2013 Final

Annual Report
2013
Contents
04 Vision, Mission and Code of Ethics and Business Practices
06 Company Information
07 Message from CEO
08 Chairman Statement
09 Directors’ Report
14 Six Years at a Glance

17 Corporate Governance
18 Statement of Compliance with Best Practices of Code of Corporate Governance
20 Pattern of Shareholding
22 Notice of Annual General Meeting
24 Auditors’ Report
25 Review Report of Code of Corporate Governance
26 Balance Sheet
28 Profit & Loss Account

29 Statement of Other Comprehensive Income
30 Cash Flow Statement
32 Statement of Changes in Equity
33 Notes to the Financial Statements
83 Form of Proxy
Financial Performance | 2013
Earning Per Share
Rs 48.35
(2012: Rs. 32.13)
Profit Before Tax
+39.69%
Rs. 1,374 M
Operating Profit
(2012: Rs. 984 M)
+9.52%
Rs. 1,861 M
Sales (2012: Rs. 1,699 M)
+8.51%
Rs. 8,099 M
(2012: Rs. 7,464 M)
Return on Capital
Employed
100%
Cash Dividend
+4.14%
Rs. 10 per share
(2012: Rs. 8)
Gross Profit 15.58 %

(2012: 11.44 %)
+18.09%
Rs. 2,503 M
(2012: Rs. 2,120 M)
Vision
Strive to develop and employ innovative technological
solutions to add value to business with progressive and
proactive approach.
Mission
Continuing growth and diversification for bottom line
results with risks well contained.
Code of Ethics and
Business Practices
We believe in stimulating and challenging
team oriented work environment that
encourages, develops and rewards
excellence and diligently serve
communities, maintaining high
standards of moral and ethical values.
Company Information
Board of Directors United Bank Limited

Bank Alfalah Limited
Haji Bashir Ahmed
Dubai Islamic Bank Pakistan Limited
(Chairman)
The Bank of Punjab
Mr. Muhammad Adrees MCB Bank Limited
(Chief Executive Officer) Standard Chartered Bank Pakistan Limited
Mr. Imran Ghafoor First Habib Bank Modaraba
Mr. Haseeb Ahmed Saudi Pak Industrial and Agricultural
Mr. Muhammad Khalil Investment Co. (Pvt.) Limited
Mr. Ijaz Hussain Al-Baraka Islamic Bank B.S.C. (E.C.)
Faysal Bank Limited
Mr. Mazhar Ali Khan Habib Bank Limited
Company Secretary Burj Bank Limited
Mr. Mazhar Ali Khan Bank Islami Pakistan Limited
Pak Oman Investment Company Ltd.
Chief Financial Officer Habib Metropolitan Bank Limited
Mr. Anwar-ul-Haq (FCA) My Bank Limited
Bank Al-Habib Limited
Audit Committee Soneri Bank Limited
Chairman Mr. Imran Ghafoor
Member Mr. Haji Bashir Ahmed Website of the Company
Mr. Muhammad Khalil www.sitara.com.pk
Human Resource and Registered Office

601-602 Business Centre,
Remuneration Committee
Mumtaz Hassan Road,
Chairman Mr. Imran Ghafoor
Karachi-74000
Members Haji Bashir Ahmed
Mr. Muhammad Adrees Shares Registrar Address
THK Associates (Private) Limited
Head of Internal Audit
Ground Floor, State Life Building No.3
Mr. Zakir Hussain (ACA)
Dr. Ziauddin Ahmed Road
Auditors Karachi-75530.
M. Yousuf Adil Saleem & Co.
Chartered Accountants Factories
28/32 KM, Faisalabad - Sheikhupura Road,
Legal Advisor Faisalabad.
Mr. Sahibzada Muhammad Arif
Bankers
Meezan Bank Limited
National Bank of Pakistan
Allied Bank Limited
6
Annual
Report
2013
Message from CEO
Sitara Group carries a long history

of responsible business while
participating in the social economic
development of the country
through industrialization.
Sitara Chemical Industries Ltd. is
one of the entity which started its
production in 1985 with a small
capacity of 30 MT / day and
by the Grace of Almighty Allah
reached to the current capacity of
610 MT / day.
This development is based on
the opportunity provided by
the market dynamics, visionary
leadership and diligence of sailing
through all hardships and obstacles.
Muhammad Adrees
Chief Executive Officer
77
Sitara
Chemical
Industries
Limited
Chairman’s Statement
On behalf of Board of Directors of Sitara Chemical Industries Ltd., I feel great pleasure to present before you
the audited financial statements for the year ended June 30, 2013.
Overall Review
All praises to Almighty Allah who blessed us with success in all aspects. Your company carried on its
performance firework during this year. We achieved the highest earning per share (EPS) establishing sheer
efforts of management of the Company. Your Management has been able to improve profitability by
effectively adopting the principle of lean management in every sphere of business of the company to
minimize production costs and controlling operational and financial cost. Focused sales and marketing
development strategies backed by stable production resulted in achieving healthy growth in sales volume over prior years. Obviously
this happened with the great help of Almighty Allah and colossal efforts by the management. During the year, we faced umpteen
challenges including higher rate of inflation, depressed economy of Pakistan, dreadful law and order situation, political instability and
geopolitical constraints. The supply of gas and electricity remained better as compared to previous years. From last two years, we were
exporting our liquid products to India through Wagah Border which enable us to sale our residual products. Considering these challenges,
International and local competition, your company performed very well. It proves sustainability and adaptability of management of the
company to face critical challenges. Further, current year financial results established our capability towards combating with local and
international competition as well. During the year under review, major overhauling of remaining two engines of Captive Power Plant was
accomplished. Renovation of one electrolyzer is under process and shall be completed in 2014. Renovation and up gradation of furnace
is planned to be started in next year. With the grace of Allah Subhana Ta Allah, expansion has been made in Carbon Dioxide plant and
production capacity reached to 32 MT per day from 12 MT per day. Textile division of your company has launched cloth finishing
product in the brand name of Rajah’s. The finest Rajah’s suiting is designed with immaculate craftsmanship to reach an excellent level.
Overall consumer response is outclass and quite encouraging.
Going forward, the management plans to continue to maintain its focus on safe and stable plant operations coupled with improving
operational efficiencies across all aspects of the business. The objective will be to reap optimal economic benefits.
Financial Performance
Net sales of the company during the year under review are Rs. 8,100 million having an increase of Rs. 636 million over last year. Sales for
the Chemical Division are Rs. 6,670 million against last year that of Rs. 6,286 million and Sales for the Textile Division is Rs. 1,430 million
against last year that of Rs. 1,178 million. Net profit after tax for the year is Rs. 1,036 million registering increase of Rs. 348 million from
last year. Earning per share for the year is Rs. 48.35 against Rs. 32.13 in last year.
These results depict absolute and audacious endeavor of management, better supply of Gas and electricity. No doubt, Allah Subhana Ta
Allah helped us to attain these results beside high rate of inflation and Geopolitical problems.
Future Outlook
Your company is proactive in considering all business options including horizontal expansion as well as vertical expansion. Alhamdulillah,
considering alternate energy sources to overcome energy crises, being the biggest need of Pakistan; we are planning to set up 30MW
Coal based power plant. This shall not only contribute to nation but also strengthen your company. Technical orientation and techno-
commercial activities are being conducted in this regards. For backward integration of SSP plant, your company is considering setting
up Sulfuric acid plant having 50 MT per capacity. Residual product will be sold in local market. This shall not only boost our existing
product line but shall also introduce Sulfate group in our products lines. Your Company is planning to finance these projects through its
operations and sale of investment property.
Acknowledgement
At the end, I would like to thank all of our business partners, stakeholders and management team for their continuous support, trust
and assistance.
Haji Bashir Ahmed

8 Chairman
Annual
Report Sitara Group of Industries
2013
Faisalabad, August 19, 2013
Directors’ Report
The Directors have pleasure in submitting their report and audited accounts of the Company for the year ended
June 30, 2013.
Profit Appropriations Rupees
Net profit for the year after tax before WPPF 1,103,720,157
Workers’ Profit Participation Fund (67,616,294)
Net profit for the year 1,036,103,863
Incremental Depreciation net of Deferred 61,523,256
Un-appropriated profit brought forward 2,678,172,367
Amount available for appropriation 3,775,799,486
Appropriations:
Proposed cash dividend @ Rs.10 per share (214,294,070)
Un-appropriated profit carried forward 3,561,505,416
Earnings per share - Basic 48.35
Staff Retirement Benefits

Company has maintained recognized provident fund, based on audited accounts as at June 30, 2013 value of investment
thereof was Rs. 47,386,138/-.
Employees of Textile Division are entitled to gratuity as per law and appropriate provision has been made in accordance
with IAS-19 in the accounts.
Board of Director
The Board comprises of four Executive and three non-executive directors. The non-executive directors are independent to
management. The Board has delegated day-to-day operations of the Company to the Chief Executive.
During the year, Mr. Anis resigned from the board of directors of company and Mr. Mazhar Ali Khan was nominated
by the board to fill the casual vacancy. The board places on record its appreciation for valuable contribution made by
Mr. Anis and Well come Mr. Mazhar Ali Khan as a new director of the company.
Board of Directors Meeting

During the year five board meetings were held and attended as follows:
1. Haji Bashir Ahmed 5
2. Mr. Muhammad Adrees 5
3. Mr. Haseeb Ahmed 5
4. Mr. Ijaz Hussain 5
5. Mr. Anis (Retired) 1
6 Mr. Mazhar Ali Khan (New) 4
7. Mr. Imran Ghafoor 5 99
Sitara
8. Mr. Muhammad Khalil Chemical
Industries
Limited
Directors’ Report
Audit Committee Meetings

1. Mr. Imran Ghafoor 4
3. Mr. Muhammad Khalil 3
4. Mr. Muhammad Anis (Retired) 1
Human Resource and Remuneration Committee

1. Mr. Imran Ghafoor 4
3. Mr. Muhammad Adrees 3
4. Mr. Muhammad Anis (Retired) 1
Corporate Governance:
Statement on Compliance of Corporate Governance is annexed.
Pattern of Shareholding:
The pattern of shareholding of the Company is annexed along with trading in shares of the Company by its Directors, CEO,
CFO and Company Secretary.
Auditors
The existing auditors M/s M. Yousuf Adil Saleem & Co., Chartered Accountants, shall retire on the conclusion of 32st
Annual General Meeting. Being eligible, they have offered themselves for re-appointment as Auditors of the Company from
conclusion of the 32st Annual General Meeting until the conclusion of 33rd Annual General Meeting. The Audit Committee
has recommended the appointment of aforesaid M/s M. Yousuf Adil Saleem & Co., Chartered Accounts as external auditors
for the year ending June 30, 2014. The external auditors have been given a satisfactory rating under the Quality Control
Review Program of the Institute of Chartered Accountants of Pakistan (ICAP) and the firm, and all its partners are in
compliance with the International Federation of Accountants’ Guidelines on Code of Ethics, as adopted by the ICAP.
Contribution to National Exchequer
During the year, The Company’s contribution to the national exchequer amounting to Rs. 1,346.85/- million in respect
of payment towards sales tax and income tax. This does not include the import duties, withholding tax deducted by the
company from employees, suppliers and contractors and deposited into the treasury.
Production Operations
During the year your company has produced 108,594 Metric Tons of Caustic Soda against last year’s production of
112,231 Metric Tons. Production of Textile Division remained 8,234,117 Kgs of Yarn against 8,012,202 Kgs in the last
year. During the year all 22,080 spindles remained operational. We wish to express our gratitude towards Almighty Allah
on successful renovation of one electrolyzers and major overhauling of all power engines in captive power plant. This would
ensure uninterrupted supply generated by Power Plant and also will increase efficiency of sophisticated membrane. Textile
Division has launched new product with name Rajah’s.
Research and Development
Your company continued its research and development activities at its exclusive R&D department that constitutes highly
professional and fully dedicated staff. For utilization of excessive chlorine produced as by-product, R&D department
performed marvelous job introducing various products and we hope further achievements in coming years.
Information Technology
“Company is committed to utilize the relevant developments in the IT sector to achieve its strategic business goals. It is
equipped with necessary hardware, software, applications, and personnel to cope with all the business challenges and the
developments taking place in the market.
10 For its commitment to implement paperless environment in managing its day to day business affairs, company has
Annual
Report completed implementation of the state of the art and world’s best ERP solution - SAP along with in house developed
2013
Directors’ Report
software applications for managing its information system The transactions

generated through different modules of these applications become the
source of real time information for effective, correct and timely business
decisions.
Environment, Health and Safety
Your company is strongly committed to continued improvement of is
environmental management system by adaptation of appropriate pollution
prevention measures and complying with all relevant legislation and standards
especially ISO 9001:2008 and ISO 14001:2004. Company is also committed
to the slogan of “safety starts from the entrance”. Trainings, awareness
sessions and workshops are held continually at the plant for safety measures,
emergency response and preparedness, chemical spillages, chlorine leakage,
security and fire fighting drills etc. During the year under review various courses/ workshops/awareness sessions were held at
the site. On average 500 persons are trained per year on the above mentioned subjects.
Human Resource Development
Human Resource planning and management is one of the most focused
point at the highest management level. The company has a Human Resource
and Management committee which is involved in selection, evaluation,
compensation and succession planning of the key management personal.
It is also involved in recommending improvement in human resource policy
and its periodic review. Your company always welcomed the opportunities
for staff training, broadening their knowledge, vision and skill and awareness
about changing technological and learning developments. For this purpose
multiple workshops / courses / seminars were held during the year under
review wherein renowned consultants were called for to train the staff.
Company has sent 36 employees to attend courses and workshops held at
various well known institutions of Pakistan as well as abroad.
Winner of Sports Fair are honoured with prizes CEO at International training centre, Italy
Corporate Social Responsibility

Corporate Social Responsibility Sitara
Chemical Industries Limited is proactive
for health and welfare of local community.
We manage and arrange medical camps
and health awareness campaigns
frequently. In this regard various activities
have been held at factory site.
11
11
Sitara
Infant ICU at Aziz Fatima Hospital OPD of Aziz Fatima Hospital Chemical
Industries
Limited
Directors’ Report
Source of Revenue
Rs.(Million) %
Caustic soda 6,191 66
Sodium Hypochlorite 529 6
Bleaching powder 136 1
Hydrochloric acid 463 5
Liquid Chlorine 172 2
Yarn 1,320 14
Fabric 107 1
Others 444 2
9,362 100
Application of Revenue
Rs.(Million) %
Fuel & power 2,881 37
Raw materials 1,679 19
Salaries & wages 228 3
Depreciation 548 6
Admin & selling expenses 574 5
Financial charges 487 9
Other 1 -
Dividend 171 2
Income tax 338 4
Retained 2,455 15
9,362 100
12
Annual
Report
2013
Directors’ Report
Acknowledgement
“Our people are our strength and key drivers behind all our achievements. We acknowledge valuable contribution of
every employee of the company in consistent growth and marvelous performance in the Financial Year 2013. We
also cannot forget to say thanks to customers for the trust they put in our products all the time. Directors also wish to
express their gratitude to the shareholders of the company and financial institutions for their support and confidence in
the management.
For and on behalf of the

BOARD OF DIRECTORS
13
13
Muhammad Adrees Sitara
Chemical
Chief Executive Officer Industries
Limited
Six Years at a Glance
Assets Employed (Rs, ‘000’) 2013 2012 2011 2010 2009 2008
Sales 8,099,795 7,463,927 6,216,880 5,735,795 6,178,399 5,749,570

Gross profit 2,503,664 2,120,006 1,553,641 1,538,725 1,961,755 1,555,284
Operating profit 1,861,275 1,699,466 1,213,155 1,220,073 1,601,620 1,289,140
Profit before tax 1,374,446 984,051 518,229 609,962 987,894 919,300
Financial ratios
Gross Profit % 30.91 27.73 24.99 26.83 31.75 27.05
Operating Profit % 22.98 22.77 19.51 21.27 25.92 22.42
Profit before tax % 16.97 13.18 8.34 10.63 15.99 15.99
Earnings per share - Basic (Rs,) 48.35 32.13 19.97 22.67 30.89 30.49
Market value per share - (Rs.) 199.99 105.05 99.81 134.93 156.00 258.90
Cash Dividend Per Share - (Rs.) 10.00 8.00 6.25* 2.50* 7.50 7.50
Inventory turn over (times) 5.85 6.03 6.72 6.58 6.48 8.10
Current ratio 0.75:1 0.63:1 0.87:1 0.84:1 0.91:1 0.79:1
Fixed assets turn over (times) 1.36 1.23 1.13 1.04 1.29 1.23
Price earning ratio 4.14 3.27 5.00 5.95 5.05 8.49
Return to capital employed % 15.58 11.44 6.88 7.45 12.71 14.66
Debt equity 21:79 33:67 42:58 51:49 52:48 55:45
* 05% bonus shares along with cash dividend was proposed.
14
Annual
Report
2013
Six Years at a Glance
Assets Employed (Rs, ‘000’) 2013 2012 2011 2010 2009 2008
Property, Plant and equipment 6,068,942 6,339,937 6,195,031 5,675,577 5,137,619 4,824,079
Intangible assets 19,950 - - - - -
Investment property 2,868,379 2,820,036 1,576,856 2,724,588 2,705,805 1,255,842
Long Term Investment 63,431 67,608 - - - -
Advances and deposits 929,735 937,790 229,142 130,815 126,659 669,954
Current assets 3,414,660 2,715,289 3,262,718 1,779,477 2,143,328 1,838,853
Current liabilities (4,540,910) (4,279,703) (3,731,902) (2,128,504) ( 2,343,211) ( 2,319,046)
8,824,187 8,600,958 7,531,845 8,181,953 7,770,200 6,269,682
Financed by:
Ordinary capital 214,294 214,294 214,294 204,091 204,090 204,090
Reserves 5,161,331 4,188,592 3,572,117 3,156,262 2,757,899 2,221,939
Shareholders’ equity 5,375,625 4,402,886 3,786,411 3,360,353 2,961,989 2,426,029
Surplus on revaluation 1,402,756 1,466,066 920,622 944,619 1,006,548 1,075,358
Long term and deferred liabilities 2,045,806 2,732,006 2,824,812 3,876,981 3,801,663 2,768,295
8,824,187 8,600,958 7,531,845 8,181,953 7,770,200 6,269,682
15
15
Sitara
Chemical
Industries
Limited
Textile division your company has
launched cloth finishing product in the
brand name of Rajah ’s .
The finest, Rajah’s suiting is designed

with immaculate craftsmanship to
reach an excellent level.
Innuagration of Rajah’s by Haji Bashir Ahmed, Chairman
16
Annual
Report
2013
Corporate Governance
Statement of Directors’ Responsibilities

Board of Directors is mindful of its responsibilities and duties under legal and corporate framework. The Board
defines and establishes Company’s overall objectives and directions and monitors status thereof. Short term and
long term plans and business performance targets are set by Chief Executive under overall policy framework of
the Board.
There has been no-material departure from the best practices of the Corporate Governance, as detailed in the
Listing Regulations.
Presentation of Financial Statements
The financial statements prepared by the management of the Company, fairly present its state of affairs, the
results of its operations, cash flows and changes in equity.
Books of Account
Company has maintained proper books of account.
Accounting Policies
“Appropriate accounting policies have been consistently applied, in the preparation of financial
Application of International Accounting Standards
International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial
statements and any departure there from has been adequately disclosed.
Internal Control System
System of internal control is sound in design and has been effectively implemented and monitored.
Taxation
Information about taxes and levies is given in the notes to and forming part of financial statements.
Going Concern
There is no doubt about the Company’s ability to continue as a going concern.
Audit Committee
Audit Committee was established to assist Board in discharging its responsibilities for Corporate Governance,
Financial Reporting and Corporate Control. The Committee consists of three members..
Going Concern
There is no doubt about the Company’s ability to continue as a going concern.
Audit Committee
Audit Committee was established to assist Board in discharging its responsibilities for Corporate Governance,
Financial Reporting and Corporate Control. The Committee consists of three members.
Human Resource and Remuneration Committee
Human Resource and Remuneration Committee was framed to monitor the procedure of selection,
evaluation, compensation and succession planning of the key management personal along with designing and
implementation of Human Resource Policy of the company. This committee comprises of Three members. 17
17
Sitara
Chemical
Industries
Limited
Statement of Compliance
with the Code of Corporate Governance
for the year ended June 30, 2013
This statement is being presented to comply with the Code of Corporate Governance (CCG) contained in listing regulations
of Karachi, Lahore and Islamabad Stock Exchanges for the purpose of establishing a framework of good governance,
whereby a listed company is managed in compliance with the best practices of corporate governance.
The company has applied the principles contained in the CCG in the following manner:
1. The Board of Directors of the Company comprised of seven directors at year ended June 30, 2013.
Category Name Category Name
Executive Mr. Muhammad Adrees Non-Executive Haji Bashir Ahmed
Executive Mr. Haseeb Ahmed Non-Executive Mr. Imran Ghafoor
Executive Mr. Ijaz Hussain Non-Executive Mr. Muhammad Khalil
Executive Mr. Mazhar Ali Khan Independent None
Election of Board of Directors for the next three years term was held on July 5, 2013. At present the Board comprises of
following individuals:
Category Name Category Name
Independent Mr. Muhammad Arif Non-Executive Haji Bashir Ahmed
Executive Mr. Muhammad Adrees Non-Executive Mr. Imran Ghafoor
Executive Mr. Haseeb Ahmed Non-Executive Mr. Muhammad Khalil
Non-Executive Mr. Nawaz ul Haq
The independent directors meets the criteria of independence under clause i (b) of the CCG.
2. The directors have confirmed that none of them is serving as a director on board of more than seven listed companies,
including this Company.
3. All the directors of the Company are registered as tax payers and none of them has defaulted in payment of any loan
to a banking company, a DFI or an NBFI. None of the directors is member of stock exchange.
4. Casual vacancy occurring on the board during the year due to resignation of one director was filled up by the
directors within 90 days.
5. The Company has prepared a ‘Code of Conduct’ and has ensured that appropriate steps have been taken to
disseminate it throughout the company along with its supporting policies and procedures.
6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the
Company. A complete record of particulars of significant policies along with the dates on which they were approved
or amended has been maintained.
7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment
and determination of remuneration and terms and conditions of employment of the CEO, other executive and non-
executive directors, have been taken by the Board/shareholders.
8. The meetings of the board were presided over by the Chairman and, in his absence, by a director elected by the
board for this purpose and the board met at least once in every quarter. Written notices of the board meetings,
along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the
meetings were appropriately recorded and circulated.
18 9. In accordance with the criteria specified in clause (xi) of CCG, two of the seven Directors of the Company are
Annual
Report exempted from the requirement of directors’ training program, while one director has got certified with directors
2013
Statement of Compliance
with the Code of Corporate Governance
training program for the year ended June 30, 2013. Further rest of the Directors will undertake Directors Training
Program within specified time.
10. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit including their
remuneration and terms and conditions of employment.
11. The directors’ report for this year has been prepared in compliance with the requirements of CCG and fully describes
the salient matters required to be disclosed.
12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the board.
13. The Directors, CEO and Executives do not hold any interest in the shares of the Company other than that disclosed
in the pattern of shareholding.
14. The company has complied with all the corporate and financial reporting requirements of the CCG
15. The Board has formed an Audit Committee. It comprises three members; all members are non-executive directors
including the chairman of the committee.
16. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final
results of the Company and as required by the CCG. The terms of reference of the committee have been formed
and advised to the committee for compliance.
17. The board has formed an HR and Remuneration Committee. It comprises of three members majority of directors are
non-executive directors including the chairman of the committee.
18. The Board has set up an effective internal audit function.
19. The Statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the
quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP), that they or any of the
partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all
its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as
adopted by the ICAP.
20. The statutory auditors or the persons associated with them have not been appointed to provide other services except
in accordance with the Listing Regulations and the auditors have confirmed that they have observed IFAC guidelines
in this regard.
21. The “closed period”, prior to the announcement of interim/final results, and business decisions, which may materially
affect market price of Company’s securities, was determined and intimated to the directors, employees and Stock
Exchanges.
22. Material/price sensitive information has been disseminated among all market participants at once through the Stock
Exchanges.
23. We confirm that all other material principles enshrined in the CCG have been complied with.
19
19
Haseeb Ahmed Muhammad Adrees Sitara
Chemical
Director Chief Executive Officer Industries
Limited
Pattern of Shareholding
Number of Shareholdings Total Number

Shareholders From To of Shares
989 1 100 26,298

593 101 500 148,494
216 501 1,000 153,285
186 1,001 5,000 450,745
45 5,001 10,000 322,031
16 10,001 15,000 194,981
10 15,001 20,000 182,003
4 20,001 25,000 90,180
4 25,001 30,000 112,869
3 30,001 35,000 96,818
2 35,001 40,000 75,000
3 40,001 45,000 125,884
1 45,001 50,000 46,465
1 50,001 55,000 50,657
2 55,001 60,000 117,750
2 65,001 70,000 131,941
1 70,001 75,000 72,775
1 80,001 85,000 84,210
1 85,001 90,000 85,234
2 95,001 100,000 199,380
3 120,001 125,000 363,825
1 145,001 150,000 150,000
1 150,001 155,000 153,000
1 195,001 200,000 200,000
1 260,001 265,000 261,915
1 265,001 270,000 265,002
1 290,001 295,000 294,621
1 310,001 315,000 313,818
1 320,001 325,000 324,555
1 370,001 375,000 373,346
1 375,001 380,000 375,540
1 570,001 575,000 570,814
1 715,001 720,000 718,716
1 900,001 905,000 904,386
1 13,390,001 13,395,000 13,392,238
2099 21,429,407
20
Annual
Report
2013
Pattern of Shareholding
Number Shares Held Percentage

NIT & ICP
National Bank of Pakistan-Trustee Department
Investment Corporation of Pakistan 3 770,070 3.59
Directors, CEO and their Spouse and Minor Children

Haji Bashir Ahmed 1 577 0.00
Mr. Muhammad Adrees 1 13,392,238 62.50
Mr. Imran Ghafoor 1 2,310 0.001
Mr. Haseeb Ahmed 1 375,540 1.75
Mr. Muhammad Khalil 1 525 0.00
Mr. Ijaz Hussain 1 324,555 1.51
Mr. Mazhar Ali Khan 1 500 0.00
Bank, Development Finance Institutions,

Non Banking Finance Institutions 7 672,186 3.14
Insurance Companies 3 1,147,386 5.35
Modarabas and Mutual Funds 8 422,946 1.97
Foreign Companies 1 28,964 0.14
General Public (Local) 2021 3,710,355 17.32
General Public (Foreign) 19 36,076 0.18
Associated Companies, Undertaking and Related Parties - - -
Joint Stock Companies, other, etc 26 461,991 2.16
Others 4 81,185 0.38
2,099 21,429,407 100.00
- Detail of purchase/sale of shares by Directors, Company Secretary, Head of Internal Audit Department, Chief Financial
Officer and their spouses/minor children during 2012-2013.
- There has been No sale/purchase of shares held by aforesaid officials of the Company, during the year.
- No individual other than CEO has more than five percent shares. 21
21
Sitara
- The Board has determined threshold under clause xvi (l) of Code of Corporate Governance 2012 in respect of trading of Chemical
Industries
Company’s shares by executives and employees who are drawing annual basic salary of Rs. 2.4 million or more. Limited
Notice of Annual Report General Meeting
Notice is hereby given that the 32nd Annual General Meeting of Sitara Chemical Industries
Limited will be held at Dr. Abdul Qadeer Khan Auditorium, Haji Abdullah Haroon Muslim
Gymkhana, Near Shaheen Complex, Aiwan-e- Sadr Road, Karachi, on Monday, October 14,
2013 at 4:00 p.m. to transact the following business:
Ordinary Business
1. To confirm the minutes of Extra Ordinary General Meeting held on July 05, 2013.
2. To receive, consider and adopt the Annual Audited Accounts of the Company for the year ended June 30, 2013
together with the Reports of the Auditors and Directors thereon.
3. To approve payment of Cash Dividend at the rate of 100% (Rs.10/- per share) as recommended by the Directors.
4. To appoint Auditors for the year ending June 30, 2014 and to fix their remuneration.
5. To transact any other ordinary business of the Company with the permission of the Chair.
By order of the Board

Mazhar Ali Khan
Company Secretary
Karachi, August 19, 2013
Notes
i. The share transfer books of the company will remain closed from October 8, 2013 to October 14, 2013
(both days inclusive).
ii. A member entitled to attend and vote at this meeting may appoint another member as his/her proxy to
attend and vote instead of him/her. Proxies in order to be effective must be received at Company’s Share
Registrar’s Office M/s. THK Associates (Pvt) Limited, State Life Building- 3, Dr. Ziauddin Ahmed Road,
Karachi not less than 48 hours before the time of meeting.
iii. The member whose name appears on the register at the close of business on October 7, 2013 will be
entitled to cash dividend.
iv. Shareholders who have deposited their shares into Central Depository Company are advised to bring their
22 Computerized National Identity Card alongwith their CDC account number at the meeting venue.
Annual
Report
2013 v. Shareholders are advised to notify any change in their addresses.
Auditors’ Report
and Financial Statements
Auditors’ Report
to the members
We have audited the annexed balance sheet of SITARA CHEMICAL INDUSTRIES LIMITED (“the
Company”) as at June 30, 2013 and the related profit and loss account, statement of other
comprehensive income, cash flow statement and statement of changes in equity together with the
notes forming part thereof, for the year then ended and we state that we have obtained all the
information and explanations which, to the best of our knowledge and belief, were necessary for the
purposes of our audit.
It is the responsibility of the Company’s management to establish and maintain a system of internal
control, and prepare and present the above said statements in conformity with the approved
accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is
to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the above said statements are free of any material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the above said statements. An audit
also includes assessing the accounting policies and significant estimates made by management, as
well as, evaluating the overall presentation of the above said statements. We believe that our audit
provides a reasonable basis for our opinion and, after due verification, we report that:
(a) in our opinion, proper books of account have been kept by the Company as required by the
Companies Ordinance, 1984;
(b) in our opinion-
(i) the balance sheet and profit and loss account together with the notes thereon have been
drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with
the books of account and are further in accordance with accounting policies consistently
applied;
(ii) the expenditure incurred during the year was for the purpose of the Company’s business;
and
(iii) the business conducted, investments made and the expenditure incurred during the year
were in accordance with the objects of the Company.
(c) in our opinion and to the best of our information and according to the explanations
given to us, the balance sheet, profit and loss account, statement of other comprehensive
income, cash flow statement and statement of changes in equity together with the notes
forming part thereof conform with the 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, 2013 and of the profit, its comprehensive income, cash
flows and changes in equity for the year then ended; and
(d) in our opinion Zakat deductible at source under Zakat and Ushr Ordinance, 1980 (XVIII
of 1980) was deducted by the Company and deposited in Central Zakat Fund established
under section 7 of that Ordinance.
Chartered Accountants
24 Engagement Partner: Talat Javed

Lahore
Date: August 19, 2013
Review Report
to the members on Statement of Compliance with Best Practices
of Code of Corporate Governance
We have reviewed the Statement of Compliance (the Statement) with the best practices contained in
the Code of Corporate Governance prepared by the Board of Directors of Sitara Chemical Industries
Limited (the company), for the year ended June 30, 2013, to comply with the relevant Listing
Regulations of the Karachi Stock Exchange Limited, Lahore Stock Exchange (Guarantee) Limited and
Islamabad Stock Exchange (Guarantee) Limited where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of
Directors of the Company. Our responsibility is to review, to the extent where such compliance can
be objectively verified, whether the Statement of Compliance reflects the status of the Company’s
compliance with the provisions of the Code of Corporate Governance and report, if it does not. A
review is limited primarily to inquiries of the Company’s personnel and review of various documents
prepared by the Company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the
accounting and internal control systems sufficient to plan the audit and develop an effective audit
approach. We are not required to consider whether the Board’s statement on internal controls covers
all risks and controls, or to form an opinion on the effectiveness of such controls, the Company’s
corporate governance procedures and risks.
Further, Listing Regulations of Stock Exchanges require the Company to place before the Board of
Directors for their consideration and approval related party transactions distinguishing between
transactions carried out on terms equivalent to those that prevail at arm’s length transactions and
transactions which are not executed at arm’s length price recording proper justification for using such
alternate pricing mechanism. Further, all such transactions are also required to be separately placed
before the audit committee. We are only required and have ensured compliance of requirement to
the extent of approval of related part transactions by the Board of Directors and placement of such
transactions before the audit committee. We have not carried out any procedures to determine
whether the related party transactions were undertaken at arm’s length price or not.
Based on our review, nothing has come to our attention which causes us to believe that the Statement
of Compliance does not appropriately reflect the Company’s compliance, in all material respects, with
the best practices contained in the Code of Corporate Governance as applicable to the Company for
the year ended June 30, 2013.
Chartered Accountants
Engagement Partner: Talat Javed

Lahore
Date: August 19, 2013
25
Balance Sheet
As at June 30, 2013
2013 2012
Note Rupees
ASSETS
Non-current assets
Property, plant and equipment 4 6,068,941,931 6,339,937,335
Intangible assets 5 19,950,000 -
Investment property 6 2,868,379,300 2,820,036,360
Long term investments 7 63,431,202 67,607,937
Long term loans and advances 8 819,302,966 827,493,584
Long term deposits 9 110,432,287 110,296,726
Total Non-current assets 9,950,437,686 10,165,371,942
Current assets
Stores, spare parts and loose tools 10 336,360,277 366,962,117
Stock in trade 11 1,010,809,125 902,720,830
Trade debts 12 936,929,485 796,202,867
Loans and advances 13 662,025,277 437,603,208
Trade deposits and prepayments 14 9,612,725 6,680,502
Other receivables 15 16,599,019 9,079,166
Other financial assets 16 162,789,304 116,178,674
Cash and bank balances 17 279,534,490 79,861,668
Total Non-current assets

3,414,659,702 2,715,289,032
Total assets 13,365,097,388 12,880,660,974

26
2013 2012
Note Rupees
EQUITY AND LIABILITIES

Equity
Share capital 18 214,294,070 214,294,070
Reserves 19 1,385,145,253 1,338,984,262
Un-appropriated profits 3,776,186,139 2,849,607,623
5,375,625,462 4,402,885,955
Surplus on revaluation of property,
plant and equipment 20 1,402,756,242 1,466,066,473
Non-current liabilities
Long term financing 21 734,474,873 1,334,775,746
Long term deposits 22 7,946,055 12,199,953
Deferred liabilities 23 1,303,384,787 1,385,029,870
Total Non-current liabilities

2,045,805,715 2,732,005,569
Current liabilities
Trade and other payables 24 1,828,764,814 1,522,591,422
Profit / financial charges payable 25 70,245,987 92,938,164
Short term borrowings 26 1,529,449,755 1,544,904,214
Current portion of long term financing 21 657,250,376 862,779,540
Provision for taxation 422,774,665 240,420,881
Sales tax payable 32,424,372 16,068,756
Total current liabilities

4,540,909,969 4,279,702,977
Contingencies and commitments 27
Total equity and liabilities 13,365,097,388 12,880,660,974

The annexed notes from 1 to 48 form an integral part of these financial statements.
27
Muhammad Adrees Haseeb Ahmed
Chief Executive Officer Director
Profit and Loss Account
2013 2012
Note Rupees
Sales - net 28 8,099,794,812 7,463,926,517

Cost of sales 29 5,596,131,127 5,343,920,112
Gross profit 2,503,663,685 2,120,006,405
Other income 30 32,768,795 38,386,400
2,536,432,480 2,158,392,805
Distribution cost 31 173,756,328 127,286,617

Administrative expenses 32 400,466,890 273,190,623
Other operating expenses 33 98,157,980 88,450,365
Finance cost 34 486,828,528 682,871,270
Share of loss of associates - net of tax 7.1 2,776,413 2,542,565
1,161,986,139 1,174,341,440
Profit before taxation 1,374,446,341 984,051,365
Provision for taxation 35 338,342,478 295,569,418
Profit for the year 1,036,103,863 688,481,947
Earnings per share - basic and diluted 36 48.35 32.13
28
Statement of Other Comprehensive Income
2013 2012
Rupees

Other comprehensive income / (loss)
for the year - net of tax
Surplus on re-measurement of
investments available for sale on fair value 46,160,991 6,825,812
Deficit realized on sale of investments available
for sale on fair value 128,909 (48,701)
Share of other comprehensive income of associate - 20,334
46,289,900 6,797,445
Total comprehensive income for the year 1,082,393,763 695,279,392
29
Cash Flow Statement
2013 2012
Note Rupees
A. CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments for:
Depreciation on property, plant and equipment 577,892,070 467,545,033
Depreciation on investment property 440,648 489,609
Amortization on intangible assets 1,050,000 -
Impairment loss on investment in associated company - 7,072,302
Finance cost 486,828,528 682,871,270
Share of profit of associates - net of tax 2,776,413 2,542,565
Loss on disposal of property, plant and equipment 4,847,494 12,024,365
Gain on sale of available for sale investments (276,743) (409,049)
Provision for employee benefits 6,179,106 4,963,570
Advances written off 84,648,998 -
Provision for doubtful debts 3,009,675 7,842,904
Profit on bank deposits (9,377,465) (12,961,483)
Dividend income (8,051,548) (6,493,185)
Operating cash flows before changes in working capital 2,524,413,517 2,149,539,266

Working capital changes 41 (29,444,835) (329,394,438)
Cash generated from operations 2,494,968,682 1,820,144,828
Finance cost paid (509,520,705) (710,309,674)

Employee benefits paid (3,392,002) (2,767,698)
Taxes paid (341,343,325) (230,650,568)
Profit received 9,377,465 12,961,483
(844,878,567) (930,766,457)
Net cash from operating activities 1,650,090,115 889,378,371
30
Cash Flow Statement
2013 2012
Note Rupees
B. CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of property, plant and equipment 14,247,991 11,129,067
Proceeds from disposal of available for sale investments 2,150,000 1,689,748
Additions to property, plant and equipment (425,294,957) (546,864,234)
Additions to intangible assets (6,346,192) -
Proceeds from term deposit - 55,000,000
Purchase of available for sale investments (2,322,896) -
Purchase of investment property (48,783,588) (65,670,348)
Long-term loans and advances 8,190,618 13,166,253
Long term deposits (135,561) (2,167,876)
Dividend received 8,051,548 6,493,185
Net cash used in investing activities (450,243,037) (527,224,205)
C. CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term financing 196,874,500 400,000,000
Payment of long term financing (1,002,704,537) (966,721,210)
Short term borrowings-net (15,454,459) 275,904,214
Long term deposits (4,253,898) 1,681,302
Dividend paid (174,635,862) (133,933,794)
Net cash used in financing activities (1,000,174,256) (423,069,488)
Net decrease in cash and cash equivalents (A+B+C) 199,672,822 (60,915,322)

Cash and cash equivalents at beginning of the year 79,861,668 140,776,990
Cash and cash equivalents at end of the year 17 279,534,490 79,861,668
31
32
Reserve on re- Share of other
Unappropriated measurement
Share capital Share premium General reserve comprehensive Total
profit of available for income of
sale associate
investments
Rupees
Balance at July 01, 2011 214,294,070 97,490,410 1,225,000,000 2,239,905,349 9,716,741 4,450 3,786,411,020
Profit for the year - - - 688,481,947 - - 688,481,947
Surplus realized on disposal of assets 5,240,155 5,240,155
Other comprehensive income for the year
Surplus on re-measurement of investments available for sale on fair value - - - - 6,825,812 - 6,825,812
Deficit realized on sale of investments available for sale on fair value - - - - (48,701) - (48,701)
Share of other comprehensive income of associate - 20,334 20,334
Other comprehensive income realized on change in classification
of investment in associate - - - 24,784 - (24,784) -
Total other comprehensive income - - - 24,784 6,777,111 (4,450) 6,797,445

Total comprehensive income - - - 693,746,886 6,777,111 (4,450) 700,519,547
Transfer to un-appropriated profit on account of
incremental depreciation - net of tax - - - 49,889,182 - - 49,889,182

Distribution to owners
Final dividend for the year ended
June 30, 2011 @ Rs. 6.25 per share - - - (133,933,794) - - (133,933,794)
Balance as at June 30, 2012 214,294,070 97,490,410 1,225,000,000 2,849,607,623 16,493,852 - 4,402,885,955
Balance at July 01, 2012 214,294,070 97,490,410 1,225,000,000 2,849,607,623 16,493,852 - 4,402,885,955
Profit for the year - - - 1,036,103,863 - - 1,036,103,863
Surplus realized on disposal of assets 386,653 386,653
Other comprehensive income for the year
Surplus on re-measurement of investments available for sale on fair value - - - - 46,160,991 - 46,160,991
Total other comprehensive income - - - - 46,160,991 - 46,160,991
Statement of Changes in Equity
Total comprehensive income - - - 1,036,490,516 46,160,991 - 1,082,651,507

Transfer to un-appropriated profit on account
of incremental depreciation - net of tax - - - 61,523,256 - - 61,523,256
Distribution to owners
Final dividend for the year ended
June 30, 2012 @ Rs. 8 per share - - - (171,435,256) - - (171,435,256)
Balance as at June 30, 2013 214,294,070 97,490,410 1,225,000,000 3,776,186,139 62,654,843 - 5,375,625,462


Notes to the Financial Statements
1. GENERAL INFORMATION
1.1 Sitara Chemical Industries Limited (“the Company”) was incorporated in Pakistan on September
08, 1981 as a public limited company under Companies Act, 1913 (now Companies Ordinance,
1984). The Company is currently listed on Karachi, Lahore and Islamabad stock exchanges.
The principal activities of the Company are operation of Chlor Alkali plant and yarn spinning
unit. The registered office of the Company is situated at 601-602, Business Centre, Mumtaz
Hassan Road, Karachi, in the province of Sindh and the manufacturing facilities are located at
28/32 K.M., Faisalabad - Sheikhupura Road, Faisalabad, in the province of Punjab.
The Company is currently organized into two operating divisions and these divisions are the
basis on which the Company reports its primary segment information.
Principal business activities are as follows:
Chemical Division Manufacturing of caustic soda and allied products
Textile Division Manufacturing of yarn and fabric
1.2 The financial statements are presented in Pak Rupee, which is the Company’s functional and
presentation currency.
2. STATEMENT OF COMPLIANCE AND SIGNIFICANT ESTIMATES
2.1 Statement of compliance
These financial statements have been prepared in accordance with the approved accounting
standards as applicable in Pakistan. Approved accounting standards comprise of such
International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB) as notified under the provisions of the Companies Ordinance, 1984,
the requirements of the Companies Ordinance, 1984 and the directives issued by the Securities
and Exchange Commission of Pakistan (SECP). Wherever the requirements of the Companies
Ordinance, 1984 or the directives issued by the SECP differ with the requirements of the
IFRS, the requirements of the Companies Ordinance, 1984, and the said directives shall take
precedence.
2.2 Standards, interpretation and amendment adopted during the year
The following amendments to existing standards have been published that are applicable
to the Company’s financial statements covering annual periods, beginning on or after the
following dates:
2.2.1 Standards, amendments to published standards and interpretations that are effective in
current year and are relevant to the Company’s operations
Following are the amendments that are applicable for accounting periods beginning on or
after July 1, 2012:
The amendments to IAS 1 change the grouping of items presented in other comprehensive
income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point
in time would be presented separately from items that will never be reclassified. Income tax
on items of other comprehensive income is required to be allocated on the same basis i.e.
the amendments do not change the option to present items of other comprehensive income
either before tax or net of tax. The amendments require retrospective application. 33
2.2.2 New accounting standards, amendments to published standards and interpretations that are
not yet effective.
The following standards, amendments and interpretations are only effective for accounting
periods, beginning on or after the date mentioned against each of them. These standards,
interpretations and the amendments are either not relevant to the Company’s operations or
are not expected to have significant impact on the Company’s financial statements other than
certain additional disclosures except for amendments in IAS 19.
Amendments to IAS 1 - Presentation of Financial Effective from accounting period beginning on

Statements – Clarification of Requirements for or after January 01, 2013
Comparative information
This improvement clarifies the difference between voluntary additional comparative information
and the minimum required comparative information. Generally, the minimum required comparative
information is the previous period.
Amendments to IAS 16 - Property, Plant Effective from accounting period beginning on

and Equipment – Classification of servicing or after January 01, 2013
equipment
This improvement clarifies that major spare parts and servicing equipment that meet the definition of
property, plant and equipment are not inventory.
Amendments to IAS 19 - Employee Benefits Effective from accounting period beginning on

or after January 01, 2013
“It eliminates the corridor approach and recognizes all actuarial gains and losses in other comprehensive
income as they occur, immediately recognizes all past service costs and replaces interest cost and
expected return on plan assets with a net interest amount that is calculated by applying the discount
rate to the net defined benefit liability / asset. Unrecognized loss of Rs. 3.122 million will be
retrospectively adjusted in next year.
Amendments to IAS 32 Financial Instruments: Effective from accounting period beginning on

Presentation - Tax effects of distributions to or after January 01, 2013
holders of an equity instrument, and transaction
costs of an equity transaction
This improvement clarifies that income taxes arising from distributions to equity holders are accounted
for in accordance with IAS 12 Income Taxes.
Amendments to IAS 32 Financial Instruments: Effective from accounting period beginning on

Presentation - Offsetting financial assets and or after January 01, 2014
financial liabilities
These amendments clarify the meaning of “currently has a legally enforceable right to set-off”. It will be
necessary to assess the impact to the entity by reviewing settlement procedures and legal documentation
34 to ensure that offsetting is still possible in cases where it has been achieved in the past. In certain cases,
offsetting may no longer be achieved. In other cases, contracts may have to be renegotiated. The
requirement that the right of set-off be available for all counter parties to the netting agreement may
prove to be a challenge for contracts where only one party has the right to offset in the event of default.
Amendments to IAS 34 - Interim Financial Effective from accounting period beginning on

Reporting - Interim reporting of segment or after January 01, 2013
information for total assets and total liabilities
This amendment aligns the disclosure requirement for total segment assets with total segment
liabilities in interim financial statements. This clarification also ensures that interim disclosures are
aligned with annual disclosures.
Amendments to IFRS 7 Financial Instruments: Effective from accounting period beginning on

Disclosures - Offsetting financial assets and or after January 01, 2013
financial liabilities
These amendments require an entity to disclose information about rights to set-off and related
arrangements. The disclosures would provide users with information that is useful in evaluating the
effect of netting arrangements on an entity’s financial position. The new disclosures are required for
all recognized financial instruments that are set off in accordance with IAS 32 Financial Instruments:
Presentation. The disclosures also apply to recognized financial instruments that are subject to an
enforceable master netting arrangement or similar agreement, irrespective of whether they are set
off in accordance with IAS 32.
IFRIC 20 - Stripping Costs in the Production Effective from accounting period beginning on
Phase of a Surface Mine or after January 01, 2013
This interpretation applies to waste removal (stripping) costs incurred in surface mining activity,
during the production phase of the mine. The interpretation addresses the accounting for the benefit
from the stripping activity.
2.2.3 Other than the aforesaid standards, interpretations and amendments, the International
Accounting Standards Board (IASB) has also issued the following standards which have not
been adopted locally by the Securities and Exchange Commission of Pakistan:
- IFRS 1 First Time Adoption of International Financial Reporting Standards

- IFRS 9 Financial Instruments
- IFRS 10 Consolidated Financial Statements
- IFRS 11 Joint Arrangements
- IFRS 12 Disclosure of Interests in Other Entities
- IFRS 13 Fair Value Measurement
- IAS 27 (Rev. 2011) Separate Financial Statements due to non-adoption of IFRS 10 and
IFRS 11
- IAS 28 (Rev. 2011) Investments in Associates and Joint Ventures due to non- adoption
of IFRS 10 and IFRS 11
2.3 SIGNIFICANT ESTIMATES

The preparation of financial statements in conformity with IFRS’s requires management
to make judgments, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, incomes and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be
35
reasonable under the circumstances, the results of which form the basis of making judgments
about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period
in which the estimates are revised.
Significant areas requiring the use of management estimates in these financial statements
relate to the useful life of depreciable assets, provision for doubtful receivables and slow
moving inventory. However, assumptions and judgments made by management in the
application of accounting policies that have significant effect on the financial statements are
not expected to result in material adjustment to the carrying amounts of assets and liabilities
in the next year.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation
These financial statements have been prepared under the “historical cost convention”,
modified by:
- revaluation of certain property, plant and equipment;
- investments in associate valued on equity method;
- financial instruments at fair value;
- recognition of certain employee retirement benefits at present value.
The principal accounting policies adopted are set out below:
3.2 Property, plant and equipment
Property, plant and equipment except free hold land, building on freehold land (factory), plant
& machinery and capital work-in-progress are stated at cost less accumulated depreciation
and accumulated impairment losses, if any. Building on freehold land (factory) and plant and
machinery are stated at revalued amount less accumulated depreciation and accumulated
impairment losses, if any. Freehold land is stated at revalued amount. Capital work-in-progress
is stated at cost less impairment in value, if any. Cost includes borrowing cost as referred in
accounting policy of borrowing cost.
Assets’ residual values, if significant and their useful lives are reviewed and adjusted, if
appropriate, at each balance sheet date.
When significant parts of an item of property, plant and equipment have different useful lives,
they are recognized as separate items of property, plant and equipment.
Repair and maintenance costs are charged to income during the year in which they are
incurred.
Depreciation is charged to income applying the reducing balance method at the rates specified
in Property, plant and equipment note to these financial statements.
Depreciation on additions and disposals during the year is charged on the basis of proportionate
period of use.
Gains or losses on disposal of assets, if any, are recognized as and when incurred.
Surplus arising on revaluation is credited to surplus on revaluation of property, plant and
36 equipment. The surplus on revaluation of property, plant and equipment to the extent of
incremental depreciation charged on the related assets is transferred by the Company to its
un-appropriated profit.
Capital work-in-progress
All expenditure connected with specific assets incurred during installation and construction
period are carried under capital work-in-progress. These are transferred to specific assets as
and when these assets are available for use.
3.3 Intangible Assets
An intangible asset is an identifiable non-monetary asset without physical substance.
Intangible assets are recognized when it is probable that the expected future economic
benefits will flow to the entity and the cost of the asset can be measured reliable. Cost of
the intangible asset (i.e. Computer software) include purchase cost and directly attributable
expenses incidental to bring the asset for its intended use.
Cost associated with maintaining computer software are recognized as an expense as and
when incurred.
Intangible assets are stated at cost less accumulated amortization and accumulated
impairment losses, if any. Amortization is charged over estimated useful life of the asset on a
systematic basis applying the straight line method.
Useful life of intangible operating assets are reviewed, at each balance sheet date and adjusted
if the impact of amortization is significant.
3.4 Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is
valued using the cost method i.e. at cost less any accumulated depreciation and any identified
impairment loss.
Depreciation on buildings is charged to income on reducing balance method at the rate
of 10% per annum. Depreciation on additions to investment property is charged from the
month in which a property is acquired or capitalized while no depreciation is charged for the
month in which the property is disposed off.
3.5 Investments
Regular way purchase or sale of investments
All purchases and sales of investments are recognized using trade date accounting. Trade
date is the date that the Company commits to purchase or sell the investment.
Investment in associates
Associates are all entities over which the Company has significant influence, but not control,
generally accompanying a shareholding of 20% or more of the voting rights.
These investments are initially recognized at cost and are subsequently valued using equity
method less impairment losses, if any.
Available for sale
Investment securities held by the Company which may be sold in response to needs for 37
liquidity or changes in interest rates or equity prices are classified as available for sale. These
investments are initially recognized at fair value plus transaction cost and subsequently re-
measured at fair value. The investments for which quoted market price is not available, are
measured at costs as it is not possible to apply any other valuation methodology. Gains and
losses arising from re-measurement at fair value is recognized directly in the equity under fair
value reserve until sold, collected, or otherwise disposed off at which time, the cumulative
gain or loss previously recognized in equity is included in profit and loss account.
De-recognition
All investments are derecognized when the rights to receive cash flows from the investments
have expired or have been transferred and the Company has transferred substantially all risks
and rewards of ownership.
3.6 Stores, spare parts and loose tools
These are valued at lower of cost and net realizable value less allowance for the obsolete and
slow moving items. Cost is determined using moving average method. Items in transit are
valued at cost comprising invoice value and other charges incurred thereon, up to balance
sheet date.
Net realizable value represents estimated selling price in the ordinary course of business, less
estimated cost of completion and estimated cost necessary to make the sales.
3.7 Stock-in-trade
These are valued at lower of cost and net realizable value. Cost is determined as follows:-
Raw and packing materials Average cost except for those in transit which
are stated at invoice price plus other charges
paid thereon up to the balance sheet date.
Work-in-process Average manufacturing cost
Finished goods Average manufacturing cost
Waste Net realizable value
Net realizable value represents estimated selling price in the ordinary course of business, less
estimated cost of completion and estimated cost necessary to make the sale.
3.8 Trade debts and other receivables
Trade debts and other receivables are carried at original invoice amount less an estimate made
for doubtful receivables based on review of outstanding amounts at the year end. Balances
considered bad and irrecoverable are written off when identified.
3.9 Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of cash
flow statement, cash and cash equivalents consist of cash in hand, balances with banks,
highly liquid short-term investments that are convertible to known amount of cash and are
subject to insignificant risk of change in value, and short-term running finance under mark-
up arrangements.
3.10 Impairment
38 The Company assesses at each balance sheet date whether there is any indication that assets
except deferred tax assets may be impaired. If such indication exists, the carrying amounts of
such assets are reviewed to assess whether they are recorded in excess of their recoverable
amount. Where carrying values exceed the respective recoverable amount, assets are written
down to their recoverable amounts and the resulting impairment loss is recognized in profit
and loss account. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use.
Where impairment loss subsequently reverses, the carrying amount of the asset is increased to
the revised recoverable amount but limited to the extent of the amount that would have been
determined (net of depreciation and amortization) had no impairment loss been recognized.
Reversal of impairment loss is recognized as income.
The gain or loss on disposal or retirement of an asset represented by the difference between
the sale proceeds and the carrying amount of the asset is recognized as an income or
expense.
3.11 Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings
are subsequently stated at amortized cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognized in the income statement over
the period of the borrowings using the effective interest method. Borrowings are classified
as current liabilities unless the Company has an unconditional right to defer settlement of
liability for at least 12 months after the balance sheet date.
3.12 Employee Benefit Costs
Defined contribution plan - Chemical division
The Company operates an approved funded contributory provident fund scheme for all its
employees eligible for benefit. Equal monthly contributions are made by the Company and
employees at the rate from 6.5% to 8.33% of basic salary depending upon the length of
service of an employee. The Company’s contribution to the fund is charged to profit and loss
account for the year.
Defined benefit plan - Textile division
The Company operates an unfunded gratuity scheme for all those permanent employees
who have completed minimum qualifying period of service as defined under the respective
scheme. Provision is made to cover the obligation under scheme on the basis of actuarial
valuation and is charged to income. The most recent Actuarial Valuation was carried out at
June 30, 2012 using “Projected Unit Credit Method”.
The amount recognized in the balance sheet represents the present value of defined benefit
obligation as adjusted for unrecognized actuarial gains and losses.
Cumulative net unrecognized actuarial gains and losses at the end of previous year which
exceeds 10% of the present value of the Company’s gratuity are amortized over the average
expected remaining lives of employees.
3.13 Trade and other payables
Liabilities for trade and other amounts payable are measured at cost which is the fair value of
the consideration to be paid in future for goods and services received whether billed to the
Company or not.
3.14 Provisions
Provisions are recognized when the Company has a present, legal or constructive obligation 39
as a result of past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate of the amount can be
made. However, provisions are reviewed at each balance sheet date and adjusted to reflect
the current best estimate.
3.15 Taxation
Current
The charge for current taxation is based on taxable income at the current rate of taxation after
taking into account applicable tax credit, rebates and exemption available, if any. However,
for income covered under final tax regime, taxation is based on applicable tax rates under
such regime.
Deferred
Deferred income tax is provided using the liability method for all temporary differences at the
balance sheet date between tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. In this regard, the effects on deferred taxation of the portion of
income subject to final tax regime is also considered in accordance with the requirement of
Technical Release – 27 of Institute of Chartered Accountants of Pakistan.
Deferred income tax asset is recognized for all deductible temporary differences and carry
forward of unused tax losses, if any, to the extent that it is probable that taxable profit will be
available against which such temporary differences and tax losses can be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the period when the asset is realized or the liability is settled, based on tax rates that
have been enacted or substantively enacted at the balance sheet date.
3.16 Dividend and other appropriations
Dividend is recognized as a liability in the year in which it is approved. Appropriations of profits
are reflected in the statement of changes in equity in the year in which such appropriations
are made.
3.17 Financial instruments
Financial assets and liabilities are recognized when the Company becomes a party to the
contractual provisions of the instrument and derecognized when the Company loses control
of the contractual rights that comprise the financial asset and in case of financial liability
when the obligation specified in the contract is discharged, cancelled or expired.
Other particular recognition methods adopted by the Company are disclosed in the individual
policy statements associated with each item of financial instruments.
3.18 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods provided in the normal course of business.
- Sales of goods are recognized when goods are delivered and title has passed.
- Export rebate is recognized on accrual basis at the time of making the export sale.
- Interest income is accrued on a time basis, by reference to the principal outstanding and
at the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s net
40 carrying amount.
- Dividend income from investments is recognized when the shareholders’ rights to receive
payment have been established.
3.19 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to get
ready for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale. Investment income earned
on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are
incurred.
3.20 Foreign currencies
Transactions in currencies other than Pakistani Rupee are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the rates prevailing
on the balance sheet date except where forward exchange contracts have been entered into
for repayment of liabilities, in that case, the rates contracted for are used.
Gains and losses arising on re-translation are included in net profit or loss for the period.
3.21 Segment Reporting
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 transactions with any of the company’s other components. All operating segments’
operating results are reviewed regularly by the company’s CEO 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 CEO include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis. Unallocated items comprise
mainly administrative and other operating expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property,
plant and equipment, and intangible assets other than goodwill.
3.22 Off setting of financial assets and financial liabilities
A financial asset and financial liability is offset and the net amount is reported in the balance
sheet if the Company has a legal enforceable right to set off the transaction and also intends
to settle on a net basis or to realize the asset and settle the liability simultaneously.
3.23 Related party transactions
Transactions with related parties are priced on commercial terms. Prices for these transactions
are determined on the basis of comparable uncontrolled price method, which sets the price
by reference to comparable goods and services sold in an economically comparable market
to a buyer unrelated to the seller.
41
42
2013 2012
Note Rupees
4. PROPERTY, PLANT AND EQUIPMENT
Operating assets 4.1 5,959,052,890 6,061,685,806
Capital work-in-progress 4.7 109,889,041 278,251,529
6,068,941,931 6,339,937,335
4.1 Operating assets as at June 30, 2013
Cost / revalued amount Accumulated depreciation
Description As at July 01, Additions/ As at June 30, As at July 01, Charge for As at June 30, Book value as Rate
2012 (disposals) 2013 2012 the year / (on 2013 at June 30, (%)
disposals) 2013
Rupees
Freehold land 628,362,000 - 628,362,000 - - - 628,362,000
Building on freehold land:

Mill 564,299,000 62,426,247 626,725,247 - 57,917,453 57,917,453 568,807,794 10
Head office 12,238,041 - 12,238,041 9,480,692 275,735 9,756,427 2,481,614 10
Plant and machinery 4,597,792,000 397,217,510 4,982,145,581 - 484,616,678 479,660,662 4,502,484,919 10
(12,863,929) (4,956,016)
Grid station and electric installation 217,704,694 34,243 217,738,937 116,958,323 10,136,973 127,095,296 90,643,641 10
Containers and cylinders 69,790,823 - 57,278,692 35,842,816 3,266,510 34,949,660 22,329,032 10
(12,512,131) (4,159,666)
Factory equipment 54,413,014 4,011,511 58,090,365 24,318,162 3,245,079 27,266,035 30,824,330 10
(334,160) (297,206)
Electric equipment 31,071,694 3,478,247 34,245,791 15,534,880 1,654,925 16,975,403 17,270,388 10
(304,150) (214,402)
Office equipment 38,970,202 2,789,660 41,540,246 20,971,559 1,943,132 22,770,241 18,770,005 10

(219,616) (144,450)
Furniture and fittings 17,206,397 4,095,644 21,302,041 8,817,763 956,717 9,774,480 11,527,561 10
Vehicles 149,098,176 20,301,577 158,646,855 87,336,040 13,878,868 93,095,249 65,551,606 20
(10,752,898) (8,119,659)
6,380,946,041 494,354,639 6,838,313,796 319,260,235 577,892,070 879,260,906 5,959,052,890
(36,986,884) (17,891,399)
Operating assets as at June 30, 2012
Cost / revalued amount Accumulated depreciation

Book value as at
Charge for Rate
Description As at July 01, Revaluation Additions/ Revaluation As at June 30, As at July 01, Revaluation As at June 30, June 30,
the year / (on (%)
2011 surplus (disposals) adjustments 2012 2011 adjustments 2012 2012
disposals)
Rupees
Freehold land 584,921,924 41,853,356 1,586,720 - 628,362,000 - - - - 628,362,000
Building on freehold land:
Mill 941,753,219 70,164,554 30,930,324 (478,549,097) 564,299,000 427,647,458 50,901,639 (478,549,097) - 564,299,000 10
Head office 12,238,041 - - - 12,238,041 9,180,711 299,981 - 9,480,692 2,757,349 10
Plant and machinery 6,276,622,236 792,849,570 371,917,928 (2,792,221,280) 4,597,792,000 2,438,665,279 383,980,496 (2,792,221,280) - 4,597,792,000 10
(51,376,454) (30,424,495)
Grid station and electric installation 217,704,694 - - - 217,704,694 105,976,544 10,981,779 - 116,958,323 100,746,371 10
Containers and cylinders 69,790,823 - - - 69,790,823 32,149,497 3,693,319 - 35,842,816 33,948,007 10
Factory equipment 48,976,363 - 5,436,651 - 54,413,014 21,170,848 3,147,314 - 24,318,162 30,094,852 10
Electric equipment 29,617,211 - 1,454,483 - 31,071,694 13,932,016 1,602,864 - 15,534,880 15,536,814 10

Office equipment 38,172,802 - 797,400 - 38,970,202 19,053,625 1,917,934 - 20,971,559 17,998,643 10
Furniture and fittings 16,611,993 - 594,404 - 17,206,397 7,949,441 868,322 - 8,817,763 8,388,634 10
Vehicles 130,908,107 - 24,619,469 - 149,098,176 81,412,582 10,151,385 - 87,336,040 61,762,136 20
(6,429,400) (4,227,927)
8,367,317,413 904,867,480 437,337,379 (3,270,770,377) 6,380,946,041 3,157,138,001 467,545,033 (3,270,770,377) 319,260,235 6,061,685,806
(57,805,854) (34,652,422)
2013 2012
Note Rupees - Note
4.2 Depreciation for the year has been allocated as under:
Cost of sales 29 547,485,385 456,041,466

Administrative expenses 32 30,406,685 11,503,567
577,892,070 467,545,033
43
4.3 The Company has its freehold land, building and plant & machinery revalued in June 30, 2012
by Hamid Mukhtar & Company (Private) Ltd, independent valuers not connected with the
Company. The basis used for the revaluation of these property plant and equipment were as
follows:
Land
Fair market rate of the land was assessed through inquiries in the vicinity of land and
information obtained through property dealers of the area.
Building
New construction value (new replacement value of each item of the buildings) was arrived at
by looking at the condition of the buildings, valuer applied 3% per annum depreciation on
“Written Down Value” basis to arrive at fair depreciated market value on “Going Concern”
basis.
Machinery (Textile)
Inquiries were made in market to obtain prevalent replacement values of similar local and
imported machinery items.
Machinery (Chemical)
Capitalized cost of the plant and machinery each year since its commissioning was taken
as basis for revaluation. This cost has been escalated because of exchange rate increases.
An average inflation rate in international prices with due consideration on the increase in
international prices of the metals like mild steel, copper etc. has then been applied to arrive
at an “Escalation Rate Factor”, which has been instrumental for arriving at “New Replacement
Values”.
Depreciation due to usage has been applied on all assets of machinery at 7.50% per annum
on written down value basis to arrive at a fair present / depreciated market value of the assets.
4.4 The revaluation surplus, net of deferred tax, is credited to surplus on revaluation of property,
plant and equipment.
4.5 Had there been no revaluation the cost, accumulated depreciation and book value of revalued
assets as at June 30, 2013 would have been as follows:
Accumulated
Cost depreciation Book Value
Rupees Rupees Rupees
Land 200,415,091 - 200,415,091

Building on free hold land 954,391,959 551,980,973 402,410,986
Plant and Machinery 5,917,138,907 3,025,535,665 2,891,603,242
2013 7,071,945,957 3,577,516,638 3,494,429,319
2012 6,625,183,018 2,890,363,551 3,734,819,467

44
4.6 The following assets were disposed off during the year:
Revalued Accumulated
Carrying value Sale proceeds Mode of
Description amount / Cost depreciation Particulars of buyer
disposal
Rupees
Plant & Machinery

NO2 Plant 12,863,929 4,956,016 7,907,913 2,610,225 Negotiation Al- Madina Oxygen Gas Works
Containers and Cylinders

Nitrous Oxide Cylinders 1,803,802 596,167 1,207,635 463,427 Negotiation Al- Madina Oxygen Gas Works
NO2 & CO2 Cylinders 20 Kg 1,639,430 541,905 1,097,525 792,241 Negotiation Al- Madina Oxygen Gas Works
CO2 Cylinders - 40 Kg 3,663,822 1,252,409 2,411,413 1,154,357 Negotiation Al- Madina Oxygen Gas Works
CO2 Cylinders - 40 Kg 1,989,036 657,384 1,331,652 673,448 Negotiation Al- Madina Oxygen Gas Works
CO2 Cylinders - 40 Kg 1,326,024 438,256 887,768 448,966 Negotiation Al- Madina Oxygen Gas Works
CO2 Cylinders - 40 Kg 1,965,357 673,545 1,291,812 665,431 Negotiation Al- Madina Oxygen Gas Works
Vehicles
Toyota Corolla 2.0 D Saloon 1,311,480 1,057,610 253,870 751,001 Negotiation Mr. Shahid Makhdoom Khan
Suzuki Liana 951,834 608,074 343,760 661,999 Negotiation Mr. Tanveer Shah
Santro 659,430 507,573 151,857 360,000 Negotiation Mr. Salman Yousuf
Santro 594,630 459,761 134,869 480,000 Negotiation Mr. Naeem Ijaz
Suzuki Bolan 370,680 295,323 75,357 320,000 Negotiation Mr. Salman Yousaf
Suzuki Bolan 378,224 284,730 93,494 375,000 Negotiation Mr. Imran Ashraf
Toyota Hilux 844,795 818,424 26,371 625,000 Negotiation Mr. Salman Yousaf
Car Suzuki Liana 843,030 526,315 316,715 650,000 Negotiation Mr. Usman Ijaz
Car Suzuki Liana 842,655 526,081 316,574 600,000 Negotiation Mr. Mobashar Asghar
Car Suzuki Liana 1.3 LT 914,700 679,454 235,246 425,000 Negotiation Mr. Maqsood Hussain
Car Suzuki Liana 906,180 683,660 222,520 605,000 Negotiation Mr. Sikandar Usman Shiekh
Car Suzuki Liana 881,200 708,251 172,949 590,000 Negotiation Mrs. Reema Mukhtar
Santro Club 659,430 513,648 145,782 400,000 Negotiation Mr. Sheikh Muhammad
Santro Club 594,630 450,755 143,875 425,000 Negotiation New Al-Noor Motors
Factory equipment
Spectrophotometer 124,160 97,743 26,417 45,000 Negotiation Business Dynamics Enterprises
Spectrophotometer 210,000 96,017 113,983 40,000 Negotiation Business Dynamics Enterprises
Weighting scale plate form type 124,660 103,446 21,214 8,620 Negotiation Mohammad Imran
Electrical equipment
AC LG split 2.0 ton 49,000 23,890 25,110 5,000 Negotiation Mr. Iqbal
Electric water cooler 59,150 40,588 18,562 10,345 Negotiation Mohammad Imran
AC window type 83,100 65,267 17,833 25,862 Negotiation Mohammad Imran
AC split type 95,000 70,852 24,148 8,621 Negotiation Mohammad Imran
Fax machine ep -5425 17,900 13,805 4,095 2,586 Negotiation Mohammad Imran
Office equipment
Telephone exchange tip dtx 100 76,138 62,735 13,403 4,310 Negotiation Mohammad Imran
Photo copier machine 143,478 81,715 61,763 21,552 Negotiation Mohammad Imran
2013 36,986,884 17,891,399 19,095,485 14,247,991

2012 57,805,854 34,652,422 23,153,432 11,129,067
45
2013 2012
Note Rupees
4.7 Capital work-in-progress

Civil work 55,908,040 45,253,201
Plant and machinery including in transit 11,074,586 122,559,291
Advance for property, plant and equipment 104,634,663 110,439,037
Major spare parts and stand-by equipment
qualifying as property, plant and equipment 22,920,750 -
Advances written off during the year 4.7.1 (84,648,998) -
109,889,041 278,251,529
4.7.1 Movement in provision for advances for property,

plant and equipment
At beginning of the year - -
Advances write off during the years 84,648,998 -
At end of the year 84,648,998 -
5. Intangible assets
Computer Software 21,000,000 -
Accumulated Amortization 5.1 (1,050,000) -
19,950,000 -
5.1 Computer software are being amortized over a u

seful life of 10 years on straight line basis.
2013 2012
Note Rupees
6. INVESTMENT PROPERTY
Land 6.1 2,864,413,464 2,815,629,876
Building 6.2 3,965,836 4,406,484
2,868,379,300 2,820,036,360
6.1 Land
Balance at beginning of the year 2,815,629,876 1,571,959,528
Add:
Acquisitions during the year 48,783,588 65,670,348
Asset classified as held for sale
46 reclassified as investment property - 1,178,000,000
Balance at end of year 2,864,413,464 2,815,629,876

2013 2012
Note Rupees
6.2 Building
Cost 13,035,566 13,035,566
Accumulated depreciation
At beginning of year 8,629,082 8,139,473
For the year 32 440,648 489,609
At end of year 9,069,730 8,629,082
Written down value at end of year 3,965,836 4,406,484
Management has decided to dispose off land measuring in total 586 Kanals of the chemical division
which was subsequently approved in extraordinary general meeting in July 2013.
For the purpose of capital appreciation and earning rental income, the Company has invested in
freehold land, residential plots and building portions covering area of 3,579 kanals and 19 marlas.
These properties are purchased within the Province of Punjab
The fair value of the investment property as at June 30, 2013 is Rs 2,920 million. The fair value
has been arrived at on the basis of a valuation carried out by W. W. Engineering Services (Private)
Limited, independent valuer not connected with the Company. The valuation was arrived at by
reference to market evidence of transaction price for similar items.
The rental income earned by the Company from its investment property amounted to Rs. 8.217
million (2012: Rs. 5.217 million).
2013 2012
Note Rupees
7. LONG TERM INVESTMENTS

Investments in associates 7.1 58,431,202 62,607,937
Other investment 7.2 5,000,000 5,000,000
63,431,202 67,607,937
7.1 Investments in associates

Quoted companies
Sitara Peroxide Limited 7.1.1 40,501,774 45,745,000
Unquoted company
Takaful Pakistan Limited 7.1.2 17,929,428 16,862,937
58,431,202 62,607,937
The Company holds less than 20 percent of the voting power in above companies; however, the 47
Company exercises significant influence by virtue of common directorship with the associates.
2013 2012
Rupees
7.1.1 Sitara Peroxide Limited

Cost 38,692,338 38,692,338
Share of post acquisition loss (20,749,909) (16,907,005)
Share of revaluation surplus 27,796,108 29,196,430
Accumulated impairment losses (5,236,763) (5,236,763)
40,501,774 45,745,000
Market value per share Rupees 14.04 13.07

No. of shares held Number 3,500,000 3,500,000
Ownership interest Percent 6.35% 6.35%
Summarized financial information in respect of the Company’s associate is set out below:

At March 31, At June 30,
2013 2012
Rupees
Non-current assets 1,920,387,401 2,121,792,528

Current assets 654,154,087 655,458,026
2,574,541,488 2,777,250,554
Non-current liabilities (1,141,410,685) (1,048,904,001)

Current liabilities (785,444,576) (948,637,843)
(1,926,855,261) (1,997,541,844)
Net assets 647,686,227 779,708,710
48
Nine months Fifteen months

ended March 31, ended June 30,
2013 2012
Rupees
Revenue 788,165,992 1,093,798,988

Loss for the period (60,498,291) (95,100,125)
Company’s share of associate’s loss (3,842,904) (6,040,843)
At the date of authorization for issue of these financial statements equity method has been applied on latest
available un-audited financial statements for the nine months ended March 31, 2013. ( 2012: For year
ended June 30, 2012 and for the quarter ended June 30, 2011).
2013 2012
Rupees
7.1.2 Takaful Pakistan Limited

Cost 30,000,000 30,000,000
Share of post acquisition loss (12,070,572) (13,137,063)
17,929,428 16,862,937
No. of shares held Number 3,000,000 3,000,000

Ownership interest Percent 10% 10%
Summarized financial information in respect of the Company’s associate is set out below:

2013 2012
Rupees
Non-current assets 56,627,493 73,837,463

Current assets 444,812,917 419,934,018
501,440,410 493,771,481
Non-current liabilities (171,960,560) (175,434,631)
Current liabilities (190,051,576) (178,717,051)
(362,012,136) (354,151,682)
Net assets 139,428,274 139,619,799 49


2013 2012
Rupees
Revenue 197,656,925 141,182,156

Profit for the period 10,664,907 5,159,965
Company’s share of associate’s profit 1,066,491 515,997
Due to non availability of annual audited financial statements of associate at the date of authorization
for issue of these financial statements, equity method has been applied on latest available un-
audited financial statements for three months ended March 31, 2013 and for the six months ended
December 31, 2012.(2012: on latest available un-audited financial statements for six months ended
June 30, 2012 and for the six months ended December 31, 2011).

2013 2012
Note Rupees
7.2 Other Investment

Available for sale (Unquoted - at cost)
Dawood Family Takaful Limited 500,000 (2012:
500,000) fully paid ordinary shares of Rs.10/- each 5,000,000 5,000,000
8. LONG TERM LOANS AND ADVANCES

Advance for investment property - considered good 8.1 816,126,890 821,699,686
Loans and advances 8.2 3,176,076 5,793,898
819,302,966 827,493,584
8.1 The Company had entered into an agreement to purchase 887 Kanals of land situated at 199
RB Faisalabad, at fair market value from Sitara Developers (Private) Limited on June 5, 2011
These advances include Rs. 816,126,390 given to Sitara Developer (Private) Limited (related party)
for purchase of this land. To ascertain, fair market value of the said land, three renowned and
independent valuers, Hamid Mukhtar & Co. (Private) Limited, Empire Enterprises (Private) Limited
and Indus Surveyors (Private) Limited, were hired. The Company intends to purchase 887 kanals of
land at fair market value in order to meet the demand of potential buyers to create a compact block
of land prior to its development and subsequent sales to customers.
50
2013 2012
Note Rupees
8.2 Loans and advances

Considered good
Secured
Executives - related parties 8.2.1 1,100,478 654,870
Staff 8.2.2 4,505,496 5,756,983
Unsecured
Staff 87,600 19,200
5,693,574 6,431,053
Less: current portion shown in current assets 13 2,517,498 637,155
8.2.3 3,176,076 5,793,898
8.2.1 These advances are given to executives as per terms of their employment for purchase of cars and
are secured by way of registration of cars in the name of the Company.

8.2.2 These are secured by way of registration of vehicles in the name of company.

8.2.3 The maximum aggregate amount due at the end of any month during the year was Rs. 5.412
million (2012 : Rs. 6.130 million).
2013 2012
Rupees
9. LONG TERM DEPOSITS

Security deposits for:
Electricity 38,775,110 38,762,230
Gas 71,599,777 71,479,096
Others 57,400 55,400
110,432,287 110,296,726
10. STORES, SPARE PARTS AND LOOSE TOOLS

Stores 301,743,283 150,229,139
Spare parts:
In hand 33,010,385 185,545,023
In transit - 30,328,373
33,010,385 215,873,396
Loose tools 1,606,609 859,582
336,360,277 366,962,117 51
2013 2012
Note Rupees
11. STOCK IN TRADE

Raw and packing material 513,369,180 542,410,560
Work in process 48,731,237 45,909,415
Finished goods 433,395,624 305,899,164
Waste 15,313,084 8,501,691
1,010,809,125 902,720,830
12. TRADE DEBTS

Related parties - considered good
Sitara Textile Industries Limited 29,252,666 19,598,155
Sitara Fabrics Limited 10,686 12,116,261
Sitara Peroxide Limited 7,886,556 4,988,679
Sitara Chemtex Limited 23,054,424 -
Sitara Spinning Mills Limited 15,579 15,255
Aziz Fatima Trust Hospital 147,776 12,652
12.1 60,367,687 36,731,002

Others
- Considered good
Local - unsecured 861,800,207 712,652,850
Foreign - secured 14,761,591 46,819,015
- Considered doubtful
Unsecured 13,024,991 10,067,610
889,586,789 769,539,475
Provision for doubtful debts 12.5 (13,024,991) (10,067,610)
876,561,798 759,471,865
936,929,485 796,202,867
12.1 These are recoverable in ordinary course of business.
52
12.1.1 Aging analysis of the amounts due from related parties is as follows:
Upto 2 to 6 More than As at June 30, As at June 30,

2 months months 6 months 2013 2012
Rupees

Sitara Textile Industries Limited 15,554,910 13,697,756 - 29,252,666 19,598,155
Sitara Fabrics Limited 10,686 - - 10,686 12,116,261
Sitara Peroxide Limited 583,665 861,138 6,441,753 7,886,556 4,988,679
Sitara Chemtex Limited 2,104,170 3,236,536 17,713,718 23,054,424 -
Sitara Spinning Mills Limited 9,652 5,927 - 15,579 15,255
Aziz Fatima Trust Hospital 147,776 - - 147,776 12,652
18,410,859 17,801,357 24,155,471 60,367,687 36,731,002
12.2 Trade receivables are non-interest bearing and relates to different products being sold on credit to
customers. The credit period allowed on these products are generally on fifteen (15) days terms for
dealers and twenty five (25) days terms for institutions.
12.3 The Company has provided fully for all receivables over three years because historical experience is
such that receivables that are past due beyond three years are generally not recoverable. Trade debts
between one year and three years are provided for based on estimated irrecoverable amounts from
the sale of goods, determined by reference to past default experience.
12.4 Before accepting any new customer, the Company makes its own survey to assess the potential
customer’s credit quality and defines credit limits by customer. Limits attributed to customers are
reviewed once a year.
2013 2012
Rupees
12.5 Movement in provision for doubtful debts

At beginning of the year 10,067,610 3,987,347
Charged during the year 3,009,675 7,842,904
Amount recovered during the year (52,295) (1,762,641)
At end of the year 13,024,991 10,067,610
12.5.1 In determining the recoverability of a trade debt, the Company considers any change in the credit
quality of the trade debt from the date credit was initially granted up to the reporting date. The
concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly,
the directors believe that there is no further provision required in excess of the allowance for doubtful
debts.
53
2013 2012
Note Rupees
13. LOANS AND ADVANCES

Loans to employees - considered good 163,296 6,078
Current portion of long term loans and advances 8.2 2,517,498 637,155
2,680,794 643,233
Advance tax 406,110,197 305,187,753

Advances - considered good
For expenses 14,586,793 13,625,078
Letters of credit fee, margin and expenses 74,877,920 31,605,130
Suppliers and contractors 163,769,573 86,542,014
Advances - considered doubtful
For expenses 49,203 49,203
Suppliers and contractors 10,100 10,100
Provision for doubtful advances (59,303) (59,303)
- -
662,025,277 437,603,208
14. TRADE DEPOSITS AND PREPAYMENTS

Trade deposits 8,927,944 6,272,880
Prepayments 684,781 407,622
9,612,725 6,680,502
15. OTHER RECEIVABLES

Unsecured - considered good
Related parties 15.1 5,843,828 4,269,594
Insurance claim 1,652,623 959,131
Others 9,102,568 3,850,441
16,599,019 9,079,166
15.1 It represents the following balances due from related parties:

Sitara Peroxide Limited 4,368,541 3,217,019
Sitara Chemtek (Private) Limited 300,000 300,000
Sitara Spinning Mills Limited 905,523 494,165
Sitara Fabrics Limited 94,387 94,387
Sitara Textile Industries Limited 172,476 161,122
Sitara Trade and Services (Private) Limited 2,901 2,901
54 5,843,828 4,269,594
15.1.1 These represent common nature expenses, of joint facilities, borne on behalf of related parties.
2013 2012
Rupees
16. OTHER FINANCIAL ASSETS

Available for sale financial assets 16.1 137,789,304 91,178,674
Term deposit certificates 16.2 25,000,000 25,000,000
162,789,304 116,178,674
16.1 Available for sale financial assets

Fully paid ordinary shares of Rs. 10 each (unless otherwise stated)

2013 2012 2013 2012
No. of shares / units Rupees Rupees
519,506 468,024 Meezan Bank Limited 15,818,958 13,535,254

933,661 933,661 Sitara Energy Limited 29,410,322 15,405,406
197,000 197,000 D.G Khan Cement Company Limited 16,896,690 7,757,860
352,505 352,505 Descon Oxychem Limited 1,903,527 1,367,719
446,250 446,250 Engro Polymer & Chemical Limited 5,631,675 4,395,563
- 300,000 Fauji Cement Company Limited - 1,689,000
65,625 65,625 Fauji Fertilizer Company Limited 7,226,625 7,287,656
100,000 100,000 Hub Power Company Limited 6,267,000 4,189,000
36,000 36,000 Ittehad Chemicals Limited 1,602,000 842,760
1,079 326 Meezan Cash Fund 53,955 16,403
(Units having face value of Rs. 50 each)
9,500 9,500 National Refinery Limited 2,308,215 2,198,205
(Face value Rs. 5 each)
150,000 150,000 Pace (Pakistan) Limited 648,000 306,000
68,000 68,000 Pakistan Oilfield Limited 34,331,160 24,951,920
28,350 13,200 Pakistan Petroleum Limited 6,134,373 2,485,428
21,600 15,000 Pakistan State Oil Company Limited 6,878,304 3,537,600
50,000 50,000 Pakistan Telecommunication Limited 1,108,500 684,500
10,000 10,000 Pakistan Tobacco Company Limited 1,570,000 528,400
137,789,304 91,178,674
16.2 These represent deposits made in different commercial banks. These are subject to profit margin
ranging from 6.00% to 7.99% per annum receivable quarterly. These are maturing at various dates
falling within one year.
55
2013 2012
Note Rupees
17. CASH AND BANK BALANCES

Cash in hand 33,554,303 9,307,332
Cash at banks
In current accounts 58,824,283 35,697,325
In saving accounts 17.1 187,155,904 34,857,011
245,980,187 70,554,336
279,534,490 79,861,668
17.1 Effective mark-up rate in respect of deposit accounts range from 6.05% to 9.52% (2012 : 5.01%
to 8.24%) per annum.
18. SHARE CAPITAL

2013 2012 2013 2012
No. of shares Rupees Rupees
Authorized
Ordinary shares of Rs. 10 each
40,000,000 40,000,000 Class “A” 400,000,000 400,000,000
20,000,000 20,000,000 Class “B” 200,000,000 200,000,000

Issued, subscribed and paid up
Class”A” ordinary shares of Rs.10/- each
8,640,000 8,640,000 - fully paid in cash 86,400,000 86,400,000
10,804,398 10,804,398 - issued as fully paid bonus shares 108,043,980 108,043,980
- issued as fully paid under scheme
1,985,009 1,985,009 of arrangement for amalgamation 19,850,090 19,850,090
21,429,407 21,429,407 214,294,070 214,294,070
18.1 Class “B” ordinary shares does not carry any voting rights.
18.2 No shares are held by any associated Company or related party.
18.3 The Company has no reserved shares under options and sales contracts.
56
2013 2012
Note Rupees
19. RESERVES
Capital
Share premium 19.1 97,490,410 97,490,410
Revenue
General reserve 19.2 1,225,000,000 1,225,000,000
Other
Reserve on re-measurement of available
for sale investments 19.3 62,654,843 16,493,852
1,385,145,253 1,338,984,262
19.1 This represents premium realized on issue of right shares amounting to Rs 34,551,000 during 1991-
92,1993-94 and 1994-95 at the rates of 10%,10% and 12.50% respectively and amounting to
Rs. 62,939,400 on issue of 1,985,009 fully paid ordinary shares to the shareholders of Sitara
Spinning Mills Ltd under scheme of amalgamation of Sitara Chemical Industries Limited and Sitara
Spinning Mills Limited, sanctioned by Honorable Sindh High Court in 1999.
19.2 The general reserve is used from time to time to transfer profits from retained profits. There is no
policy of regular transfer.
19.3 This reserve represents the unrealized surplus on re-measurement of available for sale investments
as at June 30, 2013.
57
2013 2012
Note Rupees
20.
SURPLUS ON REVALUATION OF
PROPERTY, PLANT AND EQUIPMENT
At beginning of the year 1,436,870,043 889,186,843
Addition during the year - net of tax - 602,812,537
Revaluation reserve realized on disposal of assets (386,653) (5,240,155)
Transfer to un-appropriated profit in respect
of incremental depreciation charged during
the year – (net of tax) 20.1 (61,523,256) (49,889,182)
At end of the year 1,374,960,134 1,436,870,043
Share from associate 27,796,108 29,196,430
1,402,756,242 1,466,066,473
20.1 Incremental depreciation charged during the year

transferred to un-appropriated profit 93,217,055 76,752,587
Less: tax liability relating to incremental depreciation 31,693,799 26,863,405
61,523,256 49,889,182
21. LONG TERM FINANCING

From banking companies and other financial
institution - secured
Diminishing Musharka (from financial
institutions - secured) 21.1 520,974,873 745,650,746
Term finances 21.3 213,500,000 589,125,000
734,474,873 1,334,775,746
58
21.1 Diminishing Musharka (from financial institutions - secured)

2013 2012
Description Note Profit Security Repayment Rupees Rupees

Meezan Bank Limited 21.1.1 Three months KIBOR plus First specific and exclusive Repaid in 16 quarterly - 50,000,000
1.25 % payable on quarterly charge of Rs. 223 million installments commenced
basis. over Calcium Chloride Plant from September 28, 2009
& Chlorinated Paraffin Wax and ended on June 28,
Plant. 2013.

National Bank of Pakistan 21.1.1 Three months KIBOR plus Exclusive charge by way Repaid in 12 quarterly - 71,666,664
2.50 % per annum payable of hypothecation specific installments, commenced
on quarterly basis. fixed assets of all the project from July 15th month, from
assets of 7.56 MW Gas fired date of drawdown being
power project with 25% 6th April 2009 and ended
margin (2012: 25% margin). on April 06, 2013.

Faysal Bank Limited 21.1.1 Three months KIBOR plus First pari-passu Repayable in 20 quarterly 127,600,000 167,200,000
2.00 % (2012: three months hypothecation charge of PKR installments commenced
KIBOR plus 2.5%) per 700 Million over Membrane from September 29, 2010
annum payable on quarterly Unit -III of the company. and ending on June 29,
basis. 2015, where 9 installments
are remaining.

Faysal Bank Limited 21.1.1 Three months KIBOR plus First pari-passu Repayable in 20 equal 150,000,000 200,000,000
2.00 % per annum payable hypothecation charge of PKR quarterly installments
on quarterly basis. 700 Million over Membrane commenced from July
Unit -III of the company. 31, 2011 and ending on
April 12, 2016, where 12
installments are remaining.
Standard Chartered Bank 21.1.1 Three months KIBOR plus Specific and exclusive Repayable in 16 quarterly 68,750,000 120,312,500
(Pakistan) Limited 2.50 % per annum payable charge on existing setup of installments commenced
on quarterly basis. Membrane and CSP - II plant from September 25, 2010
amounting to Rs. 366.67 and ending on June 25,
million. 2014.

Syndicated Facility 21.1.1 Three months KIBOR plus 1st Exclusive charge on This syndicated Diminishing 412,500,749 618,751,125
1.93 % per annum payable plant & accessories of M-1 Musharka facility was
on quarterly basis. (135 M/T),CSP-IV 100 (M.T), sanctioned for amount
Bleaching plant 1 & 2 and Rs. 900 million arranged
Ammonium Chloride plant 1 by Standard Chartered
& 2 amounting to Rs.1,200 Bank (Pakistan) Limited.
million. Other participants are
MCB Bank Limited, Habib
Bank Limited, Habib
Metropolitan Bank Limited
and Soneri Bank Limited,
however withdrawn
amount is aggregated to
Rs. 825 million. Facility is
repayable in 16 quarterly
installments commenced
from July 14, 2011 and
ending on April 14, 2015.

Soneri Bank Limited. 21.1.1 Three months KIBOR plus First pari-passu charge This Diminishing Musharka 196,874,500 -
1.4 % per annum payable on amounting to Rs. 280. facility was sanctioned for
quarterly basis. million over Membrane -Unit amount Rs. 196.875 million
III plant of the Company. . Facility is repayable in
9 quarterly installments
commencing from March
31, 2014 and ending on
January 31, 2016..

955,725,249 1,227,930,289
Less: Current portion 434,750,376 482,279,543

520,974,873 745,650,746
21.1.1 Effective rate of profit for the year is ranging from 10.79% to 13.27% (2012 : 13.44% to 15.28%) per annum. 59
21.2 Redeemable capital (issued to various institutions and individuals)

2013 2012
Privately placed diminishing 21.2.1 Rental payments shall Exclusive and specific Repaid in 12 equal quarterly - 274,999,997
musharaka based sukuk be calculated to provide hypothecation charge installments commenced from
return equivalent to bench (2012: Exclusive and specific April 02, 2010 and ended on
mark rate plus incremental hypothecation charge) January 2, 2013
rental and service agency in respect of Musharka
charges incurred by the assets which include all
trustee during the previous fixed assets of BMR and
quarter. Bench mark rate is expansion of 210 MTD
defined as 3 months KIBOR Caustic Soda Plant at 32 Km
(2012: 3 months KIBOR) and Faisalabad - Sheikhupura
incremental rental is defined Road, Faisalabad and to the
as margin of 1.00% (2012: extent of beneficial rights of
1.00%) plus servicing agency certificate holders.
expenses.
- 274,999,997
Less: Current portion - 274,999,997
- -
21.2.1 Effective rate of profit for the year is from 11.18% to 12.91% (2012 : from 12.91% to 14.53%) per annum.
21.3 Term finances

2013 2012
Saudi Pak Industrial and 21.3.1 Three months KIBOR plus First pari-passu charge Initially repayable in 16 - 103,125,000
Agricultural Investment 2.75 % (2012: three months amounting to Rs. 200 million equal quarterly installments
Company Limited KIBOR plus 2.75 %) per over Membrane -III. commenced from April 28,
annum payable on quarterly 2011 and ending on January 28,
basis. 2015. However, during the year,
the Company used call option
and swapped the existing facility
with Diminishing Musharka from
Soneri Bank.

Initially repayable in 16 - 137,500,000
equal quarterly installments
Pak Oman Investment 21.3.1 Three months KIBOR plus First pari-passu charge commenced from June 19, 2011
Company imited. 2.60 % (2012: three months amounting to Rs. 266.67 and ending on March 19, 2015.
KIBOR plus 2.60 %) per million over Membrane -III. However, during the year, the
annum payable on quarterly Company used call option and
basis. swapped the existing facility
with Diminishing Musharka from
Soneri Bank.
The Bank of Punjab 21.3.1 Three months KIBOR plus Specific and exclusive charge Repayable in 08 equal quarterly 36,000,000 54,000,000
1.50 % per annum payable amounting to Rs. 120 million installments commenced from
on quarterly basis. over CSP -III. June 30, 2010 and ending on
March 31, 2015.

Syndicated Facility 21.1.1 Three months KIBOR plus 1st Exclusive charge on This syndicated Term Finance 400,000,000 400,000,000
1.50 % per annum payable power plant -1 in favor facility amounting to Rs. 400
on quarterly basis. of the investment agent million arranged by Standard
(i-e Standard Chartered Chartered Bank (Pakistan)
Bank Pakistan Ltd) for the Limited. Other participants are
benefit of the participants Burj Bank Limited & Standard
amounting to Rs.533.333(M) Chartered Modarabah. Facility
is repayable in 8 equal quarterly
installments commencing from
September 01, 2013 and ending
on June 01, 2015.
436,000,000 694,625,000
Less: Current portion 222,500,000 105,500,000

213,500,000 589,125,000
21.3.1 Effective rate of profit for the year is from 11.18% to 13.90% (2012 : from 14.17% to 15.26%) per annum.
21.4 The exposure of the Company’s borrowings to interest rate changes and the contractual reprising dates at the balance sheet
dates are as follows:
Maturity
6 months or less
60 6 - 12 months

315,600,188
341,650,188
468,629,355
394,150,188
1 - 5 years 734,474,873 1,334,775,749
1,391,725,249 2,197,555,292
21.5 The carrying amount under long term financing is same as fair value.
2013 2012
Note Rupees
22. LONG TERM DEPOSITS

From customers 7,946,055 10,102,953
Others 22.1 - 2,097,000
7,946,055 12,199,953
22.1 These represent interest free security deposits received from transporters and are repayable on
cancellation or withdrawal of contracts.
2013 2012
Note Rupees
23. DEFERRED LIABILITIES

Deferred taxation 23.1 1,292,521,568 1,376,953,755
Staff retirement benefits - gratuity 23.2 10,863,219 8,076,115
1,303,384,787 1,385,029,870
23.1 Deferred taxation
This comprises the following:
Deferred tax liability on taxable temporary
differences arising in respect of:
Tax depreciation allowance 1,030,302,578 1,081,269,872
Surplus on revaluation of property,
plant and equipment 270,361,144 302,054,943
1,300,663,722 1,383,324,815
Deferred tax asset on deductible temporary

difference arising in respect of:
Provision for employee benefits (3,693,494) 2,826,640
Provision for doubtful debts (4,448,660) 3,544,420
(8,142,154) 6,371,060
1,292,521,568 1,376,953,755
23.2 Staff retirement benefits - gratuity

Movement in liability
Charge for the year 6,179,106 4,963,570
Benefits paid during the year (3,392,002) (2,767,698)
At end of year 10,863,219 8,076,115
Balance sheet reconciliation as at June 30
Present value of unfunded obligation 13,985,165 11,066,688 61
Unrecognized actuarial losses (3,121,946) (2,990,573)
Net liability recognized in the balance sheet 10,863,219 8,076,115
2013 2012
Note Rupees
Charge to profit and loss account:

Current service cost 3,463,175 3,381,406
Interest cost 1,171,336 994,983
Net actuarial loss recognized during the year 627,968 587,181
Net actuarial loss recognized due to settlement 916,627 -

6,179,106 4,963,570
Movement in the present value of defined benefit obligation

Present value of obligation at July 1, 2012 11,066,688 8,490,872
Current service cost 3,463,175 3,381,406
Interest cost 1,171,336 994,983
Benefit paid during the year (3,392,002) (2,767,698)
Actuarial loss on obligation 1,675,968 967,125
Present value of obligation at June 30, 2013 13,985,165 11,066,688
Movement in unrecognized actuarial losses

Balance as of July 1, 2012 (2,990,573) (2,610,629)
Actuarial loss on obligation (1,675,968) (967,125)
Actuarial loss recognized during the period 627,968 587,181
Actuarial loss recognized due to settlement 916,627 -
Balance as of June 30, 2013 (3,121,946) (2,990,573)
Principal actuarial assumptions Discount rate (per annum) 11.5% 13%

Expected rate of increase in salaries (per annum) 9.5% 10.50%
Expected average remaining working lives of employees (years) 3 3
24. TRADE AND OTHER PAYABLES

Creditors 354,294,115 319,772,658
Accrued liabilities 487,496,337 361,232,132
Advances from customers 48,002,945 8,846,928
Murabaha payable 24.1 816,302,121 721,654,613
Payable to provident fund - related party 24.2 1,187,806 1,316,996
Unclaimed dividend 6,833,067 10,033,673
Retentions / security deposits 45,672,574 42,027,924
Withholding tax 1,983,236 483,526
Workers’ profit participation fund 24.3 280,996 16,161,942
Workers’ welfare fund 66,703,138 41,008,946
Others 8,479 52,084
1,828,764,814 1,522,591,422
24.1 The aggregate unavailed facilities available to the Company from banking companies amounted
to Rs. 1,407 million (2012: Rs. 1,109 million). These are subject to profit margin ranging from
62 11.04% to 11.83% (2012: 12.51% to 14.10% ) per annum and are secured against joint pari-passu
charge over present and future current assets of the chemical division and pledge of stocks and
charge over present and future current assets of the textile division.
24.2 This represents contribution of the Company and employees in respect of contribution from last
month’s salary. Subsequent to year end same was deposited in the provident fund’s separate bank
account.
2013 2012
Note Rupees
24.3 Workers’ profit participation fund

Workers’ profit participation fund 24.4 - 15,730,176
Unclaimed Workers’ profit participation fund 280,996 431,766
280,996 16,161,942
24.4 Movement
Amount paid to workers on behalf of the fund 91,986,779 64,509,438
24.4.1 (76,256,603) (37,461,256)
Allocation for the year 33 67,616,294 53,191,432
At end of year (8,640,309) 15,730,176
24.4.1 At end of the financial year company makes the provision of WPPF on the basis of unaudited
accounts and make payment to workers on that basis. Over payment will be adjusted against the
next year provision. Accordingly current year balance is becoming part of other receivables.
2013 2012
Note Rupees
25. PROFIT / FINANCIAL CHARGES PAYABLE

Long term financing 33,143,596 50,544,347
Murabaha financing / short term borrowings 37,102,391 42,393,817
70,245,987 92,938,164
26. SHORT TERM BORROWINGS

Secured
From banking companies 24.1 1,526,784,600 1,544,904,214
Bank Overdraft 2,665,155 -
1,529,449,755 1,544,904,214
63
27. CONTINGENCIES AND COMMITMENTS

27.1 Contingencies
27.1.1 In 1996, a demand of Rs. 2,297,292 was raised by Sales Tax authorities on account of input tax
claimed on imported plant and machinery items which was alleged by taxation authorities as
inadmissible. The Company had filed appeal before Appellate Tribunal, however, deposited the
demanded amount under protest. The case has been remanded back to the Additional Collector
Sales Tax Faisalabad. Pending the outcome of case, since the Company is expecting favorable result
of the matter, no provision has been made in these financial statements.
27.1.2 In another matter, Sales Tax authorities have raised additional demand amounting to Rs. 1,100,844
by considering the amount of freight as part of value of supply. The Company lost the case upto
Appellate Tribunal and has deposited the demanded amount under protest. An appeal has been
filed by the Company in Honorable Lahore High Court against the decision of Appellate Tribunal.
The Company’s management is expecting favorable outcome of the case and no provision has been
made in these financial statements.
27.1.3 In 1996, a supplier had filed an appeal before Honorable Senior Civil Judge (Rajan Pur) against the
Company for recovery of disputed amount of Rs. 889,867 in respect of supply of cotton. Pending
the outcome of the case, the management is confident that the outcome of the case would be
in the favor of the Company and no provision in this regard has been recognized in the financial
statements.
2013 2012
Note Rupees
27.2 Commitments
Outstanding letters of credit for raw material
and spares 75,509,054 19,783,992
28. SALES - NET
Local
Chemical products 6,115,681,603 5,763,347,783
Textile products 1,429,493,788 1,177,669,295
7,545,175,391 6,941,017,078
Export
Chemical products 554,619,421 522,909,439
8,099,794,812 7,463,926,517
29. COST OF SALES

Raw material consumed 29.1 1,679,007,002 1,428,802,063
Fuel and power 2,880,940,664 2,791,620,301
Salaries, wages and benefits 29.2 228,245,458 237,042,045
Stores and spares 279,109,746 156,410,519
Repair and maintenance 27,425,710 31,058,663
Vehicle running and maintenance 568,157 1,735,540
Traveling and conveyance 25,083,301 26,794,940
Insurance 15,621,686 20,009,119
Depreciation 4.2 547,485,385 456,041,466
64 Amortization 1,050,000 -
Others 1,226,169 7,602,652
5,685,763,278 5,157,117,308

2013 2012
Rupees
Opening stock 45,909,415 72,438,789

Closing stock (48,731,237) (45,909,415)
(2,821,822) 26,529,374
Cost of goods manufactured 5,682,941,456 5,183,646,682
Finished stocks
Opening stock 314,400,855 432,161,824
Finished goods purchased 47,497,524 42,512,461
Closing stock (448,708,708) (314,400,855)
(86,810,329) 160,273,430
5,596,131,127 5,343,920,112
29.1 Raw material consumed

Opening stock 542,410,560 380,482,727
Purchases 1,649,965,622 1,590,729,896
2,192,376,182 1,971,212,623
Closing stock (513,369,180) (542,410,560)
1,679,007,002 1,428,802,063
29.2 Salaries, wages and benefits include Rs. 5,350,751 (2012: Rs. 5,910,918) in respect of employee
retirement benefits.
2013 2012
Rupees
30. OTHER INCOME

Income from financial assets
Profit on term deposits certificate 1,660,941 2,437,795
Profit on bank deposits 7,716,524 10,523,688
Dividend income 8,051,548 6,493,185
Exchange gain 3,702,104 1,630,120
Gain on sale of available for sale investments 276,743 409,049
21,407,860 21,493,837
Income from other than financial assets
Sale of scrap and waste 254,483 7,490,886
Rent income 8,217,161 5,217,499
Others 2,889,291 4,184,178
11,360,935 16,892,563 65
32,768,795 38,386,400

2013 2012
Note Rupees
31. DISTRIBUTION COST

Staff salaries and benefits 31.1 13,605,199 11,266,344
Freight, octroi and insurance 120,941,678 102,398,783
Advertisement 13,769,014 754,270
Vehicles running and maintenance 21,200,259 8,718,555
Postage and telephone 986,463 540,882
Printing and stationery 153,374 246,176
Others 1,126,696 2,151,366
173,756,328 127,286,617
31.1 Staff salaries and benefits include Rs. 429,371 (2012 Rs. 426,937) in respect of employee retirement
benefits.
2013 2012
Note Rupees
32. ADMINISTRATIVE EXPENSES

Directors’ remuneration 31,830,740 34,380,141
Staff salaries and benefits 32.1 142,993,354 129,158,457
Postage, telephone and telex 3,532,295 3,779,928
Vehicles running and maintenance 1,973,671 8,864,058
Printing and stationery 1,475,698 3,369,915
Electricity 2,933,841 5,622,143
Rent, rates and taxes 2,647,482 1,206,410
Advertisement 9,568,553 5,188,835
Books and periodicals 108,588 92,661
Fees and subscription 14,630,397 13,498,326
Legal and professional 3,123,196 2,208,779
Repairs and maintenance 6,457,915 5,647,757
Auditors’ remuneration 32.2 2,620,000 2,620,000
Entertainment 14,012,548 5,294,697
Donations 32.3 23,379,274 20,260,427
Insurance 6,242,525 1,127,410
Depreciation 4.2 30,406,685 11,503,567
Depreciation on investment property 6.2 440,648 489,609
Provision for bad debts and doubtful advances 3,009,675 7,842,904
Advances written off 84,648,998 -
Other 1,246,464 1,385,507
400,466,890 273,190,623
66 32.1 Staff salaries and benefits include Rs. 3,426,465 (2012: Rs. 3,516,107) in respect of employee retirement
benefits.

2013 2012
Rupees
32.2 Auditors’ remuneration

Annual statutory audit 1,500,000 1,500,000
Half yearly and COCG compliance reviews 500,000 500,000
Out of pocket 120,000 120,000
Tax advisory services 500,000 500,000
2,620,000 2,620,000
32.3 It includes Rs. 16.408 million (2012: Rs.12.647 million) donated to Aziz Fatima Trust (AFT), Faisalabad
which is primarily running a charitable hospital for needy and poor people. Mr. Haji Bashir Ahmed,
Mr. Muhammad Adrees & Imran Ghafoor, the directors of the Company are also the Trustees of the AFT.

2013 2012
Note Rupees
33. OTHER OPERATING EXPENSES

Worker’s profit participation fund 24.4 67,616,294 53,191,432
Worker’s welfare fund 25,694,192 16,162,266
Impairment loss on investment in
associated company - 7,072,302
Loss on disposal of property, plant
and equipment 4,847,494 12,024,365
98,157,980 88,450,365
34. FINANCE COST

Long term financing 210,132,741 327,196,027
Murabaha payable / short term borrowings 272,543,267 348,422,678
Bank charges and commission 4,152,520 7,252,565
486,828,528 682,871,270
35. PROVISION FOR TAXATION

Current 398,787,966 240,420,881
Prior years 23,986,699 (21,579,740)
Deferred (84,432,187) 76,728,277
338,342,478 295,569,418
67
2013 2012
% %
35.1 Numerical reconciliation between the

applicable and effective tax rate
Applicable tax rate 35.00 35.00
Prior year adjustments 1.75 (2.19)
Effect of deferred tax (3.28) 7.80
Tax credit on donations 1.70 (2.06)
Effect of change in statutory rate change (2.86) -
Income taxed at different rates (7.69) (8.51)
Effective tax rate 24.62 30.04
36. EARNINGS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on basic earnings per share o
f the Company, basic is computed as follows:
2013 2012
Profit for the year Rupees 1,036,103,863 688,481,947

Weighted average number of ordinary
shares outstanding during the year Number 21,429,407 21,429,407
Earnings per share Rupees 48.35 32.13
37. FINANCIAL RISK MANAGEMENT

The Company has exposure to the following risks from its use of financial instruments:
Credit risk
Liquidity risk
Market risk
This note presents information about the Company’s exposure to each of the above risks, the
Company’s objectives, policies and processes for measuring and managing risk, and the Company’s
management of capital. Further quantitative disclosures are included throughout these financial
statements.
The Board of Directors has overall responsibility for the establishment and oversight of the
Company’s risk management framework. The Board is responsible for developing and monitoring
the Company’s risk management policies.
The Company’s risk management policies are established to identify and analyze the risks faced by
the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to
limits. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and the Company’s activities. The Company, through its training and management
standards and procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations. All derivative activities for risk
management purposes are carried out by specialist teams that have the appropriate skills, experience
68 and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes
shall be undertaken. The Board of Directors reviews and agrees policies for managing each of these
risks.
The Company’s Audit Committee oversees how management monitors compliance with the
Company’s risk management policies and procedures and reviews the adequacy of the risk
management framework in relation to the risks faced by the Company. The Audit Committee is
assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc
reviews of risk management controls and procedures, the results of which are reported to the Audit
Committee.
37.1 Credit risk and concentration of credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial
instrument fails to meet its contractual obligations. To manage credit risk the Company maintains
procedures covering the application for credit approvals, granting and renewal of counter party
limits and monitoring of exposures against these limits. As part of these processes the financial
viability of all counter parties is regularly monitored and assessed.
The Company is exposed to credit risk from its operating activities primarily for local trade debts,
sundry receivables and other financial assets.
The Company does not hold collateral as security.
The Company’s credit risk exposures are categorized under the following headings:
37.1.1 Counter parties
The Company conducts transactions with the following major types of counter parties:
Trade debts
Trade debts are essentially due from local customers against sale of yarn, caustic soda, hydrochloric
acid, agri-chemicals and other allied products and from foreign customers against supply of
ammonium chloride and allied products and the Company does not expect these counter parties
to fail to meet their obligations. The majority of sales to the Company’s customers are made on
specific terms. Customer credit risk is managed by each business unit subject to the Company’s
established policy, procedures and controls relating to customer credit risk management. Credit
limits are established for all customers based on internal rating criteria. Credit quality of the customer
is assessed based on an extensive credit rating. Outstanding customer receivables are regularly
monitored and any shipments to foreign customers are generally covered by letters of credit or other
form of credit insurance.
Bank and investments
The Company limits its exposure to credit risk by only investing in highly liquid securities and only
with counter parties that have a credit rating of at least A1 and A. Given these high credit ratings,
management does not expect any counter party to fail to meet its obligations.
69
37.1.2 Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the reporting date was:
2013 2012
Rupees
Trade debts 936,929,485 796,202,867

Loans and advances 178,519,662 100,173,170
Other receivables 16,599,019 9,079,166
Bank balances 245,980,187 70,554,336
1,378,028,353 976,009,539
Geographically there is no concentration of credit risk.
The maximum exposure to credit risk for trade receivables

at the reporting date by type of customer is:
Chemical - local 798,631,293 723,778,918

Textile - local 138,298,192 67,714,891
Agri-chemical - local - 4,709,058
936,929,485 796,202,867

There is no single significant customer in the trade debts of the Company.

The maximum exposure to credit risk for trade debts at the reporting date by type of product is:

2013 2012
Rupees
Textile 138,298,192 67,714,891

Chemicals 798,631,293 728,487,976
936,929,485 796,202,867
37.1.3 Impairment losses

The aging of trade receivables at the reporting date is:
Gross Impairment Gross Impairment

2013 2013 2012 2012
Not past due 268,358,856 - 227,851,168 -

Past due 0-30 days 239,654,025 - 222,605,425 -
Past due 30-60 days 110,173,749 - 88,014,398 -
Past due 60-90 days 66,193,457 - 31,819,969 -
70 Over 90 days 205,206,702 13,024,991 199,248,515 10,067,610
889,586,789 13,024,991 769,539,475 10,067,610

The movement in the allowance for impairment in respect of trade receivables during the year is as
follows:
2013 2012
Rupees
Balance at 1 July 10,067,610 3,987,347

Charge for the period 3,009,675 7,842,904
Impairment loss reversed (52,295) (1,762,641)
Balance at 30 June 13,024,991 10,067,610
Based on age analysis, relationship with customers and past experience the management does not
expect any party to fail to meet their obligations. The management believes that trade debts are
considered good and hence no impairment allowance is required in this regard.
The movement in the allowance for impairment in respect of loans and advances during the year is
as follows:
2013 2012

Note Rupees
At beginning of year 59,303 628,227

Impairment loss (recovered) / recognized - (568,924)
At end of year 13 59,303 59,303
The allowance accounts in respect of trade receivables and loans and advances are used to record
impairment losses unless the Company is satisfied that no recovery of the amount owing is possible;
at that point the amount considered irrecoverable is written off against the financial asset directly.
37.2 Liquidity risk management
Liquidity risk reflects the Company’s inability in raising funds to meet commitments. Management
closely monitors the Company’s liquidity and cash flow position. This includes maintenance of
balance sheet liquidity ratios, debtors and creditors concentration both in terms of the overall
funding mix and avoidance of undue reliance on large individual customer.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has
built an appropriate liquidity risk management framework for the management of the Company’s
short, medium and long-term funding and liquidity management requirements. The Company
manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities, by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities. Included in note 24.3 to these financial statements is
a listing of additional undrawn facilities that the Company has at its disposal to further reduce
liquidity risk.
37.2.1 Liquidity and interest risk table
The following table details the Company’s remaining contractual maturity for its non-derivative
financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial 71
liabilities under long term financing agreements based on the earliest date on which the Company
can be required to pay. For effective markup rate please see relevant notes to these financial
statements.
Carrying amount and contractual cash flows of trade and other financial liabilities are approximately
same.
Carrying amount
2013 2012
Rupees
Trade and other payables

Maturity up to one year 943,495,323 743,282,395
Short term borrowings
Maturity up to one year 2,345,751,876 2,266,558,827
Long term financing
Maturity up to one year 727,496,363 955,717,704
Maturity after one year and up to five years 734,474,873 1,334,775,749
Maturity after five years - -
4,751,218,435 5,300,334,675
37.3 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the Company’s income or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimizing the return on risk.
37.3.1 Foreign currency risk management

Pak Rupee (PKR) is the functional currency of the Company and as a result currency exposure arises
from transactions and balances in currencies other than PKR. The Company’s potential currency
exposure comprise;
- Transactional exposure in respect of non functional currency monetary items.
- Transactional exposure in respect of non functional currency expenditure and revenues.
The potential currency exposures are discussed below;

Transactional exposure in respect of non functional currency monetary items
Monetary items, including financial assets and liabilities, denominated in currencies other than the
functional currency of the Company are periodically restated to PKR equivalent, and the associated
gain or loss is taken to the profit and loss account. The foreign currency risk related to monetary
items is managed as part of the risk management strategy.
Transactional exposure in respect of non functional currency expenditure and revenues
Certain operating and capital expenditure is incurred by the Company in currencies other than the
functional currency. Certain sales revenue is earned in currencies other than the functional currency
of the Company. These currency risks are managed as a part of overall risk management strategy.
72
Exposure to foreign currency risk

The Company’s exposure to foreign currency risk was as follows based on notional amounts:
2013 2012
US dollar
Trade debts 152,888 506,274
Commitments outstanding at year end amounted to Rs.75.509 million (2012: Rs. 19.784 million)
relating to letter of credits for import of plant and machinery, stores spare parts and raw material.

The following significant exchange rates applied during the year:
Average rate Reporting date spot rate

2013 2012 2013 2012
Rupees Rupees

US$ 1 95.20 92.10 99.30 96.25
A 5 percent weakening of the Pak Rupee against the USD at June 30, 2013 would have (increased)
decreased profit or loss by the amounts shown below. This analysis assumes that all other variables,
in particular interest rates, remain constant. The analysis is performed on the same basis for June
30, 2012.
2013 2012
Rupees

(Increase) / Decrease in profit and loss account (1,518,178) 4,872,887
Sensitivity analysis
A 5 percent weakening of the Pak Rupee against the US $ at June 30, 2013 would have had the
equal but opposite effect on US $ to the amounts shown above, on the basis that all other variables
remain constant.
37.3.2 Other price risk
Other price risk is the risk that the fair value or future cash flows from a financial instrument
will fluctuate due to changes in market prices (other than those a rising from interest rate risk
or currency risk), whether those changes are caused by factors specific to the individual financial
instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The
effects of changes in fair value of such investments made by Company, on the future profits are not
considered to be material in the overall context of these financial statements.
37.3.3 Interest rate risk
The interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes
in the market interest rates. Sensitivity to interest rate risk arises from mismatches of financial assets
and liabilities that mature in a given period.
Profile 73
At the reporting date, the Company does not have any fixed rate interest bearing financial
instruments.
2013 2012 2013 2012

%

% Rupees
Floating rate instruments

Financial assets
Bank balance 6.05% to 8.47% 5.01% to 8.24% 187,155,904 34,857,011
Term deposits 6.0% to 7.99% 5.36% to 12.50% 25,000,000 25,000,000
Financial liabilities
Long term financing 10.79% to 13.90% 12.91% to 16.36% 734,474,873 1,334,775,746
(522,318,969) (1,274,918,735)
Fair value sensitivity analysis for floating rate instruments

The following table demonstrates the sensitivity to a reasonably possible change in floating interest
rates, with all other variables held constant, of the Company’s profit before tax (through the impact
on floating rate borrowings). There is only an immaterial impact on the Company’s equity.
Increase / Effect on profit

(decrease) in before tax
basis points
Rupees
2013
Short term borrowings -1.00% (23,061,554)
Long term financing (18,762,323)
(41,823,877)
2012
Short term borrowings
-1.25% 27,441,656
Long term financing 31,011,449
58,453,105
37.4 Equity Price Risk Management
The Company’s listed and unlisted equity securities are susceptible to market price risk arising from
uncertainties about future values of the investment securities. The Company manages the equity
price risk through diversification and placing limits on individual and total equity instruments.
Reports on the equity portfolio are submitted to the Company’s senior management on a regular
basis. The Company’s Board of Directors reviews and approves all equity investment decisions.
At the balance sheet date, the exposure to unlisted equity securities at fair value was Rs 5,000,000.
At the balance sheet date, the exposure to listed equity securities at fair value was Rs. 137,789,304
Rs. (2012: Rs. 91,178,674). An increase of 25% on the KSE market index would have an impact
74 of approximately Rs 46,610,630 on the income or equity attributable to the Company, depending
on whether or not the increase is significant and prolonged. An decrease of 25% in the value of
the listed securities would impact equity in a similar amount but will not have an effect on income
unless there is an impairment charge associated with it.
37.4.1 Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different
levels have been defined as follows:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3 Inputs for the asset or liability that are not based on observable market data
(unobservable inputs)
Level 1 Level 2 Level 3 Total
Rupees
Financial assets at FVTPL

Derivative financial assets - - - -
Non-derivative financial - - - -
assets held for trading - - - -

Available-for-sale financial assets
Quoted equity securities 137,789,304 - - 137,789,304
Unquoted equity securities - - 5,000,000 5,000,000
Debt investments - - - -
Total 137,789,304 - 5,000,000 142,789,304
Financial liabilities at FVTPL

Derivative financial liabilities - - - -
Total - - - -

There were no transfers between Level 1 and 2 in the year.
37.5 Determination of fair Value
Fair value of financial instruments
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable willing parties in an arm’s length transaction other than in a forced or liquidation sale.
Available for sale investments as disclosed in other financial assets, are presented at fair value by
using quoted prices at Karachi Stock Exchange as at June 30, 2013. The carrying values of all other
financial assets and liabilities reflected in the financial statements approximate their fair values.
37.6 Capital risk management
The Company’s objective when managing capital is to safeguard the Company’s ability to continue
as a going concern so that it can continue to provide returns for shareholders and benefits for other
stakeholders; and to maintain a strong capital base to support the sustained development of its businesses.
The Company manages its capital structure which comprises capital and reserves by monitoring return 75
on net assets and makes adjustments to it in the light of changes in economic conditions. In order
to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to
shareholders, appropriation of amounts to capital reserves or/and issue new shares.

38. REMUNERATION TO CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amount charged in the accounts of the year for remuneration including all benefits to Chief
Executive, Directors and Executives of the Company were as follows:
2013 2012
Chief executive Directors Executives Chief executive Directors Executives
Officer Officer
Rupees Rupees

Remuneration 10,000,008 5,066,680 34,104,692 10,000,008 5,200,008 32,441,917
Perquisites
House rent 3,999,996 2,026,660 10,231,436 3,999,996 2,079,996 9,606,584
Utilities 999,996 506,660 3,410,394 999,996 519,996 3,202,313
Medical allowance - - 3,410,611 - - 3,201,023
Special allowance - - 322,392 - - 316,207
Income tax 3,668,750 1,725,418 - 3,924,004 1,452,789 -
Reimbursement of expenses - - 1,797,535 - - 1,857,016
18,668,750 9,325,418 53,277,060 18,924,004 9,252,789 50,625,060
Number of persons 1 2 38 1 2 37
38.1 The Chief Executive, certain Directors and Executives are provided with free use of Company’s cars
and telephone etc. having value amounting to Rs 5.22 million (2012: Rs. 4.45 million).
38.2 Directors have waived their meeting fee.
39. TRANSACTIONS WITH RELATED PARTIES
The related parties comprise holding company, subsidiary and associated undertakings, other related
group companies, directors of the company, key management personnel and post employment
benefit plans. The Company in the normal course of business carries out transactions with various
related parties. Amounts due from and to related parties are shown under receivables and payables
and remuneration of directors and key management personnel is disclosed in note 38.
Other significant transactions with related parties are as follows:
2013 2012
Rupees
Relationship with Nature of transactions

the Company

Associated undertaking Sales 179,983,041 105,475,031
Purchases 59,277,912 43,517,106
Organizational expenses recovered 1,153,174 1,243,746
Organizational expenses paid 1,962,260 1,851,187
Dividend received - 5,537,023
Donation 15,577,370 14,867,525
76 Key management Remuneration to Executives 86,827,228 85,169,744
personnel
All transactions with related parties have been carried out on commercial terms and conditions.
40. PLANT CAPACITY AND PRODUCTION

Chemical Division

Designed capacity Actual production
2013 2012 2013 2012 Reason of variation
Tons

Caustic soda 201,300 201,300 108,594 112,231 Due to energy and gas crisis
Sodium hypochlorite 66,000 66,000 27,466 29,740 Due to energy and gas crisis
Liquid chlorine 9,900 9,900 7,282 7,879 Due to energy and gas crisis
Ammonium chloride 6,600 6,600 - 709 Due to energy and gas crisis
Bleaching powder 7,500 7,500 4,479 4,717 Due to energy and gas crisis
Hydrochloric acid 212,200 212,200 114,361 154,748 Due to energy and gas crisis
2013 2012
Textile Division
Ring Spinning
Number of spindles installed 22,080 22,080
Number of spindles worked 22,080 22,080
Number of shifts per day 3 3
Installed capacity after conversion into 20/s count (Kgs) 10,110,166 10,110,166
Actual production of yarn after conversion into
20/s count (Kgs) 8,234,117 8,012,202
2013 2012
Rupees
41. WORKING CAPITAL CHANGES
(Increase) / decrease in current assets
Stores, spare parts and loose tools 30,601,840 (87,014,176)
Stock in trade (108,088,295) (17,637,490)
Trade debts (143,736,293) (291,647,860)
Loans and advances (123,499,625) (92,088,966)
Trade deposits and short-term prepayments (2,932,223) 356,314
Other receivables (7,519,853) (1,305,786)
(355,174,449) (489,337,964)
Increase / (decrease) in current liabilities

Trade and other payables 309,373,998 166,342,962
Sales tax payable 16,355,616 (6,399,436)
(29,444,835) (329,394,438)
77
2013 2012
Note Rupees
42. Provident Fund Related Disclosure

The following is based on latest audited financial statement of the Fund:
Size of the Funds - Total Assets 59,713,729 51,019,833
Cost of Investments made 30,000,000 30,000,000
Percentage of investments made 79% 74%
Fair Value of investments 43.1 47,386,138 37,536,902
43.1 Break up of fair value of investments
2013 2012
Rupees % Rupees %

Mutual Funds 19,632,293 41% 11,238,295 30%
Bank Balances 2,443,968 5% 1,879,353 5%
Debt Securities 25,309,877 53% 24,419,254 65%
47,386,138 100% 37,536,902 100%

43.2 The investments out of provident fund have been made in accordance with the provisions of Section 227 of the
Companies Ordinance, 1984 and rules formulated for this purpose.
43. The total average number of employees during the year and as at June 30, 2013 and 2012 respectively are as
follows:
2013 2012
Average number of employees during the year

Permanent 743 753
Contractual 1,056 982
Number of employees as at June 30
Permanent 768 741
Contractual 1,019 959
78
44. RECLASSIFICATION
Corresponding figures have been rearranged and reclassified to reflect more appropriate presentation
of events and transactions for the purposes of comparison. Significant reclassifications made are as
follows:
From To Reason Amount Rupees
Others Exchange gain “For better 1,630,120
presentation”
Plant and machinery Advance for property, “For better 82,805,498
including in transit plant including in transit presentation”
Cost of sales Administrative expenses “For better 32,154,692

presentation”
Cost of sales Administrative expenses “For better 17,864,521

presentation”
The above re-arrangements / reclassifications do not affect retained earnings for the year ended June 30, 2012. Therefore,
the balance sheet for the year ended June 30, 2011 has not been prepared.
45. OPERATING RESULTS

Chemical Textile Total
2013 2012 2013 2012 2013 2012
Rupees
Sales:
Local
Caustic soda 5,644,949,419 5,293,407,756 - - 5,644,949,419 5,293,407,756
Sodium hypochlorite 529,125,804 539,533,763 - - 529,125,804 539,533,763
Bleaching powder 136,070,477 135,475,557 - - 136,070,477 135,475,557
Liquid chlorine 171,998,327 141,634,268 - - 171,998,327 141,634,268
Hydrochloric acid 462,697,135 546,960,906 - - 462,697,135 546,960,906
Ammonium chloride 87,000 29,338,400 - - 87,000 29,338,400
Magnesium chloride
and others 263,723,668 88,512,773 - - 263,723,668 88,512,773
Agri-chemicals 164,058,905 97,819,872 - - 164,058,905 97,819,872
Yarn - - 1 ,319,679,110 1,179,412,713 1,319,679,110 1,179,412,713
Waste - - 7 ,679,068 8,113,357 7,679,068 8,113,357
Fabrics - - 1 07,363,887 - 107,363,887 -
Export:
Caustic soda flakes 546,452,682 509,848,366 - - 546,452,682 509,848,366
Liquid chlorine - 490,999 - - - 490,999
Others 8,166,738 12,570,074 - - 8,166,738 12,570,074
7,927,330,155 7,395,592,734 1,434,722,065 1,187,526,070 9,362,052,220 8,583,118,804
Less:
Commission and discount 287,802,578 178,483,026 5,228,277 3,626,205 293,030,855 182,109,231
Sales tax 969,226,553 930,852,486 - 6,230,570 969,226,553 937,083,056 79
Sales - net 6,670,301,024 6,286,257,222 1,429,493,788 1,177,669,295 8,099,794,812 7,463,926,517
Chemical Textile Total

2013 2012 2013 2012 2013 2012
Rupees
Sales - net 6,670,301,024 6,286,257,222 1,429,493,788 1,177,669,295 8,099,794,812 7,463,926,517

Cost of sales (4,362,517,716) (4,291,074,923) (1,233,613,411) (1,102,864,402) (5,596,131,127) (5,393,939,325
Gross profit 2,307,783,308 1,995,182,299 195,880,377 74,804,893 2,503,663,685 2,069,987,192
Other income 28,360,093 34,614,602 4,408,702 3,771,798 32,768,795 38,386,400
Distribution cost (160,128,521) (126,192,230) (13,627,807) (1,094,387) (173,756,328) (127,286,617)
Administrative expenses (370,349,682) (192,754,330) (27,497,208) (27,797,080) (397,846,890) (220,551,410)
Finance cost (478,397,008) (669,008,429) (8,431,520) (13,862,841) (486,828,528) (682,871,270)
(980,515,118) (953,340,387) (45,147,833) (38,982,510) (1,025,662,951) (992,322,897)
Reportable segments profit
before tax 1,327,268,190 1,041,841,912 150,732,544 35,822,383 1,478,000,734 1,077,664,295
Unallocated income / (expenses)
Administrative expenses (2,620,000) (2,620,000)
Other operating expenses (98,157,980) (88,450,365)
Share of loss of associated company (2,776,413) (2,542,565)
Provision for taxation 338,342,478 295,569,418
Other information
Segment assets 8,133,980,846 9,144,842,872 1,420,808,251 85,067,177 9,554,789,097 9,229,910,049
Unallocated corporate assets 3,822,022,812 3,650,750,925

13,365,097,388 12,880,660,974
Segment liabilities 863,660,463 724,784,477 75,116,179 21,149,469 938,776,642 745,933,946

Unallocated corporate liabilities 12,438,035,267 12,134,727,028

13,365,097,388 12,880,660,974
Capital expenditure 485,742,989 348,568,435 8,611,650 88,768,944 494,354,639 437,337,379

Depreciation 531,881,214 433,643,708 46,010,856 33,901,325 577,892,070 467,545,033
45.1 Inter-segment pricing / sales

There is no purchase and sale between the segments.
45.2 Products and services from which reportable segments derive their revenues
For management purposes, the Company is organized into business units based on their products and
services and has the following two reportable operating segments. The strategic business units offer
different products and services, and are managed separately because they require different technology
and marketing strategies. For each of the strategic business units, the Company’s CEO reviews internal
management reports on at least a quarterly basis:
The Chemicals segment produces and supplies various chemicals used in textile and fertilizer industry.
80
The textile segment is a spinning unit which produces yarn.
The Company does not have any geographical segment.
45.3 For the purposes of monitoring segment performance and allocating resources between segments:
All assets are allocated to reportable segments other than investments in associates, and tax assets.
Assets used jointly by reportable segments are allocated on the basis of the revenues earned by
individual reportable segments; and
All liabilities are allocated to reportable segments other than current and deferred tax liabilities.
Liabilities for which reportable segments are jointly liable are allocated in proportion to segment
assets.
46. EVENTS AFTER THE BALANCE SHEET DATE

In respect of current year, the directors have proposed to pay final cash dividend of Rs. 214.29
million (2012: Rs. 171.435 million) at Rs.10 (2012: Rs. 8) per ordinary share each for approval of the
shareholders at the forthcoming Annual General Meeting. Financial effect of the proposed dividend
has not been taken in these financial statements and will be accounted for subsequently in the year
when such dividend is approved.
47. GENERAL
Figures have been rounded off to the nearest Rupee.
48. DATE OF AUTHORIZATION FOR ISSUE
The financial statements were authorized for issue on August 19, 2013 by the Board of Directors of
the Company.
81
Notes
82
FORM OF PROXY
IMPORTANT
This form of Proxy, in order to be effective, must be deposited duly completed, at Company’s Share Registrar’s Office at M/s.
M/s. THK Associates (Pvt) Limited, State Life Building-3, Dr. Ziauddin Ahmed Road, Karachi not less than 48 hours
before the time of holding the meeting.

A Proxy must be a member of the Company. Signature should agree with the specimen registered with the
company. Please quote Registered Folio Number / CDC Account Number
I/We
of
being a member of Sitara Chemical Industries Limited entitled to vote and holder of
ordinary shares, hereby appoint
of
who is also a member of the Company, as my/our proxy in my/our absence to attend and vote
for me/us on my/our behalf at the 32nd Annual General Meeting of the Company to be held at
Dr. Abdul Qadeer Khan Auditorium, Haji Abdullah Haroon Muslim Gymkhana, Near Shaheen Complex,
Aiwan-e-Sadr Road, Karachi on Tuesday, October 14, 2013 at 4:00 p.m. and at any adjournment
thereof. As witness my/our hand this day of 2013.
Signed by the said
Affix Rs. 5/-

Revenue Stamp Members’ Signature
which must be
cancelled either by
signature over it or
by some other means
Place (Witness’s Signature)

Date
Designed & Produced by: ASTRAL HATCH INC. 051-8430659

2013 Final

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Annual Report

07 Message from CEO

14 Six Years at a Glance

28 Profit & Loss Account

32 Statement of Changes in Equity

33 Notes to the Financial Statements

Earning Per Share

Profit Before Tax

Gross Profit 15.58 %

Board of Directors United Bank Limited

Human Resource and Registered Office

Sitara Group carries a long history

Haji Bashir Ahmed

Profit Appropriations Rupees

Workers’ Profit Participation Fund (67,616,294)

Net profit for the year 1,036,103,863

Incremental Depreciation net of Deferred 61,523,256

Un-appropriated profit brought forward 2,678,172,367

Amount available for appropriation 3,775,799,486

Proposed cash dividend @ Rs.10 per share (214,294,070)

Un-appropriated profit carried forward 3,561,505,416

Earnings per share - Basic 48.35

Staff Retirement Benefits

Board of Directors Meeting

Audit Committee Meetings

Human Resource and Remuneration Committee

software applications for managing its information system The transactions

Corporate Social Responsibility

For and on behalf of the

Sales 8,099,795 7,463,927 6,216,880 5,735,795 6,178,399 5,749,570

The finest, Rajah’s suiting is designed

Innuagration of Rajah’s by Haji Bashir Ahmed, Chairman

Statement of Directors’ Responsibilities

18. The Board has set up an effective internal audit function.

Number of Shareholdings Total Number

989 1 100 26,298

Number Shares Held Percentage

Directors, CEO and their Spouse and Minor Children

Bank, Development Finance Institutions,

Insurance Companies 3 1,147,386 5.35

Modarabas and Mutual Funds 8 422,946 1.97

Foreign Companies 1 28,964 0.14

General Public (Local) 2021 3,710,355 17.32

General Public (Foreign) 19 36,076 0.18

Associated Companies, Undertaking and Related Parties - - -

Joint Stock Companies, other, etc 26 461,991 2.16

Others 4 81,185 0.38

2,099 21,429,407 100.00

By order of the Board

24 Engagement Partner: Talat Javed

Engagement Partner: Talat Javed

Total Non-current assets

Total assets 13,365,097,388 12,880,660,974

EQUITY AND LIABILITIES

Total Non-current liabilities

Total current liabilities

Contingencies and commitments 27

Total equity and liabilities 13,365,097,388 12,880,660,974