b. Rate of tax deduction for persons not appearing in FBR ATL 30%

Shareholders who are filers, are advised to make sure that their names are entered into latest ATL
provided on the website of FBR at the time of dividend payment, otherwise they shall be treated
as person not appearing in ATL and tax on their cash dividend will be deducted at the rate of 30%
instead of 15%.

d) For shareholders holding their shares jointly as per the clarification issued by the FBR, withholding tax
will be determined separately as per status of their names appearing in the ATL for principal shareholder
as well as joint-holder(s) based on their shareholding proportions. Therefore, all shareholders who hold
shares jointly are required to provide shareholding proportions of principal shareholder and joint-
holder(s) in respect of shares held by them to our Share Registrar in writing as follows:

Kohinoor Mills Limited
Folio/
Total Shares Principal shareholder Joint Shareholder(s)
CDC A/c No.
Name & CNIC # Shareholding Name & CNIC # Shareholding
proportion proportion
(No of Shares) (No of Shares)

e) Exemptions - Deduction of Tax and Zakat on Dividend entitlement: Members who wants to avail
the exemptions on their respective dividend entitlement are requested to furnish the following
documents to the Company/Shares Registrar, if not provided earlier:

• Valid income tax exemption certificate issued by the concerned Commissioner of inland Revenue in
order to avail tax exemption under Section 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 under Section 150 of the Ordinance, otherwise tax will be deducted under
the provisions of laws.

• Zakat exemption certificate/undertaking as per Zakat & Ushr Ordinance, 1980.

5. Shareholders still holding physical shares is/are being notified again that as per Section 72 of the
Companies Act, 2017, every existing listed company shall be required to replace its physical shares with
book-entry form within a period not exceeding four years from the promulgation of the Act, i.e., May 30,
2017. Shareholders having physical shares is/are advised to open CDC sub-account with any of the broker
or Investor Account directly with CDC to place their physical shares into scrip less form as the trading of
physical shares is not permitted as per existing regulations of the Pakistan Stock Exchange.

6. Shareholders are requested to notify change in their mailing address to our Shares Registrar at the
earliest.

7. For any query/problem/information, shareholders may contact the Company’s Shares Registrar M/s.
Hameed Majeed Associates (Pvt) Limited, HM House, 7 Bank Square, Lahore, Land Line: (00-92-42)
37235081 and 82.

20 Kohinoor Mills Limited

STATEMENT UNDER SECTION 134(3)
OF THE COMPANIES ACT, 2017
This statement sets out the material facts concerning the Special Business to be transacted at the Annual
General Meeting of the Company to be held on October 27, 2022.

A. Increase in Authorized Share Capital of the Company and consequent amendments in the
Memorandum of Association.

In order to create room for further issue of capital in future the authorized share capital of the
Company needs to be enhanced. Accordingly, the Board of Directors has recommended to
increase the existing authorized share capital of the company from PKR 1,100,000,000/- (Rupees
One Billion One Hundred Million only) divided into 80,000,000 (Eighty Million) ordinary shares of
Rs.10/- each (Rupees Ten only) and 30,000,000 (Thirty Million) preference shares of Rs.10/- each
(Rupees Ten only), to PKR 2,500,000,000/- (Rupees Two Billion Five Hundred Million only) divided
into 220,000,000 (Two Hundred Twenty Million) ordinary shares of Rs.10/- each (Rupees Ten only)
and 30,000,000 (Thirty Million) preference shares of Rs.10/- each (Rupees Ten only).

The proposed increase in the authorized share capital of the Company will also necessitate
amendments in Clause V of the Memorandum of Association of the Company. The Board of
Directors has also recommended required alterations to reflect increase in authorized share capital
of the Company. The comparison of existing clause with the proposed is as under:

Description Existing Proposed

Clause V of The authorized share capital of the The authorized share capital of the
Memorandum Company is Rs. 1,100,000,000/- (Rs Company is Rs. 2,500,000,000/-
of Association One Billion One Hundred Million (Rupees Two Billion Five Hundred
only) divided into 80,000,000 Million only) divided into 220,000,000
(Eighty Million) ordinary shares (Two Hundred Twenty Million) ordinary
of Rs.10/- each (Ten only) and shares of Rs.10/- each (Rupees Ten
30,000,000 (Thirty Million) only) and 30,000,000 (Thirty Million)
preference shares of Rs.10/- each preference shares of Rs.10/- each
(Ten only), with the power to (Rupees Ten only) with the power to
increase or reduce the capital and increase or reduce the capital and
to divide the shares in the capital for to divide the shares in the capital for
the time being into several classes the time being into several classes
in accordance with the provisions in accordance with the provisions
of the Companies Ordinance, 1984 of the Companies Act, 2017 and any
and any rules made thereunder, rules made thereunder, and to attach
and to attach thereto respectively thereto respectively such preferential,
such preferential, deferred, qualified deferred, qualified or special rights
or special rights privileges or privileges or condition as may be
condition as may be determined by determined by or in accordance
or in accordance with the articles of with the Articles of Association or the
association or the regulations of the regulations of the Company for the
Company for the time being, and to time being, and to vary, modify or
vary, modify or abrogate any such abrogate any such rights, privileges
rights, privileges or conditions in or conditions in such manner as may
such manner as may for the time for the time being be provided by the
being be provided by the Articles Articles of Association or regulations
of Association or regulations of the of the Company.
Company

Annual Report 2022 21

 Interest of Directors

The Chief Executive, Directors of the Company and their relatives have no interest directly or
indirectly in the proposed increase in authorized share capital and amendment in the Memorandum
of Association of the Company except in their capacities as Chief Executive or Directors or members
of the Company.

Availability of Relevant Documents

A copy each of the existing and amended Memorandum of Association identifying the proposed
alteration therein bearing the initial of the Company Secretary for identification purpose is available
for inspection at the Registered Office of the Company from 9:00 a.m. to 5:30 p.m. on any working
day, up to the last working day before the date of the Annual General Meeting. The same shall be
available for inspection by the members in the meeting.

22 Kohinoor Mills Limited

Annual Report 2022 23
 CHAIRMAN’S
REVIEW REPORT
I am pleased to present the report on the overall
performance of the Board and effectiveness of its
role in achieving the Company’s strategic business
objectives as well as ensuring overall compliance of
the Companies Act, 2017 and Listed Companies (Code
of Corporate Governance) Regulations, 2019. The
Board performed its duties with honesty and diligence
in the best interest of the Company. I as Chairman of
the Board, ensured that the board meetings are held
in a congenial atmosphere focusing on achieving the
goals.

During the year under review, your company faced

many operational challenges especially due to
rising interest rates, lingering supply constraints
and mounting global economic uncertainities. The
Management of your company is putting its best
efforts to maintain its profitability and market share.
Moreover, Government positive action towards textile
reforms in prevailing situation will play a vital role.

The composition of the Board of Directors reflects mix

of varied backgrounds and rich experiences in the fields
of business, finance, banking and human resource. It
represents an excellent balance of executive and non-
executive directors including independent directors,
having strong financial and analytical abilities, core
competencies and industry knowledge to lead the
company.

During the year, Board of Directors focused on the

future strategies and on setting the financial and
operational targets. The Board regularly tracked
the progress against the budgeted targets. The
Subcommittees of the Board also performed their
functions as per their terms of reference during the
year under review. The Board carried out reviews of its
effectiveness and performance during the year which
have been satisfactory.

As stated above, Board considered all aspects of

Company’s activities including performance of
individual Directors, Board Committees and I am
happy to report that your Board of Directors continue
to function effectively and is focused on priorities for
the Company’s business.

Kasur, September 22, 2022 RASHID AHMED

Chairman
24 Kohinoor Mills Limited
DIRECTORS’
REPORT
The Directors of the company are pleased to present the Annual
Report, together with the audited financial statements and Auditors’
Report for the year ended June 30, 2022.
Global Economic Review
In early 2022, the Russian-Ukraine conflict further elevated global commodity prices and inflation, that were
already at a 40-years high, due to unprecedented covid era monetary and fiscal stimulus. Threats from
high inflation, rising interest rates, lingering supply constraints, and mounting uncertainties have cast a
recessionary shadow on global economic forecasts.

Central Banks around the world led by the US Federal Reserve have aggressively tightened monetary policy
to combat inflation, whereas there is very little fiscal space for most governments to respond due to over
stretched balance sheets after covid era support. The surge in global interest rates and cost of living crisis
has caused a wave of currency crises in emerging markets, especially in oil and food-importing economies.

The relentless appreciation of the US dollar against all major currencies in the world have caused most
developed nation’s central banks to pursue a reverse currency war against the US dollar to protect their
respective economies. This, along with a long-drawn-out conflict in Eastern Europe, and continued covid
lock downs in China will most likely push most of the world economies into recession sometime in 2023.

Pakistan Economic Review

Pakistan’s economy rebounded strongly from the pandemic. For FY-22, real GDP posted a growth of 5.97%
which is slightly above the growth of 5.74% recorded for FY-21. This high growth, however, has proved
unsustainable and has resulted in financial and macroeconomic imbalances. Historically, Pakistan’s economy
had shown periodic ‘boom-bust’ growth cycles. The reasons for such volatile growth cycles include wide-
ranging economic challenges like shrinking fiscal space, exchange rate pressure, mounting current account
deficit, inflation, energy sector bottlenecks, the absence of political stability and a supportive environment
for the private sector.

During FY-22, exports grew remarkably by 26.5% and reached to US$ 32.4 billion as compared to US$ 25.6
billion for the same period last year. Around half of the increase came from the textile sector. Pakistan’s textile
exporters capitalized on the policy support available including the Export Facilitation Scheme 2021, SBP’s
concessionary refinances schemes for working capital and fixed investment, and the regionally competitive
energy tariffs and managed to ship higher volumes to key destinations such as the US, UK, and EU.

Despite the encouraging export performance, the country’s imports have also risen significantly. The
broad-based surge in global commodity prices, COVID-19 vaccine imports, and demand-side pressures,
all contributed to the rising imports. Resultantly, the trade deficit grew by 38% to US$ 39.5 billion which is
historically high. Record high level of overseas workers’ remittances were still not sufficient to offset the
trade deficit. Thus, the current account deficit was recorded at US$ 17.4 billion during the period under
discussion as compared to deficit of US$ 2.8 billion in the corresponding period of last financial year.
Further, the low performance of the Financial Account during the period not only resulted in the depletion
of foreign reserves but also brought the exchange rate under pressure. The interbank PKR-USD exchange
rate depreciated by 27.8% from Rs. 158 at the start of the financial year to Rs. 202 prevailing at the end of
the financial year.

Annual Report 2022 25

 To counter inflationary pressure and for sustainable economic recovery, SBP moved to monetary policy
normalization in September 2021. Policy Rate increased by cumulative 675 bps from 7% at the start of the
financial year to 13.75% prevailing at the end of the financial year. The decision was made on account of
significant uncertainty around the outlook for international commodity prices and global financial conditions.

To make matters worse, during the monsoon season Pakistan suffered the worst floods in its history with
over 33 million people displaced, 2,000 lives lost, and one third of the country’s land mass submerged,
including major crop growing regions. Initial estimates of losses have been assessed to the tune of US$ 30
Billion.

Pakistan’s macroeconomic imbalances coupled with extreme political instability and imprudent populist
measures, and environmental catastrophe pushed the economy to the brink. As a result, Pakistan once
again had to seek support from the IMF and friendly countries. These factors, along with the global
environment of economic uncertainty, meant that it was a challenging year, and these challenges are
expected to increase in the next year.

Textile Industry Outlook

Unprecedented challenges posed by the COVID-19 pandemic exposed the vulnerabilities of global
economies. Supply chains were disrupted due to business closures. The textile industry of Pakistan also
experienced an interlude in business activity leading to slowdown in its performance in FY-20. Nevertheless,
Large Scale Manufacturing (LSM) proved to be resilient and gained the growth momentum from the very
start of FY-21 owing to gradual opening of economic activities and contingency measures from fiscal and
monetary side in the form of industrial support package, ultra-low policy rate and export financing facility
coupled with vaccination drive.

In the period under discussion, the cotton prices globally have been quite volatile seeing new highs and
significant lows leading to supply insecurity. Despite all these challenging factors, Pakistan textile exports
have shown sturdy results in FY-22 marking historically high exports of US$ 19.3 billion compared to exports
of US$ 15.4 billion in FY-21, an increase of 25.5%.

However, it is quite uncertain that the Pakistan textile industry will be able to continue this strong momentum
due to both fears of global recession and economic uncertainty within Pakistan. Inflation is eating into
purchasing power in most developed economies where Pakistan exports it’s products. Whereas political
and economic uncertainty at home has meant that pro-export policies such a regionally competitive
energy tariffs (RCET), export financing facilities such as TERF/ERF/LTF and a free float exchange rate have
either been curtailed or abandoned.

Operating & Financial Results

In keeping with the overall growth witnessed in the textile sector as a result of increased economic activity
in post Covid-19 era, your company managed to post significant turnover and profitability growth in the year
under review. During the year ended 30 June 2022, your company earned a gross profit of Rs. 3,447 million
on sales of Rs. 21,452 million, compared to a gross profit of Rs. 1,719 million on sales of Rs. 13,241 million for
the previous financial year. During the period under review, your company recorded a net profit of Rs. 928.3
million (EPS: Rs. 18.24 per share), compared to a net profit of Rs. 267.7 million (EPS: Rs. 5.26 per share), in the
previous financial year.

Dividend
The Board of Directors has proposed a final cash dividend for the year ended 30 June 2022 of Rupees 2.00
per share. i.e., 20%.

26 Kohinoor Mills Limited

Performance Overview
A brief overview of performance of your company for the year ended 30 June 2022 is discussed below:

Weaving Division
The weaving division was able to achieve increased efficiency and productivity as a result of continued
efforts and a comprehensive BMR project which is underway in the weaving division. This resulted in the
weaving division being able to post significant growth in turnover and profitability in the year under review.
The weaving division posted a gross turnover of Rs. 13,372 million as compared to turnover of Rs. 8,245
million in the previous financial year. The comprehensive BMR project to replace existing older looms
with high speed energy efficient looms and install new state-of-the-art supporting equipment is nearing
completion. The BMR project along with the diligent efforts of the team have started to bear fruit and the
management expresses hope that the financial results of the weaving division will continue this pattern of
growth.

Dyeing Division
With much of the world under Covid-19 related restrictions through 2020 and 2021, the global fashion
industry has faced exceptionally challenging conditions. But after nearly two years of disruption, the
industry is beginning to find its feet again. High consumer demand in post pandemic period enabled the
dyeing division to post significant growth in turnover and profitability in the year under review. The Dyeing
division was able to increase its gross turnover by 60% from Rs. 8,782 million to Rs. 14,064 million. Gross
profit was increased to Rs. 1,656 million from Rs. 900 million in the corresponding period of last financial
year, an increase of 84% year on year.

The volatility experienced by global supply chains over the last two years, amidst material shortages,
transportation bottlenecks and soaring shipping costs is expected to remain a significant factor in the year
ahead, although some easing is expected as the year progresses. In the current inflationary environment
and high interest rate environment, the fashion industry continues to face headwinds. However, growth is
expected as the US and other allied countries focus on diversifying their supply chains away from China, in
light of recent Forced Labour Laws. The Dyeing Division is ideally situated to capitalize on this very significant
opportunity. We continue to follow our strategy of focusing on core competencies and diversifying our
customer base to multiple countries and regions including traditional markets like the US and Europe and
newer markets within Asia.

Genertek Division
On the electricity side, the Government of Pakistan continued its relief to exporters by providing electricity
at 9.0 US cents/ kWh. However, there is no assurance that such regionally competitive electricity rates will
continue in the long-term. On the gas side, due to the looming power crises in the country, the Government
of Pakistan rescinded the relief to exporters and increased natural gas prices from US$ 6.5 /MMBTU to
US$ 9 /MMBTU, a few months into the year under review. This has added to the ever-increasing challenge
of maintaining regionally competitive energy costs. Additionally, due to our commitments to pursue
greener sources of energy, the company has had to rely heavily on local gas supply and seasonal biomass
fuels. These factors have caused a decline in profit margins in FY-22. Your company continues to make
steadfast efforts to tackle these challenges. These efforts include continued investment into energy efficient
equipment and securing supplies of biomass based fuels.

Information Technology
Your company is making continuous efforts to have efficient IT systems in place, supporting timely and
effective decisions. It has provided its employees state-of-the-art facilities to achieve optimum efficiency

Annual Report 2022 27

 levels. Most of the manufacturing equipment and machinery used in the operations are equipped with
technologically advanced software, providing real time information for the production processes.

The company’s intranet acts as a useful resource base, providing in depth information on the company’s
policies and procedures along with other useful information to the employees of the company.

Human Resource & Training

With human capital resources of approximately 1,896 employees, the company believes that employees
are indispensable in shaping the organization’s future and each individual contributes directly to success of
the organization.

Your company’s HR team is a group of highly skilled and experienced professionals. They work very closely
with the business teams to design efficient people solutions that will effectively meet the business goals.

Your company places a premium on respect for individuals, equal opportunities, advancement based on
merit, effective communication, and the development of a high performance culture. The company takes
pride in continuous improvement at all levels and strives to ensure that opportunity for growth and varied
career experiences are provided to all employees.

Your company is an equal opportunity employer, and this is practiced in all aspects of the company’s
business activities including recruitment and employment.

The company’s ethos, combined with state of the art technology and HR Information Systems, result in
a high performance environment within which individuals can achieve their professional and personal
dreams.

Training & Development

Your company believes in human resource development through training and development and places
due emphasis on training in all spheres of its production process. The company made efforts during the
year for focused and cost effective training programs for all major technical categories such as weavers,
technologists and quality control inspectors.

Candidates are engaged through a Trainee Scheme and trained in-house over a period of 6 months before
joining their respective teams. This has helped the company in preparing a highly skilled workforce and also
provides replacements to cover turnover.

In-house training sessions are regularly conducted in general management, firefighting, first aid, health and
safety, computer and technical disciplines.

Safety, Health & Environment

Your company is focused on providing a safe & healthy workplace for all of its employees and is committed
to acting responsibly towards the communities and environment in which we operate. This will be achieved
by continuous improvement of our safety, health and environment performance through corporate
leadership, dedication of staff and the application of the highest professional standards at workplace.

Corporate Social Responsibility

Your company has very distinct Corporate Social Responsibility (CSR) policy aimed at fulfilling its
responsibilities of securing the community within which it operates. Its philanthropic activities include
participation in health and education sector initiatives.

28 Kohinoor Mills Limited

Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019
Your company is committed to maintaining high standards of corporate governance. The Board and its
Subcommittees acknowledge their responsibilities in this respect and a statement of compliance with the
Listed Companies (Code of Corporate Governance) Regulations, 2019 and Auditors’ review report on the
same is annexed to this report.

Statement of Value Addition and its Distribution and Risk Management

The ‘Statement of Value Addition and its Distribution’ is annexed to this report.

Financial Reporting and Corporate Compliance

The Board of Directors of the company is fully cognizant of its responsibility as laid down in the Code
of Corporate Governance issued by the Securities & Exchange Commission of Pakistan. The following
statements are a manifestation of its commitment towards compliance with best practices of Code of
Corporate Governance.

a. The financial statements together with the notes thereon have been drawn up in conformity with
the Companies Act, 2017. These statements, prepared by the management of the company, present
fairly its state of affairs, the results of its operations, cash flows and changes in equity.
b. Proper books of account have been maintained by the company.
c. Appropriate accounting policies have been consistently applied in preparation of financial
statements. Accounting estimates are based on reasonable and prudent judgment.
d. International Financial Reporting Standards, as applicable in Pakistan, have been followed in
preparation of financial statements and any departures therefrom has been adequately disclosed
and explained.
e. The system of internal control is sound in design and has been effectively implemented and
monitored.
f. There are no significant doubts upon the company’s ability to continue as a going concern.
g. There has been no material departure from the best practices of Corporate Governance as detailed
in Listed Companies (Code of Corporate Governance) Regulations, 2019.
h. There are no further significant plans for any corporate restructuring, business expansion or
discontinuation of any part of company’s operations.
i. The operating and financial data of past six years is annexed to this report.
j. Information regarding statutory payments on account of outstanding taxes, duties, levies and other
charges (if any) has been given in related note(s) to the audited accounts.
k. The company strictly complies with the standard of safety rules & regulations. It also follows
environmentally friendly policies.
l. The valuation of investment made by the staff retirement benefit fund (Provident Fund), based on
their respective accounts is as follows:

30-Jun-22 Rs. 220.804 million (Un-audited)

30-Jun-21 Rs. 198.546 million (Audited)

Board of Directors
The Board of Directors is responsible for the overall governance and administration of the company.
All directors are aware of their duties and powers. They exercise their fiduciary responsibilities through
board meetings which are held every quarter for reviewing and approving the adoption of company’s
financial statements in addition to review and adoption of company’s significant plans and decisions,

Annual Report 2022 29

 projections, forecasts, and budgets with due regard to the recommendations of the Sub-committees. The
responsibilities include establishing the company’s strategic objectives, providing leadership, supervising
the management of the business and reporting to shareholders on their stewardship.

The total number of directors are seven as per the following:

a. Male
i. Mr. Rashid Ahmed
ii. Mr. Aamir Fayyaz Sheikh
iii. Mr. Ismail Aamir Fayyaz
iv. Mr. Muhammad Anwarul Haq Siddiqui
v. Mr. Matiuddin Siddiqui (NIT Nominee)

b. Female
vi. Ms. Imrat Aamir Fayyaz
vii. Mrs Hajra Arham

Changes in the Board

During the year under review the election of directors of your company was held on March 31, 2022 and
seven directors were elected for a term of three years.

a. Independent Director Mr. Muhammad Anwarul Haq Siddiqui

Mrs. Hajra Arham

b. Other Non-Executive Directors Mr. Rashid Ahmed

Mr. Matiuddin Siddiqui

c. Executive Directors Mr. Aamir Fayyaz Sheikh

Mr. Ismail Aamir Fayyaz
Ms. Imrat Aamir Fayyaz

During the year under review six (6) meetings of the Board of Directors were held. The attendance by
each Director is as follows:

Sr. No Name of the Directors Number of Meetings Attended

1 Mr. Rashid Ahmed - Chairman 6/6

2 Mr. Aamir Fayyaz Sheikh - Chief Executive 5/6
3 Mr. Ismail Aamir Fayyaz - Director 6/6
4* Mrs. Safia Fayyaz - Director 2/6
5* Mr. Riaz Ahmed - Director 2/6
6* Mr. Shahbaz Munir - Director 3/6
7 Mr. Matiuddin Siddiqui - Director NIT Nominee 6/6
8* Ms. Imrat Aamir Fayyaz - Director 3/6
9* Mrs. Hajra Arham - Director 3/6
10* Mr. Muhammad Anwarul - Director 3/6
Haq Siddiqui

Leave of absence was granted to the director unable to attend the meeting.

* Ms. Imrat Aamir Fayyaz, Mrs. Hajra Arham and Mr. Muhammad Anwarul Haq Siddiqui were elected in
place of Mrs. Safia Fayyaz, Mr. Riaz Ahmed and Mr. Shahbaz Munir as on March 31, 2022.

30 Kohinoor Mills Limited

Other than those set out below, there has been no trading in shares during the year under review by the
Directors, Executives, their spouses and minor children:

Number of Shares
Name Nature of Transaction
Purchased

Mr. Aamir Fayyaz Sheikh – Chief Executive Negotiated Deal Market 375,000

Annual Board Performance Evaluation

The Board considers its performance assessment as a key contributor to good governance, as it provides
feedback from the Directors on their perceptions of how the Board is currently performing its role and
responsibilities. Envisaging the same, the Board devised an in-house questionnaires based on emerging
and leading practices to assist performance of the board as a whole, of its committees and of its members.
The company Secretary presents the summarized report for discussion and review of the Board annually.

Directors’ Remuneration

The remuneration of the Board members is approved by the Board itself. However, in accordance with the
Code of Corporate Governance, it is ensured that no Director takes part in deciding his own remuneration.
The Company does not pay remuneration to non-executive directors except fee for attending the
meetings. In order to retain the best talent, the Company’s remuneration policies are structured in line
with prevailing industry trends and business practices. For information on remuneration of Directors and
CEO, please refer notes to the Financial Statements.

Directors’ Training Programme

The Board has arranged Directors’ Training program for the following:

Sr. No. Name of Directors

1 Mr. Ismail Aamir Fayyaz - Director

2 Mr. Matiuddin Siddiqui (NIT Nominee)
3 Ms. Imrat Aamir Fayyaz – Director

Following directors meet the exemption criteria of minimum of 14 years of education and 15 years of
experience on the Boards of listed companies, hence are exempt from Directors’ Training program:

Sr. No. Name of Directors

1 Mr. Aamir Fayyaz Sheikh – Chief Executive

2 Mr. Rashid Ahmed – Director

Following directors will be pursuing for the Directors’ Training program in the financial year 2022-23 as
they were elected through election of directors held on March 31, 2022:

Annual Report 2022 31

 Sr. No. Name of Directors

1 Mrs. Hajra Arham - Director

2 Mr. Anwarul Haq Siddiqui - Director

Audit Committee
The Board has formed an Audit committee comprising of following members:

1 Mrs. Hajra Arham Chairman

2 Mr. Rashid Ahmed Member
3 Mr. Muhammad Anwarul Haq Siddiqui Member

The Audit Committee operates according to the terms of reference determined by the Board of Directors
of the company. It focuses on monitoring compliance with the best practices of the Code of Corporate
Governance and relevant statutory requirements, changes in accounting policies and practices,
compliance with applicable accounting standards and listing regulations.

It recommends to the Board of Directors the terms of appointment of external auditors and reviews their
recommendations relating to audit. Other responsibilities include monitoring the internal audit function,
safeguarding company’s assets through appropriate internal control systems including financial and
operational controls, accounting systems and reporting structures, preliminary review of business plans
and quarterly, half-yearly and annual results prior to approval and publication by the Board.

During the year under review four (4) meetings of the Audit Committee were held. The attendance by
each member was as follows:

Sr. No. Name of the Members Number of Meetings Attended

1 Mrs. Hajra Arham - Chairman 1/4

2 Mr. Rashid Ahmed - Member 4/4
3 Mr. Anwarul Haq Siddiqui - Member 1/4
4* Mr. Riaz Ahmed - Member 3/4
5* Mr. Shahbaz Munir - Member 3/4

Leave of absence was granted to the members unable to attend the meeting.

* Mr. Riaz Ahmed and Mr. Shahbaz Munir retired from the Board and the Committee as on March 31, 2022.

Human Resource and Remuneration Committee

The Board has formed a Human Resource and Remuneration Committees comprising of following
members:

1 Mr. Muhammad Anwarul Haq Siddiqui Chairman

2 Mr. Rashid Ahmed Member
3 Mrs. Hajra Arham Member

32 Kohinoor Mills Limited

The Human Resource and Remuneration Committee (HR & R) operates according to the terms of
reference approved by the Board of Directors in line with the requirements of Listed Companies (Code of
Corporate Governance) Regulations, 2019.

During the year under review four (4) meetings of the HR & R Committee were held, the attendance by
its members was as follows:

Sr.No. Name of the Members Number of Meetings Attended

1 Mr. Muhammad Anwarul Haq Siddiqui - Chairman 1/4

2 Mr. Rashid Ahmed - Member 4/4
3 Mrs. Hajra Arham - Member 1/4
4* Mr. Riaz Ahmed - Member 3/4
5* Mr. Shahbaz Munir - Member 3/4

* Mr. Riaz Ahmed and Mr. Shahbaz Munir retired from the Board and the Committee as on March 31, 2022.

Remuneration to Non-Executive / Independent Directors:

The Board of Directors ratified the policy relating to Directors’ Remuneration. The significant features of
which are as under:

• No single member of the Board of Directors can determine his/her own remuneration.
• Remuneration of Non-Executive Directors including Independent Directors is determined with
regard to the company’s need to maintain appropriately experienced and qualified Board members
and shall be aligned with market practice. The Human Resource & Remuneration Committee makes
recommendations to the Board based on a survey of comparable remuneration levels in the external
market on or before the end of each financial year.
• 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 as
per relevant policy of the company.
• Tax obligation against the remuneration shall be borne by the company.

Code of Conduct
In order to promote integrity for the Board, senior management and other employees of the company, the
Board has prepared and disseminated its Code of Conduct on the company’s website for information and
understanding of the professional standards and corporate values expected for everybody associated or
dealing with the company.

Pattern of Shareholding
The Statement of Pattern of Shareholding along with categories of shareholders of the company as at
June 30, 2022, as required under the Companies Act, 2017 and Listed Companies (Code of Corporate
Governance) Regulations, 2019, is annexed with this report.

Future Outlook
Although Pakistan has survived and recovered from the COVID-19 crisis, it faces multiple daunting tasks
in FY-22 such as controlling stimulus induced fiscal deficit, curtailing widening current account deficit,
managing pressure on exchange rate along with achieving a sustainable post-pandemic recovery. Pent-
up demand fueled by stimulus and pandemic disruptions has accelerated inflation around the world. The
situation is further exacerbated by the Ukraine War, which has stoked strong inflationary winds throughout

Annual Report 2022 33

 the global economy, resulting in higher food and energy prices and new supply-chain disruptions. The
effects of the devastating floods in Pakistan are also expected to add to this supply insecurity.

As part of monetary tightening, the SBP has also increased interest rates on Export Finance Scheme
(EFS) and Long Term Financing Facility (LTFF). Consequently, it has reached to 10% for both the EFS
and LTFF from base rate of 3% for EFS and 5% for LTFF prevailing at the inception of the FY-22. Rising
financing rates are expected to hit the bottom line profitability of textile sector.

Going forward, the Government is eyeing US$ 25 billion exports from the sector but domestic and global
challenges are dampening this outlook. The PKR depreciation will benefit exporters to some extent,
however, increasing imported raw cotton and yarn costs continue to offset the gains.

The company has already commenced work on a garment unit which is expected to start productions
in the third quarter of the current financial year with an estimated capacity of 5,000 garments/day, which
will enable the company to reap benefits of vertical integration. The apparel division will complement our
dyeing division by offering finished product to the same customer base.

The management team is also fully focused on minimizing the effects of the global slowdown in demand
amid recessive pressures. The planned order position for FY-23 appears encouraging and management
is hopeful of utilizing the higher capacity levels attained after modernization.

Auditors
The external auditors of the company, M/s Riaz Ahmad & Company, Chartered Accountants shall retire
on the conclusion of forthcoming Annual General Meeting. Being eligible for re-appointment under the
Companies Act, 2017, they have offered their services as auditors of the company for the year ending
June 30, 2023. The Board of Directors endorsed its recommendations of Audit Committee for their re-
appointment.

The auditors have conveyed that they have been assigned satisfactory rating under the Quality Control
Review Program of the Institute of Chartered Accountants of Pakistan and registered with the Audit
Oversight Board of Pakistan. The firm is fully compliant with the code of ethics issued by International
Federation of Accountants (IFAC). Further they are also not rendering any related services to the company.
The auditors have also confirmed that neither the firm nor any of their partners, their spouses or minor
children at any time during the year held or traded in the shares of the company and that no partner
of the firm or person involved in the audit are close relative i.e, spouse, parents, dependents and non-
dependents children of the CEO, the CFO, the head of internal audit, the company secretary or a director
of the company.

Acknowledgement
The board places on record its profound gratitude for its esteemed shareholders, banks, financial
institutions and customers, whose cooperation, continued support and patronage have empowered
the company to make progress towards consistent improvement. During the period under review,
relations between the management and employees remained cordial and we wish to put on record our
appreciation for the dedication, perseverance and steadiness of the employees of the company.

For and on behalf of the Board

Kasur: Aamir Fayyaz Sheikh Ismail Aamir Fayyaz

September 22, 2022 Chief Executive Director

34 Kohinoor Mills Limited

Annual Report 2022 35
 THE COMPANIES ACT, 2017 [Section 227(2)(f)]
THE COMPANIES (GENERAL PROVISIONS AND
FORMS) REGULATIONS, 2018 [Form 34]

PATTERN OF SHAREHOLDING

PART-I

1.1 Name of Company KOHINOOR MILLS LIMITED

PART-II

2.1 Pattern of holding of shares 30 June 2022
held by the shareholders as at

2.2 Number of Shares held Range Total

Shareholders From To Shares held Percentage

357 1 - 100 7,191 0.01
679 101 - 500 145,183 0.29
103 501 - 1000 82,706 0.16
195 1001 - 5000 481,349 0.95
38 5001 - 10000 298,946 0.59
11 10001 - 15000 146,348 0.29
11 15001 - 20000 197,914 0.39
5 20001 - 25000 113,382 0.22
1 25001 - 30000 27,500 0.05
2 30001 - 35000 63,500 0.12
5 45001 - 50000 241,003 0.47
2 50001 - 55000 104,000 0.20
2 55001 - 60000 116,500 0.23
1 65001 - 70000 65,826 0.13
1 70001 - 75000 70,147 0.14
1 75001 - 80000 76,000 0.15
4 80001 - 85000 327,867 0.64
1 85001 - 90000 89,000 0.17
1 110001 - 115000 112,500 0.22
2 175001 - 180000 355,500 0.70
1 220001 - 225000 222,467 0.44
1 235001 - 240000 240,000 0.47
1 905001 - 910000 909,500 1.79
1 1020001 - 1025000 1,023,661 2.01
1 1430001 - 1435000 1,434,855 2.82
1 3065001 - 3070000 3,068,059 6.03
3 5090001 - 5095000 15,273,300 30.00
1 8965001 8970000 8,965,548 17.61
1 16005001 16010000 16,651,259 32.71

1,433 T o t a l 50,911,011 100.00

Note: The slabs not applicable, have not been shown.

36 Kohinoor Mills Limited

 Shares Percentage
2.3 Categories of Shareholders
held of holding

2.3.1 Directors, Chief Executive Officer, their Spouse(s)

and Minor Children

Mr. Rashid Ahmed - Chairman 3,850 0.0076

Mr. Aamir Fayyaz Sheikh - Chief Executive 16,651,259 32.7066
Mr. Ismail Aamir Fayyaz 5,091,100 10.0000
Ms. Imrat Aamir Fayyaz 5,091,100 10.0000
Mrs. Hajra Arham 2,500 0.0049
Mr. Muhammad Anwarul Haq Siddiqui 2,500 0.0049
Mr. Matiuddin Siddiqui (Nominee Director of NIT)
Mr. Ehsan Aamir Fayyaz 5,091,100 10.0000

31,933,409 62.7240

2.3.2 Associated Companies, Undertakings and Related Parties

2.3.3 NIT and ICP
National Bank of Pakistan 600 0.0012
CDC - Trustee National Investment (Unit) Trust 3,068,059 6.0263
Investment Corporation of Pakistan 1,500 0.0029

3,070,159 6.0304

2.3.4 Banks, Development Financial institutions, Non-Banking Financial Companies 20,104 0.0395

2.3.5 Insurance Companies 125 0.0002

2.3.6 Modarabas and Mutual Funds 81,379 0.1598

2.3.7 Share holders holding 10% or more (Other than 2.3.1) 10,489,403 20.6034

2.3.8 General Public
a. Local 3,888,306 7.6375
b. Foreign 82,636 0.1623
c. Joint Stock Companies 137,327 0.2697

2.3.9 Others
Trustee Kohinoor Mills Ltd Staff Provident Fund 909,500 1.7865
Trustee National Bank of Pakistan Emp Benevolent Fund Trust 7,806 0.0153
Lahore Stock Exchange 680 0.0013
Trustees of Pakistan Mobile Communication Ltd-Provident Fund 57,000 0.1120
Trustees Al-Mal Group Staff Provident Fund 1,694 0.0033
Trustee National Bank of Pakistan Employees Pension Fund 222,467 0.4370
Trustees Moosa Lawai Foundation 1 0.0000
Trustees Al-Mal Group Staff Provident Fund 1 0.0000
Trustees Moosa Lawai Foundation 9,014 0.0177

1,208,163 2.3731

TOTAL 50,911,011 100.0000

Annual Report 2022 37

 STRATEGIC BUSINESS
OBJECTIVES

Maintain market share as preferred &

leading regional supplier for non-denim
apparel fabrics & garments.

Retain & add core customers.

Enhance product offerings, through

investments into value addition and aligned
products.

Develop and expand technical textile

products.

Add regional offices around the globe.

Target growth in non-traditional markets.

Increase focus on domestic business

considering pandemic trends.

Innovate for consistent development of

specialized and new fabrics.

Swift sampling and product development to

enhance customer experience.

Improve quality through in investment in

technology and human capital.

Become a carbon neutral company

38 Kohinoor Mills Limited

 ENVIRONMENT AND
CLIMATE ROADMAP 2021-25

Recycling of effluent
1.5 Megawatt
treatment plant,
solar system
reusing water in
installation
dyeing and finishing
process

Waste heat recovery

Over 100,000 trees will Generation of steam from
boilers on electric
be added within the agricultural biomass
generators
facility and surrounding
neighbourhood

Annual Report 2022 39

 TERMS OF REFERENCE
AUDIT COMMITTEE
The Committee is responsible for: 9. Ascertaining that the internal control
systems including financial and operational
1. Determination of appropriate measures to
controls, accounting systems for timely and
safeguard the company’s assets;
appropriate recording of purchases and
2. Review of annual and interim financial sales, receipts and payments, assets and
statements of the company, prior to their liabilities and the reporting structure are
approval by the Board of Directors, focusing adequate and effective;
on:
10. Review of the company’s statement
(i) major judgmental areas;
on internal control systems prior to
(ii) significant adjustments resulting from
endorsement by the board of directors and
the audit;
internal audit reports;
(iii) going concern assumption;
(iv) any changes in accounting policies and
11. Instituting special projects, value for money
practices;
studies or other investigations on any
(v) compliance with applicable accounting
matter specified by the board of directors,
standards;
in consultation with the chief executive
(vi) compliance with regulations and other
officer and to consider remittance of any
statutory and regulatory requirements;
matter to the external auditors or to any
and
other external body;
(vii) all related party transactions.
12. Determination of compliance with relevant
3. Review of preliminary announcements of
statutory requirements;
results prior to external communication
and publication;
13. Monitoring compliance with regulations
and identification of significant violations
4. Facilitating the external audit and discussion
thereof;
with external auditors of major observations
arising from interim and final audits and
14. Review of arrangement for staff and
any matter that the auditors may wish to
management to report to audit committee
highlight (in the absence of management,
in confidence, concerns, if any, about actual
where necessary);
or potential improprieties in financial and
other matters and recommend instituting
5. Review of management letter issued by
remedial and mitigating measures;
external auditors and management’s
response thereto;
15. Recommend to the board of directors the
appointment of external auditors, their
6. Ensuring coordination between the internal
removal, audit fees, the provision of any
and external auditors of the company;
service permissible to be rendered to the
company by the external auditors in addition
7. Review of the scope and extent of internal
to audit of its financial statements. The board
audit, audit plan, reporting framework and
of directors shall give due consideration
procedures and ensuring that the internal
to the recommendations of the audit
audit function has adequate resources and
committee and where it acts otherwise it
is appropriately placed within the company;
shall record the reasons thereof.
8. Consideration of major findings of internal
16. Consideration of any other issue or matter
investigations of activities characterized by
as may be assigned by the board of
fraud, corruption and abuse of power and
directors.
management’s response thereto;

40 Kohinoor Mills Limited

TERMS OF REFERENCE
HUMAN RESOURCE AND
REMUNERATION COMMITTEE

The Committee is responsible for:

1. Recommend to the board for consideration and approval a policy framework

for determining remuneration of directors and senior management preferably
taking into consideration that such remuneration commensurate with the
performance of the company and evaluation of board and management (as
applicable). The definition of senior management will be determined by the
board which shall normally include the first layer of management below the
chief executive officer level;

2. Undertaking annually a formal process of evaluation of performance of

the board as a whole, its members and its committees either directly or by
engaging external independent consultant and if so appointed, a statement to
that effect shall be made in the directors’ report disclosing name, qualifications
and major terms of appointment;

3. Recommending human resource management policies to the board;

4. Recommending to the board the selection, evaluation, development,

compensation (including retirement benefits) and succession planning of
chief operating officer, chief financial officer, company secretary and head of
internal audit;

5. Consideration and approval on recommendations of chief executive officer

on such matters for key management positions who report directly to chief
executive officer or chief operating officer; and

6. Where human resource and remuneration consultants are appointed, their

credentials shall be known by the committee and a statement shall be made
by them as to whether they have any other connection with the company

Annual Report 2022 41

 CODE OF CONDUCT
AND ETHICAL PRINCIPLES
Introduction to the Code

This code has been formulated to ensure that directors and employees of the Company operate within
acceptable standards of conduct and sound business principles which strive for development and
growth. The Company takes pride in adherence to its principles and continues to serve its customers,
stakeholders and society.

Contents

This code identifies the acceptable standards under following headings:

• Core values
• Business culture
• Responsibilities

Core values

The credibility, goodwill and repute earned over the years can be maintained through continued
conviction in our corporate values of honesty, justice, integrity, and respect. The Company strongly
believes in democratic leadership style with fair, transparent, ethical and high professional standards of
conduct in all areas of business activities.

Business culture

Operations The Company shall formulate and monitor its objectives, strategies and overall
business plan of the organization.

The Company shall be continuously involved in the research and development
of new products while improving quality of existing products using highest
level of quality control measures at every stage of its operations. Creativity
and innovation must prevail at all levels of hierarchy to achieve organizational
excellence.

Abidance of Law It is Company’s prime object to comply with all applicable laws and regulations
and to co-operate with all governmental and regulatory bodies.

Corporate Reporting The Company maintains effective, transparent and secure financial reporting
and internal control systems so as to ensure reliable performance measurement
and compliance with local regulations and international accounting standards
as applicable.

The Company strictly adheres to the principles of good corporate governance

and is committed to high standards of corporate governance.

The Company regularly updates and upgrades manufacturing and reporting
systems so as to keep abreast with technological advancements and achieve
economies of production.

Integrity and The Company believes in uprightness and expects it to be a fundamental

Confidentiality responsibility of employees to act in Company’s best interest while holding
confidential information and neither to solicit internal information from others
nor to disclose Company’s figures, data or any material information to any
unauthorized person/body.

Inside information about the Company, its customers, vendors, employees shall
not be used for their own gain or for that of others directly or indirectly

42 Kohinoor Mills Limited

Insider Trading No employees or his/her spouse will transact in the shares of the Company
during the closed period prior to the announcement of financial results.
Employees categorized as executives according to the requirement of code of
corporate governance should also inform the company secretary immediately
about transactions performed by them and their spouse other than during the
closed period.

Whistleblowing Policy The Company is committed to high standards of ethical, moral and legal
business conduct and open communication. In line with these commitments
the company placed whistleblowing policy on its intranet namely KNET to
provide an avenue for its employees top raise their concerns and get assurance
that they will be protected from reprisals or victimizations for whistleblowing
matters such as unlawful activity, activities not in line with the company’s policy
including code of conduct.

Harassment policy The Company has also placed a Harassment Policy on its intranet for information
of all employees. Rules and procedures of this policy provide protection to
women against harassment at their workplace according to “Protection against
Harassment of Women at Workplace Act, 2010”.

Responsibilities

Shareholders The Company believes in maximizing shareholders value by providing

consistent growth and fair return on their investment.

Customers The Company considers it imperative to maintain cordial relationship with

the customers as integral to its growth and development of business and
is committed to provide high quality products and services that conform to
highest international standards.

Employees The Company is an equal opportunity employer at all levels with respect to
issues such as colour, race, gender, age, any disability, ethnicity and religious
beliefs and its promotional policies are free of any discrimination.

The Company ensures that employees work towards achievement of corporate

objectives, individually and collectively as a team and conduct themselves at
work and in society as respectable employees and good citizens.

The Company believes in continuous development and training of its employees.

The Company has set high standards of performance and recognizes

employee’s contribution towards its growth and reward them based on their
performance. The Company believes development, growth and recognition
result in motivated employees.

All employees of the Company are part of Kohinoor family and the families
of all members are also part and parcel of Kohinoor family. The Company
believes that the sense of belonging to Kohinoor fulfils an essential need of its
employees and the organization and as such will always be nurtured.

Environment and Protecting the environment in which we live is an important element.

Social Responsibility The Company uses all means to ensure a clean, safe, and healthy and pollution
free environment not only for its workers and employees but also for the
well being of all people who live in and around any of the production and
manufacturing facilities. The Company will always employ such technology as
may be beneficial in maintaining a healthy and hygienic working environment.
It also believes in community development without political affiliations with any
person or group of persons and contributes part of its resources for a better
environment with an unprejudiced approach.

Annual Report 2022 43

 WHISTLEBLOWER
POLICY
This policy is formulated to encourage employees to feel confident in raising
concerns regarding any malpractice, embezzlement, forgery or any wrongful
conduct adversely affecting the goodwill of the company. This policy also prohibits
managerial officials from taking any adverse personal action against those
employees who have identified the wrong doing.

Policy covering issues /complaints which are in inquiry; the report shall be forwarded to the CEO
large public interest not specified to the individuals. if required.
Issues / Complaints that count as whistleblowing
are: CEO will review the preliminary inquiry report
and may appoint Officer or Committee of Senior
• A criminal offense i.e. Fraud or Financial Officials to investigate the matter if deemed
indiscipline etc. appropriate. Committee shall have right to outline
• Damaging assets of the Company. detailed procedure for an investigation.
• Health & Safety in danger due to operational
risk. The Officer or Committee, as the case may be, shall
• Risk or actual damage to the Environment have right to call for any information/document
• Failure to comply with an obligation set out in and examination of any employee of the Company
local applicable laws or other person(s), as they may deem appropriate
• A miscarriage of justice, incumbent is breaking for the purpose of conducting investigation.
rules/regulations/procedures etc.
• Someone covering up wrongdoing A report shall be prepared after completion
of investigation and submitted to the CEO for
The Chief Executive Officer is overall responsible remedies which may inter-alia include:
for ensuring implementation of this policy. In the
first instance he may delegates this responsibility a) To takes disciplinary action, impose penalty /
to the Manager HR/Administration. punishment as per law, order recovery when
any alleged unethical & improper practice or
No person entitled to protection shall be subjected wrongful conduct of any employee is proved.
to retaliation, intimidation, harassment, or other
adverse action for reporting information in b) Recommend termination or suspension of
accordance with this Policy. Any person entitled to any contract or arrangement or transaction
protection who believes that he or she is the subject vitiated by such unethical & improper practice
of any form of retaliation for such participation or wrongful conduct.
should immediately report the same as a violation
in accordance with this Policy. c) Order for compensation for lost wages,
remuneration or any other benefits, etc.
An employee of the Company who discloses in
good faith any unethical & improper practices The decision of the CEO shall be final and binding.
or alleged wrongful conduct to Manager HR/
Administration or and in exceptional cases Chief Where it is possible and deemed appropriate,
Executive Officer in writing. corrective action may be communicated to the
whistleblower
Reports should be factual rather than speculative
and contain as much specific information as Manager HR/Administration shall maintain a log of
possible to help proper investigation. all reported concerns and complaints, preliminary/
investigation report along with corrective action
Identity of the whistleblower will be kept and submit quarterly to the HR & R Committee for
confidential. review if required by them.

The Manager HR/Administration will collect full If a whistleblower believes that company has
details/evidences of the complaint to conduct treated him unfairly, he may decide to take up the
appropriately and expeditiously preliminary issue /complaint at appropriate legal forum.

44 Kohinoor Mills Limited

HARASSMENT
POLICY
The purpose of this procedure is to form a system of instructions
and assign responsibilities of the Inquiry Committee in order to
protect women against harassment at their workplace according
to the “Protection against Harassment of Women at the Workplace
Act, 2010”.

a) “Harassment” means any Committee comprises of members

unwelcome sexual advance, of HR Head, Department Head of
request for sexual favors or other Complaint & Accused. Head of Internal
verbal or written communication Audit will be member of inquiry
or physical conduct of a sexual committee if complaint and accused
nature or sexually demeaning are from same department.
attitudes, causing interference
with work performance or The Inquiry Committee, within three
creating an intimidating, hostile days of a receipt of a written complaint,
or offensive work environment, shall communicate to the accused the
or the attempt to punish the charges and allegations made against
complainant for refusal to comply him, the formal written receipt of which
to such a request or is made a is given, require the accused within
condition for employment. seven days from the day the charge
is communicated to him to submit a
b) Competent Authority” means written defense and on his failure to
the Chief Executive Officer or do so without reasonable cause, the
Chief Operating Officer for the Committee shall proceed ex-parte,
purposes of this Act. Enquire into the charge and may
examine such oral or documentary
The inquiry committee shall follow evidence in support of the charge
the regulations while conducting the or in defense of the accused as the
complaints relating to Harassment and Committee may consider necessary
to undertake the following measures and each party shall be entitled to
for implementation of this act. An cross-examine the witnesses against
inquiry committee shall be constituted him, All proceedings must be treated
-to enquire complaints under this policy. as highly confidential
It shall have at least three members out
of which at least one of them must be CENSURE MINOR
a female.
Withholding, for a specific period,
The committee will immediately promotion or increment and recovery
address the complaints of sexual of the compensation payable to the
harassment as per law, as and when complainant from pay or any other
received, Adaptation of code of conduct source of the accused;
prescribed by law, ensuring the justice
is done swiftly and retaliation against CENSURE MAJOR
the complaints is curbed.
Informing and educating the Reduction to a lower post or
employees to make them more aware designation, compulsory retirement,
of the provisions of the act and to removal from service, dismissal from
encourage a professional and dignified service, payment of a fine. A part of
work environment for the women. the fine can be used as compensation
for the complainant. In case of the
An Inquiry Committee consists of owner, the fine shall be payable to the
three members of whom at least one complainant.
member shell be a woman. Inquiry

Annual Report 2022 45

46 Kohinoor Mills Limited
SIX YEARS’
PERFORMANCE

2021-22 2020-21 2019-20 2018-19 2017-18 2016-17

OPERATING
Gross Margin % 16.07 12.99 15.56 14.43 12.00 13.56
Pre Tax Margin % 5.70 3.53 4.05 6.19 2.42 2.19
Net Margin % 4.33 2.02 3.04 5.22 2.20 1.26

PERFORMANCE
Return on Long Term Assets % 11.53 3.75 7.17 14.68 4.75 3.63
Total Assets Turnover x 1.27 0.98 1.17 1.28 1.22 1.63
Fixed Assets Turnover x 2.71 1.88 2.39 2.86 2.20 2.96
Inventory Turnover Days 84 96 86 57 54 50
Return on Equity % 15.46 5.25 9.22 19.43 7.69 6.44
Return on Capital Employed % 22.58 12.58 17.46 27.23 13.71 17.56
Retention % 89.03 100.00 100.00 79.04 74.44 58.22

LEVERAGE
Debt:Equity 53:47 50:50 49:51 54:46 55:45 57:43

LIQUIDITY
Current Times 0.95 0.90 0.94 0.94 0.80 0.78
Quick Times 0.43 0.41 0.48 0.58 0.48 0.42

VALUATION
Earning per share (pre tax) Rs. 24.01 9.17 9.54 16.96 5.16 4.59
Earning per share (after tax) Rs. 18.24 5.26 7.17 14.31 4.70 2.63
Breakup value Rs. 117.92 100.21 77.77 73.68 61.03 40.89
Dividend payout - Cash Rs. 2.00 - - 3.00 1.20 1.10
Bonus issue % - - - - - -
Payout ratio - Cash (after tax) % 10.97 - - 20.96 25.56 41.78
Price earning ratio Times 1.47 5.70 5.30 1.57 6.30 18.16
Market price to breakup value Times 0.23 0.30 0.49 0.31 0.48 1.17
Dividend yield % 6.45 - - 7.79 3.62 3.28
Market value per share Rs. 26.75 30.00 38.00 22.49 29.58 47.81
Market capitalization Rs. In million 1,362 1,527 1,935 1,145 1,506 2,434

HISTORICAL TRENDS
Turnover Rs. In million 21,453 13,241 11,998 13,952 10,856 10,656
Gross profit Rs. In million 3,447 1,720 1,867 2,014 1,303 1,445
Profit before tax Rs. In million 1,222 467 486 863 263 234
Profit after tax Rs. In million 928 268 365 729 239 134

FINANCIAL POSITION
Shareholder’s funds Rs. In million 6,004 5,102 3,959 3,751 3,107 2,082
Property Plant and Equipment Rs. In million 7,913 7,027 5,028 4,884 4,930 3,603
Current assets Rs. In million 8,824 6,440 5,195 5,904 3,833 2,842
Current liabilities Rs. In million 9,328 7,149 5,505 6,288 4,784 3,648
Long term assets Rs. In million 8,052 7,134 4,964 5,032 5,032 3,696
Long term liabilities Rs. In million 1,545 1,323 828 829 974 808

Annual Report 2022 47

 PERFORMANCE
OVERVIEW

Sales Growth
(Rupees in million)
Percentage

Profitability
Ratios
Rupees in million

Financial
Charges %
Sales Fin Charges (% of Sales)
Rupees in million

Shareholder’s
Equity

48 Kohinoor Mills Limited

Market Rupees in million
Capitalization

120.00

100.00

80.00
Rupees

60.00

40.00

Break-up Value vs 20.00

Market Price 0.00

20.00

18.00
16.00
14.00
12.00
Rupees

10.00

8.00
6.00

4.00

EPS vs P/E 2.00

0.00

1.02

0.82

0.62
Times

0.42

0.22

Liquidity Ratios 0.02

Annual Report 2022 49

 STATEMENT OF
VALUE ADDITION

2022 2021
%age Amount (000) %age Amount (000)
Value Added

Local Sales 22.80% 4,891,004 26.21% 3,470,070
Export Sales 77.20% 16,561,845 73.79% 9,770,960

Total Sales 100% 21,452,848 100% 13,241,030

Value Allocated

Materials 64% 13,629,678 62% 8,181,686
Other Manufacturing Cost 15% 3,257,297 18% 2,443,757
Staff Cost 4% 786,672 5% 635,340
Depreciation & Amortization 2% 332,527 2% 260,412
Operational Expenses 8% 1,742,293 7% 911,599
Financial Expenses 2% 482,136 3% 341,436
Profit Befor Tax 6% 1,222,245 4% 466,799

100% 21,452,849 100% 13,241,030

Application of Revenue Application of Revenue

for 2021-22 for 2020-21

50 Kohinoor Mills Limited

STATEMENT OF COMPLIANCE WITH LISTED
COMPANIES (CODE OF CORPORATE GOVERNANCE)
REGULATIONS, 2019 (THE REGULATIONS)
Name of Company: Kohinoor Mills Limited
Year ended: June 30, 2022
The Company has complied with the requirements of the Regulations in the following manner:
1. The total number of Directors are seven as per the following:
a. Male: 5
b. Female: 2
2. The composition of the board is as follows:
CATEGORY NAMES

a. Independent Directors Mrs. Hajra Arham

Mr. Muhammad Anwarul Haq Siddiqui

b. Non-Executive Directors Mr. Rashid Ahmed

Mr. Matiuddin Siddiqui (NIT Nominee)

c. Executive Directors Mr. Aamir Fayyaz Sheikh

Mr. Ismail Aamir Fayyaz
Ms. Imrat Aamir Fayyaz

3. The directors have confirmed that none by a director elected by the Board for this
of them is serving as a director on more purpose. The Board has complied with the
than seven listed companies, including this requirements of the Act and the Regulations
Company; with respect to frequency, recording and
circulating minutes of meeting of the Board;
4. The Company has prepared a Code of
Conduct and has ensured that appropriate 8. The Board have a formal policy and
steps have been taken to disseminate it transparent procedures for remuneration of
throughout the Company along with its directors in accordance with the Act and the
supporting policies and procedures; Regulations;
5. The Board has developed a vision / mission 9. The Board has arranged Directors’ Training
statement, overall corporate strategy and program for the following:
significant policies of the Company. The
Board has ensured that complete record of Name of Directors
particulars of the significant policies along Mr. Ismail Aamir Fayyaz
with their date of approval or updating is Mr. Matiuddin Siddiqui (NIT Nominee)
maintained by the Company; Ms. Imrat Aamir Fayyaz
6. All the powers of the Board have been duly Following directors meet the exemption
exercised and decisions on relevant matters criteria of minimum of 14 years of education
have been taken by the Board / shareholders and 15 years of experience on the Boards of
as empowered by the relevant provisions of listed companies, hence are exempt from
the Companies Act, 2017 (the Act) and the Directors’ Training program:
Regulations;
Name of Directors
7. The meetings of the Board were presided Mr. Aamir Fayyaz Sheikh
over by the Chairman and, in his absence, Mr. Rashid Ahmed

Annual Report 2022 51

 Following directors will be pursuing for the and Head of Internal Audit, including their
Directors’ Training program in the financial remuneration and terms and conditions of
year 2022-23 as they were elected through employment and complied with relevant
election of directors held on March 31, 2022: requirements of the Regulations;
Name of Directors 11. Chief Financial Officer and Chief Executive
Mrs. Hajra Arham Officer duly endorsed the financial statements
Mr. Muhammad Anwarul Haq Siddiqui before approval of the Board.
10. The board has approved appointment of 12. The Board has formed committees
Chief Financial Officer, Company Secretary comprising of members given below:

a) Audit Committee

Names Designation held

Mrs. Hajra Arham Chairman
Mr. Rashid Ahmed Member
Mr. Muhammad Anwarul Haq Siddiqui Member

b) HR and Remuneration Committee

Names Designation held

Mr. Muhammad Anwarul Haq Siddiqui Chairman
Mr. Rashid Ahmed Member
Mrs. Hajra Arham Member

13. The terms of reference of the aforesaid Chartered Accountants of Pakistan (ICAP)
committees have been formed, documented and registered with Audit Oversight Board of
and advised to the committees for Pakistan, that they and all their partners are
compliance; in compliance with International Federation
of Accountants (IFAC) guidelines on code
14. The frequency of meetings (quarterly, half
of ethics as adopted by ICAP and that they
yearly, yearly) of the committees were as per
and the partners of the firm involve in the
following;
audit are not a close relative (spouse, parent,
a) Audit Committee dependent and non-dependent children) of
the Chief Executive Officer, Chief Financial
Four meetings were held during the financial Officer, Head of Internal Audit, Company
year ended June 30, 2022. Secretary or Director of the Company;
b) HR and Remuneration Committee 17. The statutory auditors or the persons
associated with them have not been
Four meetings of HR and Remuneration appointed to provide other services except
Committee were held during the financial in accordance with the Act, the Regulations
year ended June 30, 2022. or any other Regulatory requirement and
the auditors have confirmed that they have
15. The Board has setup of an effective internal observed IFAC guidelines in this regard;
audit function who are considered suitably
qualified and experienced for the purpose 18. We confirm that all requirements of
and are conversant with the policies and Regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the
procedures of the Company; Regulations have been complied with.
16. The statutory auditors of the Company 19. Explanation for non-compliance with
have confirmed that they have been given requirements, other than Regulations 3, 6, 7,
a satisfactory rating under the Quality 8, 27, 32, 33 and 36 are given below:
Control Review program of the Institute of

52 Kohinoor Mills Limited

 Regulation
Sr. No Requirement Explanation of Non-Compliance
Number
1 Representation of minority No one intended to contest election 5
shareholders as director representing minority
The minority members as a class shareholders.
shall be facilitated by the Board
to contest election of directors by
proxy solicitation.

2 Directors’ Training No Directors’ Training program was 19(3)

Companies are encouraged to conducted for any female executive of
arrange training for at least one the Company in the financial year under
female executive every year under
the Directors’ Training Program review, however, the Company has
from year July 2020 planned to arrange Directors’ Training
Program certification for female executive
before 30 June 2023.
3 Responsibilities of the Board and Non-mandatory provisions of the 10(1)
its Members Regulations are partially complied.
The Board is responsible for The Company is deliberating on full
adoption of corporate governance compliance with all the provisions of the
practices by the company. Regulations.

4 Nomination Committee Currently, the Board has not constituted 29

The Board may constitute a a separate nomination committee and
separate committee, designated the functions are being performed by
as the nomination committee, of
such number and class of directors, the human resource and remuneration
as it may deem appropriate in its committee.
circumstances.

5 Risk Management Committee Currently, the Board has not constituted a 30

The Board may constitute the risk risk management committee and senior
management committee, of such officers of the Company perform the
number and class of directors,
as it may deem appropriate in its requisite functions and apprise the Board
circumstances, to carry out a review accordingly.
of effectiveness of risk management
procedures and present a report to
the Board.

6 Disclosure of significant policies Although these are well circulated among 35

on website the relevant employees and directors, the
The Company may post key Board shall consider posting such policies
elements of its significant policies,
brief synopsis of terms of reference and synopsis on its website in near future.
of the Board’s committees on its
website and key elements of the
directors’ remuneration policy.

Annual Report 2022 53

 20. The two elected independent directors have requisite competencies, skills, knowledge and
experience to discharge and execute their duties competently, as per applicable laws and
regulations. As they fulfill the necessary requirements as per applicable laws and regulations, hence,
appointment of a third independent director is not warranted.

21. Executive directors, including the chief executive officer on the Board are three out of total seven
directors. One third of the Board i.e. 2.33 has been rounded up as 3 directors as the manufacturing
units of the Company need executive directors for effective management of operations.

Kasur: Rashid Ahmed Aamir Fayyaz Sheikh

September 22, 2022 Chairman Chief Executive

54 Kohinoor Mills Limited

INDEPENDENT AUDITOR’S
REVIEW REPORT

To the members of Kohinoor Mills Limited

Review Report on the Statement of Compliance contained in Listed
Companies (Code of Corporate Governance) Regulations, 2019
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Kohinoor Mills
Limited (the Company) for the year ended 30 June 2022 in accordance with the requirements of
regulation 36 of the Regulations.

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

As a part of our audit of the financial statements we are required to obtain an understanding of the
accounting and internal control systems sufficient to plan the audit and develop an effective audit
approach. We are not required to consider whether the Board of Directors’ statement on internal control
covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the
Company’s corporate governance procedures and risks.

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

Based on our review, nothing has come to our attention which causes us to believe that the Statement
of Compliance does not appropriately reflect the Company’s compliance, in all material respects, with the
requirements contained in the Regulations as applicable to the Company for the year ended 30 June
2022.

RIAZ AHMAD & COMPANY

Chartered Accountants

Lahore:
September 22, 2022
UDIN: CR202210168L4Ms8Bq53

Annual Report 2022 55

56 Kohinoor Mills Limited
 FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022

Annual Report 2022 57

 INDEPENDENT AUDITOR’S REPORT
To the members of Kohinoor Mills Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the annexed financial statements of Kohinoor Mills Limited (‘the Company’), which
comprise the statement of financial position as at 30 June 2022, 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 2022 and of
the profit, other comprehensive loss, 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.

58 Kohinoor Mills Limited

Following are the key audit matters:

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

1 Inventory existence and valuation

Inventory as at 30 June 2022 amounted Our procedures over existence and valuation
to Rupees 4,820.340 million, break up of of inventory included, but were not limited to:
which is as follows:
• To test the quantity of inventories at all
- Stores, spares and loose tools Rupees locations, we assessed the corresponding
768.118 million inventory observation instructions and
participated in inventory counts on sites.
- Stock-in-trade Rupees 4,052.222 Based on samples, we performed test
million counts and compared the quantities
counted by us with the results of the
Inventory is measured at lower of cost and counts of the management.
net realizable value.
• For a sample of inventory items, re-
We identified existence and valuation of
performed the weighted average cost
inventory as a key audit matter due to its
calculation and compared the weighted
size, representing 28.56% of total assets of
average cost appearing on valuation
the Company as at 30 June 2022, and the
sheets.
judgment involved in valuation.

For further information on inventory, refer to • We tested that the ageing report used by
the following: management correctly aged inventory
items by agreeing a sample of aged
- Summary of significant accounting inventory items to the last recorded invoice.
policies, Inventories note 2.18 to the
financial statements. • On a sample basis, we tested the net
realizable value of inventory items to
- Stores, spares and loose tools note recent selling prices and re-performed the
20 and Stock-in-trade note 21 to the calculation of the inventory write down, if
financial statements. any.

• We assessed the percentage write down

applied to older inventory with reference
to historic inventory write downs and
recoveries on slow moving inventory.

• In the context of our testing of the

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

• We also made enquires of management,

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

Annual Report 2022 59

 Sr. Key audit matters How the matters was addressed in our audit
No.
2 Revenue recognition Our procedures included, but were not limited to:

The Company recognized net revenue • We obtained an understanding of the

of Rupees 21,452.848 million for the year process relating to recognition of revenue
ended 30 June 2022. and testing the design, implementation
and operating effectiveness of key internal
We identified recognition of revenue as a controls over recording of revenue.
key audit matter because revenue is one
of the key performance indicator of the • We compared a sample of revenue
Company and gives rise to an inherent transactions recorded during the year
risk that revenue could be subject to with sales orders, sales invoices, delivery
misstatement to meet expectations or documents and other relevant underlying
targets. documents.

For further information, refer to the • We compared a sample of revenue

following: transactions recorded around the year-
end with the sales orders, sales invoices,
- Summary of significant accounting delivery documents and other relevant
policies, Revenue recognition note underlying documentation to assess if
2.22 to the financial statements. the related revenue was recorded in the
appropriate accounting period.
- Revenue note 30 to the financial
statements. • We assessed whether the accounting
policies for revenue recognition complies
with the requirements of IFRS 15 ‘Revenue
from Contracts with Customers’.

• We also considered the appropriateness

of disclosures in the financial statements.
3 Capital expenditures Our procedures included, but were not limited
to:
The Company is investing significant
amounts in its operations and there are • We tested operating effectiveness of
a number of areas where management controls in place over the property, plant
judgement impacts the carrying value and equipment cycle including the controls
of property, plant and equipment and its over whether costs incurred on activities is
respective depreciation profile. These capital or operating in nature.
include among other the decision to
capitalize or expense costs; and review • We evaluated the appropriateness of
of useful life of the assets including the capitalization policies and depreciation
impact of changes in the Company’s rates.
strategy.
• We performed tests of details on costs
We focused on this area since the capitalized.
amounts have a significant impact on the
financial position of the Company and • We verified the accuracy of management’s
there is significant management judgment calculation used for the impairment
required that has significant impact on the testing.
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, fixed assets note 2.7 to the
financial statements.
- Fixed assets note 14 to the financial
statements.
60 Kohinoor Mills Limited
Information Other than the Financial Statements and Auditor’s Report Thereon

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

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

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

Responsibilities of Management and Board of Directors for the Financial Statements

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

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

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

Auditor’s Responsibilities for the Audit of the Financial Statements

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

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:

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

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

• Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

Annual Report 2022 61

 • Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report 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) no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

The engagement partner on the audit resulting in this independent auditor’s report is Syed Mustafa
Ali.

RIAZ AHMAD & COMPANY

Chartered Accountants

Lahore
DATE: 22 September 2022
UDIN: AR2022101683dv279jiq

62 Kohinoor Mills Limited

STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022

Note 2022 2021

Rupees Rupees
EQUITY AND LIABILITIES

Share capital and reserves

Authorized share capital 3 1,100,000,000 1,100,000,000

Issued, subscribed and paid-up share capital 4 509,110,110 509,110,110

Capital reserves

Share premium reserve 5 213,406,310 213,406,310
Fair value reserve 5 15,225,957 32,625,692
Surplus on revaluation of operating fixed assets - net of tax 5 2,564,006,429 2,628,073,544

Revenue reserves

General reserve 5 788,199,282 788,199,282
Accumulated profit 5 1,913,672,412 930,133,905

Total equity 6,003,620,500 5,101,548,843

LIABILITIES

Non-current liabilities

Long term financing - secured 6 1,212,265,071 1,007,982,666
Deferred liabilities 7 332,346,215 314,611,824
Deferred income - Government grant 8 - 396,337

1,544,611,286 1,322,990,827
Current liabilities

Trade and other payables 9 3,643,219,712 2,883,469,947
Accrued mark-up 10 71,578,017 69,459,909
Short term borrowings - secured 11 5,082,318,845 3,681,196,820
Current portion of non-current liabilities 12 523,293,032 507,559,630
Unclaimed dividend 7,119,615 7,119,615

9,327,529,221 7,148,805,921

Total liabilities 10,872,140,507 8,471,796,748

Contingencies and commitments 13

TOTAL EQUITY AND LIABILITIES 16,875,761,007 13,573,345,591

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

AAMIR FAYYAZ SHEIKH KAMRAN SHAHID

CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER

Annual Report 2022 63

 Note 2022 2021
Rupees Rupees
ASSETS

Non-current assets

Fixed assets 14 7,912,753,661 7,026,799,146
Intangible asset 15 - -
Investment property 16 1,981,607 1,981,607
Long term investments 17 23,429,479 42,398,345
Long term loans 18 22,252,126 -
Long term deposits 19 91,159,847 62,528,657

8,051,576,720 7,133,707,755



Current assets

Stores, spares and loose tools 20 768,117,752 567,778,159
Stock-in-trade 21 4,052,222,277 2,915,133,657
Trade debts 22 1,217,245,076 952,761,514
Loans and advances 23 320,700,705 92,590,304
Short term deposits and prepayments 24 57,457,728 38,509,943
Advance income tax - net 25 71,366,395 134,982,812
Sales tax recoverable 26 1,630,418,799 872,205,656
Other receivables 27 43,732,753 185,402,883
Short term investment 28 56,772,172 20,431,615
Cash and bank balances 29 606,150,630 659,841,293

8,824,184,287 6,439,637,836

TOTAL ASSETS 16,875,761,007 13,573,345,591

ISMAIL AAMIR FAYYAZ

DIRECTOR

64 Kohinoor Mills Limited

STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2022

Note 2022 2021

Rupees Rupees

REVENUE 30 21,452,848,316 13,241,029,839

COST OF SALES 31 (18,006,175,246) (11,521,196,034)

GROSS PROFIT 3,446,673,070 1,719,833,805

DISTRIBUTION COST 32 (1,100,151,805) (717,552,202)

ADMINISTRATIVE EXPENSES 33 (474,068,267) (358,939,342)
OTHER EXPENSES 34 (303,439,382) (123,455,168)

(1,877,659,454) (1,199,946,712)

1,569,013,616 519,887,093
OTHER INCOME 35 135,366,747 288,347,891

PROFIT FROM OPERATIONS 1,704,380,363 808,234,984

FINANCE COST 36 (482,135,678) (341,436,153)

PROFIT BEFORE TAXATION 1,222,244,685 466,798,831

TAXATION 37 (293,871,831) (199,015,804)

PROFIT AFTER TAXATION 928,372,854 267,783,027

EARNINGS PER SHARE - BASIC AND DILUTED 38 18.24 5.26

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

AAMIR FAYYAZ SHEIKH KAMRAN SHAHID ISMAIL AAMIR FAYYAZ

CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER DIRECTOR

Annual Report 2022 65

 STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022

2022 2021
Rupees Rupees

PROFIT AFTER TAXATION 928,372,854 267,783,027

OTHER COMPREHENSIVE (LOSS) / INCOME

Items that will not be re-classified to profit or loss:

(Deficit) / surplus arising on remeasurement of investment
at fair value through other comprehensive income (18,968,866) 5,200,829
Deferred income tax relating to this item 1,569,131 (1,131,180)

(17,399,735) 4,069,649

Surplus on revaluation of operating fixed assets - 896,092,189
Deferred income tax relating to this item (8,901,462) (25,560,060)

(8,901,462) 870,532,129

Items that may be re-classified subsequently to profit or loss - -

Other comprehensive (loss) / income for the year - net of tax (26,301,197) 874,601,778

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 902,071,657 1,142,384,805


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

AAMIR FAYYAZ SHEIKH KAMRAN SHAHID ISMAIL AAMIR FAYYAZ

CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER DIRECTOR

66 Kohinoor Mills Limited

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022

Note 2022 2021

Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES

CASH GENERATED FROM OPERATIONS 39 292,626,136 286,524,880

Income tax paid (233,643,001) (48,328,140)

Net increase in long term deposits (28,631,190) (32,869,700)
Gas infrastructure development cess paid (32,828,138) (31,344,260)
Finance cost paid (432,147,042) (264,086,858)

NET CASH USED IN OPERATING ACTIVITIES (434,623,235) (90,104,078)

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure on property, plant and equipment (1,364,303,538) (1,429,915,749)

Proceeds from disposal of operating fixed assets 132,537,221 123,936,924
Investments made (1,152,097,226) (20,000,000)
Investments disposed off 1,115,787,786 -
Dividend received 24,510,530 3,294,501

NET CASH USED IN INVESTING ACTIVITIES (1,243,565,227) (1,322,684,324)

CASH FLOWS FROM FINANCING ACTIVITIES

Long term financing obtained 781,115,857 872,684,872

Repayment of long term financing (557,740,083) (174,580,546)
Short term borrowings - net 1,401,122,025 608,575,979

NET CASH FROM FINANCING ACTIVITIES 1,624,497,799 1,306,680,305

NET DECREASE IN CASH AND CASH EQUIVALENTS (53,690,663) (106,108,097)

CASH AND CASH EQUIVALENTS AT THE

  BEGINNING OF THE YEAR 659,841,293 765,949,390

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 606,150,630 659,841,293

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

AAMIR FAYYAZ SHEIKH KAMRAN SHAHID ISMAIL AAMIR FAYYAZ

CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER DIRECTOR

Annual Report 2022 67

68
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022

RESERVES

CAPITAL RESERVES REVENUE RESERVES

SHARE Surplus on TOTAL
Fair value

Kohinoor Mills Limited

CAPITAL revaluation of EQUITY
Share premium reserve FVTOCI General Accumulated
operating fixed Sub Total Sub Total
reserve investments - reserve profit
assets - net
net of tax
of tax
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - R U P E E S - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Balance as at 01 July 2020 509,110,110 213,406,310 28,556,043 1,793,761,543 2,035,723,896 788,199,282 626,130,750 1,414,330,032 3,959,164,038

Transferred from surplus on revaluation of operating fixed assets - net of tax - - - (36,220,128) (36,220,128) - 36,220,128 36,220,128 -

Profit for the year ended 30 June 2021 - - - - - - 267,783,027 267,783,027 267,783,027
Other comprehensive income for the year ended 30 June 2021 - - 4,069,649 870,532,129 874,601,778 - - - 874,601,778

Total comprehensive income for the year ended 30 June 2021 - - 4,069,649 870,532,129 874,601,778 - 267,783,027 267,783,027 1,142,384,805

Balance as at 30 June 2021 509,110,110 213,406,310 32,625,692 2,628,073,544 2,874,105,546 788,199,282 930,133,905 1,718,333,187 5,101,548,843

Transferred from surplus on revaluation of operating fixed assets - net of tax - - - (55,165,653) (55,165,653) - 55,165,653 55,165,653 -

Profit for the year ended 30 June 2022 - - - - - - 928,372,854 928,372,854 928,372,854
Other comprehensive loss for the year ended 30 June 2022 - - (17,399,735) (8,901,462) (26,301,197) - - - (26,301,197)

Total comprehensive income for the year ended 30 June 2022 - - (17,399,735) (8,901,462) (26,301,197) - 928,372,854 928,372,854 902,071,657

Balance as at 30 June 2022 509,110,110 213,406,310 15,225,957 2,564,006,429 2,792,638,696 788,199,282 1,913,672,412 2,701,871,694 6,003,620,500

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

AAMIR FAYYAZ SHEIKH KAMRAN SHAHID ISMAIL AAMIR FAYYAZ

CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER DIRECTOR
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022

1. THE COMPANY AND ITS OPERATIONS

Kohinoor Mills Limited (“the Company”) is a public limited company incorporated on 21

December 1987 in Pakistan under the Companies Ordinance, 1984 (Now Companies Act,
2017) and its shares are quoted on Pakistan Stock Exchange Limited. All manufacturing units
(dyeing, weaving, and power generation), registered office and other offices of the Company are
situated at 8-K.M., Manga Raiwind Road, District Kasur. The Company is principally engaged
in the business of textile manufacturing covering weaving, bleaching, dyeing, buying, selling
and otherwise dealing in yarn, cloth and other goods and fabrics made from raw cotton and
synthetic fiber and to generate, and supply electricity.

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 accounting and reporting
standards as applicable in Pakistan. The Accounting and reporting standards applicable in
Pakistan comprise of:

- International Financial Reporting Standards (IFRSs) issued by the International

Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and

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

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

b) Accounting convention

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

c) Critical accounting estimates and judgments

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

Financial instruments – fair value

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 the reporting date.

Annual Report 2022 69

 Useful lives, patterns of economic benefits and impairment

Estimates with respect to residual values and 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 impairments 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 and investment property with a corresponding effect on the depreciation
charge and impairment.

Income tax

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

Inventories

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

Provisions

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

Allowance for expected credit losses

The allowance for Expected Credit Losses (ECLs) assessment requires a degree of estimation
and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue,
and makes assumptions to allocate an overall expected credit loss rate for each group. These
assumptions include recent sales experience and historical collection rates.

Revenue from contracts with customers involving sale of goods

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

Contingencies

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

70 Kohinoor Mills Limited

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

Following amendments to published approved accounting standards are mandatory for the
Company’s accounting periods beginning on or after 01 July 2021:

• Amendments to IFRS 16 ‘Leases’ – Covid-19 related rent concessions extended

beyond 30 June 2021.

• Interest Rate Benchmark Reform– Phase 2 which amended IFRS 9 ‘Financial

Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’, IFRS
4 ‘Insurance Contracts’, IFRS 7 ‘Financial Instruments: Disclosures’ and IFRS 16
‘Leases’.

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

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

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

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

Following amendments to existing standards have been published and are mandatory for the
Company’s accounting periods beginning on or after 01 July 2022 or later periods:

Classification of liabilities as current or non-current (Amendments to IAS 1 ‘Presentation of

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

Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37 ‘Provisions, Contingent

Liabilities and Contingent Assets’) effective for the annual period beginning on or after 01
January 2022 amends IAS 1 ‘Presentation of Financial Statements’ by mainly adding paragraphs
which clarifies what comprise the cost of fulfilling a contract. Cost of fulfilling a contract is
relevant when determining whether a contract is onerous. An entity is required to apply the
amendments to contracts for which it has not yet fulfilled all its obligations at the beginning
of the annual reporting period in which it first applies the amendments (the date of initial
application). Restatement of comparative information is not required, instead the amendments
require an entity to recognize the cumulative effect of initially applying the amendments as
an adjustment to the opening balance of retained earnings or other component of equity, as
appropriate, at the date of initial application.

Annual Report 2022 71

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

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

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

- IFRS 16 ‘Leases’ – The amendment partially amends Illustrative Example 13

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

- IAS 41 ‘Agriculture’ – The amendment removes the requirement in paragraph 22 of

IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a
biological asset using a present value technique.

Disclosure of Accounting Policies (Amendments to IAS 1 ‘Presentation of Financial Statements’

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

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

Change in definition of Accounting Estimate (Amendments to IAS 8 ‘Accounting Policies,

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

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

72 Kohinoor Mills Limited

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 2022 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 a funded contributory provident fund scheme for its permanent
employees. The Company and employees make equal monthly contributions of 8.33 percent
of the basic salary, towards the fund. The Company’s contribution is charged to the statement
of profit or loss.

2.3 Provisions

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

2.4 Taxation

Current

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

Deferred

Deferred tax is accounted for using the liability method in respect of all temporary differences
arising from differences between the carrying amount of assets and liabilities in the 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 statement of comprehensive income or directly
in equity, respectively.

2.5 Functional and presentation currency

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

Annual Report 2022 73

 2.6 Foreign currency transactions and translation

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

2.7 Fixed assets

Property, plant, equipment and depreciation

Property, plant and equipment except freehold land and buildings are stated at cost less
accumulated depreciation and any identified impairment loss. Freehold land is stated at
revalued amount less any identified impairment loss, buildings are stated at revalued amount
less accumulated depreciation and any identified impairment loss.

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

Increases in the carrying amounts arising on revaluation of operating fixed assets are recognised,
net of tax, in other comprehensive income and accumulated in surplus on revaluation of
operating fixed assets in shareholders’ equity. To the extent that increase reverses a decrease
previously recognised in the statement of profit or loss, the increase is first recognised in the
statement of profit or loss. Decreases that reverse previous increases of the same asset are first
recognised 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. Each year, the
difference between depreciation based on the revalued carrying amount of the asset charged
to the statement of profit or loss and depreciation based on the asset’s original cost, net of tax,
is reclassified from surplus on revaluation of operating fixed assets to retained earnings.

Depreciation

Depreciation on all operating fixed assets is charged to the statement of profit or loss on a
reducing balance method so as to write off cost / depreciable amount of an asset over its
estimated useful life at the rates as disclosed in note 14 Depreciation on additions is charged
from the month in which the asset is put to use and on disposal up to the month of disposal.
The residual values and useful lives are reviewed by the management, at each financial year
end and adjusted if impact on depreciation is significant.

De-recognition

An item of property, plant and equipment is derecognized on 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 (calculated as the difference between the net disposal proceeds and
carrying amount of the asset) is included in the statement of profit or loss in the year the asset
is de-recognized.

74 Kohinoor Mills Limited

 Capital work-in-progress

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

2.8 Intangible assets

Intangible assets, which are non-monetary assets without physical substance, are recognized
at cost, which comprise purchase price, non-refundable purchase taxes and other directly
attributable expenditures 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 Company. The useful life and amortization method is reviewed and adjusted, if appropriate,
at each reporting date.

2.9 Investment properties

Land and buildings held for capital appreciation or to earn rental income are classified as
investment properties. Investment properties except land, are stated at cost less accumulated
depreciation and any recognized impairment loss. Land is stated at cost less any recognized
impairment loss. Depreciation on buildings is charged to the statement of profit or loss applying
the reducing balance method so as to write off the cost of buildings over their estimated useful
lives at a rate of 5% per annum.

2.10 Right-of-use assets

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

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

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

2.11 Lease liabilities

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

Annual Report 2022 75

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

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

2.12 Investments and other financial assets

a) Classification

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

• those to be measured subsequently at fair value (either through other comprehensive

income, or through profit or loss), and
• those to be measured at amortized cost

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

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

b) Measurement

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

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

Debt instruments

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

Amortized cost

Financial assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. Interest
income from these financial assets is included in other income using the effective interest

76 Kohinoor Mills Limited

 rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss
and presented in other income / (other expenses) together with foreign exchange gains and
losses. Impairment losses are presented as separate line item in the statement of profit or
loss.

Fair value through other comprehensive income (FVTOCI)

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

Fair value through profit or loss (FVTPL)

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

Equity instruments

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

Fair value through other comprehensive income (FVTOCI)

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

Fair value through profit or loss (FVTPL)

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

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

2.13 Financial liabilities - classification and measurement

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability
is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated

Annual Report 2022 77

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

2.14 Impairment of financial assets

The Company recognizes loss allowances for ECLs on:

- Financial assets measured at amortized cost;

- Debt investments measured at FVOCI; and
- Contract assets.

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

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

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

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

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

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

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

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

78 Kohinoor Mills Limited

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

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

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

- significant financial difficulty of the debtor;

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

2.15 De-recognition of financial asset and financial liabilities

a) Financial assets

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

b) Financial liabilities

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

2.16 Offsetting of financial instruments

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

2.17 Equity investments in associated companies

The investments in associates in which the Company does not have significant influence are
classified as FVTOCI.

2.18 Inventories

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

Annual Report 2022 79

 Stores, spares and loose tools

Usable stores and spares are valued principally at weighted average cost, while items
considered obsolete are carried at nil value. In transit stores and spares are valued at cost
comprising invoice value plus other charges paid thereon.

Stock in trade

Cost of raw material is based on weighted average cost.

Cost of work in process and finished goods comprises prime cost and appropriate production
overheads determined on weighted average cost. Cost of goods purchased for resale are
valued at their respective purchase price by using first-in-first-out method.

Materials in transit are valued at cost comprising invoice value plus other charges paid thereon.
Waste stock and rejected goods 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.

2.19 Non-current assets held for sale

Non-current assets classified as assets held for sale are stated at the lower of carrying amount
and fair value less costs to sell if their carrying amount is recoverable principally through a sale
transaction rather than through continuing use.

2.20 Borrowings

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

2.21 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.

2.22 Revenue recognition

Sale of goods

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

Processing services

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

80 Kohinoor Mills Limited

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

Interest

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

Dividend

Dividend is recognized when right to receive the dividend is established.

Other revenue

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

2.23 Contract assets

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

2.24 Customer acquisition costs

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

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

2.25 Customer fulfilment costs

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

2.26 Right of return assets

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

Annual Report 2022 81

 2.27 Contract liabilities

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

2.28 Refund liabilities

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

2.29 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to depreciation and are tested annually
for impairment. Assets that are subject to depreciation are reviewed for impairment at each
statement of financial position date or whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognized for the
amount for which assets carrying amount exceeds its recoverable amount. Recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment
are reviewed for possible reversal of the impairment at each reporting date. Reversals of the
impairment losses are restricted to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortization, if
impairment losses had not been recognized. An impairment loss or reversal of impairment loss
is recognized in the statement of profit or loss.

2.30 Share capital

Ordinary shares are classified as equity and recognized at their face value. Incremental costs
directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, if
any.

2.31 Trade debts and other receivables

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

Other receivables are recognised at amortised cost, less any allowance for expected credit
losses.

2.32 Trade and other payables

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

82 Kohinoor Mills Limited

2.33 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current accounts, 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.

2.34 Derivative financial instruments

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

2.35 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 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 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 Company has three reportable business segments. Weaving (Producing different quality
of greige fabric using yarn), Dyeing (Converting greige into dyed fabric) and Power Generation
(Generating and distributing power).

2.36 Ijara contracts

Under the Ijarah contracts the Company obtains usufruct of an asset for an agreed period for
an agreed consideration. The Company accounts for its Ijarah contracts in accordance with the
requirements of IFAS 2 ‘Ijarah’. Accordingly, the Company as a Mustaj’ir (lessee) in the Ijarah
contract recognises the Ujrah (lease) payments as an expense in the profit and loss on straight
line basis over the Ijarah term.

2.37 Government grants

Grants from the government are recognised at their fair value where there is a reasonable
assurance that the grant will be received and the Company will comply with all attached
conditions.

Government grants relating to costs are deferred and recognised in the profit or loss over the
period necessary to match them with the costs that they are intended to compensate.

Government grants relating to the purchase of property, plant and equipment are included in
non-current liabilities as deferred income and are credited to profit or loss over the expected
lives of the related assets.

Annual Report 2022 83

 2.38 Dividend and other appropriations

Dividend distribution to the Company’s shareholders is recognized as a liability in the Company’s

financial statements in the period in which the dividends are declared and other appropriations
are recognized in the period in which these are approved by the Board of Directors.

2.39 Earnings per share

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

2.40 Contingent assets

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

2.41 Contingent liabilities

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

84 Kohinoor Mills Limited

3. AUTHORIZED SHARE CAPITAL

2022 2021 2022 2021
(NUMBER OF SHARES) Rupees Rupees
80,000,000 80,000,000 Ordinary shares of Rupees 10 each 800,000,000 800,000,000

30,000,000 30,000,000 Preference shares of Rupees 10 each 300,000,000 300,000,000

110,000,000 110,000,000 1,100,000,000 1,100,000,000

4. ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL

2022 2021
(NUMBER OF SHARES)

28,546,003 28,546,003 Ordinary shares of Rupees 285,460,030 285,460,030

10 each fully paid in cash

18,780,031 18,780,031 Ordinary shares of Rupees 10 each 187,800,310 187,800,310

issued as fully paid bonus shares

3,584,977 3,584,977 Ordinary shares of Rupees 10 each 35,849,770 35,849,770

issued due to merger with
Kohinoor Genertek Limited as
per scheme of arrangement

50,911,011 50,911,011 509,110,110 509,110,110

5. RESERVES

Composition of reserves is as follows:

Capital reserves

Share premium reserve (Note 5.1) 213,406,310 213,406,310

Fair value reserve FVTOCI investment - net of
  deferred income tax (Note 5.2) 15,225,957 32,625,692
Surplus on revaluation of operating fixed assets
  - net of deferred income tax (Note 5.3) 2,564,006,429 2,628,073,544

Balance as at 30 June 2,792,638,696 2,874,105,546

Revenue reserves

General reserve 788,199,282 788,199,282

Accumulated profit 1,913,672,412 930,133,905

2,701,871,694 1,718,333,187

Balance as at 30 June 5,494,510,390 4,592,438,733

Annual Report 2022 85

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

5.2 This represents the unrealized gain on re-measurement of investment at fair value through
other comprehensive income and is not available for distribution. Reconciliation of fair value
reserve - net of deferred income tax is as under:

2022 2021
Rupees Rupees

Balance as at 01 July 41,694,174 36,493,345

Fair value adjustment during the year (18,968,866) 5,200,829

Balance as at 30 June 22,725,308 41,694,174

Less: Related deferred income tax liability (Note 7.2) 7,499,351 9,068,482

Balance as at 30 June - net of deferred income tax 15,225,957 32,625,692

5.3 Surplus on revaluation of operating fixed

  assets - net of deferred income tax

Balance as at 01 July 2,696,005,772 1,838,363,825

Add: Surplus on revaluation incorporated
   during the year - 896,092,189
Less: Incremental depreciation 58,562,264 38,450,242

Balance as at 30 June 2,637,443,508 2,696,005,772

Less: Related deferred income tax liability (Note 7.2) 73,437,079 67,932,228

Balance as at 30 June - net of deferred income tax 2,564,006,429 2,628,073,544

6. LONG TERM FINANCING - SECURED

Financing from banking companies (Note 6.1) 1,658,623,951 1,414,880,245

Less: Current portion shown under current
    liabilities (Note 12) 446,358,880 406,897,579

1,212,265,071 1,007,982,666

86 Kohinoor Mills Limited

 6.1
Lender 2022 2021 Terms Security

-------- Rupees --------

National Bank of 179,197,005 240,146,649 This loan is repayable in 36 stepped up quarterly First pari passu charge of Rupees 1,438.550 million
Pakistan (Note 6.2) instalments commenced from 30 June 2015 and ending by way of hypothecation and mortgage charge over
on 31 March 2025. This loan carries mark-up at the rate present and future fixed assets of the Company, pari
of 7.70% per annum based on the average cost of funds passu charge of Rupees 667 million and ranking
of the bank which will be reviewed annually. Mark-up will charge of Rupees 100 million over current assets of
be accrued over ten years during which the principal will the Company as margin and personal guarantees of
be repaid. After repayment of principal, accrued mark- sponsor directors.
up will be repaid in twelve equal quarterly instalments
commencing on 30 June 2025 and ending on 31 March
2028. (Note 6.3)
The Bank of 4,780,000 9,560,000 This loan is repayable in 20 quarterly instalments of First joint pari passu charge of Rupees 1,561.293
Punjab (Note 6.4) Rupees 1.195 million each commenced from 28 July million and ranking charge of Rupees 354.930 over
2017 and ending on 28 April 2023. Mark-up is payable present and future fixed assets of the Company.
quarterly at SBP rate + 2.5% per annum. (Note 6.3)
1,040,000 2,080,000 This loan is repayable in 20 quarterly instalments of
Rupees 0.260 million each commenced from 25 August
2017 and ending on 25 May 2023. Mark-up is payable
quarterly at SBP rate + 2.5% per annum. (Note 6.3)
54,825,000 98,685,000 This loan is repayable in 20 quarterly instalments of
Rupees 10.965 million each commenced from 23
November 2017 and ending on 23 August 2023. Mark-
up is payable quarterly at SBP rate + 2.5% per annum.
(Note 6.3)
50,520,000 84,200,000 This loan is repayable in 20 quarterly instalments of
Rupees 8.420 million each commenced from 19 March
2018 and ending on 19 December 2023. Mark-up is
payable quarterly at SBP rate + 2.5% per annum. (Note
6.3)
9,800,000 15,400,000 This loan is repayable in 20 quarterly instalments of
Rupees 1.400 million each commenced from 19 April
2018 and ending on 19 January 2024. Mark-up is payable
quarterly at SBP rate + 2.5% per annum. (Note 6.3)
27,600,000 38,640,000 This loan is repayable in 20 quarterly instalments
of Rupees 2.760 million each commenced from 01
February 2019 and ending on 01 November 2024. Mark-
up is payable quarterly at SBP rate + 2.5% per annum.
(Note 6.3)
300,000,000 380,000,000 This loan is repayable in 20 quarterly instalments of
Rupees 20.000 million each commenced from 20 April
2021 and ending on 20 January 2026. Mark-up is payable

Annual Report 2022

quarterly at SBP rate + 2.5% per annum.
448,565,000 628,565,000

87
88
Lender 2022 2021 Terms Security

-------- Rupees --------

The Bank of 22,391,465 65,800,299 This loan is obtained by the Company under SBP First joint Pari Passu of Rupees 933.330 million
Punjab (Note 6.2) Refinance Scheme for payment of wages and salaries and ranking charge of Rupees 99.710 million over
to workers. This loan is repayable in 8 equal quarterly present and future current assets of the company.
instalments of Rupees 11.194 million each commenced
from 10 January 2021 and ending on 10 October 2022.
Mark-up is payable quarterly in arrears at SBP refinance
rate + 3% per annum. (Note 8.1)
Samba Bank 7,870,000 13,122,000 This loan is repayable in 16 quarterly instalments of First joint pari passu charge of Rupees 788.000

Kohinoor Mills Limited

Limited (Note 6.4) Rupees 1.313 million each commenced from 29 January million over fixed assets of the Company with 25%
2020 and ending on 29 October 2023. Mark-up is margin.
payable quarterly at SBP rate + 2.5% per annum.
4,661,250 7,768,750 This loan is repayable in 16 quarterly instalments of
Rupees 0.777 million each commenced from 06 March
2020 and ending on 06 December 2023. Mark-up is
payable quarterly at SBP rate + 2.5% per annum.
18,493,750 25,218,750 This loan is repayable in 16 quarterly instalments of
Rupees 1.681 million each commenced from 25 May
2021 and ending on 25 February 2025. Mark-up is
payable quarterly at SBP rate + 2.5% per annum.
13,575,000 18,100,000 This loan is repayable in 16 quarterly instalments
of Rupees 1.131 million each commenced from 04
September 2021 and ending on 04 June 2025. Mark-up
is payable quarterly at SBP rate + 2.5% per annum.
97,418,750 119,900,000 This loan is repayable in 16 quarterly instalments
of Rupees 7.494 million each commenced from 01
December 2021 and ending on 01 September 2025.
Mark-up is payable quarterly at SBP rate + 2.5% per
annum.
60,000,000 60,000,000 This loan is repayable in 16 quarterly instalments
of Rupees 3.750 million each commencing from 25
September 2022 and ending on 25 June 2026. Mark-up
is payable quarterly at SBP rate + 2.5% per annum.
48,000,000 - This loan is repayable in 16 quarterly instalments
of Rupees 3.000 million each commencing from 22
December 2022 and ending on 22 September 2026.
Mark-up is payable quarterly at SBP rate + 2.5% per
annum.
250,018,750 244,109,500

Samba Bank 37,433,694 109,458,797 This loan is obtained by the Company under SBP First joint pari passu charge of Rupees 200.000
Limited (Note 6.2) Refinance Scheme for payment of wages and salaries million on present and future current assets of the
to workers. This loan is repayable in 8 equal quarterly Company.
instalments of Rupees 18.750 million commenced from
01 January 2021 and ending on 01 October 2022. Mark-
up is payable quarterly in arrears at SBP refinance rate +
2% per annum. (Note 8.1)
 Lender 2022 2021 Terms Security

-------- Rupees --------

Askari Bank 11,914,288 13,900,000 This loan is repayable in 28 quarterly instalments of Ranking charge of Rupees 333.334 million over all
Limited Rupees 0.496 million each commenced from 28 August present and future fixed assets of the Company with
2021 and ending on 28 May 2028. Mark-up is payable 25% margin
quarterly in arrears at SBP rate + 2.5% per annum. (Note
6.4)
85,371,428 99,600,000 This loan is repayable in 28 quarterly instalments
of Rupees 3.557 million each commenced from 29
September 2021 and ending on 29 June 2028. Mark-up
is payable quarterly in arrears at SBP rate + 2.5% per
annum. (Note 6.4)
3,368,750 - This loan is repayable in 28 quarterly instalments
of Rupees 0.135 million each commenced from 10
December 2021 and ending on 10 September 2028.
Mark-up is payable quarterly in arrears at SBP rate +
2.5% per annum. (Note 6.4)
123,428,571 - This loan is repayable in 28 quarterly instalments of
Rupees 4.571 million each commenced from 26 April
2022 and ending on 26 January 2029. Mark-up is payable
quarterly in arrears at 3 month KIBOR + 2% per annum.
224,083,037 113,500,000

Bank Al-Falah 10,640,000 13,300,000 This loan is repayable in 20 equal quarterly instalments First joint pari passu charge of Rupees 666.667
Limited (Note 6.5 of Rupees 0.665 million each commenced from 06 million ranking charge of Rupees 716.667 million
and Note 6.6) August 2021 and ending on 06 May 2026. Mark-up is over fixed asset of the Company.
payable quarterly in arrears at SBP refinance rate + 3%
per annum
85,425,000 - This loan is repayable in 20 equal quarterly instalments
of Rupees 5.025 million each commenced from 19
October 2021 and ending on 19 July 2026. Mark-up is
payable quarterly in arrears at SBP refinance rate + 3%
per annum.
1,700,000 - This loan is repayable in 20 equal quarterly instalments
of Rupees 0.100 million each commenced from 23
November 2021 and ending on 23 August 2026. Mark-
up is payable quarterly in arrears at SBP refinance rate +
3% per annum.
13,175,000 - This loan is repayable in 20 equal quarterly instalments
of Rupees 0.775 million each commenced from 30
November 2021 and ending on 30 August 2026. Mark-
up is payable quarterly in arrears at SBP refinance rate +
3% per annum.
7,395,000 - This loan is repayable in 20 equal quarterly instalments
of Rupees 0.435 million each commenced from 07
December 2021 and ending on 07 September 2026.

Annual Report 2022

Mark-up is payable quarterly in arrears at SBP refinance
rate + 3% per annum.

89
118,335,000 13,300,000
90
Lender 2022 2021 Terms Security

-------- Rupees --------

MCB Bank Limited 15,900,000 - This loan is repayable in 32 quarterly instalments Ranking charge of Rupees 1,000 million over fixed
(Note 6.5 and Note of Rupees 0.497 million each commencing from 23 assets of the Company with 25% margin.
6.6) December 2023 and ending on 23 September 2031.
Mark-up is payable quarterly at SBP rate + 2.00% per
annum.

Kohinoor Mills Limited

203,100,000 - This loan is repayable in 32 quarterly instalments
of Rupees 6.347 million each commencing from 10
September 2024 and ending on 10 June 2032. Mark-up
is payable quarterly at SBP rate + 2.00% per annum.
219,000,000 -
MCB Bank Limited 159,600,000 - This loan is repayable in 32 quarterly instalments of Ranking charge of Rupees 666.667 million over fixed
(Note 6.4) Rupees 4.988 million each commencing from 07 June assets of the Company with 25% margin.
2024 and ending on 07 March 2032. Mark-up is payable
quarterly at SBP rate + 1.00% per annum.
1,658,623,951 1,414,880,245

6.2 These loans are recognized and measured in accordance with IFRS 9 ‘Financial Instruments’. Fair value adjustments are recognized at discount rates ranging
from 7.50% and 9.85% (2021: 7.50% and 9.85%) per annum.

6.3 Repayment period includes deferment of repayment of principal loan amount by one year in accordance with State Bank of Pakistan (SBP) BPRD Circular Letter
No. 13 of 2020 dated 26 March 2020.

6.4 These loans are obtained by the Company under SBP’s Long Term Financing Facility (LTFF).

6.5 These loans are obtained by the Company under SBP’s Temporary Economic Refinance Facility (TERF) scheme for purchase of new imported and locally
manufactured plant and machinery.

6.6 The fair value adjustment in accordance with the requirement of IFRS 9 ‘Financial Instruments’ arising in respect of these loans are not considered material and
hence not recognized.

 2022 2021
Rupees Rupees
7. DEFERRED LIABILITIES

Deferred accrued mark-up (Note 7.1) 251,400,761 227,540,361

Deferred income tax liability (Note 7.2) 80,945,454 77,000,710
Gas Infrastructure Development Cess (GIDC)
  payable (Note 7.3) - 10,070,753

332,346,215 314,611,824

7.1 This represents accrued mark-up on long term finance obtained from National Bank of Pakistan
deferred in accordance with the terms disclosed in note 6.1 to these financial statements.

7.2 Deferred income tax liability

The liability for deferred taxation originated due to taxable temporary differences relating to:

2022 2021
Rupees Rupees

Surplus on revaluation of operating fixed

  assets (Note 5.3) 73,437,079 67,932,228
Unrealized gain on FVTOCI investment (Note 5.2) 7,499,351 9,068,482
Unrealized gain on FVTPL investment (Note 28.1) 9,024 -

80,945,454 77,000,710

7.2.1 Movement in taxable temporary differences during the year is as follows:

2022
Recognized
Recognized in
Opening in other Closing
statement of
balance comprehensive balance
profit or loss
income
- - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - -

Surplus on revaluation of operating

  fixed assets 67,932,228 (3,396,611) 8,901,462 73,437,079
Unrealized gain on FVTOCI investment 9,068,482 - (1,569,131) 7,499,351
Unrealized gain on FVTPL investment - 9,024 - 9,024

77,000,710 (3,387,587) 7,332,331 80,945,454

2021
Recognized
Recognized in
Opening in other Closing
statement of
balance comprehensive balance
profit or loss
income
- - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - -

Surplus on revaluation of operating

  fixed assets 44,602,282 (2,230,114) 25,560,060 67,932,228
Unrealized gain on FVTOCI investment 7,937,302 - 1,131,180 9,068,482

52,539,584 (2,230,114) 26,691,240 77,000,710

Annual Report 2022 91

 7.2.2 This represents deferred income tax liability on surplus on revaluation of operating fixed
assets, unrealized gain on remeasurement of investment at FVTOCI and unrealized gain on
remeasurement of investment at FVTPL. Provision for deferred income tax on other temporary
differences was not considered necessary as the Company is chargeable to tax under section
169 of the Income Tax Ordinance, 2001.

2022 2021
Rupees Rupees
7.3 Gas Infrastructure Development Cess (GIDC) Payable

Gas Infrastructure Development Cess payable

  at amortized cost 105,723,757 129,148,091
Add: Adjustment due to impact of IFRS 9 (Note 36) 3,642,196 7,919,926
Less: Payments made during the year 32,828,138 31,344,260

Balance as on 30 June 76,537,815 105,723,757

Less: Current portion shown under current
    liabilities (Note 12) 76,537,815 95,653,004

- 10,070,753

7.3.1 This represents Gas Infrastructure Development Cess (GIDC) levied through GIDC Act, 2015.
The Honorable Supreme Court of Pakistan upheld the GIDC Act, 2015 to be constitutional and
intra vires. The Company is paying GIDC in 24 installments. GIDC payable has been recorded
at amortized cost in accordance with IFRS 9.

2022 2021
Rupees Rupees
8. DEFERRED INCOME - GOVERNMENT GRANT

Balance as at 01 July 5,405,384 5,029,274

Add: Recognized during the year - 8,855,155
Less: Amortized during the year (Note 35) 5,009,047 8,479,045

396,337 5,405,384
Less: Current portion shown under current
    liabilities (Note 12) 396,337 5,009,047

Balance as at 30 June - 396,337

8.1 The State Bank of Pakistan (SBP), through its Circular No. 06 of 2020 dated 10 April 2020
introduced a temporary Refinance Scheme for Payment of Wages and Salaries to the Workers
and Employees of Business Concerns (the Refinance Scheme). The Refinance Scheme was
funded by SBP. Borrowers obtained loans from the Banks and eased their cash flow constraints
to avoid layoffs. One of the key feature of the Refinance Scheme was that borrowers obtained
loans at mark-up rates that were below normal lending rates. As per International Accounting
Standard 20 (IAS-20) “Accounting for Government Grants and Disclosure of Government
Assistance” the benefit of a Government loan at a below-market rate of interest is treated as
a Government Grant. The Company has obtained these loans as disclosed in note 6.1 to the
financial statements. In accordance with IFRS 9 “Financial Instruments” loans obtained under
the Refinance Scheme were initially recognized at their fair value which is the present value
of loans proceeds received, discounted using prevailing market rates of interest for a similar

92 Kohinoor Mills Limited

 instrument. Hence, the benefit of the below-market rate of interest has been measured as the
difference between the initial carrying value of the loans determined in accordance with IFRS
9 and the proceeds received. This benefit is accounted for and presented as deferred grant in
accordance with IAS 20. The grant is being amortized in the statement of profit or loss, in line
with the recognition of interest expense the grant is compensating.

2022 2021
Rupees Rupees
9. TRADE AND OTHER PAYABLES

Creditors 2,870,054,056 1,925,934,611

Accrued and other liabilities (Note 9.1) 473,614,615 329,573,419
Contract liabilities-unsecured 68,847,038 275,493,413
Sales commission payable 55,640,791 33,485,647
Loans from related parties (Note 9.2) 10,351,970 25,532,515
Income tax deducted at source 13,836,125 8,194,249
Security deposits - interest free (Note 9.3) 565,110 2,065,110
Workers' profit participation fund (Note 9.4) 105,925,292 263,750,037
Workers' welfare fund (Note 9.5) 44,384,715 19,440,946

3,643,219,712 2,883,469,947

9.1 This includes Rupees 58.192 million (2021: Rupees 64.307 million) payable to legal heirs of
deceased director.

9.2
These represent interest free, unsecured and repayable on demand, loans obtained from
following related parties:
2022 2021
Rupees Rupees

Close relatives of the chief executive officer 969,970 25,532,515

Director 9,382,000 -

10,351,970 25,532,515

9.3 These deposits are interest free and repayable on completion of contracts. These deposits have
been utilized for the purpose of business in accordance with the terms of written agreements
with contractors.
2022 2021
Rupees Rupees
9.4 Workers' profit participation fund

Balance as at 01 July 263,750,037 214,762,519

Add: Allocation for the year (Note 34) 66,430,161 26,265,643
Add: Interest accrued for the year (Note 36) 39,495,131 22,721,875
Less: Paid during the year 263,750,037 -

Balance as at 30 June 105,925,292 263,750,037

9.4.1 The Company retains workers' profit participation fund for its business operations till the date
of allocation to workers. Interest is accrued at prescribed rate under the Companies Profit
(Workers' Participation) Act, 1968 on funds utilized by the Company till the date of allocation to
workers.

Annual Report 2022 93

 2022 2021
Rupees Rupees
9.5 Workers' welfare fund
Balance as at 01 July 19,440,946 9,914,439
Add: Allocation for the year (Note 34) 24,943,769 9,526,507

Balance as at 30 June 44,384,715 19,440,946

10. ACCRUED MARK-UP

Long term financing 17,478,163 11,689,405
Short term borrowings 54,099,854 32,770,504
Deferred mark-up (Note 10.1) - 25,000,000

71,578,017 69,459,909

10.1 Deferred markup of Rupees 25.000 million has been fully repaid during the year.

2022 2021
Rupees Rupees
11. SHORT TERM BORROWINGS - SECURED
From banking companies
SBP refinance (Note 11.1 and Note 11.2) 4,032,370,000 3,182,370,000
Other short term finances (Note 11.1 and Note 11.3) 785,630,000 498,826,820
Temporary bank overdraft 264,318,845 -

5,082,318,845 3,681,196,820

11.1 These facilities are secured against hypothecation charge on current assets, lien on export
contracts / letters of credit, first joint pari passu charge on fixed and current assets, personal
guarantees of directors and ranking charge on current assets of the Company.
11.2 These carry mark-up ranging from 3.00% to 7.50% (2021: 3.00%) per annum on outstanding
balance.
11.3 These carry mark-up ranging from 8.49% to 16.39% (2021: 8.28% to 12.57%) per annum on
outstanding balance.
2022 2021
Rupees Rupees
12. CURRENT PORTION OF NON CURRENT LIABILITIES
Current portion of long term financing - secured (Note 6) 446,358,880 406,897,579
Current portion of GIDC payable (Note 7.3) 76,537,815 95,653,004
Current portion of deferred income - Government
  grant (Note 8) 396,337 5,009,047
523,293,032 507,559,630
13. CONTINGENCIES AND COMMITMENTS
13.1 Contingencies
13.1.1
During the year ended 30 June 2011, pursuant to the sale of assets agreement
with M/s Interloop Limited, the Company is contingently liable for Rupees 31.958
million against payment of certain outstanding dues to Employees' Old-Age Benefits
Institution (EOBI) and bifurcation of gas connections in favour of M/s Interloop Limited.

94 Kohinoor Mills Limited

 To secure the performance of aforesaid conditions, the Company has pledged equity
investment (note 17.2) and bank balance (note 29.3) with Allied Bank Limited. However,
no provision has been recognized in these financial statements as the management is
confident to fulfil the conditions in accordance with the sale of assets agreement.

13.1.2 During the year ended 30 June 2010, Lahore Electric Supply Company Limited (LESCO)
served a notice to the Company in connection with violation of Power Purchase
Agreement. According to the aforesaid notice, the Company was using gas along
with Refined Furnace Oil (RFO) in the ratio of 50:50 as co-fuel in order to generate
electric power for sale to LESCO whereas tariff was charged to LESCO on the basis
of RFO. The matter has been referred for arbitration and is being resolved under the
provisions of above said Power Purchase Agreement. The proceedings of arbitration
are in process. An amount of Rupees 86.833 million receivable by the Company from
LESCO is still unpaid. Full provision against this receivable has been made in books of
account. However, the Company is confident that the said amount will be recovered.

13.1.3 Bank guarantees of Rupees 157.189 million (2021: Rupees 157.189 million) are given by
the banks of the Company in favour of Sui Northern Gas Pipelines Limited against gas
connections.

13.1.4 Bank guarantee of Rupees 7.000 million (2021: Rupees 6.500 million) is given by the
bank of the Company in favour of Director, Excise and Taxation to cover the disputed
amount of infrastructure cess.

13.1.5 Bank guarantees of Rupees 8.164 million (2021: Rupees 8.164 million) are given by the
bank of the Company in favour of Lahore Electric Supply Company Limited against
electricity connections.

13.1.6 Post dated cheques amounting to Rupees 229.964 million (2021: Rupees 146.107
million) are issued to custom authorities.

13.2 Commitments

13.2.1 Aggregate commitments for capital expenditure and revenue expenditures are
amounting to Rupees 663.561 million and Rupees 193.514 million (2021: Rupees
964.324 million and Rupees 200.787 million) respectively.

13.2.2 Post dated cheques amounting to Rupees 1,052.561 million (2021: 560.915 million) are
issued to creditors of the Company.

2022 2021
Rupees Rupees
14. FIXED ASSETS

Property, plant and equipment

Operating fixed assets (Note 14.1) 7,147,998,813 6,557,877,576

Capital work-in-progress (Note 14.2) 764,754,848 468,921,570

7,912,753,661 7,026,799,146

Annual Report 2022 95

96
14.1 Reconciliations of carrying amounts of operating fixed assets at the beginning and end of the year are as follows:

Operating fixed assets
Furniture,
Description Freehold Residential Factory Plant and Electric
fixtures and
Computers Motor Total
land building building machinery Installations equipment vehicles

---------------------------------------------------- (RUPEES) ----------------------------------------------------

As at 30 June 2020

Kohinoor Mills Limited

Cost / revalued amount 1,351,146,621 287,486,061 1,269,209,244 5,271,736,104 170,438,663 119,051,651 55,812,690 147,614,602 8,672,495,636
Accumulated depreciation - (111,861,366) (435,700,009) (2,893,254,778) (110,818,347) (80,129,931) (52,544,068) (63,203,114) (3,747,511,613)
Accumulated impairment loss - - - (54,082,319) - - - - (54,082,319)
Net book value 1,351,146,621 175,624,695 833,509,235 2,324,399,007 59,620,316 38,921,720 3,268,622 84,411,488 4,870,901,704

Year ended 30 June 2021
Opening net book value 1,351,146,621 175,624,695 833,509,235 2,324,399,007 59,620,316 38,921,720 3,268,622 84,411,488 4,870,901,704
Additions 111,262,884 - 6,714,739 968,326,550 15,485,844 162,576 1,042,535 15,225,330 1,118,220,458

Disposals:
   Cost - - - (223,430,613) - - - (10,572,071) (234,002,684)
   Accumulated depreciation - - - 186,081,089 - - - 4,434,273 190,515,362
- - - (37,349,524) - - - (6,137,798) (43,487,322)
Depreciation charge - (8,781,235) (41,821,128) (209,132,186) (6,920,361) (3,907,075) (1,204,635) (12,082,833) (283,849,453)
Surplus on revaluation 455,401,495 34,333,540 406,357,154 - - - - - 896,092,189

Closing net book value 1,917,811,000 201,177,000 1,204,760,000 3,046,243,847 68,185,799 35,177,221 3,106,522 81,416,187 6,557,877,576

As at 30 June 2021
Cost / revalued amount 1,917,811,000 321,819,601 1,682,281,137 6,016,632,041 185,924,507 119,214,227 56,855,225 152,267,861 10,452,805,599
Accumulated depreciation - (120,642,601) (477,521,137) (2,916,305,875) (117,738,708) (84,037,006) (53,748,703) (70,851,674) (3,840,845,704)
Accumulated impairment loss - - - (54,082,319) - - - - (54,082,319)
Net book value 1,917,811,000 201,177,000 1,204,760,000 3,046,243,847 68,185,799 35,177,221 3,106,522 81,416,187 6,557,877,576

Year ended 30 June 2022

Opening net book value 1,917,811,000 201,177,000 1,204,760,000 3,046,243,847 68,185,799 35,177,221 3,106,522 81,416,187 6,557,877,576
Additions 244,550,909 7,790,506 12,355,783 749,692,468 25,013,290 5,256,302 - 23,811,002 1,068,470,260
Disposals:
   Cost - - - (381,023,985) - - - (8,499,256) (389,523,241)
   Accumulated depreciation - - - 265,498,545 - - - 5,046,208 270,544,753
- - - (115,525,440) - - - (3,453,048) (118,978,488)
Depreciation charge - (10,253,611) (60,427,703) (262,645,848) (8,611,188) (3,588,999) (931,957) (12,911,230) (359,370,536)
Closing net book value 2,162,361,909 198,713,895 1,156,688,080 3,417,765,027 84,587,901 36,844,524 2,174,565 88,862,911 7,147,998,813

As at 30 June 2022
Cost / revalued amount 2,162,361,909 329,610,107 1,694,636,920 6,385,300,524 210,937,797 124,470,529 56,855,225 167,579,607 11,131,752,618
Accumulated depreciation - (130,896,212) (537,948,840) (2,913,453,178) (126,349,896) (87,626,005) (54,680,660) (78,716,696) (3,929,671,486)
Accumulated impairment loss - - - (54,082,319) - - - - (54,082,319)
Net book value 2,162,361,909 198,713,895 1,156,688,080 3,417,765,027 84,587,901 36,844,524 2,174,565 88,862,911 7,147,998,813

Depreciation rate % per annum - 5 5 10 10 10 30 20

14.1.1 Freehold land and buildings of the Company were revalued as at 30 June 2021 by an
independent valuer, Messrs Hamid Mukhtar and Company (Private) Limited. Had there been
no revaluation, the value of the assets would have been lower by Rupees 2,637.444 million
(2021: Rupees 2,696.006 million). Forced sale value of freehold land and buildings as on the
date of valuation was Rupees 1,534.249 million and Rupees 1,124.749 million respectively.

14.1.2 The book value of freehold land and buildings on cost basis is Rupees 637.601 million
and Rupees 242.719 million (2021: Rupees 393.051 million and Rupees 234.692 million)
respectively.

14.1.3 Detail of operating fixed assets exceeding book value of Rupees 500,000 disposed of during
the year is as follows:

Accumulated Net book Sale Gain / Mode of

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

                          - - - - - - - - - - - - - - - - - - - ( R U P E E S ) - - - - - - - - - - - - - - - - - - - - - -
Plant and machinery

Toyoda Looms 28 99,424,115 72,318,829 27,105,286 42,000,000 14,894,714 Negotiation Hanoof Textile, Faisalabad
Jacquard Looms with heads 8 42,549,094 35,436,317 7,112,777 7,424,242 311,465 Negotiation Gagan Textile, Karachi
Jacquard Looms 8 21,344,194 17,776,163 3,568,031 7,575,758 4,007,727 Negotiation Valitex (Private) Limited, Karachi
Jacquard Loom heads 8 46,233,650 38,504,940 7,728,710 10,000,000 2,271,290 Negotiation M.S.M Traders, Karachi
Caterpillar Gas Engine 2 98,287,616 58,095,624 40,191,992 30,000,000 (10,191,992) Negotiation Mahmood Textile Mills Limited, Multan
Caterpillar Gas Engine 1 48,145,364 27,689,727 20,455,637 15,000,000 (5,455,637) Negotiation Al Zamin Textile Mills (Private) Limited,
  Faisalabad
Nigatta Waste Heat Boiler 1 6,864,030 4,492,878 2,371,152 2,072,650 (298,502) Negotiation Ahmad Traders, Faisalabad
Steam Boiler 1 8,002,700 5,168,719 2,833,981 6,923,077 4,089,096 Negotiation J.B. Industries, Karachi
Caterpillar Waste Heat Boiler 2 10,173,222 6,015,348 4,157,874 5,700,000 1,542,126 Negotiation Industrial Boiler and Pressure Vessels
  (Private) Limited, Gujranwala
381,023,985 265,498,545 115,525,440 126,695,727 11,170,287
Motor vehicles

Suzuki Cultus LEA-20-9559 1 1,788,730 556,494 1,232,236 1,232,236 - Negotiation Mr. Asif Naseem Ahmed, Company’s
  ex-employee, Faisalabad
Honda City LEE-14-2160 1 1,549,740 992,644 557,096 561,284 4,188 Negotiation Mr. Ghulam Mustafa Bhatti, Company’s
  employee, Lahore
3,338,470 1,549,138 1,789,332 1,793,520 4,188
Aggregate of vehicles with
individual book values not
exceeding Rupees 500,000 5 5,160,786 3,497,070 1,663,716 4,047,974 2,384,258 Negotiation -

8,499,256 5,046,208 3,453,048 5,841,494 2,388,446

389,523,241 270,544,753 118,978,488 132,537,221 13,558,733

2022 2021
Rupees Rupees
14.1.4 The depreciation charge for the year has been
  allocated as follows:

Cost of sales (Note 31) 344,016,904 269,074,382

Distribution cost (Note 32) 2,295,297 2,412,118
Administrative expenses (Note 33) 13,058,335 12,362,953

359,370,536 283,849,453

Annual Report 2022 97

 14.1.5 P
articulars of immovable properties (i.e. land and buildings) are as follows:

Manufacturing units Covered area of
Address Area of land
and office buildings

Acres Square feet
Manufacturing units:

Weaving 8-K.M., Manga Raiwind Road,
District Kasur. 57.803 394,901
Open land Moza Rosa and Bhail, 8-K.M.,
Manga Raiwind Road, District Kasur. 64.134 -
Dyeing 8-K.M., Manga Raiwind Road,
District Kasur. 8.670 455,742
Power generation 8-K.M., Manga Raiwind Road,
District Kasur. 21.010 109,880
Office 8-K.M., Manga Raiwind Road,
District Kasur. 0.410 19,591

152.027 980,114

14.2 Movement in capital work in progress

Advance Advance
Stores held
against Plant and Electric against
Buildings for capital Total
purchase machinery installations purchase
expenditures
of land of vehicles
………..……………..………………..Rupees ………..……………..………………..

At 30 June 2020 - 64,668,123 75,759,566 - - 16,798,590 157,226,279

Add: Additions during the year 111,262,884 214,027,566 1,033,925,827 22,597,504 26,793,330 - 1,408,607,111
Less: Capitalized during the year 111,262,884 6,714,739 941,349,878 10,827,041 15,225,330 11,531,948 1,096,911,820

At 30 June 2021 - 271,980,950 168,335,515 11,770,463 11,568,000 5,266,642 468,921,570

Add: Additions during the year 245,350,909 148,381,039 894,142,490 6,398,394 17,954,229 8,899,966 1,321,127,027
Less: Capitalized during the year 244,550,909 20,146,289 723,181,467 23,356,251 13,895,229 - 1,025,130,145
Less: Charged to statement of profit
or loss - - - - - 163,604 163,604
Add / (less): Reclassification - - (7,984,422) 7,984,422 - - -

At 30 June 2022 800,000 400,215,700 331,312,116 2,797,028 15,627,000 14,003,004 764,754,848

14.3 During the year, the Company has capitalized borrowing cost amounting to Rupees Nil (2021:
Rupees 0.676 million).

15. INTANGIBLE ASSET

15.1 Intangible asset - computer software having cost of Rupees 9.297 million has been fully
amortized at the rate of 20.00% per annum. However, it is still in use of the Company.

2022 2021
Rupees Rupees
16. INVESTMENT PROPERTY

Land (Note 16.1) 1,981,607 1,981,607

16.1 This represents 13.7 kanal agricultural land located at Sahiwal, Farooqa Road, Sargodha.

16.2 No expenses directly related to investment property were incurred during the year. The market
value of land is estimated at Rupees 4.453 million (2021: Rupees 4.110 million). Forced sale
value of investment property as on the reporting date is Rupees 3.562 million (2021: Rupees
3.288 million). The valuation has been carried out by an independent valuer.

98 Kohinoor Mills Limited

 2022 2021
Rupees Rupees
17. LONG TERM INVESTMENTS
Equity instruments
Fair value through other comprehensive income
Associated company (without significant influence)
K-2 Hosiery (Private) Limited - unquoted
  1,194,000 (2021: 1,194,000) ordinary shares of
  Rupees 10 each (Note 17.1) - -
Other
Security General Insurance Company Limited -
  unquoted (Note 17.2)
643,667 (2021: 643,667) fully paid ordinary shares
  of Rupees 10 each 704,171 704,171
Add: Fair value adjustment 22,725,308 41,694,174
23,429,479 42,398,345
23,429,479 42,398,345

17.1 Investment in K-2 Hosiery (Private) Limited has been impaired and written off. This investment
was made in accordance with requirements of the Companies Act, 2017.
17.2 Ordinary shares of Security General Insurance Company Limited have been valued by an
independent valuer at Rupees 36.40 (2021: Rupees 65.87) per share using present value
technique. 640,000 ordinary shares of Security General Insurance Company Limited have been
pledged in favour of Allied Bank Limited to serve the performance of certain conditions of sale of
assets agreement with M/s Interloop Limited.
2022 2021
Rupees Rupees
18. LONG TERM LOANS
Considered good:
Executives - secured (Note 18.1 and Note 18.2) 14,003,271 -
Other employees - secured (Note 18.2) 16,702,735 -
30,706,006 -
Less: Current portion shown under current assets (Note 23)
Executives 2,100,000 -
Other employees 6,353,880 -

8,453,880 -
22,252,126 -

18.1 Maximum aggregate balance due from executives at the end of any month during the year was
Rupees 17.003 million.
18.2 These represent interest free loans given to executives and other employees as per the Company’s
policy for general purposes. These are secured against balance to the credit of employees in the
provident fund trust and are recoverable in monthly installments.
18.3 The fair value adjustment in accordance with the requirements of IFRS 9 ‘Financial Instruments’
arising in respect of staff loans is not considered material and hence not recognized.

Annual Report 2022 99

 2022 2021
Rupees Rupees
19. LONG TERM DEPOSITS

Security deposits 91,159,847 62,528,657

20. STORES, SPARES AND LOOSE TOOLS

Stores and spares (Note 20.1) 879,242,064 674,131,148

Loose tools 1,668,854 1,660,021

880,910,918 675,791,169
Less: Provision for slow moving, obsolete and
    damaged store items (Note 20.2) 112,793,166 108,013,010

768,117,752 567,778,159

20.1 These include stores in transit of Rupees 86.018 million

  (2021: Rupees 17.036 million)

20.2 Provision for slow moving, obsolete and damaged store items

Balance as on 01 July 108,013,010 108,787,917

Add: Provision made during the year (Note 34) 4,780,156 -
Less: Provision reversed during the year (Note 35) - 774,907

Balance as on 30 June 112,793,166 108,013,010

21. STOCK-IN-TRADE

Raw material (Note 21.1) 1,535,984,629 1,021,049,307

Work-in-process 447,555,892 245,407,748
Finished goods (Note 21.2 and 21.3) 2,068,681,756 1,648,676,602

4,052,222,277 2,915,133,657

21.1 This includes raw material of Rupees 68.854 million (2021: Rupees 75.935 million) valued at net
realizable value.

21.2 These include finished goods of Rupees 46.719 million (2021: Rupees 203.209 million) valued at
net realizable value.

21.3 Finished goods include stock-in-transit amounting to Rupees 701.515 million (2021: Rupees
705.926 million).

21.4 The aggregate amount of write-down of inventories to net realizable value recognized as an
expense during the year was Rupees 45.145 million (2021: Rupees 54.298 million).

21.5 Stock in trade of Rupees 56.087 million (2021: Rupees 38.721 million) is sent to outside parties for
processing.

100 Kohinoor Mills Limited

 2022 2021
Rupees Rupees
22. TRADE DEBTS
Other than related parties - considered good:
Secured (against letters of credit) 503,238,457 523,066,227
Unsecured 836,598,030 529,155,391
1,339,836,487 1,052,221,618
Less: Allowance for expected credit losses (Note 22.1) 122,591,411 99,460,104
1,217,245,076 952,761,514
22.1 Allowance for expected credit losses
Balance as at 01 July 99,460,104 101,536,875
Add: Recognized during the year (Note 34) 23,462,900 26,830,481
Less: Trade debts written off during the year
  against expected credit losses 331,593 28,907,252
Balance as at 30 June 122,591,411 99,460,104

22.2 Types of counterparties

Export
Corporate 734,728,620 535,460,912
Others - -
734,728,620 535,460,912
Local
Corporate 590,303,522 452,510,689
Others 14,804,345 64,250,017
605,107,867 516,760,706
1,339,836,487 1,052,221,618

22.3 Foreign jurisdictions of trade debts

Australia 11,753,166 35,715,515
Asia 555,042,765 219,917,763
Europe 147,257,183 201,182,919
North America 18,070,284 17,177,835
South America 847,120 1,224,134
Africa 1,758,102 60,242,746
734,728,620 535,460,912
23. LOANS AND ADVANCES
Considered good:
Advances to staff:
  - Against salary (Note 23.1) 8,890,451 23,839,042
  - Against expenses (Note 23.2) 16,617,334 4,337,619
  - Current portion of long term loans to executives
   and employees (Note 18) 8,453,880 -
33,961,665 28,176,661
Advances to suppliers 285,199,154 58,450,786
Letters of credit 1,539,886 5,962,857
320,700,705 92,590,304

Annual Report 2022 101

 23.1 These include interest free advances to executives amounting to Rupees 3.047 million (2021:
Rupees 18.647 million).

2022 2021
Rupees Rupees
23.2 Advances to staff against expenses

Considered good 16,617,334 4,337,619

Advances to staff against expenses - considered

  doubtful (Note 23.2.2) 9,308,043 9,308,043
Less: Provision for doubtful advances to staff
    against expenses (Note 23.2.1) 9,308,043 9,308,043
- -
16,617,334 4,337,619

23.2.1 Provision for doubtful advances to staff against expenses

Balance as at 01 July 9,308,043 5,837,029

Add: Provision for the year (Note 34) - 3,471,014
Balance as at 30 June 9,308,043 9,308,043

23.2.2 These include unsecured advance against expenses of Rupees 5.895 million (2021: Rupees
5.895 million) given to Mr. Aamir Alam Qureshi (Ex.General manager marketing).

2022 2021
Rupees Rupees
24. SHORT TERM DEPOSITS AND PREPAYMENTS

Security deposits 57,083,692 37,918,361

Prepayments 374,036 591,582
57,457,728 38,509,943

25. ADVANCE INCOME TAX - NET

Advance income tax 378,936,585 321,624,315

Provision for taxation (307,570,190) (186,641,503)
71,366,395 134,982,812

26. SALES TAX RECOVERABLE

Sales tax recoverable 1,708,787,336 929,618,602

Less: Provision for doubtful sales tax
    recoverable (Note 26.1) 78,368,537 57,412,946
1,630,418,799 872,205,656
26.1 Provision for doubtful sales tax recoverable

Balance as at 01 July 57,412,946 40,836,727

Add: Provision for the year (Note 34) 20,955,591 16,576,219
Balance as at 30 June 78,368,537 57,412,946

102 Kohinoor Mills Limited

 2022 2021
Rupees Rupees
27. OTHER RECEIVABLES
Considered good:
Export rebate and claims (Note 27.1) 28,546,726 19,001,356
Duty draw back (Note 27.2) 2,795,160 162,420,596
Receivable from employees’ provident fund trust 5,908,569 3,206,750
Miscellaneous receivables (Note 27.3) 6,482,298 774,181
43,732,753 185,402,883

27.1 Export rebate and claims

Considered good 28,546,726 19,001,356
Considered doubtful 16,257,635 15,710,984
Less: Provision for doubtful export rebate and
    claims (Note 27.1.1) 16,257,635 15,710,984

- -
28,546,726 19,001,356
27.1.1 Provision for doubtful export rebate and claims
Balance as at 01 July 15,710,984 29,313,623
Add: Provision for the year (Note 34) 546,651 430,150
Less: Export rebate and claims written off
    during the year against provision - 14,032,789
Balance as at 30 June 16,257,635 15,710,984

27.2 Duty draw back

Considered good 2,795,160 162,420,596
Considered doubtful 20,896,827 20,114,903
Less: Provision for doubtful duty draw back (Note 27.2.1) 20,896,827 20,114,903
- -
2,795,160 162,420,596
27.2.1 Provision for doubtful duty draw back
Balance as at 01 July 20,114,903 14,471,887
Add: Provision for the year (Note 34) 781,924 5,643,016
Balance as at 30 June 20,896,827 20,114,903

27.3 Miscellaneous receivables

Considered good 6,482,298 774,181
Considered doubtful 545,000 545,000
Less: Provision for doubtful miscellaneous receivables 545,000 545,000
- -
6,482,298 774,181

Annual Report 2022 103

 2022 2021
Rupees Rupees
28. SHORT TERM INVESTMENT

At fair value through profit or loss

Mutual funds (Note 28.1) 56,772,172 20,431,615

28.1 Mutual funds

2022 2021 2022 2021

Name of fund
Number of units     Carrying Unrealised Fair Carrying Unrealised Fair
value gain value value gain value

                                     ................................... (Rupees) ...................................

- 2,043,161.455 NBP Islamic Daily Dividend Fund - - - 20,431,615 - 20,431,615

936,238.123 - MCB Pakistan Cash Management 47,249,878 - 47,249,878 - - -

Fund

958,835.691 - NBP Money Market Fund 9,491,176 31,118 9,522,294 - - -

1,895,073.814 2,043,161.455 56,741,054 31,118 56,772,172 20,431,615 - 20,431,615

2022 2021
Rupees Rupees
29. CASH AND BANK BALANCES

Cash in hand (Note 29.1) 15,158,693 13,568,651

Cash with banks:
On current accounts (Note 29.1 and Note 29.3) 483,578,603 391,127,223
On deposit accounts (Note 29.2 and 29.4) 107,413,334 255,145,419

590,991,937 646,272,642

606,150,630 659,841,293

29.1 Cash and bank balances include foreign currencies disclosed in note 47.1 (a)(i) to these
financial statements.

29.2 Rate of profit on bank deposits ranges from 5.50% to 12.25% (2021: 5.50% to 5.75%) per annum.

29.3 Cash with banks on current accounts includes an amount of Rupees 8.491 million (2021: Rupees
8.491 million) with Allied Bank Limited, in a non-checking account, to secure performance of
certain conditions of sale of assets agreement with M/s Interloop Limited (Note 13.1.1).

29.4 These include term deposit receipts of Rupees 18.00 million (2021: Rupees 18.00 million)
which are under lien with Habib Metropolitan Bank Limited.

104 Kohinoor Mills Limited

 2022 2021
Rupees Rupees
30. REVENUE

Revenue from contracts with customers:

Export sales 16,506,144,998 9,608,578,589

Local sales (Note 30.1) 4,729,271,771 3,274,928,543
Processing income 161,732,043 195,141,470

21,397,148,812 13,078,648,602

Export rebate 54,318,892 32,726,425

Duty draw back 1,380,612 129,654,812

21,452,848,316 13,241,029,839

30.1 Local sales

Sales (Note 30.1.1) 5,533,380,174 3,897,295,025

Less: Sales tax 804,108,403 622,366,482

4,729,271,771 3,274,928,543

30.1.1 These include sales of Rupees 3,106.530 million (2021: Rupees 1,586.028 million) made to
direct exporters against standard purchase orders (SPOs). Further, local sales include waste
sales of Rupees 121.747 million (2021: Rupees 67.334 million).

30.2 The amount of Rupees 263.462 million included in contract liabilities (Note 9) at 30 June 2021
has been recognized as revenue in 2022 (2021: Rupees 66.246 Million).

Annual Report 2022 105

 30.3 Disaggregation of revenue

In the following table, revenue is disaggregated by primary geographical market, major products
and service lines and timing of revenue recognition.

Weaving Dyeing Total

Description
2022 2021 2022 2021 2022 2021

Rupees Rupees Rupees Rupees Rupees Rupees

Geographical market

Australia - - 282,942,821 70,620,630 282,942,821 70,620,630

Asia 1,740,486,551 1,194,386,705 8,559,416,200 4,726,682,367 10,299,902,751 5,921,069,072
Europe 4,140,821,802 1,892,924,533 827,399,627 1,062,881,568 4,968,221,428 2,955,806,101
North America 50,394,185 100,408,831 558,276,077 258,067,241 608,670,263 358,476,072
South America - - 28,365,825 5,715,772 28,365,825 5,715,772
Africa 176,361,247 79,073,119 141,680,663 217,817,823 318,041,910 296,890,942
Pakistan 1,430,612,547 1,347,216,033 3,460,391,267 2,122,853,980 4,891,003,814 3,470,070,013

7,538,676,332 4,614,009,221 13,858,472,480 8,464,639,381 21,397,148,812 13,078,648,602

Export rebate 5,779,313 4,200,894 48,539,579 28,525,531 54,318,892 32,726,425

Duty draw back 565,848 2,094,040 814,764 127,560,772 1,380,612 129,654,812

7,545,021,493 4,620,304,155 13,907,826,823 8,620,725,684 21,452,848,316 13,241,029,839

Major products / service lines

Greige cloth 7,328,614,131 4,373,488,465 - - 7,328,614,131 4,373,488,465

Dyed cloth - - 13,722,865,490 8,405,985,665 13,722,865,490 8,405,985,665
Yarn 117,889,996 199,079,917 - - 117,889,996 199,079,917
Processing income - - 161,732,043 195,141,470 161,732,043 195,141,470
Waste 98,517,366 47,735,773 23,229,290 19,598,549 121,746,656 67,334,322

7,545,021,493 4,620,304,155 13,907,826,823 8,620,725,684 21,452,848,316 13,241,029,839

Timing of revenue recognition

Products and services transferred at

  a point in time 7,545,021,493 4,620,304,155 13,907,826,823 8,620,725,684 21,452,848,316 13,241,029,839

Products and services transferred over time - - - - - -

7,545,021,493 4,620,304,155 13,907,826,823 8,620,725,684 21,452,848,316 13,241,029,839

30.4 Revenue is recognized at point in time as per the terms and conditions of underlying contracts
with customers.

106 Kohinoor Mills Limited

 2022 2021
Rupees Rupees
31. COST OF SALES

Raw material consumed (Note 31.1) 14,100,613,926 8,453,833,703

Chemicals consumed 1,329,090,754 964,685,853
Salaries, wages and other benefits 785,851,993 632,722,201
Employees’ provident fund contributions 28,001,403 23,751,101
Cloth conversion and processing charges 56,187,165 63,808,392
Fuel, oil and power 1,406,979,083 1,098,783,447
Stores, spares and loose tools consumed 268,472,952 235,081,113
Packing materials consumed 106,609,047 82,351,875
Repair and maintenance 68,764,198 88,314,565
Insurance 28,383,716 22,481,063
Other manufacturing expenses 105,357,403 72,832,299
Depreciation on operating fixed assets (Note 14.1.4) 344,016,904 269,074,382

Cost of goods manufactured 18,628,328,544 12,007,719,994

Work-in-process inventory
As on 01 July 245,407,748 181,271,612
As on 30 June (447,555,892) (245,407,748)

(202,148,144) (64,136,136)

18,426,180,400 11,943,583,858
Finished goods inventory
As on 01 July 1,648,676,602 1,226,288,778
As on 30 June (2,068,681,756) (1,648,676,602)

(420,005,154) (422,387,824)

18,006,175,246 11,521,196,034

31.1 Raw material consumed

Opening stock 1,021,049,307 542,225,474

Add: Purchased during the year 14,615,549,248 8,932,657,536

15,636,598,555 9,474,883,010
Less: Closing stock (1,535,984,629) (1,021,049,307)

14,100,613,926 8,453,833,703

Annual Report 2022 107

 2022 2021
Rupees Rupees
32. DISTRIBUTION COST

Salaries and other benefits 136,234,118 108,825,103

Employees’ provident fund contributions 4,987,584 4,129,986
Travelling, conveyance and entertainment 13,532,860 1,944,980
Printing and stationery 516,925 520,344
Communications 52,970,492 38,483,063
Vehicles’ running 8,722,364 5,355,404
Insurance 12,761,366 6,772,201
Repair and maintenance 139,234 373,569
Commission to selling agents 229,662,899 195,932,106
Outward freight and handling 536,586,550 245,337,051
Clearing and forwarding 95,380,992 102,360,066
Sales promotion and advertising 939,822 1,003,134
Depreciation on operating fixed assets (Note 14.1.4) 2,295,297 2,412,118
Miscellaneous 5,421,302 4,103,077

1,100,151,805 717,552,202

33. ADMINISTRATIVE EXPENSES

Salaries and other benefits 236,109,232 183,989,965

Employees’ provident fund contributions 8,083,441 6,924,442
Travelling, conveyance and entertainment 74,814,028 37,094,850
Printing and stationery 7,954,912 5,396,369
Communications 5,836,297 8,597,136
Vehicles’ running 18,967,689 12,383,933
Legal and professional 8,752,995 4,034,138
Insurance 13,738,800 11,850,521
Fee, subscription and taxes 8,436,833 9,106,839
Repair and maintenance 22,211,055 13,993,328
Electricity, gas and water 3,584,530 2,897,260
Auditors’ remuneration (Note 33.1) 2,792,750 2,435,000
Depreciation on operating fixed assets (Note 14.1.4) 13,058,335 12,362,953
Miscellaneous 49,727,370 47,872,608

474,068,267 358,939,342

33.1 Auditors’ remuneration

Audit fee 2,000,000 1,850,000

Half yearly review 500,000 320,000
Other certifications 80,000 80,000
Reimbursable expenses 212,750 185,000

2,792,750 2,435,000

108 Kohinoor Mills Limited

 2022 2021
Rupees Rupees
34. OTHER EXPENSES

Workers’ profit participation fund (Note 9.4) 66,430,161 26,265,643

Workers’ welfare fund (Note 9.5) 24,943,769 9,526,507
Donations (Note 34.1) 15,700,000 3,250,000
Loss on sale of stores - 3,515,584
Exchange loss - net 141,676,513 23,142,964
Provision for slow moving, obsolete and
  damaged store items (Note 20.2) 4,780,156 -
Provision for doubtful duty draw back (Note 27.2.1) 781,924 5,643,016
Provision for doubtful export rebate and
  claims (Note 27.1.1) 546,651 430,150
Provision for doubtful sales tax recoverable (Note 26.1) 20,955,591 16,576,219
Provision for doubtful advances to staff against
  expenses (Note 23.2.1) - 3,471,014
Advances to suppliers written off 4,161,717 4,803,590
Allowance for expected credit losses (Note 22.1) 23,462,900 26,830,481

303,439,382 123,455,168

34.1 The names of donees are as follows:

Cancer Care Hospital and Research Center 10,000,000 1,000,000

Progressive Education Network 2,000,000 -
Anjuman-E-Mohammadi 1,000,000 -
Zubaida Associates - 1,000,000
H & EF Endowment Fund - 500,000
Friends of Punjab Institute of Cardiology 700,000 750,000
Decent Departmental Store (for distribution of ration) 2,000,000 -

15,700,000 3,250,000

34.1.1 There is no interest of any director or his spouse in donee’s fund except for Friends of Punjab
Institute of Cardiology where Mr. Amir Fayyaz Sheikh Chief Executive Officer of the Company is
Trustee.

2022 2021
Rupees Rupees
35. OTHER INCOME

Income from financial assets

Dividend income 24,510,530 3,726,116

Return on bank deposits 9,942,683 26,806,680
Credit balances written back - 57,863,322
Accrued markup written back - 41,618,428
Unrealized gain on remeasurement of
  FVTPL investment (Note 28.1) 31,118 -

Annual Report 2022 109

 2022 2021
Rupees Rupees
Income from non-financial assets

Scrap sales 75,234,085 52,869,245

Reversal of provision for slow moving, obsolete and
  damaged store items (Note 20.2) - 774,907
Gain on sale of property, plant and equipment -
  net (Note 14.1.3) 13,558,733 80,449,602
Gain on initial recognition of GIDC payable at
  amortized cost - 11,640,485
Amortization of deferred grant (Note 8) 5,009,047 8,479,045
Others 7,080,551 4,120,061

135,366,747 288,347,891

36. FINANCE COST

Mark-up on long term financing 83,460,376 61,441,221

Mark-up on short term borrowings 192,399,879 122,463,463
Adjustment due to impact of IFRS - 9 on
  long term financing 20,367,932 23,051,962
Bank commission and other financial charges 142,770,164 103,837,706
Interest on workers’ profit participation fund (Note 9.4) 39,495,131 22,721,875
Adjustment due to impact of IFRS - 9 on GIDC (Note 7.3) 3,642,196 7,919,926

482,135,678 341,436,153

37. TAXATION

Current (Note 37.1) 307,570,190 186,641,503

Prior year adjustment (10,310,772) 14,604,415
Deferred (3,387,587) (2,230,114)

293,871,831 199,015,804

37.1 The Company falls under the ambit of presumptive tax regime under section 169 of the Income
Tax Ordinance, 2001. Provision for income tax is made accordingly. Provision for super tax on
income is calculated as per Section 4C of the Income Tax Ordinance, 2001. Further, provision
against income from other sources is made under the relevant provisions of the Income Tax
Ordinance, 2001.

37.2 Provision for deferred income tax is not required as the Company is chargeable to tax under
section 169 of the Income Tax Ordinance, 2001 and no temporary differences are expected to
arise in the foreseeable future except for deferred tax liability as explained in note 7.2.

110 Kohinoor Mills Limited

 2022 2021
Rupees Rupees
37.3 Reconciliation between tax expense
  and accounting profit

Accounting profit before taxation 1,222,244,685 466,798,831

Applicable tax rate 29% 29%

Tax on accounting profit 354,450,959 135,371,661

Tax effect of change in prior year’s tax (10,310,772) 14,604,415
Tax effect of dividend income taxed at a lower rate (3,431,474) (521,656)
Tax effect of deferred tax (3,387,587) (2,230,114)
Tax effect of gain on disposal of operating fixed assets - (6,851,533)
Tax effect of income that are not considered in
  determining taxable liability (1,461,648) (6,059,387)
Tax effect of final tax regime income taxed
  at a lower rate (121,731,664) 64,702,518
Tax effect of super tax 79,744,017 -

293,871,831 199,015,904

38. EARNINGS PER SHARE - BASIC AND DILUTED

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

2022 2021

Profit attributable to ordinary shareholders (Rupees) 928,372,854 267,783,027

Weighted average number of ordinary shares (Numbers) 50,911,011 50,911,011

Earnings per share (Rupees) 18.24 5.26

Annual Report 2022 111

 2022 2021
Rupees Rupees
39. CASH GENERATED FROM OPERATIONS

Profit before taxation 1,222,244,685 466,798,831

Adjustment for non-cash charges and other items:

Depreciation on operating fixed assets 359,370,536 283,849,453

Dividend income (24,510,530) (3,726,116)
Gain on sale of operating fixed assets (13,558,733) (80,449,602)
Adjustment due to impact of IFRS - 9 on long term financing 20,367,932 23,051,962
Adjustment due to impact of IFRS - 9 on GIDC 3,642,196 7,919,926
Gain on initial recognition of GIDC payable at amortized cost - (11,640,485)
Unrealized gain on remeasurement of FVTPL investment (31,118) -
Amortization of deferred grant (5,009,047) (8,479,045)
Allowance for expected credit losses 23,462,900 26,830,481
Provision for slow moving, obsolete and
  damaged store items 4,780,156 -
Reversal of provision for slow moving, obsolete and
  damaged store items - (774,907)
Provision for doubtful duty draw back 781,924 5,643,016
Provision for doubtful export rebate and claims 546,651 430,150
Provision for doubtful advances to staff against expenses - 3,471,014
Provision for doubtful sales tax recoverable 20,955,591 16,576,219
Advances to suppliers written off 4,161,717 4,803,590
Credit balances written back - (57,863,322)
Accrued markup written back - (41,618,428)
Impact of GIDC - 83,622,308
Finance cost 458,125,550 310,464,265
Working capital changes (Note 39.1) (1,782,704,274) (742,384,430)

292,626,136 286,524,880

39.1 Working capital changes

(Increase) / decrease in current assets:

Stores, spares and loose tools (205,119,749) 42,269,704

Stock-in-trade (1,137,088,620) (965,347,793)
Trade debts (287,946,462) (433,992,597)
Loans and advances (250,362,527) 10,743,482
Short term deposits and prepayments (18,947,785) (15,597,389)
Other receivables 136,179,838 (98,484,250)
Sales tax recoverable (779,168,734) (205,891,779)

(2,542,454,039) (1,666,300,622)

Increase in trade and other payables 759,749,765 923,916,192

(1,782,704,274) (742,384,430)

112 Kohinoor Mills Limited

39.2 Reconciliation of movement of liabilities to cash flows arising from financing activities

2022
Liabilities from financing activities
Long term Short term Unclaimed Total
financing borrowings dividend
Rupees Rupees Rupees Rupees


Balance as at 01 July 2021 1,414,880,245 3,681,196,820 7,119,615 5,103,196,680
Short term borrowing obtained - 13,766,842,113 - 13,766,842,113
Repayment of short term borrowings - (12,365,720,088) - (12,365,720,088)
Long term financing obtained 781,115,857 - 781,115,857

Repayment of long term financing (557,740,083) - - (557,740,083)

Impact of IFRS - 9 20,367,932 - - 20,367,932

(537,372,151) - - (537,372,151)

Balance as at 30 June 2022 1,658,623,951 5,082,318,845 7,119,615 6,748,062,411

2021
Liabilities from financing activities
Long term Short term Unclaimed Total
financing borrowings dividend
Rupees Rupees Rupees Rupees

Balance as at 01 July 2020 702,579,112 3,072,620,841 7,119,615 3,782,319,568
Short term borrowing obtained - 9,498,032,620 - 9,498,032,620
Repayment of short term borrowings - (8,889,456,641) - (8,889,456,641)
Long term financing obtained 872,684,872 - - 872,684,872
Repayment of long term financing (174,580,546) - - (174,580,546)
Impact of IFRS - 9 23,051,962 - - 23,051,962
(151,528,584) - - (151,528,584)
Deferred income - Government grant recognized (8,855,155) - - (8,855,155)

Balance as at 30 June 2021 1,414,880,245 3,681,196,820 7,119,615 5,103,196,680

40. EVENTS AFTER THE REPORTING PERIOD

The Board of Directors of the Company has proposed a cash dividend for the year ended 30
June 2022 of rupees 2.00 per share (2021: Rupees Nil per share) at their meeting held on 22
September, 2022. However, this event has been considered as non-adjusting events under
IAS 10 ‘Events after the Reporting Period’ and has not been recognized in these financial
statements.

Annual Report 2022 113

 41. REMUNERATION TO CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

Aggregate amounts charged in these financial statements for remuneration, including all
benefits to chief executive officer, directors and other executives are as follows:

2022 2021
Chief Chief

Executive Directors Executives Executive Director Executives

Officer Officer
---------------------------------- Rupees -------------------------------------

Managerial remuneration 11,880,000 9,157,500 89,753,132 9,478,150 3,643,750 67,275,316

House rent 2,970,000 2,289,375 21,090,781 2,369,538 910,938 15,692,646
Utilities 1,187,778 915,579 8,973,609 947,639 364,306 6,726,284
Special allowance 2,376,000 1,831,500 15,232,527 1,895,630 728,750 13,455,067
Contribution to provident fund 989,607 762,825 7,476,442 789,530 303,529 3,754,787
Other allowances 1,188,000 915,750 8,975,313 2,542,043 673,727 16,131,407

20,591,385 15,872,529 151,501,804 18,022,530 6,625,000 123,035,507

Number of persons 1 2 40 1 1 31

41.1 Chief executive officer, directors and certain executives of the Company are provided with free
use of the Company’s owned and maintained cars.

41.2 Meeting fee of Rupees 2.840 million (2021: Rupees 2.000 million) was paid to the non-executive
directors for attending meetings.

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

42. TRANSACTIONS WITH RELATED PARTIES

The related parties comprise associated undertakings, key management personnel, close
members of the family of the key management personnel and provident fund trust. The
Company in the normal course of business carries out transactions with related parties. Detail
of transactions with related parties, other than those which have been specifically disclosed
elsewhere in these financial statements are as follows:

2022 2021
Rupees Rupees

Advance to close relative of chief executive officer 6,044,485 -
Advance received back from close relative of the
  chief executive officer 6,044,485 -
Repayment of loans to legal heirs of the deceased director 6,115,000 17,450,000
Repayment of loans to close relatives of the
  chief executive officer 15,180,545 14,589,000

42.1 Detail of compensation to key management personnel comprising of chief executive officer,
directors and executives is disclosed in note 41.

114 Kohinoor Mills Limited

42.2 Following are the related parties with whom the Company have arrangements / agreements in
place:

Transactions entered
or agreements and / or Percentage
Name of the related party Basis of relationship arrangements in place of
during the financial year shareholding
2022 2021
Service Industries Limited Common directorship - No None
  (Note 42.3)

Punjab Social Security Health Common directorship No No None

Management Company

Master Wind Energy Limited Common directorship No - None

Lalpir Power Limited Common directorship No - None

Kohinoor Mills Limited Staff Post-employment benefit Yes Yes None

  Provident Fund Trust plan

Friends of Punjab Institute of Director is trustee of the trust Yes Yes None
  Cardiology

42.3 Mr. Riaz Ahmed has ceased to be director of the Company due to election of board of directors
of the Company held on 31 March 2022 . Hence, Service Industries Limited is no more related
party of the Company as on the reporting date.

43. PROVIDENT FUND

As at the reporting date, the Kohinoor Mills Limited Staff Provident Fund Trust is in the process
of regularizing its investments in accordance with section 218 of the Companies Act, 2017
and the regulations formulated for this purpose by Securities and Exchange Commission of
Pakistan.

44. NUMBER OF EMPLOYEES

2022 2021

Number of employees as on June 30 1961 1856

Average number of employees during the year 1896 1803

Annual Report 2022 115

 45. SEGMENT INFORMATION
45.1 The Company has three reportable segments. The following summary describes the operation in each of the Company’s reportable segments:

116
Weaving Production of different qualities of greige fabric using yarn.
Dyeing Processing of greige fabric for production of dyed fabric.
Power Generation Generation and distribution of power and steam using gas, coal and oil.

Power Elimination of inter-

Weaving Dyeing Total- Company
Generation segment transactions

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

--------------------------------------------------------------- ( R u p e e s ) --------------------------------------------------------------

Sales
  - External 7,545,021,493 4,620,304,155 13,907,826,823 8,620,725,684 - - - - 21,452,848,316 13,241,029,839

Kohinoor Mills Limited

  - Intersegment 5,827,380,274 3,625,051,855 156,276,165 161,379,940 1,121,226,627 951,394,550 (7,104,883,066) (4,737,826,345) - -
13,372,401,767 8,245,356,010 14,064,102,988 8,782,105,624 1,121,226,627 951,394,550 (7,104,883,066) (4,737,826,345) 21,452,848,316 13,241,029,839
Cost of sales (11,503,950,329) (7,344,145,339) (12,407,858,066) (7,881,856,881) (1,199,249,916) (1,033,020,159) 7,104,883,066 4,737,826,345 (18,006,175,246) (11,521,196,034)
Gross profit / (loss) 1,868,451,438 901,210,671 1,656,244,922 900,248,743 (78,023,289) (81,625,609) - - 3,446,673,070 1,719,833,805

Distribution cost (435,847,800) (255,886,903) (664,304,003) (461,665,299) - - - - (1,100,151,803) (717,552,202)

Administrative expenses (230,329,098) (174,622,670) (229,115,257) (173,110,381) (14,623,912) (11,206,292) - - (474,068,267) (358,939,342)
(666,176,898) (430,509,573) (893,419,260) (634,775,680) (14,623,912) (11,206,292) - - (1,574,220,070) (1,076,491,544)
Profit / (loss) before taxation and unallocated
  income / expenses 1,202,274,540 470,701,098 762,825,662 265,473,063 (92,647,201) (92,831,901) - - 1,872,453,000 643,342,261

Unallocated income and expenses:

Finance cost (482,135,678) (341,436,153)
Other expenses (303,439,382) (123,455,168)
Other income 135,366,747 288,347,891
Taxation (293,871,831) (199,015,804)
(944,080,144) (375,559,234)
Profit after taxation 928,372,856 267,783,027

45.2 Reconciliation of reportable segment assets and liabilities

Power
Weaving Dyeing Total - Company
Generation
2022 2021 2022 2021 2022 2021 2022 2021

- ------------------------------------------- ( R u p e e s ) ---------------------------------------------------
Segment assets 7,861,287,785 5,410,614,068 5,684,860,200 4,512,454,431 1,383,383,783 1,273,446,775 14,929,531,768 11,196,515,274

Unallocated assets 1,946,229,239 2,376,830,317

Total assets as per the statement of financial position 16,875,761,007 13,573,345,591

Segment liabilities 1,918,667,447 1,475,844,336 1,524,424,341 1,012,641,375 132,203,879 185,164,141 3,575,295,667 2,673,649,852
Unallocated liabilities:
Long term financing - secured 1,658,623,951 1,414,880,245
Deferred liabilities 408,884,030 410,264,828
Deferred income - Government grant 396,337 5,405,384
Accrued mark-up 71,578,017 69,459,909
Short term borrowings - secured 5,082,318,845 3,681,196,820
Unclaimed dividend 7,119,615 7,119,615
Trade and other payables 67,924,045 209,820,095

Total liabilities as per the statement of financial position 10,872,140,507 8,471,796,748

45.3 Geographical information
The Company’s revenue from external customers by geographical location is detailed below:

2022 2021
Rupees Rupees

Australia 282,942,821 70,620,630
Asia 10,299,902,751 5,921,069,072
Europe 4,968,221,428 2,955,806,101
North America 608,670,263 358,476,072
South America 28,365,825 5,715,772
Africa 318,041,910 296,890,942
Pakistan 4,891,003,814 3,470,070,013

21,397,148,812 13,078,648,602
Export rebate 54,318,892 32,726,425
Duty draw back 1,380,612 129,654,812

21,452,848,316 13,241,029,839

45.4 All non-current assets of the Company as at the reporting date are located and operating in
Pakistan.
45.5 Revenue from major customers
The Company’s revenue is earned from a large mix of customers.
2022 2021
46. PLANT CAPACITY AND PRODUCTION
Weaving
Number of looms in operation 230 260
Rated capacity of operative looms converted
  to 60 picks (square meter) 81,589,424 78,533,297
Actual production converted to 60 picks (square meter) 80,146,089 73,162,886
Number of days worked during the year (3 shifts per day) 365 365
Dyeing
Rated capacity in 3 shifts (linear meter) 48,000,000 48,000,000
Actual production for three shifts (linear meter) 33,335,435 30,872,652
Number of days worked during the year (3 shifts per day) 348 319
Power generation
Number of generators installed 7 9
Installed capacity (Mega Watt Hours) 288,029 317,375
Actual generation (Mega Watt Hours) 40,689 41,476

46.1 REASON FOR LOW PRODUCTION

Under utilization of available capacity for dyeing division and weaving division is due to routine
maintenance and BMR respectively. Actual power generation in comparison to installed
capacity is low due to periodical scheduled and unscheduled maintenance of generators, BMR
and low demand.
Although the number of looms have been decreased in the current financial year, the newer
looms installed have higher production capacity and operational efficiency.

Annual Report 2022 117

 47 FINANCIAL RISK MANAGEMENT

47.1 Financial risk factors

The Company’s activities expose it to a variety of financial risks: market risk (including currency
risk, other price risk and interest rate risk), credit risk and liquidity risk. The Company’s overall
risk management programme focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on the Company’s financial performance.

Risk management is carried out by the Company’s finance department under policies approved
by the Board of Directors (the Board). The Company’s finance department evaluates and hedges
financial risk. 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 and liquidity risk.

(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), Great Britain Pound (GBP),
Arab Emirates Dirham (AED), Chinese Yuan (CNY) and Euro. Currently, the Company’s
foreign exchange risk exposure is restricted to foreign currency bank balances and the
amounts receivable from / payable to the foreign entities. The Company uses forward
exchange contracts to hedge its foreign currency risk, when considered appropriate.
The Company’s exposure to currency risk was as follows:

2022 2021

Cash at bank - USD 35,353 37,443
Cash in hand - USD 18,458 28,600
Cash in hand - Euro 7,080 20,640
Cash in hand - GBP 4,925 135
Cash in hand - AED 5,940 5,940
Trade debts - USD 3,501,616 3,146,581
Trade debts - Euro 125,914 200,885
Trade debts - CNY - 6,984
Trade and other payable - USD (272,706) (197,142)
Trade and other payable - Euro (6,974) (10,631)
Trade and other payable - CNY (9,914) -
Net exposure - USD 3,282,721 3,015,482
Net exposure - Euro 126,020 210,894
Net exposure - GBP 4,925 135
Net exposure - CNY (9,914) 6,984
Net exposure - AED 5,940 5,940

118 Kohinoor Mills Limited

 The following significant exchange rates were applied during the year:

2022 2021
Rupees per USD

Average rate 179.29 159.81
Reporting date rate 202.50 157.80

Rupees per Euro

Average rate 199.13 191.29

Reporting date rate 212.00 188.12

Rupees per GBP

Average rate 235.07 216.28

Reporting date rate 246.00 218.58

Rupees per AED

Average rate 48.85 43.53

Reporting date rate 55.10 43.27

Rupees per CNY

Average rate 26.94 24.33

Reporting date rate 28.04 24.69

Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5%

against the USD, GBP, Euro, AED and CNY with all other variables held constant, the
impact on profit after taxation for the year would have been higher / lower by Rupees
31.453 million (2021: Rupees 23.507 million) 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 instrument traded in the market. The Company is not exposed to other price risk.

(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.

Annual Report 2022 119

 The Company has no significant long-term interest-bearing assets except for bank deposits.
The Company’s interest rate risk arises from long term financing and short term borrowings.
Borrowings obtained at variable rates expose the Company to cash flow interest rate risk.
Borrowings obtained at fixed rate expose the Company to fair value interest rate risk.

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

2022 2021
Rupees Rupees
Fixed rate instruments

Financial liabilities

Long term financing 1,535,195,380 1,414,880,245

Short term borrowings 4,032,370,000 3,182,370,000

Floating rate instruments

Financial assets

Bank balances - deposit accounts 107,413,334 255,145,419

Financial liabilities

Long term financing 123,428,571 -

Short term borrowings 785,630,000 498,826,820

Fair value sensitivity analysis for fixed rate instruments

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

Cash flow sensitivity analysis for variable rate instruments

If interest rates at the year end date, fluctuate by 1% higher / lower with all other variables
held constant, profit for the year would have been Rupees 7.455 million lower / higher (2021:
Rupees 2.266 million higher / lower), mainly as a result of higher / lower interest expense /
income. This analysis is prepared assuming the amounts of liabilities outstanding at reporting
dates were outstanding for the whole year.

(b) Credit risk

Credit risk represents the risk that one party to a financial instrument will cause a financial
loss for the other party by failing to discharge an obligation. The carrying amount of financial
assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was as follows:

120 Kohinoor Mills Limited

 2022 2021
Rupees Rupees

Investments 80,201,651 62,829,960

Long term loans 30,706,006 -
Loans and advances 8,890,451 23,839,042
Deposits 148,243,539 100,447,018
Trade debts 1,217,245,076 952,761,514
Other receivables 6,482,298 774,181
Bank balances 590,991,937 646,272,642

2,082,760,958 1,786,924,357

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
2022 2021
Banks Short Long Agency Rupees Rupees
Term Term

National Bank of Pakistan A1+ AAA PACRA 1,414,898 14,199,953
Allied Bank Limited A1+ AAA PACRA 11,980,363 162,134,748
Askari Bank Limited A1+ AA+ PACRA 274,704,606 175,700,939
Bank Alfalah Limited A1+ AA+ PACRA 22,544,267 16,395,221
Faysal Bank Limited A1+ AA PACRA 2,521,642 558,010
Habib Bank Limited A-1+ AAA VIS 27,759,196 65,804,074
Habib Metropolitan Bank Limited A1+ AA+ PACRA 20,113,820 19,317,696
The Bank of Punjab A1+ AA+ PACRA 80,718,956 135,579,655
MCB Bank Limited A1+ AAA PACRA 130,037,918 51,577,052
Silk Bank Limited A-2 A - VIS 3,630,890 252,197
Standard Chartered Bank
  (Pakistan) Limited A1+ AAA PACRA - 210,880
United Bank Limited A-1+ AAA VIS 2,432,157 2,095,604
Al Baraka Bank (Pakistan) Limited A-1 A+ VIS 100,413 1,060,681
Samba Bank Limited A-1 AA VIS 220,211 1,385,932
Meezan Bank Limited A-1+ AAA VIS 12,812,600 -
590,991,937 646,272,642
Investments

Security General Insurance

  Company Limited - - - - - - -- - - AA+ (IFS) - - - - - - - - - - VIS 23,429,479 42,398,345
MCB Pakistan Cash Management Fund - - - AA+ (f) - - PACRA 47,249,878 -
NBP Money Market Fund - - - - - - - AA (f) - - - - - - - PACRA 9,522,294 -
NBP Islamic Daily Dividend Fund - - - - - - - AA (f) - - - - - - PACRA - 20,431,615

80,201,651 62,829,960

671,193,588 709,102,602

The Company’s exposure to credit risk and allowance for expected credit loss related to trade
debts is disclosed in note 22.

Due to the Company’s long standing business relationships with these counterparties and
after giving due consideration to their strong financial standing, management does not expect
non-performance by these counterparties on their obligations to the Company. Accordingly,
the credit risk is minimal.

Annual Report 2022 121

 Trade debts

The Company applies the IFRS 9 simplified approach to measure expected credit losses which
uses a lifetime expected loss allowance for all trade debts.

To measure the expected credit losses, trade receivables have been grouped based on shared
credit risk characteristics and the days past due. These trade receivables are netted off with the
collateral obtained, if any, from these customers to calculate the net exposure towards these
customers. The Company has concluded that the expected loss rates for trade debts against
local sales are different from the expected loss rates for trade debts against export sales.

The expected loss rates are based on the payment profiles of sales over a period of 36 months
before 30 June 2022 and the corresponding historical credit losses experienced within this
period. The historical loss rates are adjusted to reflect current and forward-looking information
on macroeconomic factors affecting the ability of the customers to settle the receivables. The
Company has identified the Gross Domestic Product, Unemployment, Interest, and the inflation
Index to be the most relevant factors, and accordingly adjusts the historical loss rates based on
expected changes in these factors.

On that basis, the loss allowance as at 30 June 2022 and 30 June 2021 was determined as
follows:

At 30 June 2022
Local Sales Export Sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% Rupees % Rupees

Not past due 0.00% 223,676,048 - 0.00% 230,781,818 -

Up to 30 days 7.19% 107,101,036 7,695,592 0.40% 54,170,553 218,144
31 to 60 days 14.29% 19,593,693 2,799,229 2.42% 57,306,232 1,385,647
61 to 90 days 32.60% 15,749,308 5,133,768 9.04% 19,422,769 1,755,180
91 to 180 days 51.35% 4,022,420 2,065,644 22.07% 2,846,811 628,355
181 to 360 days 59.22% 1,018,047 602,865 53.65% 2,014,823 1,080,922
361 days and above 100.36% 93,092,994 93,424,587 100.00% 5,801,478 5,801,478

464,253,546 111,721,685 372,344,484 10,869,726

Trade debts which are not

  subject to risk of default 140,854,319 - 362,384,138 -

Total 605,107,865 111,721,685 734,728,622 10,869,726

At 30 June 2021
Local Sales Export Sales
Expected Trade Loss Expected Trade Loss
loss rate debts allowance loss rate debts allowance
% Rupees % Rupees

Not past due 0.00% 159,827,348 - 0.00% 65,874,563 -

Up to 30 days 0.85% 105,687,634 899,412 0.41% 59,562,908 244,504
31 to 60 days 3.71% 2,689,451 99,854 2.73% 28,497,784 776,651
61 to 90 days 15.13% 2,425,615 366,965 7.96% 2,883,342 229,377
91 to 180 days 31.41% 4,932,772 1,549,575 13.27% 392,116 52,034
181 to 360 days 47.05% 724,252 340,795 39.23% 1,245,164 488,495
361 days and above 100.00% 91,374,288 91,374,288 100.00% 3,038,154 3,038,154
367,661,360 94,630,889 161,494,031 4,829,215

Trade debts which are not subject to

  risk of default 149,099,346 - 373,966,881 -
Total 516,760,706 94,630,889 535,460,912 4,829,215

122 Kohinoor Mills Limited

(c) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated
with financial liabilities.

The Company manages liquidity risk by maintaining sufficient cash and availability of funding
through an adequate amount of committed credit facilities. At 30 June 2022, the Company
had Rupees 6,568.596 million (2021: Rupees 3,088.450 million) available borrowing limits from
financial institutions and Rupees 606.151 million (2021: Rupees 659.841 million) cash and bank
balances. The management believes the liquidity risk to be manageable. 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 2022

Carrying Contractual 6 month 6-12 1-2 More than
amount cash flows or less months Years 2 Years

- ----------------------------------- (Rupees) -------------------------------------

Non-derivative financial liabilities

Long term financing 1,658,623,951 2,187,078,686 297,643,575 227,641,319 395,911,944 1,265,881,848

Trade and other payables 3,410,226,542 3,410,226,542 3,410,226,542 - - -
Accrued mark-up 322,978,778 322,978,778 71,578,017 - - 251,400,761
Short term borrowings 5,082,318,845 5,162,789,308 5,162,789,308 - - -
Unclaimed dividend 7,119,615 7,119,615 7,119,615 - - -

10,481,267,731 11,090,192,929 8,949,357,057 227,641,319 395,911,944 1,517,282,609

Contractual maturities of financial liabilities as at 30 June 2021

Carrying Contractual 6 month 6-12 1-2 More than
amount cash flows or less months Years 2 Years

- ----------------------------------- (Rupees) -------------------------------------

Non-derivative financial liabilities

Long term financing 1,414,880,245 1,920,366,267 253,159,131 246,695,742 383,339,295 1,037,172,099

Trade and other payables 2,316,591,302 2,316,591,302 2,316,591,302 - - -
Accrued mark-up 297,000,270 297,000,270 69,459,909 - - 227,540,361
Short term borrowings 3,681,196,820 3,746,358,313 3,746,358,313 - - -
Unclaimed dividend 7,119,615 7,119,615 7,119,615 - - -

7,716,788,252 8,287,435,767 6,392,688,270 246,695,742 383,339,295 1,264,712,460

The contractual cash flows relating to the above financial liabilities have been determined on
the basis of interest rates / mark up rates effective as at 30 June. The rates of interest / mark up
have been disclosed in note 6 and note 11 to these financial statements.

Annual Report 2022 123

 47.2 Financial instruments by categories

Assets as per the statement of financial position

2022 2021
Amortised Amortised
FVTPL FVTOCI Total FVTPL FVTOCI Total
cost cost
- - - - - - - - - - - - - Rupees - - - - - - - - - - - - - - - - - - - - - - - - - Rupees - - - - - - - - - - - -

Investments - 56,772,172 23,429,479 80,201,651 - 20,431,615 42,398,345 62,829,960

Long term loans 30,706,006 - - 30,706,006 - - - -
Loans and advances 8,890,451 8,890,451 23,839,042 - - 23,839,042
Deposits 148,243,539 - - 148,243,539 100,447,018 - - 100,447,018
Trade debts 1,217,245,076 - - 1,217,245,076 952,761,514 - - 952,761,514
Other receivables 6,482,298 - - 6,482,298 774,181 - - 774,181
Cash and bank balances 606,150,630 - - 606,150,630 659,841,293 - - 659,841,293
2,017,718,000 56,772,172 23,429,479 2,097,919,651 1,737,663,048 20,431,615 42,398,345 1,800,493,008

2022 2021
Financial Financial
Liabilities at Liabilities at
amortized cost amortized cost
Rupees Rupees
Liabilities as per the statement of financial position
Long term financing 1,658,623,951 1,414,880,245
Accrued mark-up 322,978,778 297,000,270
Short term borrowings 5,082,318,845 3,681,196,820
Trade and other payables 3,410,226,542 2,316,591,302
Unclaimed dividend 7,119,615 7,119,615
10,481,267,731 7,716,788,252

47.3 Reconciliation of financial assets and financial liabilities to the line items presented in the
statement of financial position is as follows:

2022 2021
Financial Non- Financial Non-
assets financial Total assets financial Total
assets assets
- - - - - - - Rupees - - - - - - - - - - - - - - Rupees - - - - - - -

Assets
Long term investments 23,429,479 - 23,429,479 42,398,345 - 42,398,345
Long term loans 22,252,126 - 22,252,126 - - -
Long term deposits 91,159,847 - 91,159,847 62,528,657 - 62,528,657
Loans and advances 17,344,331 303,356,374 320,700,705 23,839,042 68,751,262 92,590,304
Short term deposits and
  prepayments 57,083,692 374,036 57,457,728 37,918,361 591,582 38,509,943
Trade debts 1,217,245,076 - 1,217,245,076 952,761,514 - 952,761,514
Other receivables 6,482,298 37,250,455 43,732,753 774,181 184,628,702 185,402,883
Short term investment 56,772,172 - 56,772,172 20,431,615 - 20,431,615
Cash and bank balances 606,150,630 - 606,150,630 659,841,293 - 659,841,293

2,097,919,651 340,980,865 2,438,900,516 1,800,493,008 253,971,546 2,054,464,554

124 Kohinoor Mills Limited

 2022 2021
Financial Non- Financial Non-
liabilities financial Total liabilities financial Total
liabilities liabilities
- - - - - - - Rupees - - - - - - - - - - - - - - Rupees - - - - - - -
Liabilities
Long term financing 1,658,623,951 - 1,658,623,951 1,414,880,245 - 1,414,880,245
Accrued mark-up 322,978,778 - 322,978,778 297,000,270 - 297,000,270
Short term borrowings 5,082,318,845 - 5,082,318,845 3,681,196,820 - 3,681,196,820
Trade and other payables 3,410,226,542 232,993,170 3,643,219,712 2,316,591,302 566,878,645 2,883,469,947
Unclaimed dividend 7,119,615 - 7,119,615 7,119,615 - 7,119,615

10,481,267,731 232,993,170 10,714,260,901 7,716,788,252 566,878,645 8,283,666,897

47.4 Offsetting financial assets and financial liabilities

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

47.5 Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order
to maintain or adjust the capital structure, the Company may adjust the amount of dividends
paid to share holders, issue new shares or sell assets to reduce debt. Consistent with others in
the industry and the requirements of the lenders, the Company monitors the capital structure
on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital
employed. Borrowings represent long term financing, and short term borrowings obtained by
the Company as referred to in note 6 and note 11 respectively. Total capital employed includes
‘total equity’ as shown in the statement of financial position plus ‘borrowings’. The Company’s
strategy, remained unchanged from last year.
2022 2021
Rupees Rupees

Borrowings 6,740,942,796 5,096,077,065
Total equity 6,003,620,500 5,101,548,843
Total capital employed 12,744,563,296 10,197,625,908

Gearing ratio (Percentage) 52.89 49.97

The increase in the gearing ratio resulted primarily from increase in borrowings of the Company.

48. RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS

(i) Fair value hierarchy

Judgements and estimates are made in determining the fair values of the financial instruments
that are recognised and measured at fair value in these financial statements. To provide an
indication about the reliability of the inputs used in determining fair value, the Company has
classified its financial instruments into the following three levels. An explanation of each level
follows underneath the table.

Annual Report 2022 125

 Recurring fair value measurements
Level 1 Level 2 Level 3 Total
At 30 June 2022
.............................. (Rupees) .............................
Financial asset

Investment at fair value through

  profit or loss 56,772,172 - - 56,772,172
Investment at fair value through
  other comprehensive income - - 23,429,479 23,429,479

Total financial assets 56,772,172 - 23,429,479 80,201,651

Recurring fair value measurements

Level 1 Level 2 Level 3 Total
At 30 June 2021
.............................. (Rupees) .............................
Financial asset

Investment at fair value through

  profit or loss 20,431,615 - - 20,431,615
Investment at fair value through
  other comprehensive income - - 42,398,345 42,398,345

Total financial asset 20,431,615 - 42,398,345 62,829,960

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. For the majority of the non-current
receivables, the fair values are also not significantly different to their carrying amounts.

There was no transfer in and out of level 1 and level 3 measurements during the year.

The Company’s policy is to recognise 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 equity securities) is based on quoted market prices at the end of the reporting
period. The quoted market price used for financial assets held by the Company is the current
bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximise the
use of observable market data and rely as little as possible on entity-specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included
in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the
instrument is included in level 3. This is the case for unlisted equity securities.

(ii) Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include the use of quoted
market prices or dealer quotes for similar instruments and the fair value of the remaining
financial instruments is determined using discounted cash flow analysis.

126 Kohinoor Mills Limited

(iii) Fair value measurement using significant unobservable inputs (level 3)

The following table presents the changes in level 3 item for the years ended 30 June 2022 and
30 June 2021:

Unlisted equity
security
Rupees

Balance as on 01 July 2020 37,197,516

Add : Surplus recognized in other comprehensive income 5,200,829

Balance as on 30 June 2021 42,398,345

Less : Deficit recognized in other comprehensive income (18,968,866)

Balance as on 30 June 2022 23,429,479

(iv) Valuation inputs and relationships to fair value

The following table summarises the quantitative information about the significant unobservable
inputs used in level 3 fair value measurement.

Range of
inputs Relationship of
Fair value as at Un-observable (probability- unobservable
Description inputs weighted inputs to
average) fair value
30 June 30 June 30 June
2022 2021 2022
Rupees Rupees

Investment

Security General Insurance 23,429,479 42,398,345 Terminal growth 4.00% Increase / decrease
  Company Limited   factor in terminal growth
Risk adjusted 17.65% factor by 1.00% and
  discount rate decrease/increase in
discount rate by 1.00%
would increase /
decrease fair value by
Rupees +2.716 million
/ -2.066 million.

There were no significant inter-relationships between unobservable inputs that materially

affect fair values.

Valuation processes

Independent valuer performs the valuation of non-property item required for financial reporting
purposes, including level 3 fair values. The independent valuer reports directly to the chief
financial officer. Discussions of valuation processes and results are held between the chief
financial officer and the valuation team at least once every six month, in line with the Company’s
half yearly reporting period.

Annual Report 2022 127

 The main level 3 inputs used by the Company are derived and evaluated as follows:

Discount rate for financial instrument is determined using a capital asset pricing model to
calculate a rate that reflects current market assessments of the time value of money and the
risk specific to the asset.

Earnings growth factor for unlisted equity security is estimated based on market information
for similar types of companies.

Changes in level 2 and 3 fair values are analysed at the end of each half yearly reporting period
during the valuation discussion between the chief financial officer and the independent valuer.
As part of this discussion the independent valuer presents a report that explains the reason for
the fair value movements.

49. RECOGNIZED FAIR VALUE MEASUREMENTS - NON-FINANCIAL ASSETS

(i) Fair value hierarchy

Judgements and estimates are made for non-financial assets 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 Company has classified its non-financial assets into
the following three levels.

As at 30 June 2022 Level 1 Level 2 Level 3 Total

.............................. (Rupees) .............................
Property, plant and equipment:
  - Freehold land - 2,162,361,909 - 2,162,361,909
  - Buildings - 1,355,401,975 - 1,355,401,975

Total non-financial assets - 3,517,763,884 - 3,517,763,884

As at 30 June 2021 Level 1 Level 2 Level 3 Total

.............................. (Rupees) .............................
Property, plant and equipment:
  - Freehold land - 1,917,811,000 - 1,917,811,000
  - Buildings - 1,405,937,000 - 1,405,937,000

Total non-financial assets - 3,323,748,000 - 3,323,748,000

The Company’s policy is to recognise 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 the items of property, plant and equipment
carried at revalued amounts every three years. The management updates the assessment of
the fair value of each item of property, plant and equipment carried at revalued amount, taking
into account the most recent independent valuations. The management determines the value of
items of property, plant and equipment carried at revalued amounts within a range of reasonable

128 Kohinoor Mills Limited

 fair value estimates. The best evidence of fair value of freehold 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.

Valuation processes

The Company engages external, independent and qualified valuer to determine the fair value
of the Company’s items of property, plant and equipment carried at revalued amounts at the
end of every three years. As at 30 June 2021, the fair values of the items of property, plant and
equipment were determined by Messers Hamid Mukhtar and Company (Private) Limited, the
approved valuer.

Changes in fair values are analysed between the chief financial officer and the valuer. As part of
this discussion the team presents a report that explains the reason for the fair value movements.

50. FAIR VALUE MEASUREMENTS - NON-FINANCIAL ASSETS

(i) Fair value hierarchy

Judgements and estimates are made for non-financial assets not measured at fair value in these
financial statements but for which the fair value is described in these financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the
Company has classified its non-financial assets into the following three levels.

As at 30 June 2022 Level 1 Level 2 Level 3 Total

.............................. (Rupees) .............................
Investment property:
  - Land - 4,453,000 - 4,453,000

Total non-financial asset - 4,453,000 - 4,453,000

As at 30 June 2021 Level 1 Level 2 Level 3 Total

.............................. (Rupees) .............................
Investment property:
  - Land - 4,110,000 - 4,110,000

Total non-financial asset - 4,110,000 - 4,110,000

The Company’s policy is to recognise 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.

Annual Report 2022 129

 (ii) Valuation techniques used to determine level 2 fair values

The Company obtains independent valuations for its investment property at least annually. At
the end of each reporting period, the management updates the assessment of the fair value of
each property, taking into account the most recent independent valuations. The management
determines a property’s value within a range of reasonable fair value estimates. The best
evidence of fair value is current prices in an active market for similar properties.

Valuation processes

The Company engages external, independent and qualified valuer to determine the fair value
of the Company’s investment property at the end of every financial year. As at 30 June 2022, the
fair value of the investment property has been determined by Hamid Mukhtar and Company
(Private) Limited.

Change in fair value is analysed at the end of each year during the valuation discussion between
the chief financial officer and the valuer. As part of this discussion the team presents a report
that explains the reason for the fair value movements.

51. UNUTILIZED CREDIT FACILITIES

Non-funded Funded
2022 2021 2022 2021
- - - - - - - - - - - - - - Rupees - - - - - - - - - - - - - -

Total facilities 1,959,588,000 1,687,730,000 12,003,406,000 7,046,000,000

Utilized at the end of the year 1,713,650,000 1,334,950,000 5,434,810,000 3,957,550,000

Unutilized at the end of the year 245,938,000 352,780,000 6,568,596,000 3,088,450,000

52. AUTHORIZATION OF FINANCIAL STATEMENTS

These financial statements were authorized for issue by the Board of Directors of the Company
on 22 September, 2022.

53. CORRESPONDING FIGURES

Corresponding figures have been re-arranged / reclassified, wherever necessary, for the
purpose of comparison. However, no significant re-arrangements have been made.

54. GENERAL

Figures have been rounded off to nearest of Rupee.

AAMIR FAYYAZ SHEIKH KAMRAN SHAHID ISMAIL AAMIR FAYYAZ

CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER DIRECTOR

130 Kohinoor Mills Limited

 PROXY FORM
35th Annual General Meeting 2022

I/We __________________________________________________________________________________

of _____________________ in the district of ________________________________ being a member of

KOHINOOR MILLS LIMITED hereby appoint ______________________________________________

____________________________ of _____________another member of the Company or failing him/her

appoint _______________________________________________________________________________

of _________________________________________ another member of the Company as my / our proxy

to vote for me/us and on my/our behalf, at the 35th Annual General Meeting of the Company to be

held on Thursday, October 27, 2022 at 2:00 p.m., and at any adjournment thereof.

As witness my/our hand seal this ______________________ day of ____________________, 2022

CDC Account Holders No. of Ordinary Signatures on

Folio No. Participant I.D. No. Account / Sub-Account No. Shares held Fifty Rupees
Revenue Stamp

The Signature should agree

with the specimen registered
with the Company
Witness 1 Witness 2

Signature Signature

Name Name

CNIC No. CNIC No.

Passport No. Passport No.

Address Address

Important Notes:

1. Proxies, in order to be effective, must be received at the Company’s Registered Office situated at 8th K.M. Manga Raiwind
Road, District Kasur, not later than 48 hours before the time for holding the meeting and must be duly stamped, signed and
witnessed.

2. If a member appoints more than one proxy and more than one instruments of proxies are deposited by a member with the
Company, all such instruments of proxy shall be rendered invalid.

3. No person can act as proxy unless he / she is member of the Company, except that a corporation may appoint a person
who is not a member.

For CDC Account Holders / Corporate entities

In addition to the above, the following requirements have to be met.

a) The proxy form shall be witnessed by two persons whose name, address and Computerized National Identity Card
(CNIC) number shall be mentioned on the form.
b) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be provided with the proxy form.
c) The proxy shall produce original CNIC or passport at the time of attending the meeting.
d) In case of the Corporate entity, the Board of Directors’ Resolution / Power of Attorney with specimen signature shall be
submitted (unless it has been provided earlier) along with proxy form to the Company.

Annual Report 2022 131

 AFFIX
CORRECT
POSTAGE
The Company Secretary

KOHINOOR MILLS LIMITED

8-Km, Manga Raiwind Road,
Distt. Kasur,
Pakistan.

132 Kohinoor Mills Limited

2022

Annual Report 2022 133

 AFFIX
CORRECT
POSTAGE
The Company Secretary

KOHINOOR MILLS LIMITED

8-Km, Manga Raiwind Road,
Distt. Kasur,
Pakistan.

134 Kohinoor Mills Limited

Annual Report 2022 135
136 Kohinoor Mills Limited
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138 Kohinoor Mills Limited
Annual Report 2022 139
140 Kohinoor Mills Limited
Annual Report 2022 141
142 Kohinoor Mills Limited
1,896

Annual Report 2022 143

144 Kohinoor Mills Limited
Annual Report 2022 145
146 Kohinoor Mills Limited
KOHINOOR
MILLS LIMITED
8-Kilometer, Manga Raiwind Road,
District Kasur, Pakistan