ACCOUNTING POLICIES

AUDITORS REPORT

Presenting an unqualified opinion the auditor states: a) In our opinion, proper books of account have been kept by the company as required by companys ordinance 1984. b) In our opinion: 1) The balance sheet and P&L account together with their notes thereon have been drawn in conformity with the companys ordinance 1984. 2) The expenditure incurred during the year was for the purpose of companys business 3) The business conducted, investments made and the expenditure incurred during the year was in accordance with objects of the company 4) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet and profit & loss account, statement of comprehensive income, statement of changes in equity and statement of cash flow together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at June 30, 2010 and of the loss, total comprehensive loss, changes in equity and its cash flows for the year then ended; and 5) in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980

STATEMENT OF COMPLIANCE

The financial reports have been prepared in accordance with the approved accounting standards such as IFRS issued by IASB , applicable in Pakistan. BASIS OF MEASUREMENT

The financial statements have been prepared under the historical cost convention; except for freehold land, that are stated at revalued amounts. REVENUE RECOGNITION

Revenue is measured at fair value of the consideration received, excluding discounts, rebates and sales tax or duty. The following criteria must me met to recognize revenue: 1) Revenue from sale of goods is recognized when significant risk and rewards of ownership of goods have been passed to the buyers, usually on delivery of goods. 2) Service income is recognized when related services are rendered. In such case, revenue is recognized by reference to stage of completion of a transaction. 3) Sales of scrap goods are recorded net of cost on receipt basis. 4) Interest income is recorded using effective interest rate. 5) Rental income is recognized on accrual basis. 6) Dividend income is recognized when the right to receive the dividend is established. STORES, SPARES AND LOOSE TOOLS These are valued at net realizable value. Cost is determined on the weighted average cost less provision for obsolete and slow moving items. TAXATION

Current: The current tax for the company is determined on the basis of the prevailing income tax law. The charge for current tax is calculated using prevailing tax rates. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years. Deferred: it is provided in full using the liability method on all temporary differences arising at balance sheet. Deferred tax is charged or credited to the profit and loss account. EARNING PER SHARE

EPS is presented by the company using ordinary shares, calculated by dividing profit available to ordinary shareholders of company divided by the weighted average number of ordinary shares outstanding for the period. DEPRECIATION

Depreciation is charged to profit and loss account using the straight-line method over the estimated useful lives of the assets. REPAIR AND MAINTENANCE

It is charged to profit and loss account when incurred. Major renewals and improvements, if any, are capitalized. IMAPIRMENT OF ASSETS

An impairment loss is recognized as an expense in the profit and loss account for the amount by which the assets carrying amount exceeds its recoverable amount GAINS OR LOSSES ARISING ON DISOSAL OF ASSETS Gains or losses on disposal of assets are taken to profit and loss account in the year the assets are derecognized. STOCK, WIP AND FG

Raw materials are valued at the lower of weighted average cost and net realizable value except for items in transit which are valued at cost comprising invoice values plus other charges. Work-in-process is valued at average cost comprising prime cost and an appropriate portion of manufacturing overheads. Finished goods are valued at the lower of weighted average cost and net realizable value. CHANGE IN ACCOUNTING POLICY During the year 2012, the company changed its accounting policy in respect of valuation of free hold, that are freely transferrable, whereby, with effect from the current year, these are carried at the revalued amounts, being fair value at the date of revaluation less subsequent accumulated depreciation and subsequent accumulated impairment loses, if any. The above changes, made to provide a more accurate reflection of the carrying value of the assets of the company and has been accounted for in accordance with IAS-16 property, plant and equipment, as required by IAS-8 accounting policies, change in accounting estimate and errors Had there been no revaluation, the cost and written down value of revalued freehold land and leasehold land in the balance sheet would have been Rs.270.737 million and Rs.270.333 million and surplus on revaluation of fixed assets would have been lower by Rs.1100.337 million.

NATURE OF PROFIT AND LOSS STATEMENT ACCOUNTS

SALES

FREQUENT ITEMS Local sales Returns Export sales Sales tax Excise duty

COST OF SALES FREQUENT ITEMS

Finished goods Salaries, wages & benefits Insurance Procured services

Work-in-progress

Purchases Fuel and power

RM consumed Stores consumed Repair and maintenance Other expenses

Rent, rates and taxes Communication

Sale of scrap Travelling, conveyance and entertainment Depreciation Reversal for slow moving inventory

Printing and stationery Insurance

Technical assistance fees trading

DISTRIBUTION COST FREQUENT ITMES

Transportation & Staff salaries and other charges on local other benefits and export sales Rent, rates & taxes Advertisement and sales promotion Printing and stationery Commission expense

Travelling, conveyance and entertainment Repair and maintenance communication others

Professional charges

Fuel, water and power Procured services

Depreciation Insurance

ADMINISTRATIVE EXPENSES FREQUENT ITMES

Ijarah rentals

Salaries, wages and other benefits

Travelling, conveyance and entertainment

Others

Rent, rates & taxes

Directors meeting fee Repair and maintenance amortization Depreciation

Fuel, water & power Communication Donation

Legal and professional Printing and charges stationery Insurance OTHER INCOME Procured services

FREQUENT ITMES Income from bank deposits Rental income INFREQUENT ITEMS Gain on disposal of fixed asset Income from investment Reversal of provision on doubtful debts Net income form services

OPERATING EXPENSES FREQUENT ITMES

Directors rumeneration

Workers profit

Audit committee fee

Workers welfare fund

others

Restructuring cost

Impairment loss on plant and machinery

donations

FINANCE COST FREQUENT ITMES

Markup on short term Markup on long term finance finance

Bank charges

Interest on workers participation fund

PROFIT AND LOSS STATEMENT ANALYSIS

2012 NET PROFIT MARGIN (%) GROSS PROFIT MARGIN (%) OPERATING PROFIT MARGIN (%) 2011 2010 2009 2008

25 20

NET PROFIT MARGIN GROSS PROFIT MARGIN

15 OPERATING PROFIT MARGIN 10 5 0 2012 -5 2011 2010 2009